<PAGE>   1

                                    Form 10-Q

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

[X]      Quarterly report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the quarterly period ended March 31, 2001 or

[ ]      Transition report pursuant to section 13 or 15(d) of the Securities
         Exchange Act of 1934 for the transition period from ______ to _______

Commission File Number 0-14120

                                  Advanta Corp.
             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                                                       <C>
           Delaware                                           23-1462070
(State or other jurisdiction of                            (I.R.S. Employer
incorporation or organization)                            Identification No.)
</TABLE>

          Welsh and McKean Roads, P.O. Box 844, Spring House, PA 19477
               (Address of Principal Executive Offices) (Zip Code)

                                 (215) 657-4000
              (Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes [X] No [ ]

         Applicable only to issuers involved in bankruptcy proceedings during
         the preceding five years:

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.

Yes [ ] No [ ]

         Applicable only to corporate issuers:

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.

<TABLE>
<CAPTION>
           Class A                               Outstanding at May 4, 2001
<S>                                              <C>
Common Stock, $.01 par value                          10,041,764 shares
</TABLE>

<TABLE>
<S>                                              <C>
           Class B                               Outstanding at May 4, 2001
Common Stock, $.01 par value                          17,259,839 shares
</TABLE>

                                       1
<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                PAGE
<S>                                                             <C>
PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets                              3
          Consolidated Income Statements                           4
          Consolidated Statements of Changes in
            Stockholders' Equity                                 5-6
          Consolidated Statements of Cash Flows                    7
          Notes to Consolidated Financial Statements               8

Item 2.   Management's Discussion and Analysis of Financial
            Condition and Results of Operations                   21

Item 3.   Quantitative and Qualitative Disclosures
            About Market Risk                                     32

PART II - OTHER INFORMATION                                       33

Item 1.   Legal Proceedings                                       33

Item 4.   Submission of Matters to a Vote of Security Holders     34

Item 6.   Exhibits and Reports on Form 8-K                        34
</TABLE>

                                       2
<PAGE>   3
ITEM 1.   FINANCIAL STATEMENTS

                         ADVANTA CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS


<TABLE>
<CAPTION>
($ IN THOUSANDS)                                            MARCH 31,        DECEMBER 31,
                                                              2001              2000
                                                           (UNAUDITED)
<S>                                                        <C>               <C>
ASSETS
Cash                                                       $    20,800       $     1,716
Federal funds sold                                             416,337           107,584
Restricted interest-bearing deposits                           124,753            16,398
Investments available for sale                               1,133,856           758,792
Receivables, net:
  Held for sale                                                168,017           154,265
  Other                                                        196,355           186,026
                                                           -----------       -----------
Receivables, net                                               364,372           340,291
Retained interests in securitizations                           72,908            72,908
Amounts due from securitizations                                61,751            61,610
Premises and equipment, net                                     25,410            26,185
Other assets                                                   264,613           256,658
Net assets of discontinued operations                          216,114         1,201,330
                                                           -----------       -----------
TOTAL ASSETS                                               $ 2,700,914       $ 2,843,472
                                                           -----------       -----------
LIABILITIES
Deposits:
  Noninterest-bearing                                      $    20,344       $     4,546
  Interest-bearing                                           1,118,372         1,342,430
                                                           -----------       -----------
Total deposits                                               1,138,716         1,346,976
Long-term debt                                                 815,138           755,184
Other borrowings                                                 4,158             4,289
Other liabilities                                              224,020           196,121
                                                           -----------       -----------
TOTAL LIABILITIES                                            2,182,032         2,302,570
                                                           -----------       -----------
Company-obligated mandatorily redeemable preferred
 securities of subsidiary trust holding solely
 subordinated debentures of Advanta Corp.                      100,000           100,000

STOCKHOLDERS' EQUITY
Class A preferred stock, $1,000 par value:
 authorized, issued and outstanding - 1,010
 shares in 2001 and 2000                                         1,010             1,010
Class A voting common stock, $.01 par value:
 authorized - 214,500,000 shares; Issued - 10,041,764
 shares in 2001 and 10,040,230 shares in 2000                      100               100
Class B non-voting common stock, $.01 par value:
 authorized - 230,000,000 shares; Issued - 17,759,166
 shares in 2001 and 17,613,166 shares in 2000                      177               176
Additional paid-in capital                                     225,418           220,371
Deferred compensation                                           (5,429)           (7,336)
Unearned ESOP shares                                           (11,609)          (11,714)
Accumulated other comprehensive income (loss)                    1,057            (1,302)
Retained earnings                                              226,123           257,562
Less: Treasury stock at cost, 527,168 Class B
  common shares in 2001 and 2000                               (17,965)          (17,965)
                                                           -----------       -----------
TOTAL STOCKHOLDERS' EQUITY                                     418,882           440,902
                                                           -----------       -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 2,700,914       $ 2,843,472
                                                           -----------       -----------
</TABLE>

See Notes to Consolidated Financial Statements

                                       3
<PAGE>   4
                         ADVANTA CORP. AND SUBSIDIARIES
                         CONSOLIDATED INCOME STATEMENTS


(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                THREE MONTHS ENDED
                                                                     MARCH 31,
                                                               2001            2000
                                                                    (UNAUDITED)
<S>                                                          <C>            <C>
Interest income                                              $ 34,004       $ 30,383
Interest expense                                               24,276         20,179
                                                             --------       --------
Net interest income                                             9,728         10,204
Provision for credit losses                                     7,940          7,620
                                                             --------       --------
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES           1,788          2,584
NONINTEREST REVENUES:
 Securitization income                                         22,173         13,244
 Servicing revenues                                             6,652          3,840
 Interchange income                                            17,622         12,602
 Other revenues, net                                          (16,448)        11,475
                                                             --------       --------
TOTAL NONINTEREST REVENUES                                     29,999         41,161
                                                             --------       --------
EXPENSES:
 Operating expenses                                            43,053         32,925
 Minority interest in income of consolidated subsidiary         2,220          2,220
 Unusual charges                                               40,750              0
                                                             --------       --------
TOTAL EXPENSES                                                 86,023         35,145
                                                             --------       --------
Income (loss) before income taxes                             (54,236)         8,600
Income tax expense (benefit)                                  (16,880)         3,310
                                                             --------       --------
INCOME (LOSS) FROM CONTINUING OPERATIONS                      (37,356)         5,290
Income (loss) from discontinued operations, net of tax         (8,438)        11,779
Gain, net, on discontinuance of mortgage and leasing
 businesses, net of tax                                        16,361              0
                                                             --------       --------
NET INCOME (LOSS)                                            $(29,433)      $ 17,069
                                                             --------       --------
Basic income (loss) from continuing
 operations per common share
  Class A                                                    $  (1.49)      $   0.19
  Class B                                                       (1.48)          0.22
  Combined                                                      (1.48)          0.21
                                                             --------       --------
Diluted income (loss) from continuing
 operations per common share
  Class A                                                    $  (1.49)      $   0.19
  Class B                                                       (1.48)          0.21
  Combined                                                      (1.48)          0.20
                                                             --------       --------
Basic net income (loss) per common share
  Class A                                                    $  (1.18)      $   0.67
  Class B                                                       (1.16)          0.69
  Combined                                                      (1.17)          0.68
                                                             --------       --------
Diluted net income (loss) per common share
  Class A                                                    $  (1.18)      $   0.65
  Class B                                                       (1.16)          0.67
  Combined                                                      (1.17)          0.67
                                                             --------       --------
Basic weighted average common shares outstanding
  Class A                                                       9,103          9,088
  Class B                                                      16,200         15,697
  Combined                                                     25,303         24,785
                                                             --------       --------
Diluted weighted average common shares outstanding
  Class A                                                       9,103          9,143
  Class B                                                      16,200         16,241
  Combined                                                     25,303         25,384
                                                             --------       --------
</TABLE>

