SEC Info - Advanta Corp - 10-Q

SEC Info

Home

My Interests

Help

Please Sign In

Advanta Corp · 10-Q · For 6/30/94

Filed On 8/11/94 · SEC File 0-14120 · Accession Number 96638-94-13

  As Of               Filer                 Filing     On/For/As Docs:Pgs

 8/11/94  Advanta Corp                      10-Q        6/30/94    1:27

Quarterly Report · Form 10-Q
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-Q        Quarterly Report                                      27    108K

Document Table of Contents

Page	(sequential)	\|	(alphabetic)	Top
			Alternative Formats (RTF, XML, et al.) Exhibits and Reports on Form 8-K Financial Statements Provision for Credit Losses
1	1st Page
2	Item 1. Financial Statements
17	Provision for Credit Losses
25	Item 6. Exhibits and Reports on Form 8-K

10-Q 1st Page of 27 TOC Top Previous Next Bottom Just 1st
 Sponsored Ads...







Form 10Q            
SECURITIES AND EXCHANGE COMMISSION          
Washington, D.C. 20549          

[X]  Quarterly report pursuant to section 13 or 15(d) of the                    
Securities Exchange Act of 1934 for the quarterly period ended        
June 30, 1994 or                                                      

[ ]  Transition report pursuant to section 13 or 15(d) of the                   
Securities Exchange Act of 1934 for the transition period from        
______ to _______                                                     

Commission File Number 0-14120          

Advanta Corp.           
(Exact name of registrant as specified in its charter)          

Delaware                               23-1462070       
(State or other jurisdiction of               (I.R.S. Employer                  
incorporation or organization)              Identification No.)               

Brandywine Corporate Center, 650 Naamans Rd., Claymont, DE   19703              
(Address of Principal Executive Offices)             (Zip Code)     

(302) 791-4400              
(Registrant's telephone number, including area code)          

____________________________________________________________________            
(Former name, former address and former fiscal year, if changed                 
since last report)                                                            

Indicate by check mark whether the registrant (1) has filed all                 
reports required to be filed by Section 13 or 15(d) of the Securities           
Exchange Act of 1934 during the preceding 12 months (or for such                
shorter period that the registrant was required to file such reports),          
and (2) has been subject to such filing requirements for the past 90            
days.                                                                           

Yes   X        No ____                                                          

*   Applicable only to issuers involved in bankruptcy proceedings               
during the preceding five years:                                        

Indicate by check mark whether the registrant has filed all documents           
and reports required to be filed by Sections 12, 13 or 15(d) of the             
Securities Exchange Act of 1934 subsequent to the distribution of               
securities under a plan confirmed by a court.                                   

Yes            No ____                                                          

*  Applicable only to corporate issuers:                                        

Indicate the number of shares outstanding of each of the issuer's               
classes of common stock, as of the latest practicable date.                     

Class A                      Outstanding at August 1, 1994    
Common Stock, $.01 par value                17,347,018 shares                   

Class B                      Outstanding at August 1, 1994    
Common Stock, $.01 par value                23,109,277 shares                   

10-Q 2nd Page of 27 TOC 1st Previous Next Bottom Just 2nd

Table of Contents         

                                        Page

Part I - Financial Information                                        

Item 1.  Financial Statements                                         

Consolidated Condensed Balance Sheets         3     
Consolidated Condensed Income Statements      4     
Consolidated Statements of Cash Flows         5     
Notes to Consolidated Condensed Financial           
Statements                                   6    

Item 2.  Management's Discussion and Analysis of                      
Financial Condition and Results of                  
Operations                                   14     

Part II - Other Information                           26              

10-Q 3rd Page of 27 TOC 1st Previous Next Bottom Just 3rd

ADVANTA CORP. AND SUBSIDIARIES          
CONSOLIDATED CONDENSED BALANCE SHEETS         
(Dollars in thousands)          

                                   June 30,       December 31,
                                1994            1993
ASSETS                                     (Unaudited)                          
Cash                                       $   30,803       $   31,162          
Federal funds sold and interest-bearing                                         
deposits with banks                          220,228          234,196         
Investments available for sale                297,132          308,026          
Loan and lease receivables, net:                                                
Available for sale                           966,779          667,774         
Other loan and lease receivables, net        360,931          614,879         
Total loan and lease receivables, net       1,327,710        1,282,653          
Premises and equipment, net                    21,380           17,045          
Amounts due from credit card                                                    
securitizations                              119,382          117,764         
Other assets                                  175,207          149,349          

Total assets                            $2,191,842       $2,140,195       

LIABILITIES                                                                     
Deposits                                   $1,041,005       $1,254,881          
Debt and other borrowings                     670,592          473,699          
Other liabilities                              91,027           68,874          

Total liabilities                        1,802,624        1,797,454       

STOCKHOLDERS' EQUITY (See Notes 10 & 11)                                        
Class A preferred stock, $1,000 par                                             
value: authorized, issued and                                                 
outstanding -- 1,010 shares in 1994                                           
and 1993                                       1,010            1,010         
Class B preferred stock, $.01 par                                               
value: authorized -- 1,000,000 shares                                         
in 1994 and 1993; none issued                                                 
Class A common stock, $.01 par value:                                           
authorized -- 200,000,000 shares;                                             
issued -- 17,344,568 shares in 1994                                           
and 17,240,064 in 1993                           173              172         
Class B common stock, $.01 par value:                                           
authorized -- 200,000,000 shares;                                             
issued -- 23,100,209 in 1994 and                                              
22,603,088 in 1993                               231              226         
Additional paid in capital, net               172,588          166,646          
Retained earnings, net                        215,838          174,687          
Less: Treasury stock at cost, 63,396                                            
Class B common shares in 1994                   (622)               0         

Total stockholders' equity                 389,218          342,741       

Total liabilities and stockholders'                                       
equity                                 $2,191,842       $2,140,195      

See Notes to Consolidated Condensed Financial Statements                        

10-Q 4th Page of 27 TOC 1st Previous Next Bottom Just 4th

ADVANTA CORP. AND SUBSIDIARIES          
CONSOLIDATED CONDENSED INCOME STATEMENTS          
(In thousands, except per share data)         

                     Three Months Ended     Six Months Ended
                       June 30,             June 30,
                       (Unaudited)           (Unaudited)
                     1994         1993     1994       1993
Interest income:                                                                
Loans and leases              $ 23,123   $31,662    $ 52,332  $ 61,575        
Investments                      7,020     6,715      13,046    12,794        
Total interest income            30,143    38,377      65,378    74,369         

Interest expense:                                                               
Deposits                        11,485    13,381      23,920    26,736        
Other debt                      10,095     6,284      18,415    13,158        
Total interest expense           21,580    19,665      42,335    39,894         

Net interest income               8,563    18,712      23,043    34,475         

Provision for credit losses      15,434     6,364      22,263    13,545         

Net interest income after                                                       
provision for credit losses     (6,871)   12,348         780    20,930        

Noninterest revenues:                                                           
Gain on sale of credit cards    18,352         0      18,352         0        
Other noninterest revenues      89,154    58,338     168,934   115,389        
Total noninterest revenues      107,506    58,338     187,286   115,389         

Operating expenses               60,022    41,651     108,387    81,658         

Income before income taxes       40,613    29,035      79,679    54,661         

Provision for income taxes       14,856    10,564      28,998    20,046         

Net income before                                                               
extraordinary item              25,757    18,471      50,681    34,615        

Extraordinary item, net                                                         
(See Note 12)                        0    (1,273)          0    (1,273)       

Net income                     $ 25,757   $17,198    $ 50,681  $ 33,342         

Earnings per common share                                                       
before extraordinary item (A) $    .63   $   .46    $   1.23  $    .90        

