Recognizing a faster than planned rise in prepayments, Advanta Corp. took a pretax charge of $23.9 million to its second-quarter earnings Tuesday; it also revised its prepayment assumptions.

Advanta, based in Horsham, Pa., reported a 51% increase in net income from the quarter before, to $9.5 million, or 35 cents a share-a few cents below the mean of analysts' estimates but above Nelson Information's mean. The charge is not expected to affect projected yearend earnings, the company said.

Loan originations totaled $1.67 billion in the quarter ended June 30, up 12.2% from the quarter before and 32% from a year earlier.

Last year, Advanta sold its credit card portfolio to Fleet Financial Group, leaving the company with home equity, mortgage, auto, and small- business lending units.

Chargeoffs for home equity loans were up slightly in the quarter, to 0.61%, from 0.49% a year earlier. The combined delinquency rate for home equity and auto loans was 6.86%, slightly below the year earlier's 7.05%.

Advanta is trying to curtail problems that have felled other subprime lenders recently by concentrating on keeping customers, said Larry Hedge, the new head of Advanta's retail branch unit.

"The whole home equity industry is facing a rising tide of competition," said Mr. Hedge, who last week was promoted to chief executive of Advanta Finance, the 56-branch retail division of Advanta Mortgage. "Securitization has allowed more people to enter the marketplace."

To counter rising prepayment rates, Advanta has been focusing on customer retention, he said.

"We're trying to identify people that are going to refinance anyway," Mr. Hedge said. As customers' credit quality improves, Advanta offers new loans at lower rates. "We're trying to be proactive," he said.

Many lenders have had to adjust earnings to reflect rising prepayments as the competition steals their customers.

Mr. Hedge, 51, succeeded George Anderson, a three-year Advanta veteran who is leaving the company for new opportunities. Previously Mr. Hedge was senior vice president for corporate support. He has also worked for ITT Consumer Financial Corp. and Banc One Financial Services.

Prepayment rates have risen in the second quarter, he said, but Advanta is "not suffering as badly as the competition."

About one-third of all Advanta refinancings are done internally, he said. "We're going to do more of that activity within our branches. People like the personal touch and direct interaction."

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