See Notes to Consolidated Financial Statements

                                       4
<PAGE>   5
ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED)
($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                        CLASS A       CLASS A       CLASS B       ADDITIONAL
                                                    COMPREHENSIVE      PREFERRED       COMMON        COMMON         PAID-IN
                                                    INCOME (LOSS)        STOCK          STOCK         STOCK         CAPITAL
                                                    -------------        -----          -----         -----         -------
<S>                                                 <C>                <C>            <C>           <C>           <C>
BALANCE AT DECEMBER 31, 1999                                             $1,010          $105          $182         $232,585
                                                                         ------          ----          ----         --------
Net loss                                               $(156,684)
Other comprehensive income:
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  expense of $5,111                                        9,492
                                                       ---------
Comprehensive loss                                     $(147,192)
                                                       =========
Preferred and common cash
 dividends declared
Exercise of stock options                                                                                                155
Issuance of stock-
 Benefit plans                                                                                            2            2,545
Amortization of deferred
 compensation
Termination benefit-
 Benefit plans                                                                             (1)           (4)          (6,455)
Retirement of treasury stock                                                               (4)           (4)          (8,496)
ESOP shares committed to be  released                                                                                     37
                                                                         ------          ----          ----         --------
BALANCE AT DECEMBER 31, 2000                                             $1,010          $100          $176         $220,371
                                                                         ------          ----          ----         --------
Net loss                                                $(29,433)
Other comprehensive income:
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  expense of $1,270                                        2,359
                                                        --------
Comprehensive loss                                      $(27,074)
                                                        ========
Preferred and common cash
 dividends declared
Exercise of stock options                                                                                 2            1,228
Modifications of stock options and issuance of
  restricted stock                                                                                                     4,118
Issuance of stock-
 Benefit plans                                                                                                           220
Amortization of deferred
 compensation
Termination benefit-
 Benefit plans                                                                                           (1)            (529)
ESOP shares committed to be released                                                                                      10
                                                                         ------          ----          ----         --------
BALANCE AT MARCH 31, 2001                                                $1,010          $100          $177         $225,418
                                                                         ------          ----          ----         --------
</TABLE>

See Notes to Consolidated Financial Statements

                                       5
<PAGE>   6
($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                DEFERRED          ACCUMULATED
                                              COMPENSATION           OTHER                                               TOTAL
                                               & UNEARNED        COMPREHENSIVE      RETAINED         TREASURY         STOCKHOLDERS'
                                               ESOP SHARES       INCOME (LOSS)      EARNINGS          STOCK              EQUITY
                                               -----------       -------------      --------          -----              ------
<S>                                            <C>               <C>                <C>              <C>              <C>
BALANCE AT DECEMBER 31, 1999                     $(28,729)          $(10,794)       $421,741         $(26,469)          $589,631
Net loss                                                                            (156,684)                           (156,684)
Other comprehensive income:
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  expense of $5,111                                                    9,492                                               9,492
Comprehensive loss
Preferred and common cash
 dividends declared                                                                   (7,495)                             (7,495)
Exercise of stock options                                                                                                    155
Issuance of stock-
 Benefit plans                                     (2,547)                                                                     0
Amortization of deferred
 compensation                                       5,348                                                                  5,348
Termination benefit-
 Benefit plans                                      6,460                                                                      0
Retirement of treasury stock                                                                            8,504                  0
ESOP shares committed to be released                  418                                                                    455
                                                 --------           --------        --------         --------           --------
BALANCE AT DECEMBER 31, 2000                     $(19,050)           $(1,302)       $257,562         $(17,965)          $440,902
                                                 --------           --------        --------         --------           --------
Net loss                                                                             (29,433)                            (29,433)
Other comprehensive income:
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  expense of $1,270                                                    2,359                                               2,359
Comprehensive loss
Preferred and common cash
 dividends declared                                                                   (2,006)                             (2,006)
Exercise of stock options                                                                                                  1,230
Modifications of stock options
 and issuance of restricted stock                                                                                          4,118
Issuance of stock-
 Benefit plans                                       (220)                                                                     0
Amortization of deferred
 compensation                                       1,597                                                                  1,597
Termination benefit-
 Benefit plans                                        530                                                                      0
ESOP shares committed to be  released                 105                                                                    115
                                                 --------           --------        --------         --------           --------
BALANCE AT MARCH 31, 2001                        $(17,038)            $1,057        $226,123         $(17,965)          $418,882
                                                 --------           --------        --------         --------           --------
</TABLE>

See Notes to Consolidated Financial Statements

                                       6
<PAGE>   7
ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                    THREE MONTHS ENDED
($ IN THOUSANDS)                                                         MARCH 31,
                                                                   2001             2000
                                                                         (UNAUDITED)
OPERATING ACTIVITIES
<S>                                                            <C>               <C>
Net income (loss)                                              $   (29,433)      $    17,069
Adjustments to reconcile net income (loss) to net cash
   used in operating activities:
   (Income) loss from discontinued operations, net of tax            8,438           (11,779)
   Gain, net, on discontinuance of mortgage and leasing
     businesses, net of tax                                        (16,361)                0
   Investment securities (gains) losses                              8,197           (10,914)
   Depreciation and amortization                                     3,103             2,666
   Provision for credit losses                                       7,940             7,620
   Change in receivables held for sale                            (113,752)         (149,043)
   Proceeds from sale of receivables held for sale                 100,000           146,713
   Change in other assets and other liabilities                     24,762           (10,673)
   Change in retained interests in securitizations                       0            (7,893)
                                                               -----------       -----------
Net cash used in operating activities                               (7,106)          (16,234)
                                                               -----------       -----------
INVESTING ACTIVITIES - CONTINUING OPERATIONS
   Change in federal funds sold and interest-
     bearing deposits                                             (417,108)          (21,911)
   Purchase of investments available for sale                   (1,188,996)         (318,082)
   Proceeds from sales of investments available for sale           584,698           144,957
   Proceeds from maturing investments available for sale           225,166            28,779
   Change in receivables not held for sale                               (18,269)          (31,629)
   Purchases of premises and equipment, net                         (2,325)           (7,280)
                                                               -----------       -----------
Net cash used in investing activities                             (816,834)         (205,166)
                                                               -----------       -----------
FINANCING ACTIVITIES - CONTINUING OPERATIONS
   Change in demand and savings deposits                            13,063            (4,849)
   Proceeds from sales of time deposits                            187,538         1,234,399
   Payments for maturing time deposits                            (408,861)         (608,357)
   Change in repurchase agreements, term fed funds and
     FHLB advances                                                       0          (124,191)
   Proceeds from issuance of long-term debt                        107,860            62,365
   Payments on redemption of long-term debt                        (48,808)         (136,172)
   Change in other borrowings                                         (131)           (1,719)
   Proceeds from issuance of stock                                   1,230                39
   Cash dividends paid                                              (2,006)           (1,891)
                                                               -----------       -----------
Net cash (used in) provided by financing activities               (150,115)          419,624
                                                               -----------       -----------
DISCONTINUED OPERATIONS
   Proceeds from sale of mortgage business                       1,093,975                 0
   Other cash used in operating activities                        (100,836)           (4,306)
                                                               -----------       -----------
   Net cash provided by (used in) operating activities             993,139            (4,306)
   Net cash used in investing activities                                 0          (105,645)
   Net cash used in financing activities                                 0           (75,717)
                                                               -----------       -----------
Net cash provided by (used in) discontinued operations             993,139          (185,668)
                                                               -----------       -----------
Net increase in cash                                                19,084            12,556
Cash at beginning of period                                          1,716             5,784
                                                               -----------       -----------
Cash at end of period                                          $    20,800       $    18,340
                                                               -----------       -----------
</TABLE>

