Advanta’s Loss May Mean Sale of Credit Firm

Advanta Corp., facing a first-quarter loss from bad credit card loans, said Monday that it may put itself up for sale, the largest casualty yet in an industry paying the price for years of easy credit.

Advanta also said Chief Operating Officer David A. Brooks resigned after two months on the job. Investors were taken by surprise as Advanta said it would report a loss of $20 million, or 44 cents a share. Shares of the ninth-largest credit card issuer fell $8.50 to close at $31.875 in Nasdaq trading.

“We expected some loan losses, but everyone is surprised at the extent of the problem,” said Mark Girolamo, a Bear, Stearns & Co. analyst. “This is tough going.”

Advanta, like its competitors, spent the last several years mailing credit cards with low introductory interest rates to U.S. consumers, only to see their customers fall behind on their bills or file for bankruptcy protection.

Advanta, based in Spring House, Pa., hired Bankers Trust New York Corp. unit BT Wolfensohn to help it consider a partnership, alliance or sale of all or part of the company, or other means of reversing the decline, Chairman Dennis Alter said.