Earnings per common share (A)  $    .63   $   .43    $   1.23  $    .87         

Weighted average common                                                         
shares outstanding (A)          41,173    40,299      40,957    38,165        

(A) All share and per share amounts have been adjusted to                       
reflect the three-for-two stock split effective October                 
15, 1993.  See Note 10 of Notes to Consolidated                         
Condensed Financial Statements.                                         

See Notes to Consolidated Condensed Financial Statements                        

10-Q 5th Page of 27 TOC 1st Previous Next Bottom Just 5th

ADVANTA CORP. AND SUBSIDIARIES          
CONSOLIDATED STATEMENTS OF CASH FLOWS         
(Dollars in thousands)          
                                    Six Months Ended
                                      June 30,
                                     1994         1993
OPERATING ACTIVITIES                                 (Unaudited)                
Net income                                   $    50,681   $  33,342            
Adjustments to reconcile net income to net                                      
cash provided by operating activities:                                        
Proceeds from sales/securitizations of                                      
receivables                                   865,458     479,962         
Purchase of mortgage/lease portfolios          (57,294)    (46,493)         
Principal collected on mortgages                11,206      12,218          
Mortgages made to customers                   (246,489)   (221,440)         
Depreciation and amortization of intangibles     3,605       2,271          
Provision for credit losses                     22,263      13,545          
Change in other assets and amounts due                                      
from credit card securitizations                4,772       9,589         
Change in other liabilities                     27,039      11,336          
Gain on securitization of mortgages                                         
and leases                                    (14,046)    (10,041)        
Loss on repurchase of senior subordinated                                   
debentures                                          0       1,928         
Net cash provided by operating activities        667,195     286,217            

INVESTING ACTIVITIES                                                            
Purchase of investments                      (1,168,013)   (509,702)          
Proceeds from sales of investments              503,866     294,589           
Proceeds from maturing investments              667,516      61,145           
Change in fed funds sold and interest-                                        
bearing deposits                                13,968      70,746          
Change in credit card receivables,                                            
excluding sales                               (597,337)   (415,278)         
Change in premises and equipment                 (7,563)     (2,902)          
Excess of cash collections over income                                        
recognized on direct financing leases            9,271       8,597          
Equipment purchased for direct financing                                      
lease contracts                                (70,606)    (40,538)         
Net change in other loans                          (108)        103           
Net cash used by investing activities           (649,006)   (533,240)           

FINANCING ACTIVITIES                                                            
Increase in demand and savings deposits         113,617      20,251           
Proceeds from sales of time deposits            139,533     353,792           
Payments for maturing time deposits            (467,026)   (336,686)          
Change in repurchase agreements                 140,000     166,398           
Proceeds from issuance of subordinated debt      15,919      46,324           
Payments on redemption of subordinated debt     (26,565)    (59,173)          
Redemption of senior subordinated debentures          0     (36,404)          
Proceeds from issuance of notes payable to                                    
banks                                            2,300      54,204          
Repayment of notes payable to banks              (9,787)    (66,318)          
Proceeds from issuance of medium term notes      75,026           0           
Proceeds from issuance of stock                   3,051      92,198           
Cash dividends paid                              (4,616)     (3,233)          
Net cash (used)/provided by financing                                           
activities                                      (18,548)    231,353           
Net decrease in cash                                (359)    (15,670)           
Cash at beginning of period                       31,162      35,753            
Cash at end of period                         $   30,803   $  20,083            

10-Q 6th Page of 27 TOC 1st Previous Next Bottom Just 6th

ADVANTA CORP. AND SUBSIDIARIES          
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS          
(Dollars in thousands)          

June 30, 1994         

1) In the opinion of management, the accompanying audited and                   
unaudited consolidated condensed financial statements contain all         
adjustments necessary to present fairly the financial position of         
Advanta Corp. and Subsidiaries as of June 30, 1994 and December           
31, 1993, and the results of their operations and the statements          
of cash flows for the three and six month periods ended June 30,          
1994 and 1993.  The results of operations for the three and six           
month periods ended June 30, 1994 are not necessarily indicative          
of the results to be expected for the full year.  Certain prior           
period amounts have been reclassified to conform with current year        
classifications.                                                          

2) Investments available for sale include securities that the Company           
sells from time to time to provide liquidity and in response to           
changes in the market.  In 1993, the Financial Accounting                 
Standards Board ("FASB") issued Statement of Financial Accounting         
Standards No. 115, "Accounting for Certain Investments in Debt and        
Equity Securities" ("SFAS 115").  This statement requires that            
debt and equity securities classified as available for sale be            
reported at market value.  This statement is effective for fiscal         
years beginning after December 15, 1993, although a company may           
elect earlier adoption as of the end of a fiscal year for which           
annual statements have not been previously issued.  The Company           
elected to adopt this statement as of December 31, 1993, and as           
such, these securities are recorded at market value.  Unrealized          
holding gains and losses on these securities are reported as a            
separate component of stockholder's equity and included in                
retained earnings.                                                        

3) Loan and lease receivables available for sale represent                      
receivables that the Company generally intends to sell or                 
securitize within the next six months.  These receivables are             
reported at the lower of book or fair market value.                       

4) Loan and lease receivables on the balance sheet, including those             
available for sale, consisted of the following:                           

                                 June 30,     December 31,
                             1994           1993
Gross loan and lease receivables     $1,329,740     $1,277,305        

Add: Deferred origination costs,                                      
net of deferred fees                48,192         36,575   

Less: Reserve for credit losses         (50,222)       (31,227)       

Loan and lease receivables, net      $1,327,710     $1,282,653        

Number of Accounts:                                                   
Credit cards                           433,019        514,334       
Other loans and leases                  10,668          8,035       
Total                                  443,687        522,369       

10-Q 7th Page of 27 TOC 1st Previous Next Bottom Just 7th

Receivables and accounts serviced for others consisted of the         
following:                                                            
               June 30,       December 31,
           1994             1993
Receivables:                                                    
Credit cards            $3,344,024       $2,790,719           
Mortgage loans           1,115,265        1,058,524           
Leases                     144,092          119,613           
Total                   $4,603,381       $3,968,856           

Number of Accounts:                                             
Credit cards             2,664,901        2,183,024           
Mortgage loans              23,470           23,925           
Leases                      31,181           27,566           
Total                    2,719,552        2,234,515           

5) The Company accounts for credit card origination costs under                 
Statement of Financial Accounting Standards No. 91, "Accounting           
for Nonrefundable Fees and Costs Associated with Originating or           
Acquiring Loans and Initial Direct Costs of Leases" ("SFAS 91").          
This accounting standard requires certain loan and lease                  
origination fees and costs to be deferred and amortized over the          
life of a loan or lease as an adjustment to interest income.              
Origination costs are defined under this standard to include costs        
of loan origination associated with transactions with independent         
third parties and certain costs relating to underwriting                  
activities and preparing and processing loan documents.  The              
Company engages third parties to solicit and originate credit card        
account relationships.  Amounts deferred under these arrangements         
were $25.4 million and $16.3 million in the first six months of           
1994 and 1993, respectively.  For credit card receivables,                
deferred origination costs have been amortized over 60 months.            

At the May 20, 1993 meeting of the Emerging Issues Task Force ("EITF")    
of the Financial Accounting Standards Board, the task force               
reached a consensus regarding the acquisition of individual credit        
card accounts from independent third parties (EITF Issue 93-1).           
The consensus was that credit card accounts acquired individually         
should be accounted for as originations under SFAS 91 and EITF            
Issue 92-5.  Amounts paid to a third party to acquire individual          
credit card accounts should be deferred and netted against the            
related credit card fee, if any, and the net amount should be             
amortized on a straight line basis over the privilege period.  If         
a significant fee is charged, the privilege period is the period          
that the fee entitles the cardholder to use the card.  If there is        
no significant fee, the privilege period should be one year.              