See Notes to Consolidated Financial Statements

                                       7
<PAGE>   8
                         ADVANTA CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
          (IN THOUSANDS EXCEPT PER SHARE DATA, UNLESS OTHERWISE NOTED)

                                 MARCH 31, 2001
                                   (UNAUDITED)

In these notes to consolidated financial statements, "we", "us", and "our" refer
to Advanta Corp. and its subsidiaries, unless the context otherwise requires.

NOTE 1) BASIS OF PRESENTATION

Advanta Corp. (collectively with its subsidiaries, "Advanta") has prepared the
consolidated financial statements included herein pursuant to the rules and
regulations of the Securities and Exchange Commission. We have condensed or
omitted certain information and footnote disclosures normally included in
consolidated financial statements prepared in accordance with generally accepted
accounting principles pursuant to such rules and regulations. In the opinion of
management, the statements include all adjustments (which include normal
recurring adjustments) required for a fair statement of financial position,
results of operations and cash flows for the interim periods presented. These
financial statements should be read in conjunction with the financial statements
and notes thereto included in our latest annual report on Form 10-K. The results
of operations for the interim periods are not necessarily indicative of the
results for the full year.

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Estimates are used when accounting for securitization income, retained interests
in securitizations, the fair value of certain financial instruments, the
allowance for credit losses, litigation and income taxes, among others. Actual
results could differ from those estimates.

Certain prior period balances have been reclassified to conform to the current
period presentation.

NOTE 2) DISCONTINUED OPERATIONS

Effective February 28, 2001, we completed the sale of our mortgage business,
Advanta Mortgage, to Chase Manhattan Mortgage Corporation as buyer. Following
the transaction, we no longer operate a mortgage business. The purchase and sale
agreement provided for the sale, transfer and assignment of substantially all of
the assets and operating liabilities associated with our mortgage business, as
well as specified contingent liabilities arising from our operation of the
mortgage business prior to closing that were identified in the purchase and sale
agreement. We retained contingent liabilities, primarily relating to litigation,
arising from our operation of the mortgage business before closing that were not
specifically assumed by the buyer. The proceeds from the sale exceeded $1
billion, subject to closing adjustments, resulting in an estimated gain of
approximately $60 million before transaction expenses, severance expenses and
other costs. We used part of the proceeds from the sale of mortgage assets to
pay off a portion of our outstanding medium-term notes via a tender offer to
repurchase the outstanding notes at par value plus accrued interest. The tender
offer was completed April 6, 2001. Although the sale of our mortgage business
resulted in a gain for financial reporting purposes, due to book/tax
differences, we will not pay any material federal income tax as a result of the
sale.

On January 23, 2001, we announced that after a thorough review of strategic
alternatives available for our leasing business, Advanta Leasing Services, we
decided to cease originating leases. We will continue to service the existing
portfolio rather than sell the business or the portfolio. In connection with the
discontinuance of the leasing

                                       8
<PAGE>   9
business, we recorded a $4.3 million pretax loss effective December 31, 2000,
representing the estimated operating results through the remaining term of the
leasing portfolio. In the first quarter of 2001, we recorded an additional $4.0
million pretax loss due to a change in estimate of those operating results. This
change in estimate was needed due to an increase in estimated credit losses
expected throughout the remaining term of the leasing portfolio based on recent
credit loss experience in 2001.

The sale of the mortgage business and discontinuance of the leasing business
represent the disposal of business segments following Accounting Principles
Board ("APB") Opinion No. 30. Accordingly, results of these operations are
classified as discontinued in all periods presented.

Advanta Leasing Services incurred a net loss of $5.2 million for the three
months ended March 31, 2000, including revenues of $3.5 million, interest
expense of $3.0 million, other expenses of $9.0 million, and income tax benefit
of $3.3 million. Revenues and expenses of Advanta Mortgage were as follows for
the period from January 1, 2001 to the disposal date of February 28, 2001 and
for the three months ended March 31, 2000:

<TABLE>
<CAPTION>
                                        2001            2000
                                        ----            ----
<S>                                  <C>             <C>
Revenues                             $  36,631       $ 107,806
Interest expense                       (11,160)        (24,575)
Other expenses                         (37,721)        (55,601)
Income tax (expense) benefit             3,812         (10,638)
Income (loss) from discontinued
 operations                          $  (8,438)      $  16,992
                                     ---------       ---------
</TABLE>

We allocated interest expense to the discontinued operations based on the ratio
of net assets of discontinued operations to the total net assets of the
consolidated company. The loss on discontinuance of the leasing business
includes estimated interest expense of $20.2 million for the period from
December 31, 2000 through the remaining life of the lease portfolio.

The estimated operating results of Advanta Leasing Services through the
remaining term of the lease portfolio were estimated at the measurement date of
December 31, 2000 in the determination of the loss on discontinuance. As
discussed above, the estimate was revised and an additional loss was recorded in
the three months ended March 31, 2001 as a loss on discontinuance.

The components of the gain (loss) on discontinuance of our mortgage and leasing
businesses were as follows in the three months ended March 31, 2001:


<TABLE>
<CAPTION>
                                                                                        Advanta         Advanta Leasing
                                                                                        Mortgage            Services
                                                                                        --------            --------
<S>                                                                                     <C>             <C>
Pretax gain (loss) on discontinuance of mortgage and leasing businesses                  $27,753            $(4,000)
Income tax (expense) benefit                                                               8,637             (1,245)
Gain (loss) on discontinuance of mortgage and leasing businesses, net of tax
                                                                                         $19,116            $(2,755)
                                                                                         -------            -------
</TABLE>

                                       9
<PAGE>   10
Per share data was as follows for the three months ended March 31:

<TABLE>
<CAPTION>
                                                                                                 Advanta Leasing
                                                                    Advanta Mortgage                 Services
                                                                    ----------------                 --------
                                                                   2001           2000          2001           2000
                                                                   ----           ----          ----           ----
<S>                                                              <C>            <C>           <C>            <C>
Basic income (loss) from discontinued operations per common
   share
   Class A                                                       $  (0.33)      $   0.69      $   0.00       $   0.21
   Class B                                                          (0.33)          0.69          0.00           0.21
   Combined                                                         (0.33)          0.69          0.00           0.21
Diluted income (loss) from discontinued operations per
   common share
   Class A                                                       $  (0.33)      $   0.67      $   0.00       $   0.21
   Class B                                                          (0.33)          0.67          0.00           0.21
   Combined                                                         (0.33)          0.67          0.00           0.21
Basic gain (loss), net, on discontinuance of mortgage and
   leasing businesses, net of tax
   Class A                                                       $   0.76       $   0.00      $  (0.11)      $   0.00
   Class B                                                           0.76           0.00         (0.11)          0.00
   Combined                                                          0.76           0.00         (0.11)          0.00
Diluted gain (loss), net, on discontinuance of mortgage and
   leasing businesses, net of tax
   Class A                                                       $   0.76       $   0.00      $  (0.11)      $   0.00
   Class B                                                           0.76           0.00         (0.11)          0.00
   Combined                                                          0.76           0.00         (0.11)          0.00
                                                                 --------       --------      --------       --------
</TABLE>

