Advanta Seeks to Calm Investors, Promising a Brighter Tomorrow

At its annual shareholders' meeting Thursday, Advanta Corp. tried to put investor concerns to rest, saying the worst of its troubles was over.

The eighth-largest U.S. credit card issuer has been reeling from a $20 million first-quarter loss and the resignation of chief operating officer

David Brooks soon after he arrived. The mergers and acquisition firm BT Wolfensohn has been exploring strategic options, including a possible sale, since March 17.

Some 50 shareholders attended the 45-minute meeting in an auditorium at the company's headquarters. Referring to the positive spin in Advanta's annual report, one shareholder said, "Obviously, this was written before they started giving credit cards to street people."

But executives said they had taken the necessary actions to stabilize the portfolio and restore Advanta's condition.

"I can assure you that (we) are determined to return our company to a former level of profitability," said chairman Dennis Alter. "We are doing everything in our power to do that.

"This has more to do with our pride and tradition of growing a successful business than it has to do with stock price."

Advanta's shares have fallen from a 52-week high of $51.56 Feb. 13 to $23.81 Thursday.

When the floor was opened briefly for questions, a shareholder asked if the company should repurchase shares to boost the stock. Mr. Alter said Advanta would probably not do this because it would reduce capital.

Responding to another question, Mr. Alter said Mr. Brooks would not be replaced, since chief executive officer Alex W. Hart has taken on his responsibilities. He also gave no specifics about whether or when Advanta might consider being acquired.

Advanta has repriced its loan portfolio, added fees, and beefed up risk management, collections, and customer service, officials said. Mr. Alter said the 30-day delinquency rate dropped from 5.34% in January to 4.92% as of March 31.

Mr. Hart, a former MasterCard International president, said, "This is my 28th year in the credit card business, which has always been cyclical. Advanta has been a very successful player for a long time managing customers in a very careful way.

Last year things went differently, with losses that represented historic highs for the industry.

"We've approached marketing carefully and felt it was prudent to understand the composition of our portfolio, which had 6.6% of losses, and will go a wee bit higher for the year," Mr. Hart said.

Mr. Alter said, "This is the last quarter of losses we will report to shareholders." u

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