10-Q 8th Page of 27 TOC 1st Previous Next Bottom Just 8th

In accordance with this consensus, direct origination costs               
incurred related to credit card originations initiated after the          
May 20, 1993 consensus date are deferred and amortized over 12            
months.  Costs incurred for originations which were initiated prior       
to May 20, 1993 will continue to be amortized over a 60 month             
period.  Prior to the EITF Issue 93-1 consensus, it was the               
Company's practice to write off deferred origination costs related        
to credit card receivables that have been securitized.  This              
practice had effectively written off credit card origination costs        
much more quickly than the 60 month period previously utilized.  In       
connection with the prospective adoption of a 12 month amortization       
period for deferred credit card origination costs, the Company will       
no longer write off deferred origination costs related to credit          
card receivables being securitized, as under the EITF Issue 93-1          
consensus such costs are not directly associated with the                 
receivables.                                                              

The Company records excess servicing income on credit card                
securitizations representing additional cash flow from the                
receivables initially sold based on the repayment term, including         
prepayments.  Prior to the EITF Issue 93-1 consensus, net gains           
were not recorded at the time each transaction was completed as           
excess servicing income was offset by the write-off of deferred           
origination costs and the establishment of recourse reserves.             
Subsequent to the prospective adoption discussed above, excess            
servicing income has been recorded at a lower level at the time of        
each transaction, and is predominantly offset by the establishment        
of recourse reserves.  The lower level of excess servicing income         
corresponds with the discontinuance of deferred origination cost          
write-offs upon securitization of receivables as discussed above.         
During the "revolving period" of each securitization, income is           
recorded based on additional cash flows from the new receivables          
which are sold to the securitization trust on a continual basis to        
replenish the investors' interest in trust receivables which have         
been repaid by the credit cardholders.                                    

6) The following table shows the changes in the reserve for credit              
losses for the periods presented:                                         

                      Six Months Ended      Year Ended
                           June 30,         December 31,
                         1994               1993

Balance, beginning of period      $ 31,227           $ 40,228         

Current provision                 22,263             29,802       

Transfer of reserves to                                           
recourse reserves                     0            (12,027)     

Transfer of recourse                                              
reserves to mortgage                                            
reserves                         11,335                  0      

Net charge-offs                  (14,603)           (26,776)      

Balance, end of period            $ 50,222           $ 31,227         

7) At June 30, 1994 and December 31, 1993, the Company had $119.4               
million and $117.8 million, respectively, of amounts due from             
credit card securitizations.  These amounts include excess                
servicing, accrued interest receivable and other amounts related to       
these securitizations and are net of recourse reserves established.       
A portion of these amounts are subject to liens held by the               
providers of credit enhancement facilities for the respective             
securitizations.                                                          

8) Selected Balance Sheet Information                                           

Other Assets                                                        
                                      June 30,        December 31,
                                   1994             1993
Excess mortgage servicing rights       $ 73,981         $ 57,017    
Accrued interest receivable              29,148           25,735    
Prepaid assets                           24,551           16,307    
Deferred costs                            6,790            5,583    
Due from trustees - mortgage              6,041            6,040    
Goodwill                                  5,483            5,648    
Excess servicing - leasing                4,278            1,287    
Other real estate owned                   2,907            1,447    
Due from trustees - leasing               1,744            1,297    
Other                                    20,284           28,988    
Total other assets                     $175,207         $149,349    

Other Liabilities                                                   
                                       June 30,       December 31,
                                    1994            1993
Current and deferred income taxes       $30,350          $37,844    
Accounts payable and accrued expenses    25,545           15,139    
Accrued interest payable                 16,604            8,387    
Other                                    18,528            7,504    
Total other liabilities                 $91,027          $68,874    

9) Income tax expense for the three and six month periods ended June            
30, 1994 was at an effective tax rate of approximately 36.4%,             
compared to 36.7% for the comparable 1993 period.  Effective              
January 1, 1993, the Company implemented the provisions of                
Statement of Financial Accounting Standards No. 109, "Accounting          
for Income Taxes" ("SFAS 109") with no material effect on the             
financial statements.  SFAS 109 utilizes the liability method and         
deferred taxes are determined based on the estimated future tax           
effects of differences between the financial statement and the tax        
bases of assets and liabilities given the provisions of the               
enacted tax laws.  Prior to the implementation of SFAS 109, the           
Company accounted for income taxes using Accounting Principles            
Board Opinion No. 11.                                                     

10-Q 9th Page of 27 TOC 1st Previous Next Bottom Just 9th

Income tax expense consisted of the following components:                 

                   Three Months Ended       Six Months Ended
                    June 30,                June 30,
                     1994       1993         1994       1993
Current:                                                              
Federal                $18,212    $ 6,974      $30,476    $11,033   
State                    2,224      1,235        4,496      2,953   
Total current            20,436      8,209       34,972     13,986    

Deferred:                                                             
Federal                 (5,205)     2,104       (6,224)     5,978   
State                     (375)       251          250         82   
Total deferred           (5,580)     2,355       (5,974)     6,060    

Total tax                                                             
expense before                                                      
extraordinary item     $14,856    $10,564      $28,998    $20,046   

The reconciliation of the statutory federal income tax to the             
consolidated tax expense is as follows:                                   

                   Three Months Ended       Six Months Ended
                    June 30,                June 30,
                   1994       1993         1994       1993
Statutory federal                                                     
income tax             $14,228    $ 9,872      $27,901    $18,585   

State income taxes        1,202        981        3,085      2,003    

Other                      (574)      (289)      (1,988)      (542)   

Consolidated tax                                                      
expense before                                                      
extraordinary item     $14,856    $10,564      $28,998    $20,046   

Tax benefit on loss                                                   
from repurchase of                                                  
debentures                   0       (656)           0       (656)  

Consolidated tax                                                      
expense                $14,856    $ 9,908      $28,998    $19,390   

10-Q 10th Page of 27 TOC 1st Previous Next Bottom Just 10th

The net deferred tax liability is comprised of the following:             

                 June 30,     December 31,
               1994           1993

Deferred taxes:                                                       

Gross assets                 $ 34,239      $ 25,755               

Gross liabilities             (47,726)      (43,815)              

Total deferred taxes           $(13,487)     $(18,060)                

The Company did not record any valuation allowances against               
deferred tax assets at June 30, 1994 and December 31, 1993.               

The tax effect of significant temporary differences representing          
deferred tax assets and liabilities is as follows:                        

                    June 30,      December 31,
                 1994           1993

SFAS 91                        $(17,454)     $(13,344)                
Loan losses                      24,897        23,631                 
Mortgage banking income           2,381        (2,395)                
Securitization income           (27,554)      (25,817)                
Insurance underwriting           (2,516)       (2,258)                
Deferred compensation             1,092           592                 
Other                             5,667         1,531                 

Net deferred tax liabilities   $(13,487)     $(18,060)                

10) On September 23, 1993, the Board of Directors approved a three-for-         
two stock split effected in the form of a 50% stock dividend on         
both the Class A and Class B Common Stock to shareholders of            
record as of October 4, 1993, which dividend was paid on October        
15, 1993.  All share and per share amounts reflect the three-for-       
two stock split as a result of the stock dividend. Earnings per         
share for the six month period ended June 30, 1993 have been            
adjusted to reflect the impact of this dividend, as if it had           
already occurred at the beginning of the period.                        

