Advanta reports steep first-quarter decline

Advanta Corp. today reported a steep decline in profit from its small-business credit cards in the first quarter, as the slumping economy caused more borrowers to fall behind in their payments.

Even so, the Spring House company's class B shares jumped 16.45 percent, or $1.24, to $8.78 in Nasdaq trading today because the earnings were better than expected.

Advanta said its credit card operation earned $6.67 million in the first quarter, off sharply from $21.17 million in the same period a year earlier.

Overall, Advanta earned $18.36 million in the quarter, including a $13.8 million gain from the public offering of Visa Inc. shares. Advanta was among the banks that owned the credit card company. In the first quarter a year earlier, its profit was $21.4 million.

The combined earnings per share for Advanta's class A and class B shares were 44 cents in the first quarter, down from 48 cents a year earlier.

"This is a very difficult environment," Dennis Alter, Advanta's chairman and chief executive officer, said in a conference call with analysts. "Consumer delinquencies are at levels not seen in two decades."

The company boosted its provision for loan losses to $28.38 million in the first three months of 2008 from $10.08 million in the same period a year earlier.

The amount of debt 30 days or more delinquent was $332.11 million, or 5.3 percent of all receivables, the company said. A year earlier, those figures were $150.97 million and 2.7 percent.

To save an estimated $15 million a year starting late next year, Alter said Advanta would move offshore "significant portions" of certain operations. The company did not immediately provide detail on job losses here.