The components of net assets of discontinued operations were as follows:

<TABLE>
<CAPTION>
                                            March 31,      December 31,
                                               2001            2000
                                               ----            ----
<S>                                        <C>             <C>
Loans and leases, net                      $   70,026      $  370,682
Other assets                                  167,120         887,168
Liabilities                                    21,032          56,520
                                           ----------      ----------
Net assets of discontinued operations      $  216,114      $1,201,330
                                           ----------      ----------
</TABLE>

As discussed above, we will continue to service the existing lease portfolio. At
March 31, 2001, there were $606 million of securitized leases outstanding, and
we had retained interests in leasing securitizations of $68 million. At December
31, 2000, there were $658 million of securitized leases outstanding, and we had
retained interests in leasing securitizations of $78 million. The retained
interests in leasing securitizations are included in net assets of discontinued
operations in the consolidated balance sheets. At March 31, 2001, the fair value
of the retained interests in leasing securitizations was estimated using a 8.5%
discount rate on future cash flows excluding credit losses, a 5.0% discount rate
on future credit losses, a 5.2% loss rate and a weighted average life of 1.3
years. Actual results may vary from our estimates, and the impact of any
differences will be recognized in income when determined.

NOTE 3) RESTRICTED INTEREST-BEARING DEPOSITS AND INVESTMENTS AVAILABLE FOR SALE

Restricted interest-bearing deposits at March 31, 2001 include $70.1 million of
amounts held in escrow in connection with our litigation with Fleet Financial
Group ("Fleet"), and $44.1 million held in escrow in connection with other
litigation related contingencies.

                                       10
<PAGE>   11
Investments available for sale consisted of the following:

<TABLE>
<CAPTION>
                                                MARCH 31, 2001                DECEMBER 31, 2000
                                           AMORTIZED         MARKET        AMORTIZED        MARKET
                                             COST            VALUE           COST           VALUE
                                             ----            -----           ----           -----
<S>                                       <C>             <C>             <C>             <C>
U.S. Treasury & other U.S.
  Government securities                   $  487,662      $  489,021      $  401,168      $  401,225
State and municipal securities                 4,553           4,705           4,280           4,436
Collateralized mortgage obligations           31,706          31,985         165,689         162,897
Mortgage-backed securities                    14,232          14,006          91,520          91,973
Equity securities(1)                          55,798          55,798          72,403          72,403
Other(2)                                     538,279         538,341          25,735          25,858
                                          ----------      ----------      ----------      ----------

Total investments available for sale      $1,132,230      $1,133,856      $  760,795      $  758,792
                                          ==========      ==========      ==========      ==========
</TABLE>

(1)   Includes venture capital investments of $34.3 million at March 31, 2001
      and $45.3 million at December 31, 2000. The amount shown as amortized cost
      represents fair value for these investments.

(2)   Other investments at March 31, 2001 include $524.8 million of short-term
      investments held in a custodial account in connection with Advanta
      National Bank's February 2001 agreement with the Office of the Comptroller
      of the Currency.

NOTE 4) RECEIVABLES

Receivables on the balance sheet, including those held for sale, consisted of
the following:

<TABLE>
<CAPTION>
                                                           MARCH 31,      DECEMBER 31,
                                                              2001            2000
                                                           ---------      ----------
<S>                                                        <C>            <C>
Business credit card receivables                           $ 355,927       $ 335,087
Other receivables                                             27,029          24,203
                                                           ---------       ---------
       Gross receivables                                     382,956         359,290
                                                           ---------       ---------
Add: Deferred origination costs, net of deferred fees         16,784          14,368
Less: Allowance for credit losses
  Business credit cards                                      (35,166)        (33,165)
  Other receivables                                             (202)           (202)
                                                           ---------       ---------
       Total allowance                                       (35,368)        (33,367)
                                                           ---------       ---------
Receivables, net                                           $ 364,372       $ 340,291
                                                           ---------       ---------
</TABLE>

Gross managed receivables (owned receivables and securitized receivables) and
managed credit quality data were as follows:

<TABLE>
<CAPTION>
                                                       MARCH 31,     DECEMBER 31,
                                                         2001            2000
                                                       ---------     ------------
<S>                                                   <C>            <C>
Owned business credit card receivables                $  355,927      $  335,087
Owned other receivables                                   27,029          24,203
Securitized business credit card receivables           1,425,078       1,324,137
Total managed receivables                              1,808,034       1,683,427
Nonperforming assets - managed                            54,016          45,160
Receivables 30 days or more delinquent - managed          93,478          83,798
Net charge-offs year-to-date - managed                    27,489          64,638
                                                      ----------      -----------
</TABLE>

                                       11
<PAGE>   12
NOTE 5) ALLOWANCE FOR CREDIT LOSSES

The following table presents activity in the allowance for credit losses for the
periods presented:

<TABLE>
<CAPTION>
                                  THREE MONTHS ENDED        YEAR ENDED
                                    MARCH 31, 2001      DECEMBER 31, 2000
                                    --------------      -----------------
<S>                               <C>                  <C>
Beginning balance                      $ 33,367             $ 14,865
Provision for credit losses               7,940               36,309
Gross charge-offs                        (6,830)             (20,176)
Recoveries                                  891                2,369
                                       --------             --------
Net charge-offs                          (5,939)             (17,807)
                                       --------             --------
Ending balance                         $ 35,368             $ 33,367
                                       ========             ========
</TABLE>

NOTE 6) SECURITIZATION ACTIVITIES

In September 2000, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities - a Replacement of FASB Statement No. 125."
SFAS No. 140 revises the standards for accounting for securitizations and other
transfers of financial assets and collateral and requires certain disclosures,
but it carries over most of SFAS No. 125's provisions without amendment. SFAS
No. 140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The statement is
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. We adopted the disclosure provisions of SFAS 140 for
the year ended December 31, 2000. We anticipate that the adoption of the
accounting provisions of SFAS No. 140 will not have a material effect on our
financial position or results of operations.

The following represents business credit card securitization data for the three
months ended March 31, 2001 and 2000, and the key assumptions used in measuring
the fair value of retained interests at the time of each new securitization or
replenishment during those periods.

<TABLE>
<CAPTION>
                                                                                Three Months Ended
                                                                              March 31,      March 31,
                                                                                2001           2000
                                                                                ----           ----
<S>                                                                           <C>            <C>
Securitization income                                                         $ 22,173       $ 13,244
Servicing revenues                                                               6,652          3,840
Proceeds from new securitizations                                              100,000        146,713
Proceeds from collections reinvested in revolving-period securitizations       717,638        405,346
Cash flows received on retained interests                                       38,750         18,485

KEY ASSUMPTIONS:
Discount rate                                                                     12.0%          12.0%
Monthly payment rate                                                              18.8%          18.8%
Loss rate                                                                          7.8%           7.2%
Net interest margin                                                               12.1%          10.4%
                                                                              --------       --------
</TABLE>

There were no purchases of delinquent accounts during the three months ended
March 31, 2001 or 2000.