11) On March 24, 1993, in a public offering, the Company sold                   
2,575,000 shares (pre-split) of Class B Common Stock.  Proceeds         
from the offering, net of the underwriting discount, were $77.5         
million.  On April 21, 1993, the underwriters of the offering           
purchased an additional 450,000 shares (pre-split) of Class B           
Common Stock, pursuant to the overallotment option granted to them      
by the Company.  This brought the Company's total proceeds of the       
offering, net of related expenses, to approximately $90 million.        
The Company used the proceeds of the offering for general               
corporate purposes, including the financing of growth in its            
subsidiaries.                                                           

10-Q 11th Page of 27 TOC 1st Previous Next Bottom Just 11th

12) In April of 1993, the Company repurchased the remaining $33.2               
million of its 12 3/4% Senior Subordinated Debentures at a price        
equal to 104% of par.  This transaction resulted in an                  
extraordinary loss of $1.3 million (net of a tax benefit of $.6         
million) or $.03 per share for the three and six month periods          
ended June 30, 1993.                                                    

13) Under certain stock based bonus programs, certain employees have            
received awards in the form of restricted shares of common stock        
which are subject to forfeiture should the employee terminate           
employment with the Company prior to vesting.  The shares become        
unrestricted over time if certain performance criteria are met.         
At June 30, 1994, a total of 1,215,924 shares issued under these        
plans were subject to restriction and are included in the number        
of shares outstanding.  During 1994, the Company granted 200,000        
shares of restricted stock to an executive outside the above            
mentioned bonus programs, which shares are included in the number       
of shares outstanding at June 30, 1994.  Restricted shares are          
considered common stock equivalents in the calculation of earnings      
per common share.                                                       

Deferred compensation of $16.3 million and $11.0 million related        
to these programs is reflected as a reduction of equity at June 30, 1994
and December 31, 1993, respectively.                                    

14) In April 1994, the Company, through its subsidiary, Colonial                
National Bank USA, reached an agreement with NationsBank of             
Delaware, N.A., to sell certain credit card customer relationships      
which at that time represented approximately $150 million of            
securitized credit card receivables (less than 4% of the Company's      
managed credit card receivables as of June 30, 1994).  The              
receivables associated with these relationships will continue to        
be serviced by Colonial National until the securitization trust         
terminates.  The Company anticipates this will occur in the second      
quarter of 1995.  In the quarter ended June 30, 1994, the Company       
recorded an $18.4 million pretax gain on the sale.  In addition,        
the Company deferred a portion of the proceeds related to the           
excess spread of the receivables to be generated over the               
remaining life of the trust.  These proceeds will be recognized as      
securitization income over the related period.                          

10-Q 12th Page of 27 TOC 1st Previous Next Bottom Just 12th

15) The following table shows the calculation of earnings per common            
share reflecting the effect of the three-for-two stock split            
described in Note 10:                                                   
               Three Months Ended     Six Months Ended
              June 30,              June 30,
                1994       1993       1994        1993

Net income             $25,757   $ 17,198    $50,681   $33,342        
less: preferred                                                       
dividends                   0          0       (141)     (141)      

Net income available                                                  
to common shares      $25,757   $ 17,198    $50,540   $33,201       

Average common                                                        
stock outstanding      38,863     37,697     38,759    35,588       
Common stock                                                          
equivalents             2,310      2,602      2,198     2,577       

Weighted average                                                      
shares outstanding                                                  
(in thousands)         41,173     40,299     40,957    38,165       

Earnings per common                                                   
share                 $   .63    $   .43    $  1.23   $   .87       

10-Q 13th Page of 27 TOC 1st Previous Next Bottom Just 13th

ADVANTA CORP. AND SUBSIDIARIES          
MANAGEMENT'S DISCUSSION AND ANALYSIS OF         
FINANCIAL CONDITION AND RESULTS OF OPERATIONS         

OVERVIEW                                                                        
Net income for the three months ended June 30, 1994 was $25.8 million,          
an $8.6 million or 50% increase from the $17.2 million reported for             
the second quarter of 1993.  Earnings per share for the second quarter          
of 1994 were $.63, a 47% increase from $.43 per share for the same              
period of 1993.  Earnings for 1993 include a $1.3 million or $.03 per           
share extraordinary loss on the early retirement of debt.  Earnings             
per share for 1993 have been adjusted to reflect an effective three-            
for-two stock split as a result of the October 15, 1993 stock                   
dividend.                                                                       

Earnings increased in the second quarter of 1994 primarily as a result          
of a 44% increase in average managed receivables and continued                  
improvement in credit quality with the total managed charge-off rate            
decreasing to 2.5% for the second quarter of 1994 from 3.2% for the             
second quarter of 1993. The Company continues to securitize a majority          
of the growth in its receivables and report the performance of the              
securitized receivables as noninterest revenues. Noninterest revenues           
increased $49.2 million, or 84%, to $107.5 million in the second                
quarter of 1994 from $58.3 million in the comparable 1993 period.               
This increase was due to a 44% increase in average managed receivables          
coupled with an $18.4 million gain on the sale of $150 million of               
credit card customer relationships.  This transaction allowed the               
Company to make additional investments in marketing and developmental           
initiatives.  The Company also provided an additional $10 million of            
loan loss reserves.  Despite the increase in marketing and                      
developmental expenses, total operating expense growth was maintained           
at a level in line with the growth in average managed receivables, and          
the operating expense ratio was flat at 4.27% of average managed                
receivables for both the 1994 and 1993 second quarter periods.                  
Although asset quality indicators continue to trend favorably, the              
Company continues to maintain a conservative outlook and to strengthen          
reserves.                                                                       

For the six months ended June 30, 1994, net income was $50.7 million,           
a 52% increase over the $33.3 million for the comparable year earlier           
period.  Earnings per share increased 41% to $1.23 in 1994 compared to          
$.87 in 1993.  Earnings per share before extraordinary item were $.90           
in 1993.                                                                        

NET INTEREST INCOME                                                             
Net interest income for the second quarter of 1994 decreased to $8.6            
million from $18.7 million for the same period of 1993.  This decrease          
was due to an increase in the amortization of deferred origination              
costs due to the change in the policy and amortization period for               
these costs (see Note 5 of Notes to Consolidated Condensed Financial            
Statements).  Also affecting net interest income was a drop in the              
owned net interest margin to 3.85% from 4.74% for the second quarter            
of 1993, offset by an increase in average interest earning assets of            
$245 million.  The Company is executing a strategy to market a "risk-           
adjusted" credit card product in which credit cards are issued with             
lower rates to customers whose credit quality is expected to result in          
a lower rate of credit losses (the "risk-adjusted" pricing strategy).           
This strategy resulted in a drop in credit card yields thereby                  
lowering the owned net interest margin.   Also affecting the owned net          
interest margin was a lag in the repricing of the interest rates on             
the Company's credit cards, as the result of multiple changes in the            
prime rate during the quarter.  The Company's credit cards are                  
contractually indexed monthly to the prime rate.                                

10-Q 14th Page of 27 TOC 1st Previous Next Bottom Just 14th

The following tables provide an analysis of both owned and managed              
interest income and expense data, average balance sheet data, net               
interest spread (the difference between the yield on interest earning           
assets and the average rate paid on interest-bearing liabilities), and          
net interest margin (the difference between the yield on interest               
earning assets and the average rate paid to fund interest earning               
assets) for the three and six month periods ended June 30, 1994 and             
1993.  Average owned loan and lease receivables and the related                 
interest revenues exclude deferred origination costs and deferred fees          
and the amortization thereof (see Notes to Consolidated Condensed               
Financial Statements) and include certain loan fees.                            

