Credit Losses Take Toll on Two Card Issuers

Two mid-size credit card issuers reported middling quarterly results this week with increases in card charge offs impacting their numbers.

Advanta Corp. (NASDAQ: ADVN.B), a Spring House, Pa.-based issuer of cards to small businesses, reported net income of $23.7 million, virtually unchanged from the second quarter of 2006. Interest income rose more than 17 percent to $47.6 million in the second quarter from $40.5 million a year ago.

Advanta set aside $11.8 million for credit losses in the second quarter, up from $10.1 million a year ago. It charged off $50.6 million, up more than 48 percent from $34.1 million a year ago. The net charge off rate was 3.48 percent compared with 3.24 percent a year ago.

Receivables 90 days or more delinquent totaled $81.9 million, up 42 percent from $57.6 million. The 90-day delinquency rate was 1.37 percent compared with 1.31 percent.

Managed receivables totaled $5.9 billion on June 30, up more than 36 percent from $4.4 billion a year ago. Advanta said it added 103,000 new customers in the quarter.

There were only a few positive numbers for Atlanta-based CompuCredit Corp., an issuer that focuses on consumers with blemished credit histories.  Total managed receivables at the end of the quarter totaled $3.9 billion, up 46 percent from $2.7 billion a year ago.

CompuCredit (NASDAQ: CCRT[http://www.marketwatch.com/quotes/ccrt]) reported a loss of $11.0 million, compared with profits of $28.3 million a year ago. Managed earnings tallied $12.3 million, down 75 percent from $48.8 million in the second quarter of 2006.

Its adjusted charge off rate rose to 9.2 percent in the second quarter, up from 8.3 percent a year ago. Charge offs totaled $87.2 million, up from $54.2 million. The 60-day delinquency rate was 13.2 percent this year, compared with 11.5 percent a year ago. CompuCredit increased its provision for loan losses to $203.2 million from $127.9 million a year ago, an increase of nearly 59 percent.