Advanta reports loss, plans layoffs

Advanta Corp., a small-business credit card lender in Montgomery County, yesterday reported a large fourth-quarter loss, slashed its dividend 88 percent, and said it would eliminate a third of its workforce, or about 300 jobs.

Losses have mounted at Advanta, as its customers have increasingly failed to keep up with their payments because of the deteriorating nationwide economy.

Advanta said it lost $46.94 million in the fourth quarter compared with a profit of $7.39 million in the 2007 period. The company's provision for losses on loans rose to $35.49 million from $21.55 million.

Credit conditions among Advanta's small-business customers weakened sharply over the last year. The company said 9.53 percent of loans were 30 or more days late in payment, up from 4.29 percent a year earlier.

The cut in the quarterly dividend - designed to help absorb loan losses - is to 2 cents from 17.71 cents on Class A shares and to 2.5 cents from 21.25 cents on Class B shares. That will be a blow to chief executive officer Dennis Alter's income.

Before the cut, his dividend income on Advanta shares was $3 million a year, based on holdings reported by Bloomberg News. The new figure for Alter, who is a major philanthropist in the Philadelphia region, will be $346,018.

Alter expressed confidence yesterday in a conference call with investors that a smaller Advanta has a future despite the hard times and the competition it faces from goliaths such as Citigroup Inc. and Bank of America Corp.

He said Advanta was smaller and profitable in the past. "We look forward to that again," he said.

Advanta's Class A shares closed down 13 cents at 54 cents on Nasdaq. The company's more widely held Class B shares fell 19 cents to close at 70 cents.