10-Q 15th Page of 27 TOC 1st Previous Next Bottom Just 15th

                                                        · Enlarge/Download Table
                                                                                                  
INTEREST RATE ANALYSIS                                                                          
                                                                                                
                                                Three Months Ended June 30,                     
                                        1994                                  1993              
                          Average                     Yield/     Average                  Yield/
                          Balance (1)      Interest    Rate      Balance (1)    Interest   Rate 
                                                                                                
On-balance sheet                                                                                
Credit cards              $1,099,843       $ 28,006   10.19%      $  833,751    $ 25,746  12.35%
Mortgage loans               135,025          2,550    7.57          164,137       4,051   9.90 
Leases                        52,894          1,909   14.43           63,998       2,784  17.40 
Other loans                    3,772             68    7.23            1,649          40   9.73 
Gross receivables          1,291,534         32,533   10.08        1,063,535      32,621  12.27 
Investments (2)              621,424          7,463    4.80          604,687       6,860   4.54 
Total interest earning                                                                          
 assets                   $1,912,958       $ 39,996    8.37%      $1,668,222    $ 39,481   9.47%

Interest-bearing                                                                                
 liabilities              $1,747,315       $ 21,580    4.87%      $1,531,943    $ 19,665   5.14%

Net interest spread                                    3.50%                               4.33%
Net interest margin                                    3.85%                               4.74%

Off-balance sheet                                                                               
Credit cards              $3,118,461                              $1,903,216                    
Mortgage loans             1,073,957                                 860,567                    
Leases                       135,160                                  78,017                    
Total average                                                                                   
 securitized receivables  $4,327,578                              $2,841,800                    
Total average managed                                                                           
 receivables              $5,619,112                              $3,905,335                    

Managed Net Interest                                                                            
Analysis (3):                                                                                   
Interest earning assets   $5,031,419       $151,233   12.03%      $3,571,438    $113,794  12.75%
Interest-bearing                                                                                
 liabilities              $4,865,776       $ 63,898    5.23%      $3,435,159    $ 44,834   5.22%

  Net interest spread                                  6.80%                               7.53%
  Net interest margin                                  6.95%                               7.72%
<FN>                                                                                            
(1)Includes assets held and available for sale and nonaccrual loans and                         
    leases.                                                                                     
(2)Interest and average rate for tax-free securities computed on a tax                          
    equivalent basis using a statutory rate of 35%.                                             
(3)Combination of owned interest earning assets/owned interest-bearing                          
    liabilities and securitized credit card assets/liabilities.                                 
                                                                              
10-Q 16th Page of 27 TOC 1st Previous Next Bottom Just 16th

                                                        · Enlarge/Download Table
                                                                                                   
INTEREST RATE ANALYSIS                                                                           
                                                                                                 
                                                  Six Months Ended June 30,                      
                                        1994                                   1993              
                          Average                     Yield/      Average                  Yield/
                          Balance (1)      Interest    Rate       Balance (1)    Interest   Rate 
                                                                                                 
On-balance sheet                                                                                 
Credit cards              $1,115,658       $ 58,210   10.44%      $  776,851     $ 48,749  12.55%
Mortgage loans               127,038          5,361    8.51          186,197        9,493  10.28 
Leases                        49,453          3,652   14.77           58,693        5,176  17.64 
Other loans                    3,707            135    7.34            1,698           81   9.62 
Gross receivables          1,295,856         67,358   10.41        1,023,439       63,499  12.42 
Investments (2)              602,759         13,912    4.63          559,582       12,956   4.64 
Total interest earning                                                                           
 assets                   $1,898,615       $ 81,270    8.57%      $1,583,021     $ 76,455   9.67%

Interest-bearing                                                                                 
 liabilities              $1,747,496       $ 42,335    4.83%      $1,498,138     $ 39,894   5.36%

Net interest spread                                    3.74%                                4.31%
Net interest margin                                    4.07%                                4.59%

Off-balance sheet                                                                                
Credit cards              $2,954,347                              $1,893,455                     
Mortgage loans             1,057,728                                 803,116                     
Leases                       129,219                                  80,908                     
Total average                                                                                    
 securitized receivables  $4,141,294                              $2,777,479                     
Total average managed                                                                            
 receivables              $5,437,150                              $3,800,918                     

Managed Net Interest                                                                             
Analysis (3):                                                                                    
Interest earning assets   $4,852,962       $292,669   12.06%      $3,476,476     $224,800  12.94%
Interest-bearing                                                                                 
 liabilities              $4,701,843       $118,883    5.05%      $3,391,593     $ 90,187   5.33%

  Net interest spread                                  7.01%                                7.61%
  Net interest margin                                  7.15%                                7.73%
<FN>                                                                                             
(1)Includes assets held and available for sale and nonaccrual loans and                          
    leases.                                                                                      
(2)Interest and average rate for tax-free securities computed on a tax                           
    equivalent basis using a statutory rate of 35%.                                              
(3)Combination of owned interest earning assets/owned interest-bearing                           
    liabilities and securitized credit card assets/liabilities.                                  
                                                                              
10-Q 17th Page of 27 TOC 1st Previous Next Bottom Just 17th

The effects of the amortization of deferred origination costs, deferred         
fees and tax equivalent interest on net interest income were as follows:        

                             Three Months Ended     Six Months Ended
                             June 30,               June 30,
                             1994      1993         1994      1993
Net interest income before                                            
amortization of deferred                                            
origination costs and                                               
fees and including tax                                              
 equivalent interest        $18,416    $19,816      $38,935    $36,561
Amortization of deferred                                                
origination costs, net of                                             
 deferred fees                (9,395)      (959)     (15,006)    (1,924)
Tax equivalent interest         (458)      (145)        (886)      (162)

Net interest income          $ 8,563    $18,712     $ 23,043    $34,475 

PROVISION FOR CREDIT LOSSES                                                     

The provision for credit losses for the second quarter of 1994 was $15.4        
million compared to $6.4 million for the comparable period of 1993.  For        
the six month period ended June 30, 1994, the provision for credit losses       
was $22.3 million compared to $13.5 million for the six months of 1993.         
Despite lower charge-offs on owned receivables, which on a consolidated         
basis were 2.3% of average receivables for the first six months of 1994         
versus 2.8% a year ago, the Company provided an additional $10 million of       
general reserves in the second quarter of 1994.  At June 30, 1994, the          
general reserve was $18.8 million.  The owned impaired asset level was          
$48.7 million or 3.7% of receivables at June 30, 1994 compared to $23.9         
million or 2.0% of receivables a year ago.  This increase was due to            
several transactions in which the Company repurchased nonperforming             
mortgage loans from the securitization trusts, in order to lower net            
funding costs on these managed assets.  The Company repurchased                 
$45 million of nonperforming mortgages during the first half of 1994 and        
transferred approximately $11 million of off-balance sheet recourse             
reserves to on-balance sheet reserves as a result of these transactions.        
These repurchases increased the owned impaired asset level while having         
no impact on either the level of managed impaired assets or the provision       
for credit losses. (See also Asset Quality below).                              

ASSET QUALITY                                                                   

The reserve for credit losses is maintained for on-balance sheet                
receivables.  The reserve is intended to cover credit losses inherent in        
the owned loan portfolio.  With regard to securitized assets, anticipated       
losses and related recourse reserves are reflected in the calculations of       
securitization income, amounts due from credit card securitizations and         
other assets.  Recourse reserves are intended to cover all probable             
credit losses over the life of the receivables securitized.  The Company        
periodically evaluates its on-balance sheet and recourse reserve                
requirements and, as appropriate, effects transfers between these accounts.     

10-Q 18th Page of 27 TOC 1st Previous Next Bottom Just 18th

The reserve for credit losses on a consolidated owned basis was $50.2           
million or 3.8% of receivables at June 30, 1994 up from $31.2 million or        
2.4% of receivables at December 31, 1993 and $37.2 million or 3.1% of           
receivables at June 30, 1993.  Due to the increase in the proportion of         
owned impaired mortgages, which have a lower level of reserve coverage,         
the consolidated coverage of impaired assets dropped to 103.1% at June          
30, 1994 from 138.6% at year end 1993 and 155.8% at June 30, 1993.              