Retained interests in business credit card securitizations serve as credit
enhancements for securitization transactions and include restricted cash
reserves, the retained interest-only strip and subordinated trust assets. The
following assumptions were used in measuring the fair value of retained
interests in business credit card securitizations at March 31, 2001 and December
31, 2000. The assumptions listed represent weighted averages of assumptions used
for each securitization.

                                       12
<PAGE>   13
<TABLE>
<CAPTION>
                            March 31,   December 31,
                              2001         2000
                              ----         ----
<S>                         <C>         <C>
Discount rate                 12.0%        12.0%
Monthly payment rate          18.8%        19.0
Loss rate                      7.8          7.8
Net interest margin           12.1         10.8
                              ----         ----
</TABLE>

We have prepared sensitivity analyses of the valuations of retained interests in
securitizations. The sensitivity analyses show the hypothetical effect on the
fair value of those assets of two unfavorable variations from the expected
levels for each key assumption, independently from any change in another key
assumption. The following are the results of those sensitivity analyses on the
valuation at March 31, 2001.

<TABLE>
<S>                                                      <C>
Fair value at March 31, 2001                             $ 72,908
Effect on fair value of the following
 hypothetical changes in key assumptions:
    Discount rate increased by 2%                        $   (713)
    Discount rate increased by 4%                          (1,418)
    Monthly payment rate at 110% of base assumption          (847)
    Monthly payment rate at 120% of base assumption          (847)
    Loss rate at 110% of base assumption                   (3,095)
    Loss rate at 120% of base assumption                   (6,151)
    Net interest margin decreased by 1%                    (3,969)
    Net interest margin decreased by 2%                    (7,937)
</TABLE>

The objective of these hypothetical analyses is to measure the sensitivity of
the fair value of the retained interests to changes in assumptions. The
methodology used to calculate the fair value in the analyses is a discounted
cash flow analysis, the same methodology used to value the retained interests at
each reporting date. These estimates do not factor in the impact of simultaneous
changes in other key assumptions. The above scenarios do not reflect
management's expectation regarding the future direction of these rates, and they
depict only certain possibilities out of a large set of possible scenarios.

NOTE 7) SELECTED BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
                                                   MARCH 31,   DECEMBER 31,
OTHER ASSETS                                         2001          2000
------------                                         ----          ----
<S>                                                <C>         <C>
Current and deferred federal and state income
  taxes, net                                       $100,154      $ 87,794
Cash surrender value of insurance contracts          20,293        20,432
Other                                               144,166       148,432
                                                   --------      --------
Total other assets                                 $264,613      $256,658
                                                   ========      ========
</TABLE>

<TABLE>
<CAPTION>
                                                   MARCH 31,   DECEMBER 31,
OTHER LIABILITIES                                    2001          2000
-----------------                                    ----          ----
<S>                                                <C>         <C>

Accounts payable and accrued expenses              $ 73,390      $ 70,041
Accrued interest payable                             36,405        31,048
Other                                               114,225        95,032
                                                   --------      --------
Total other liabilities                            $224,020      $196,121
                                                   ========      ========
</TABLE>

NOTE 8) CAPITAL STOCK

The Board of Directors of Advanta Corp. has authorized management to purchase up
to 1.5 million shares of Advanta Corp. common stock or the equivalent dollar
amount of capital securities, or some combination thereof.

Cash dividends per share applicable to common stock declared during the three
months ended March 31, 2001 and 2000 were $0.063 for Class A Common Stock and
$0.076 for Class B Common Stock.

                                       13
<PAGE>   14
NOTE 9) SEGMENT INFORMATION

Our reportable segments as of January 1, 2001 were Advanta Business Cards and
our venture capital segment. During the first quarter of 2001, we made changes
to the methods used to allocate centrally incurred interest and operating
expenses to the reportable segments. These changes were made in order to better
reflect the results of the continuing businesses due to the discontinuance of
the mortgage and leasing segments and the restructuring of our corporate
functions in the first quarter of 2001. Prior period segment results have been
restated to reflect the current allocation methods.

Advanta Business Cards offers MasterCard(R) business credit cards to small
businesses using targeted direct mail, the Internet and telemarketing
solicitation of potential cardholders. This product provides approved customers
with access, through merchants, banks, checks and ATMs, to an instant unsecured
revolving business credit line. Advanta Business Cards generates interest and
other income through finance charges assessed on outstanding balances,
interchange income, and cash advance and other credit card fees.

Our venture capital segment makes venture capital investments through our
affiliates. The investment objective is to earn attractive returns by building
the long-term values of the businesses in which they invest. Our investment
affiliates combine transaction expertise, management skills and a broad contact
base with strong industry-specific knowledge.

<TABLE>
<CAPTION>
                                                       ADVANTA
                                                       BUSINESS          VENTURE
                                                         CARDS           CAPITAL           OTHER (1)          TOTAL
                                                         -----           -------           ---------          -----
<S>                                                  <C>               <C>               <C>               <C>
THREE MONTHS ENDED MARCH 31, 2001
Interest income                                      $    18,493       $        31       $    15,480       $    34,004
Interest expense                                           7,220               418            16,638            24,276
Noninterest revenues (losses), net                        47,176           (11,355)           (5,822)           29,999
Unusual charges                                                0                 0            40,750            40,750
Pretax income (loss) from continuing operations           13,448           (12,715)          (54,969)          (54,236)
Average managed receivables                            1,691,479                 0            28,547         1,720,026
Total assets                                             488,934            35,631         2,176,349         2,700,914
                                                     -----------       -----------       -----------       -----------
THREE MONTHS ENDED MARCH 31, 2000
Interest income                                      $    15,884       $        31       $    14,468       $    30,383
Interest expense                                           5,193               317            14,669            20,179
Noninterest revenues (losses), net                        31,122            10,926              (887)           41,161
Pretax income (loss) from continuing operations            9,104            10,029           (10,533)            8,600
Average managed receivables                            1,120,635                 0            20,752         1,141,387
Total assets                                             394,936            46,970         3,527,829         3,969,735
                                                     -----------       -----------       -----------       -----------
</TABLE>

(1)   Other includes insurance operations and assets, investment and other
      activities not attributable to reportable segments. It also includes net
      assets of discontinued operations, and corporate overhead previously
      allocated to the mortgage and leasing business units while they were
      operating segments. Corporate overhead allocations were removed from the
      results of the discontinued segments as a result of the restatement for
      discontinued operations.

                                       14
<PAGE>   15
NOTE 10) UNUSUAL CHARGES

In the first quarter of 2001, we implemented a plan to restructure our corporate
functions to a size commensurate with our ongoing businesses and incurred
certain other unusual charges related to employee costs. Costs associated with
these restructuring activities and other employee costs are included in unusual
charges in the consolidated income statements. Accruals related to these costs
are included in other liabilities in the consolidated balance sheets. The
details of these costs are as follows:

<TABLE>
<CAPTION>
                                                                      Charged      3/31/01
                                                         Accrued     to Accrual    Accrual
                                                         in 2001      in 2001      Balance
                                                         -------      -------      -------
<S>                                                      <C>          <C>          <C>
Employee costs                                           $25,626      $ 8,857      $16,769
Expenses associated with exited businesses/products       12,565        9,820        2,745
Asset impairments                                          2,559        2,559            0
                                                         -------      -------      -------
Total                                                    $40,750      $21,236      $19,514
                                                         =======      =======      =======
</TABLE>

Employee costs

In the first quarter of 2001, we recorded a $4.1 million charge for severance
and outplacement costs associated with the restructuring of corporate functions.
There were 69 employees severed who were entitled to benefits. These employees
worked in corporate support functions including accounting and finance, human
resources, information technology, legal and facilities management. Employees
were notified in March 2001, and we expect to pay severance amounts over the
following twelve-month period.

