HORSHAM, Pa. -- By midmorning in the nerve center of Advanta Corp.'s headquarters in this bucolic Philadelphia suburb, the three executives who head the financial services company already have crossed paths often.
One day recently, while chairman Dennis Alter was making his rounds of the offices, executive vice chairman Alex W. "Pete" Hart ducked into the office of president and chief operating officer Richard Greenawalt for a quick chat.
Throughout the day, the Advanta partners have a number of meetings of the mind - on the phone or in an office, a break room, or a common area. Rarely is one executive far from the others, and by day's end, a number of decisions will have been made.
Unlike some of its larger and less nimble competitors, $6.8 billion-asset Advanta needs only the agreement of these three executives to put into motion ideas that come in from all over the company.
"We make lots of decisions by 9:00 in the morning, just because somebody walks in at 8:15 and says, 'I have an idea," said Mr. Hart, 53. "That's really exciting."
He said this is a luxury he didn't have as president of MasterCard International before his surprise move from the card association this year.
"Advanta executives are extremely bright," said Anita Boomstein, a partner in the New York law finn Hughes, Hubbard & Reed who has had Advanta as a client. They are "very strategically oriented, very focused on the objectives they want to achieve."
Advanta has made its name by using technology to identify highly profitable prospects for its credit products.
Chief among them are credit cards. In 1982, Advanta bought Colonial National Bank of Wilmington, Del. After initial problems, Advanta has found success issuing no-fee gold cards, plus variable-rate cards with low introductory rates.
Of the company's 1993 revenue of $407 million, 76% came from the credit card business, 10% from mortgages, 9% from insurance, and 5% from equipment leasing.
With $4.5 billion in managed credit card receivables and 3.5 million accounts, Advanta is the 14th-largest credit card issuer.
It also managed $1.2 billion in home equity loans as of June 30, representing about 21% of its total, while managed leases and other receivables were $195 million about 3% of the total $5.8 billion.
Despite the dominance of credit card revenue, it would be a mistake to consider Advanta a one-trick pony. Its latest annual report hints at diversification, with the title, "The Nature of Things to Come ."
"We have been a credit card issuer for two decades," said the 52-year-old Mr. Alter. "We've thought of ourselves as a credit card issuer, but that's defining us by a product. We are moving away from that.
"We're something more than a credit card issuer, more than a mortgage provider. We're in the process of redefining ourselves. We'll be the Horsham, Pa.-based 'blank.' Stay tuned. It's evolving."
During the metamorphosis, more attention will be paid to creating a corporate image beyond credit cards.
"We have made little attempt to really build the Advanta brand," said Mr. Hart, who was preoccupied with brand-building during his five years as president of MasterCard.
"We bought Colonial National for credit cards," Mr. Hart said. "But as we become a more broadbased consumer financial services company, Advanta as a brand clearly has potential to become far more dramatic and far more inclusive than Colonial National Bank. We don't want to confine ourselves to bank services."
As Mr. Greenawalt, a 51-year-old Citicorp veteran, emphatically pointed out, Advanta wants to distance itself from what banks have done.
"Right now, we look reasonably new-wave classic," he said. "We're not the old bank, but we have a mortgage company, a leasing company, and a card company."
As they have in the past, customers will define the shape Advanta takes. While the products might be the same, he said, the delivery method will be different.
"It's going to be done in a fairly nontraditional way, without having to refer to different departments," Mr. Greenawalt explained. '"That's the transition we're going through. It's going to take time, but because we don't come with a huge built-in infrastructure like the classic way of doing things, we don't have the natural barriers between products."
The officials hinted that plans are in motion to launch a yet-to-be identified consumer credit product through a new delivery channel.
Meanwhile, Advanta has introduced a business card for small companies and a credit card, called Edvance, that rewards users with savings bonds.
People looking for Advanta to do a big cobranding deal will be disappointed.