On the total managed portfolio, impaired assets were $90.9 million or 1.5%      
of receivables at June 30, 1994, versus $95.1 million or 1.8% of                
receivables at December 31, 1993 and $89.0 million or 2.2% of receivables       
at June 30, 1993.  A key credit quality statistic, the 30+ day delinquency      
rate on managed credit cards, dropped to 2.0% at June 30, 1994 from 2.9% a      
year ago and is at its lowest level in over five years.                         

On the total owned portfolio, impaired assets were $48.7 million or  3.7%       
of receivables at June 30, 1994, compared to $22.5 million or 1.8% of           
receivables and $23.9 million or 2.0% of receivables at December 31, 1993       
and June 30, 1993, respectively.  This increase was due to the repurchase       
of the nonperforming mortgages from the securitization trusts.                  

The total managed charge-off rate for the first six months of 1994 was          
2.5%, down from 2.9% for the full year of 1993 and 3.2% for the first six       
months of 1993.  The charge-off rate on managed credit cards was 2.7% for       
the first six months of 1994, down from 3.5% for the full year 1993 and         
4.0% for the comparable 1993 period.  The Company believes that charge-offs     
on mortgages will remain at approximately the current levels throughout         
1994.                                                                           

The charge-off rate on owned receivables on a consolidated basis was 2.3%       
of average receivables for the first six months of 1994, down from 2.4% for     
the full year 1993 and 2.8% a year ago.  The charge-off rate on owned           
credit cards was 2.0% for the first six months of 1994, down from 2.6% for      
the full year 1993 and 3.4% for the comparable 1993 period.                     

The following tables provide a summary of impaired assets, delinquencies        
and charge-offs, as of and for the year-to-date periods indicated.              

10-Q 19th Page of 27 TOC 1st Previous Next Bottom Just 19th

                                     June    December     June
                                      30,       31,        30,
CONSOLIDATED - MANAGED                     1994      1993       1993      

Nonperforming assets                     $63,062   $ 63,589   $ 61,991    
Accruing loans past due 90 days or more   27,831     31,514     26,992    
Impaired assets                           90,893     95,103     88,983    
Total loans 30 days or more delinquent   173,725    186,297    173,463    
As a percentage of gross receivables:                                     
Nonperforming assets                        1.1%       1.2%       1.5%  
Accruing loans past due 90 days or more      .5         .6         .7   
Impaired assets                             1.5        1.8        2.2   
Total loans 30 days or more delinquent      2.9        3.6        4.2   
Net charge-offs:                                                          
Amount                                  $67,859   $122,715   $ 60,644   
As a percentage of average gross                                        
receivables(annualized)                    2.5%       2.9%       3.2% 
CREDIT CARDS - MANAGED                                                      
Nonperforming assets                     $13,885   $ 10,881   $  7,984    
Accruing loans past due 90 days or more   27,793     31,489     26,953    
Impaired assets                           41,678     42,370     34,937    
Total loans 30 days or more delinquent    89,306     94,035     84,092    
As a percentage of gross receivables:                                     
Nonperforming assets                         .3%        .3%        .3%  
Accruing loans past due 90 days or more      .6         .8         .9   
Impaired assets                              .9        1.1        1.2   
Total loans 30 days or more delinquent      2.0        2.4        2.9   
Net charge-offs:                                                          
Amount                                  $55,862   $105,966   $ 54,512   
As a percentage of average gross                                        
receivables(annualized)                    2.7%       3.5%       4.0% 
MORTGAGE LOANS - MANAGED                                                    
Nonperforming assets                     $47,396   $ 50,418   $ 50,437    
Total loans 30 days or more delinquent    69,086     75,747     74,623    
As a percentage of gross receivables:                                     
Nonperforming assets                        3.9%       4.4%       4.7%  
Total loans 30 days or more delinquent      5.6        6.6        7.0   
Net charge-offs:                                                          
Amount (1)                              $10,366   $ 13,991   $  4,818   
As a percentage of average gross                                        
receivables(annualized) (1)                1.7%       1.3%       1.0% 
LEASES - MANAGED                                                            
Nonperforming assets                     $ 1,771   $  2,290   $  3,570    
Total loans 30 days or more delinquent    15,239     16,476     14,691    
As a percentage of receivables:                                           
Nonperforming assets                         .9%       1.3%       2.6%  
Total loans 30 days or more delinquent      7.6        9.7       10.6   
Net charge-offs:                                                          
Amount                                  $ 1,648   $  2,759   $  1,299   
As a percentage of average receivables                                  
(annualized)                               1.8%       1.9%       1.9% 

(1)  Restated, where necessary, to exclude interest advances on the             
serviced portfolio to be consistent with presentation of owned        
portfolio.                                                            

10-Q 20th Page of 27 TOC 1st Previous Next Bottom Just 20th

                                       June    December     June
                                        30,       31,        30,
CONSOLIDATED - OWNED                         1994      1993       1993      
Reserve for credit losses                 $50,222   $31,227    $37,165    
Nonperforming assets                       41,783    11,487     13,648    
Accruing loans past due 90 days or more     6,907    11,038     10,206    
Impaired assets                            48,690    22,525     23,854    
Reserve as a percentage of impaired assets  103.1%    138.6%     155.8%   
As a percentage of gross receivables:                                     
Reserve                                      3.8%      2.4%       3.1%  
Nonperforming assets                         3.1        .9        1.2   
Accruing loans past due 90 days or more       .5        .9         .9   
Impaired assets                              3.7       1.8        2.0   
Net charge-offs:                                                          
Amount                                   $14,603   $26,776    $14,224   
As a percentage of average gross                                        
receivables(annualized)                     2.3%      2.4%       2.8% 
CREDIT CARDS - OWNED                                                        
Reserve for credit losses                 $18,125   $25,859    $23,876    
Nonperforming assets                        2,875     3,062      2,288    
Accruing loans past due 90 days or more     6,869    11,013     10,167    
Impaired assets                             9,744    14,075     12,455    
Reserve as a percentage of impaired assets  186.0%    183.7%     191.7%   
As a percentage of gross receivables:                                     
Reserve                                      1.6%      2.3%       2.4%  
Nonperforming assets                          .2        .3         .2   
Accruing loans past due 90 days or more       .6       1.0        1.0   
Impaired assets                               .8       1.2        1.3   
Net charge-offs:                                                          
Amount                                   $11,074   $23,623    $13,096   
As a percentage of average gross                                        
receivables(annualized)                     2.0%      2.6%       3.4% 
MORTGAGE LOANS - OWNED (1)                                                  
Reserve for credit losses                 $11,953   $ 2,706    $ 3,166    
Nonperforming assets                       38,453     7,090      9,292    
Reserve as a percentage of impaired assets   31.1%     38.2%      34.1%   
As a percentage of gross receivables:                                     
Reserve                                     10.6%      3.0%       2.3%  
Nonperforming assets                        34.1       7.8        6.6   
Net charge-offs:                                                          
Amount                                   $ 3,145   $ 2,207    $   633   
As a percentage of average gross                                        
receivables(annualized)                     5.0%      1.4%        .7% 
LEASES - OWNED                                                              
Reserve for credit losses                 $ 1,385   $ 1,826    $ 1,448    
Nonperforming assets                          445     1,335      2,068    
Reserve as a percentage of impaired assets  311.2%    136.8%      70.0%   
As a percentage of receivables:                                           
Reserve                                      2.4%      3.6%       2.3%  
Nonperforming assets                          .8       2.6        3.2   
Net charge-offs:                                                          
Amount                                   $   401   $   947    $   480   
As a percentage of average receivables                                  
(annualized)                                1.6%      1.6%       1.6% 