Additionally, during the first quarter of 2001, we incurred $21.6 million of
other employee costs. This amount includes approximately $10 million
attributable to bonuses to certain key employees in recognition of their efforts
on behalf of Advanta in the strategic alternatives process. It also includes
approximately $4.5 million of bonuses in recognition of the restructuring of the
company and other significant transitional efforts. These bonuses will be paid
over a twelve-month period. In 2001, we accelerated vesting of 32% of
outstanding options that were not vested at the date of the closing of the sale
of our mortgage business. This acceleration resulted in a non-cash charge of
$1.3 million. In connection with reviewing our compensation plans after the sale
of the mortgage business and restructuring of corporate functions, management
identified certain programs that would not be continued including stock
appreciation rights and phantom stock programs. We recorded charges of $3.6
million associated with the settlement of outstanding stock appreciation rights
and phantom stock with employees and directors. In addition, due to the
restructuring of the company, we implemented a program whereby
certain out-of-the money options are exchanged for shares of restricted stock.
Non-cash charges associated with the issuance of the restricted stock under this
program totaled $2.2 million.

Expenses associated with exited businesses/products

In 1998, in connection with the sale of our consumer credit card business (the
"Consumer Credit Card Transaction"), we made major organizational changes to
reduce corporate expenses incurred in the past: (a) to support the business
contributed to Fleet LLC in the Consumer Credit Card Transaction, and (b)
associated with the business and products no longer being offered or not
directly associated with our mortgage, business credit card and leasing units.
As of December 31, 2000, the remaining accrual related to charges associated
with these organizational changes was $13.0 million. This accrual related to
contractual commitments to certain customers, and non-related financial
institutions that were providing benefits to those customers, under a product
that was no longer offered and for which no future revenues or benefits would be
received. A third party assumed the liabilities associated with these
commitments in the first quarter of 2001, and we recorded an additional charge
relating to the settlement of these commitments of $10.3 million.

                                       15
<PAGE>   16
In addition, in the three months ended March 31, 2001, there were charges of
$2.2 million recorded related to other products exited in the first quarter of
2001 for which no future revenues or benefits would be received. We expect to
pay these costs, which include lease and other commitments, over the next 15
months.

Asset impairments

In connection with our plan to restructure our corporate functions to a size
commensurate with our ongoing businesses during the first quarter of 2001, we
identified certain assets that would no longer be used, and the carrying costs
of these assets were written off resulting in a charge of $2.6 million. We
estimated the realizable value of these assets to be zero due to the nature of
the assets, which include leasehold improvements and capitalized software.

                                       16
<PAGE>   17
NOTE 11) EARNINGS (LOSS) PER SHARE

The following table presents the calculation of basic earnings (loss) per common
share and diluted earnings (loss) per common share.

<TABLE>
<CAPTION>
                                                                             THREE MONTHS ENDED
                                                                                  MARCH 31,
                                                                             2001           2000
                                                                             ----           ----
<S>                                                                       <C>            <C>
Income (loss) from continuing operations                                  $(37,356)      $  5,290
 Less: Preferred A dividends                                                  (141)          (141)
                                                                          --------       --------
Income (loss) from continuing operations
 available to common shareholders                                          (37,497)         5,149
Income (loss) from discontinued operations,
 net of tax                                                                 (8,438)        11,779
Gain, net, on discontinuance of mortgage and leasing businesses, net
   of tax                                                                   16,361              0
                                                                          --------       --------
Net income (loss) available to common
 shareholders                                                              (29,574)        16,928
 Less: Class A dividends declared                                             (572)          (519)
 Less: Class B dividends declared                                           (1,293)        (1,231)
                                                                          --------       --------
Undistributed net income (loss)                                           $(31,439)      $ 15,178
                                                                          --------       --------
Basic income (loss) from continuing
 operations per common share
  Class A                                                                 $  (1.49)      $   0.19
  Class B                                                                    (1.48)          0.22
  Combined(1)                                                                (1.48)          0.21
Diluted income (loss) from continuing
 operations per common share
  Class A                                                                 $  (1.49)      $   0.19
  Class B                                                                    (1.48)          0.21
  Combined(1)                                                                (1.48)          0.20
Basic net income (loss) per common share
  Class A                                                                 $  (1.18)      $   0.67
  Class B                                                                    (1.16)          0.69
  Combined(1)                                                                (1.17)          0.68
Diluted net income (loss) per common share
  Class A                                                                 $  (1.18)      $   0.65
  Class B                                                                    (1.16)          0.67
  Combined(1)                                                                (1.17)          0.67
                                                                          --------       --------
Basic weighted average common shares
 outstanding
  Class A                                                                    9,103          9,088
  Class B                                                                   16,200         15,697
  Combined                                                                  25,303         24,785
Options Class A                                                                  0              1
Options Class B                                                                  0            247
Restricted shares Class A                                                        0             54
Restricted shares Class B                                                        0            297
Diluted weighted average common shares
 outstanding
  Class A                                                                    9,103          9,143
  Class B                                                                   16,200         16,241
  Combined                                                                  25,303         25,384
Antidilutive shares
  Options Class B                                                            2,847          1,540
  Restricted shares Class A                                                     47             45
  Restricted shares Class B                                                    914          1,187
                                                                          --------       --------
</TABLE>

(1)   Combined represents a weighted average of Class A and Class B earnings
      (loss) per common share.

                                       17
<PAGE>   18
NOTE 12) CONTINGENCIES

On January 22, 1999, Fleet and certain of its affiliates filed a lawsuit against
Advanta Corp. and certain of its subsidiaries in Delaware Chancery Court.
Fleet's allegations, which we deny, center around Fleet's assertions that we
failed to complete certain post-closing adjustments to the value of the assets
and liabilities we contributed to Fleet LLC in connection with the Consumer
Credit Card Transaction. Fleet seeks damages of approximately $141 million. We
have filed an answer to the complaint denying the material allegations of the
complaint, but acknowledging that we contributed $1.8 million in excess
liabilities in the post-closing adjustment process, after taking into account
the liabilities we have already assumed. We also have filed a countercomplaint
against Fleet for approximately $101 million in damages we believe have been
caused by certain actions of Fleet following the closing of the Consumer Credit
Card Transaction. Formal discovery has begun and is ongoing. The court has
scheduled trial in this matter to begin in October 2001. Management expects that
the ultimate resolution of this litigation will not have a material adverse
effect on our financial position or future operating results.

On December 5, 2000, a former executive of Advanta obtained a jury verdict
against Advanta in the amount of $3.9 million, in connection with various claims
against Advanta related to the executive's termination of employment. Both
parties filed post-trial motions. The former executive has filed a motion for a
new trial with respect to his claims that were dismissed. The former executive
is seeking, among other things, an award of approximately $6 million based upon
the jury verdict and additional amounts, including attorney's fees and costs of
$1.2 million. We will vigorously pursue our post-trial motions, and if
necessary, an appeal to the United States Court of Appeals for the Third Circuit
and will continue to contest the former executive's positions. Management
expects that the ultimate resolution of this litigation will not have a material
adverse effect on our financial position or future operating results.