"We're not looking to hit home runs where there are going to be tens of millions of cards out there," Mr. Greenawalt said. "If we decided we wanted a 10% return or 15%, maybe we could do something like that."
Instead, the niches will be well defined.
As it does with all new products or services, Advanta is testing a program to sell second mortgages to small businesses. Already, Advanta is selling property/casualty insurance to the companies to which it leases computers and other equipment, and it expects to capitalize on other overlaps in its businesses.
"The thing that's made it a breakthrough," Mr. Greenawalt said, is that "the technology is now there to do this seamlessly."
"To the extent that any service provider can, you would like to deliver exactly what each person needs, rather than creating this huge factory and throwing things into the market," Mr. Hart said.
Whatever direction Advanta heads in, the executives were clear that they would not give up on their bread-and-butter product, which should be welcome news to the investment community.
The stock market has responded favorably to Advanta, categorizing it with other credit card specialists like First USA Inc. and MBNA Corp.
July was a rocky month as investors worded that card companies' growth may have been peaking. But on Aug. 13, CS First Boston analyst Samuel G. Liss raised his investment rating on Advanta to "buy" from "hold," and its two classes of stock rose $2.25 and $1.75 a share, respectively.
Wednesday afternoon, Advanta's Class A stock price was $30.625, unchanged, and Class B $32.9375, down 6.25 cents.
"Advanta's growing 50% with credit cards," said Moshe Orenbuch, an analyst at Sanford C. Bernstein & Co., New York. '"That's nothing to sneeze at."
There is ample room to play in the $800 billion consumer installment credit market. Revolving credit and auto loans are each around $300 billion.
Looking to other consumer products may make sense, Mr. Orenbuch said, "but on the other hand, [Advanta] had some problems in the mortgage business."
Prepayments, which forced the company to take a $4.5 million writedown in the fourth quarter of 1993, and credit problems on some lower-quality home equity loans weakened the performance of its San Diego-based mortgage unit.
If Advanta gets into high-quality auto credit. it will face stiff competition. Mr. Orenbuch said. However, if Advanta goes after riskier borrowers, it may cause concern among investors, he added, "given what happened in mortgages ."
Managers, including Mr. Alter, Mr. Hart, and Mr. Greenawalt, own 30% of the company. They say they are not fixated on day-to-day swings in the stock price.
"Five years ago, Advanta was a $200 million company," points out Mr. Alter. "We're now $1.2 billion. I take a long-term view of it. We're pretty sanguine about daily or weekly fluctuations in stock price."
In an example of taking the longer view, the company in late June announced the formation of a limited partnership called Advanta Partners. It will work as a venture capital fund, searching out investment opportunities in the financial and information services industry.
Mr. Alter described Advanta Partners as explorers, seeking out young, fast-growing companies in need of cash infusions. It will also consider management buyouts of divisions of public companies deemed to be of strategic value to Advanta.
"We wanted to establish an outside-in look to opportunities that may exist for us," said Mr. Alter.
Meanwhile, Advanta continues to examine inside-out opportunities. This summer, the company's corporate development group initiated a 10% buyout of HNC Software Inc., San Diego, which markets Falcon fraud protection software.
Typically, Falcon uses advanced technology to identify likely credit risks. But Advanta wants to turn the process around, using the software to seek potential customers, Mr. Hart said. "Instead of identifying needles in haystacks, we'll start taking a look at the hay. We think there's a lot of opportunity there."
Advanta's leaders are the first to admit they don't have all the answers.
"We run scared all the time," Mr. Greenawalt said. "We're not cocky people, but we're very confident in the sense that we have a lot of smart people here and that we're working very hard, but we can't take any of this for granted."
With the consumer financial services industry in flux, Mr. Hart added, opportunities will arise. "We think we're quick enough and smart enough to take advantage of our fair share," he said.
"It's fabulous fun," Mr. Alter said. "The people here have high energy and high intellect. Pete's the visionary, Rich runs the business, and I'm an enabler. I set an organizational temperature and get out of their way."