(1) Beginning March 1994, the Company initiated a program for repurchasing      
nonperforming assets from the securitized portfolios  (see "Provision     
for Credit Losses").                                                      

10-Q 21st Page of 27 TOC 1st Previous Next Bottom Just 21st

NONINTEREST REVENUES                                                            
                            Three Months Ended      Six Months Ended
                           June 30,               June 30,
                            1994      1993         1994       1993
Gain on sale of credit cards   $ 18,352   $     0     $ 18,352   $      0   
Other noninterest revenues:                                                 
Credit card securitization                                                
income                         49,824    27,939       95,048     57,394 
Credit card servicing                                                     
income                         15,336     9,397       29,136     18,690 
Income from mortgage                                                      
banking activities              8,587     8,851       16,792     17,236 
Leasing revenues, net            5,787     1,319       10,380      2,665  
Other credit card revenues       3,253     2,511        6,501      4,808  
Insurance revenues, net          3,056     2,058        5,966      4,141  
Credit card interchange                                                   
income                          2,992     4,981        4,448      7,803 
Other                              319     1,282          663      2,652  
Total other noninterest                                                     
revenues                      $ 89,154   $58,338     $168,934   $115,389  

Total noninterest revenues     $107,506   $58,338     $187,286   $115,389   

For the second quarter of 1994, noninterest revenues increased 84% to           
$107.5 million from $58.3 million for the same period of 1993.  During the      
quarter, the Company sold $150 million of credit card customer relationships    
from a securitization trust.  The Company will continue to service the          
receivables until the securitization trust terminates, which is anticipated     
to occur in the second quarter of 1995.  The Company recorded a gain of         
$18.4 million on this transaction.  (See Note 14 of Notes to Consolidated       
Condensed Financial Statements.)  Excluding this gain, other noninterest        
revenues of $89.2 million increased $30.9 million or 53% from the second        
quarter of 1993. Securitization income increased $21.9 million or 78% as        
average securitized credit card receivables grew 64% from the comparable        
quarter of 1993 and interchange income paid to the credit card trusts           
(included in securitization income) also increased.  Securitization income      
as an annualized percentage of average securitized credit card receivables      
was 6.4% for the second quarter of 1994 versus 5.9% for the second quarter      
of 1993.  Credit card servicing income increased $5.9 million due to higher     
securitized balances.  Leasing revenues, net, increased $4.5 million            
primarily due to a 73% growth in average securitized lease receivables from     
the comparable quarter of 1993.  Credit card interchange income represents      
approximately 1.4% of credit card purchases less amounts paid to the            
securitization trusts, which amounts range from 1% to 2% of securitized         
balances and are included in credit card securitization income.  Interchange    
income decreased $2.0 million due to a higher level of interchange fees being   
included in credit card securitization income, as well as an increase in the    
volume of balance transfer activity which yields no interchange income.  Other  
income declined $1.0 million primarily due to $.9 million of securities gains   
included in the second quarter of 1993.                                         

For the six month period ended June 30, 1994, noninterest revenues rose to      
$187.3 million from $115.4 million for the comparable 1993 period, a 62%        
increase.  This improvement resulted from the gain on sale of credit cards,     
as well as a 56% growth in average securitized credit card receivables and      
a 60% growth in average securitized lease receivables.                          

10-Q 22nd Page of 27 TOC 1st Previous Next Bottom Just 22nd

OPERATING EXPENSES                                                              
                       Three Months Ended     Six Months Ended
                        June 30,              June 30,
                         1994      1993         1994      1993
Salaries and employee                                                       
benefits                     $21,460   $15,671      $42,023   $30,070     
Marketing                      11,976     5,037       18,360     9,428      
External processing             5,349     3,828       10,006     7,414      
Credit card fraud losses        4,737     3,482        8,244     6,787      
Postage                         3,052     2,333        5,753     4,591      
Equipment expense               2,291     1,464        4,346     2,840      
Occupancy expense               2,076     1,488        3,863     3,012      
Professional fees               1,824     2,119        3,576     4,815      
Telephone expense               1,804     1,288        3,597     2,458      
Credit and collection                                                       
expense                        1,769     1,748        3,435     3,424     
Other                           3,684     3,193        5,184     6,819      
Total operating expenses      $60,022   $41,651     $108,387   $81,658      

Operating expenses of $60.0 million for the three months ended June 30,         
1994 increased 44% from $41.7 million for the same period of 1993.              
Operating expenses as a percentage of average managed receivables were          
4.27% for the second quarter of 1994, flat with the comparable 1993 period.     
Included in expenses for the second quarter of 1994 was approximately $9        
million of marketing and developmental expenses related to new initiatives.     
The remainder of the growth in operating expenses was driven by a 44%           
growth in average managed receivables.  As a result, the Company                
experienced an increase in salaries and employee benefits with a 20%            
increase in the number of employees from 1,414 at June 30, 1993 to 1,693 at     
June 30, 1994 to effectively service the current and anticipated account        
growth.  Other expenses, including postage, telephone expense and external      
processing increased consistent with the increase in the number of credit       
card accounts managed.                                                          

For the first six months of 1994, operating expenses increased 33% to           
$108.4 million from $81.7 million for the same 1993 period.  Average            
managed receivables grew 43% over the same period of time.  Operating           
expenses as a percentage of average managed receivables were 3.99% for the      
six months ended June 30, 1994, down from 4.30% for the six months ended        
June 30, 1993.                                                                  

LIQUIDITY AND CAPITAL RESOURCES                                                 

The Company's goal is to maintain an adequate level of liquidity, both          
long- and short-term, through active management of both assets and              
liabilities.  During the first six months of 1994, the Company, through its     
subsidiaries, securitized $550 million of credit card receivables,  $183        
million of mortgage loans and $43 million of equipment lease receivables.       
Cash generated from these transactions was temporarily invested in              
short-term, high quality investments at money market rates awaiting             
redeployment to pay down deposits and to fund future credit card, mortgage      
and lease receivable growth.  At June 30, 1994, the Company had                 
approximately $967 million of loan and lease receivables and $297 million       
of investments available for sale which could be sold to generate               
additional liquidity.                                                           

10-Q 23rd Page of 27 TOC 1st Previous Next Bottom Just 23rd

During 1993, the debt securities of Advanta Corp. achieved investment-grade     
ratings from the nationally recognized rating agencies.  These ratings have     
allowed the Company to further diversify its funding sources.  As a result,     
in 1994 the Company obtained a revolving credit facility totaling $255          
million from a consortium of banks.  In November 1993, the Company filed a      
shelf registration statement with the Securities and Exchange Commission        
for $1 billion of debt securities, and subsequently sold $150 million of        
three-year notes in the fourth quarter of 1993 and has sold $90 million of      
medium-term notes under this registration statement through the second          
quarter of 1994.  The Company anticipates selling up to an additional $410      
million of medium-term notes as needed.                                         

Due to the continued success in marketing credit cards, the Company             
anticipates that its marketing and developmental expenditures in 1994 will      
be substantially higher than those of 1993, in order to sustain the rapid       
growth in managed credit card receivables.  While there can be no assurance     
that this strategy will in fact result in continued rapid receivable            
growth, the Company believes that, in light of current market conditions,       
the Company's credit card offers will continue to appeal to consumers and       
will thus enable the Company to continue to increase its share of the           
domestic bank credit card market. The Company added 570,000 new credit card     
accounts during the first six months of 1994, and now manages over 3            
million credit card accounts, a 33% increase from a year ago.  Credit card      
sales through June 30, 1994 were $3.6 billion, a 46% increase over the $2.4     
billion generated in the first six months of 1993.  Subsequent to June 30,      
1994, the Company securitized $750 million of credit card receivables, $200     
million of which were previously included in securitized receivables,           
generating additional funding for future asset growth.                          