On December 21, 2000, Banc One Financial Services, Inc. and Bank One, N.A
(together "Banc One") filed a complaint in the United States District Court for
the Northern District of Illinois, Eastern Division, that alleges, among other
things, that Advanta breached two mortgage loan servicing agreements by
wrongfully withholding as termination fees an amount in excess of $23 million,
from amounts that we had collected under the loan servicing agreements, and by
failing to perform under those agreements in certain respects. We dispute these
claims and allegations. An answer to the complaint was filed February 23, 2001
denying liability and raising affirmative defenses. The case is in active
discovery with a discovery cut-off date of April 2, 2002 and a trial ready date
of May 2, 2002. Management expects that the ultimate resolution of this
litigation will not have a material adverse effect on our financial position or
future operating results.

On February 1, 2001, Fleet and certain of its affiliates filed a complaint in
Delaware Chancery Court in an attempt to block the sale of our mortgage business
to Chase Manhattan Mortgage Corporation. The complaint alleged that the terms of
the proposed sale of our mortgage business breach a provision of Fleet's 1998
agreement to acquire our consumer credit card business, as amended (the
"Contribution Agreement"), that essentially requires a buyer of "substantially
all" of our assets to assume any of our remaining obligations under the
Contribution Agreement at the time of the sale of "substantially all" of our
assets. In February 2001, we announced that we had reached an agreement with
Fleet, with regard to Fleet's attempt to block the sale. As part of the
agreement, Fleet dismissed its injunction claim and agreed that it would raise
no future issue with respect to the sale of the mortgage business. Under the
agreement, $70.1 million of our reserves in connection with our long-standing
litigation with Fleet were funded in an escrow account. The court presiding over
the claims will order the funds paid to Advanta or to Fleet depending upon the
outcome of that litigation. The amount escrowed, $70.1 million, represents our
maximum exposure to Fleet in the litigation, assuming a court were to rule in
favor of Fleet on every claim involved in the litigation.

                                       18
<PAGE>   19
Advanta Corp. and its subsidiaries are involved in other legal proceedings,
claims and litigation, including those arising in the ordinary course of
business. Management believes that the aggregate liabilities, if any, resulting
from those actions will not have a material adverse effect on the consolidated
financial position or results of our operations. However, as the ultimate
resolution of these proceedings is influenced by factors outside of our control,
it is reasonably possible that our estimated liability under these proceedings
may change.

NOTE 13) DERIVATIVES

We use derivative financial instruments as part of our risk management strategy
to reduce interest rate risk. Derivatives are not used for trading or
speculative activities. We adopted SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," and SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an amendment of FASB
Statement No. 133," on January 1, 2001. The adoption of SFAS No. 133 had no
impact on income from continuing operations and was not material to income from
discontinued operations.

We recognize all derivatives on the balance sheet at fair value. On the date the
derivative instrument is entered into, we may designate the derivative as a
hedge of the fair value of a recognized asset or liability or of an unrecognized
firm commitment. Changes in the fair value of a derivative that is designated
as, and meets all the required criteria for, a fair value hedge, along with the
gain or loss on the hedged asset or liability that is attributable to the hedged
risk, are recorded in current period earnings. The portion of the change in fair
value of a derivative associated with hedge ineffectiveness or the component of
a derivative instrument excluded from the assessment of hedge effectiveness is
recorded currently in earnings. Also, changes in the entire fair value of a
derivative that is not designated as a hedge are recorded immediately in
earnings. We formally document all relationships between hedging instruments and
hedged items, as well as our risk-management objective and strategy for
undertaking various hedge transactions. This process includes relating all
derivatives that are designated as fair value hedges to specific assets and
liabilities on the balance sheet or to specific firm commitments or forecasted
transactions.

We also formally assess, both at the inception of the hedge and on an ongoing
basis, whether each derivative is highly effective in offsetting changes in fair
values of the hedged item. If it is determined that a derivative is not highly
effective as a hedge or if a derivative ceases to be a highly effective hedge,
we will discontinue hedge accounting prospectively.

We use interest rate swaps to manage the impact of fluctuating interest rates on
our cost of funds. Interest rate swap agreements generally involve the exchange
of fixed and floating rate interest payments without the exchange of the
underlying notional amount on which the interest payments are calculated. In
2001, we used interest rate swaps to effectively convert fixed rate debt to a
LIBOR-based variable rate. The notional amount of interest rate swaps
outstanding was $194.5 million at March 31, 2001 and December 31, 2000. The
estimated fair value of outstanding interest rate swaps was $902 thousand at
March 31, 2001 and $379 thousand at December 31, 2000.

The notional amounts of derivatives do not represent amounts exchanged by the
counterparties and, thus, are not a measure of our exposure through our use of
derivatives. The amounts exchanged are determined by reference to the notional
amounts and the other terms of the derivative contracts. The fair value of
interest rate swaps is the estimated amount that we would pay or receive to
terminate the agreement at the reporting date, taking into account current
interest rates and the current creditworthiness of the counterparty. Our credit
exposure is represented by swaps with a positive fair value without giving
consideration to the value of any collateral exchanged.

On January 1, 2001, all interest rate swaps used in continuing operations were
designated as fair value hedges. There were no derivatives designated as cash
flow

                                       19
<PAGE>   20
hedges. There were no net gains (losses) from hedge ineffectiveness or from
excluding a portion of a derivative instrument's gain or loss from the
assessment of hedge effectiveness included in other income for the three months
ended March 31, 2001. There was also no gain or loss recognized in earnings as a
result of a hedged firm commitment no longer qualifying as a fair value hedge.

                                       20
<PAGE>   21
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

In this form 10-Q, "Advanta", "we", "us", and "our" refer to Advanta Corp. and
its subsidiaries, unless the context otherwise requires.

OVERVIEW

During the year ended December 31, 2000, our lending and leasing business units
consisted of Advanta Business Cards, Advanta Mortgage and Advanta Leasing
Services. In addition to our lending and leasing businesses, we have an
insurance business and venture capital investments. In the first quarter of
2001, we sold our mortgage business, announced the discontinuance of our leasing
business, and restructured our corporate functions to a size commensurate with
our ongoing businesses. We are continuing to service the existing leasing
portfolio rather than sell the business or the portfolio. The results of the
mortgage and leasing businesses are reported as discontinued operations in all
periods presented. The results of our ongoing businesses are reported as
continuing operations for all periods presented.

For the three months ended March 31, 2001, we reported a net loss from
continuing operations of $37.4 million or $1.48 per combined common share,
assuming dilution, compared to net income from continuing operations of $5.3
million or $0.20 per combined diluted common share for the same period of 2000.
Net income for Advanta Business Cards was $8.3 million for the three months
ended March 31, 2001 and $5.6 million for the same period of 2000. Our venture
capital segment had a net loss of $7.8 million for the three months ended March
31, 2001, and net income of $6.2 million for the same period of 2000. For the
three months ended March 31, 2001, the loss from continuing operations includes
pretax unusual charges of $40.8 million, representing costs associated with the
restructure of our corporate functions to a size commensurate with our ongoing
businesses and certain other unusual charges related to employee costs.