ASSET/LIABILITY MANAGEMENT                                                      

The Company attempts to minimize the impact of market interest rate             
fluctuations on net interest income and net income by regularly evaluating      
the risk inherent in its asset and liability structure, including               
securitized assets.  The risk arises from continuous changes in the             
Company's asset/liability mix, market interest rates, the yield curve,          
prepayment trends, and the timing of cash flows.  Computer simulations are      
used to evaluate net interest income volatility under varying rate, spread      
and volume assumptions over monthly time periods of up to two years.            

In managing its rate sensitivity position, the Company periodically             
securitizes, sells and purchases assets, alters the mix and term structure      
of its retail and institutional funding base, and complements its basic         
business activities by changing the investment portfolio and short-term         
asset positions.  The Company has primarily utilized variable rate funding      
in pricing its credit card securitization transactions in an attempt to         
match the pricing dynamics of the underlying receivables sold to the            
trusts.  Although credit card receivables are priced at a spread over the       
prime rate, they generally contain interest rate floors.  These floors have     
the impact of converting the credit card receivables to fixed rate              
receivables in a low interest rate environment.  In instances when a            
significant portion of credit card receivables are at their floors, the         
Company may convert part of the underlying funding to a fixed rate by using     
interest rate hedges, swaps and fixed rate securitizations.  In pricing         
mortgage and lease securitizations, both fixed rate and variable rate           
funding are used depending upon the characteristics of the underlying           
receivables.                                                                    

10-Q 24th Page of 27 TOC 1st Previous Next Bottom Just 24th

Interest rate fluctuations affect net interest income at virtually all          
financial institutions.  While interest rate volatility does have an effect     
on net interest income, other factors also contribute significantly to          
changes in net interest income.  Specifically, within the credit card           
portfolio, pricing decisions and customer behavior regarding convenience        
usage impact the yield on the portfolio.  These factors may counteract or       
exacerbate income changes due to fluctuating interest rates.  The Company       
closely monitors interest rate movements, competitor pricing and consumer       
behavioral changes in its ongoing analysis of net interest income               
sensitivity.                                                                    

10-Q 25th Page of 27 TOC 1st Previous Next Bottom Just 25th

PART II - OTHER INFORMATION     

Item 6. Exhibits and Reports on Form 8-K.                             

(a)  The following exhibits are being filed with this Report:   

    10(a) Agreement of Limited Partnership of Advanta Partners
LP, dated as of May 6, 1994.              

       10(b) Employment Agreement by and between Advanta Partners LP
     and Anthony P. Brenner, made as of May 6, 1994.

(b)  A report on Form 8-K, dated July 20, 1994, was filed       
  by the Company setting forth the financial highlights of
  the Company's results of operations for the period ended
      June 30, 1994.  A Financial Data Schedule was included as an
exhibit in this Form 8-K.                             

10-Q 26th Page of 27 TOC 1st Previous Next Bottom Just 26th

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 thereto duly authorized.             

                       Advanta Corp.

                      (Registrant)

August 11, 1994                 By  /s/David Wesselink                  
                         Senior Vice President and
                       Chief Financial Officer

August 11, 1994                 By  /s/John J. Calamari                 
                           Vice President, Finance and
                            Principal Accounting Officer

10-Q Last Page of 27 TOC 1st Previous Next Bottom Just 27th

EXHIBIT INDEX     

Exhibit                       Description                               

2                          Inapplicable.                        

4                          Inapplicable.                        

10(a)                         Agreement of Limited Partnership        
                      of Advanta Partners LP, dated as
                      of May 6, 1994 (filed herewith).

10(b)                         Employment Agreement by and between     
                        Advanta Partners LP and Anthony P.
                     Brenner, made as of May 6, 1994
       (filed herewith).

11                          Inapplicable.                         

15                          Inapplicable.                         

18                          Inapplicable.                         

19                          Inapplicable                          

22                          Inapplicable.                         

23                          Inapplicable.                         

24                          Inapplicable.                         

27                          Inapplicable.                         

99                          Inapplicable.

10-Q	1st Page of 27	TOC	Top	Previous	Next	Bottom	Just 1st

10-Q	2nd Page of 27	TOC	1st	Previous	Next	Bottom	Just 2nd

10-Q	3rd Page of 27	TOC	1st	Previous	Next	Bottom	Just 3rd

10-Q	4th Page of 27	TOC	1st	Previous	Next	Bottom	Just 4th

10-Q	5th Page of 27	TOC	1st	Previous	Next	Bottom	Just 5th

10-Q	6th Page of 27	TOC	1st	Previous	Next	Bottom	Just 6th

10-Q	7th Page of 27	TOC	1st	Previous	Next	Bottom	Just 7th

10-Q	8th Page of 27	TOC	1st	Previous	Next	Bottom	Just 8th

10-Q	9th Page of 27	TOC	1st	Previous	Next	Bottom	Just 9th

10-Q	10th Page of 27	TOC	1st	Previous	Next	Bottom	Just 10th

10-Q	11th Page of 27	TOC	1st	Previous	Next	Bottom	Just 11th

10-Q	12th Page of 27	TOC	1st	Previous	Next	Bottom	Just 12th

10-Q	13th Page of 27	TOC	1st	Previous	Next	Bottom	Just 13th

10-Q	14th Page of 27	TOC	1st	Previous	Next	Bottom	Just 14th

10-Q	15th Page of 27	TOC	1st	Previous	Next	Bottom	Just 15th

10-Q	16th Page of 27	TOC	1st	Previous	Next	Bottom	Just 16th

10-Q	17th Page of 27	TOC	1st	Previous	Next	Bottom	Just 17th

10-Q	18th Page of 27	TOC	1st	Previous	Next	Bottom	Just 18th

10-Q	19th Page of 27	TOC	1st	Previous	Next	Bottom	Just 19th

10-Q	20th Page of 27	TOC	1st	Previous	Next	Bottom	Just 20th

10-Q	21st Page of 27	TOC	1st	Previous	Next	Bottom	Just 21st

10-Q	22nd Page of 27	TOC	1st	Previous	Next	Bottom	Just 22nd

10-Q	23rd Page of 27	TOC	1st	Previous	Next	Bottom	Just 23rd

10-Q	24th Page of 27	TOC	1st	Previous	Next	Bottom	Just 24th

10-Q	25th Page of 27	TOC	1st	Previous	Next	Bottom	Just 25th

10-Q	26th Page of 27	TOC	1st	Previous	Next	Bottom	Just 26th

10-Q	Last Page of 27	TOC	1st	Previous	Next	Bottom	Just 27th

Dates Referenced Herein and Documents Incorporated By Reference

		Referenced-On Page
This 10-Q Filing	Date	First	Last	Other Filings

	1/1/93	8
	3/24/93	10
	4/21/93	10
	5/20/93	7	8
	6/30/93	6	22
	9/23/93	10
	10/4/93	10
	10/15/93	4	13
	12/15/93	6
	12/31/93	6	18	10-K, 11-K, 8-K, 8-K/A
	5/6/94	25	27
For The Period Ended	6/30/94	1	25	8-K
	7/20/94	25		8-K
	8/1/94	1
Filed On / Filed As Of	8/11/94	26

Top				List All Filings

Filing Submission - Alternative Formats (Word / Rich Text, HTML, Plain Text, SGML, XML, et al.)

Advanta Corp · 10-Q · For 6/30/94

Filed On 8/11/94 · SEC File 0-14120 · Accession Number 96638-94-13

Quarterly Report · Form 10-QFiling Table of Contents

Document Table of Contents

Dates Referenced Herein and Documents Incorporated By Reference

Quarterly Report · Form 10-Q
Filing Table of Contents