Loss from discontinued operations, net of tax, was $8.4 million for the three
months ended March 31, 2001, compared to income from discontinued operations,
net of tax, of $11.8 million for the same period of 2000. In addition to the
operating results of discontinued operations, we recorded an after-tax gain on
the discontinuance of our mortgage and leasing businesses of $16.4 million for
the three months ended March 31, 2001. This net gain includes a pretax gain on
the sale of our mortgage business of $27.8 million, a pretax loss on the
discontinuance of our leasing business of $4.0 million and tax provision of $7.4
million.

This report contains forward-looking statements that are subject to certain
risks and uncertainties that could cause actual results to differ materially
from those projected. These forward-looking statements can be identified by the
use of forward-looking phrases such as "will likely result," "may," "are
expected to," "is anticipated," "estimate," "projected," "intends to" or other
similar words. The most significant among these risks and uncertainties are: (1)
our managed net interest margin; (2) competitive pressures; (3) factors that
affect the level of delinquencies and charge-offs, including a deterioration of
general economic conditions; (4) factors affecting fluctuations in the number of
accounts or loan balances; (5) interest rate fluctuations; (6) the level of
expenses; (7) the timing of the securitizations of our receivables; (8) factors
affecting the value of investments that we hold; (9) the effects of government
regulation, including restrictions and limitations imposed by banking laws,
regulators, examinations, and the agreements between our bank subsidiaries and
their regulators; (10) relationships with significant vendors, business partners
and customers; (11) the amount and cost of financing available to us; (12) the
ratings on the debt of Advanta Corp. and its subsidiaries; (13) the ultimate
amount of restructuring and other related charges associated with the conclusion
of strategic alternatives process for our mortgage and leasing businesses; and
(14) the ability to attract and retain key personnel. Additional risks that may
affect our future performance are set forth elsewhere in this Quarterly Report
on Form 10-Q, in our Annual Report on Form 10-K for

                                       21
<PAGE>   22
the year ended December 31, 2000 and in our other filings with the Securities
and Exchange Commission.

ADVANTA BUSINESS CARDS

OVERVIEW

Advanta Business Cards offers MasterCard(R)* business credit cards to small
businesses using targeted direct mail, the Internet and telemarketing
solicitation of potential cardholders. This product provides approved customers
with access, through merchants, banks, checks and ATMs, to an instant unsecured
revolving business credit line. Advanta Business Cards generates interest and
other income through finance charges assessed on outstanding balances,
interchange income, and cash advance and other credit card fees.

The managed business credit card receivable portfolio grew from $1.2 billion at
March 31, 2000 to $1.7 billion at December 31, 2000 and to $1.8 billion at March
31, 2001. Advanta Business Cards originated 68,771 new accounts in the three
months ended March 31, 2001 and 106,411 new accounts in the same period of 2000.

Pretax income for Advanta Business Cards was $13.4 million for the three months
ended March 31, 2001 as compared to $9.1 million for the same period of 2000.
The increase of $4.3 million in 2001 as compared to 2000 includes a $0.6 million
increase in net interest income, a $0.3 million increase in the provision for
credit losses, and a $16.0 million increase in noninterest revenues, offset by
a $12.0 million increase in operating expenses. The increase in both net
interest income and noninterest revenues is due primarily to growth in managed
receivables, increases in portfolio yields and increased interchange income. The
increase in operating expenses resulted from growth in managed receivables and
account origination activities.

SECURITIZATION INCOME

Advanta Business Cards recognized securitization income of $22.2 million for the
three months ended March 31, 2001 and $13.2 million for the same period of 2000.
Advanta Business Cards sells interests in receivables through securitizations.
Advanta Business Cards also sells receivables to existing securitization trusts
on a continuous basis to replenish the investors' interest in trust receivables
that have been repaid by the card holders. The increase in securitization income
in 2001 was due to increased yields on the securitized receivables and increased
volume of securitized receivables, partially offset by increased credit losses
on securitized receivables.

The following table provides selected information on a managed loan portfolio
basis.

<TABLE>
<CAPTION>
                                                            Three Months Ended
                                                                 March 31,
                                                                 ---------
Managed Portfolio Data ($ in thousands)                   2001               2000
---------------------------------------                   ----               ----
<S>                                                   <C>                <C>
Average managed business credit card receivables      $  1,691,479       $  1,120,635
Ending managed business credit card receivables          1,781,005          1,226,210
Ending number of accounts- managed                         627,501            438,575
Managed net interest margin                                   13.9%              12.5%
As a percentage of gross managed receivables:
     Receivables 30 days or more delinquent                    5.2%               3.4%
     Net charge-offs                                           6.5%               4.4%
                                                      ------------       ------------
</TABLE>

*MasterCard(R) is a federally registered servicemark of MasterCard
International, Inc.

                                       22
<PAGE>   23
In September 2000, the FASB issued SFAS No. 140, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a Replacement
of FASB Statement No. 125." SFAS No. 140 revises the standards for accounting
for securitizations and other transfers of financial assets and collateral and
requires certain disclosures, but it carries over most of SFAS No. 125's
provisions without amendment. SFAS No. 140 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring after
March 31, 2001. The statement is effective for recognition and reclassification
of collateral and for disclosures relating to securitization transactions and
collateral for fiscal years ending after December 15, 2000. We adopted the
disclosure provisions of SFAS No. 140 for the year ended December 31, 2000. We
anticipate that the adoption of the accounting provisions of SFAS No. 140 will
not have a material effect on our financial position or results of operations.

SERVICING REVENUES

Advanta Business Cards recognized servicing revenue of $6.7 million for the
three months ended March 31, 2001 and $3.8 million for the same period of 2000.
The increase in servicing revenue was due to increased volume of securitized
receivables.

INTERCHANGE INCOME

Business credit card interchange income was $17.6 million in the three months
ended March 31, 2001 as compared to $12.6 million in the same period of 2000.
The increase in interchange income was due to higher purchase volume related to
the increase in average managed business credit card accounts and receivables.
The average interchange rate was 2.1% in the three months ended March 31, 2001
and 2000.

VENTURE CAPITAL

Our venture capital segment makes venture capital investments through our
affiliates. The investment objective is to earn attractive returns by building
the long-term values of the businesses in which they invest. Our investment
affiliates combine transaction expertise, management skills and a broad contact
base with strong industry-specific knowledge. Pretax loss for the venture
capital segment was $12.7 million for the three months ended March 31, 2001, and
included a $4.9 million loss on the sale of a venture capital investment and
$6.5 million of net decreases in valuations of venture capital investments.
Pretax income for the venture capital segment was $10.0 million for the three
months ended March 31, 2000, and included $10.9 million in gains on venture
capital investments.

DISCONTINUED OPERATIONS

Loss from discontinued operations, net of tax, was $8.4 million for the three
months ended March 31, 2001, compared to income from discontinued operations,
net of tax, of $11.8 million for the same period of 2000. In addition to the
operating results of discontinued operations, we recorded an after-tax gain on
the discontinuance of our mortgage and leasing businesses of $16.4 million for
the three months ended March 31, 2001. This net gain includes a pretax gain on
the sale of our mortgage business of $27.8 million, a pretax loss on the
discontinuance of our leasing business of $4.0 million and tax provision of $7.4
million.

Effective February 28, 2001, we completed the sale of our mortgage business,
Advanta Mortgage, to Chase Manhattan Mortgage Corporation as buyer. Following
the transaction, we no longer operate a mortgage business. The purchase and sale
agreement provided for the sale, transfer and assignment of substantially all of
the assets and operating liabilities associated with our mortgage business, as
well as specified contingent liabilities arising from our operation of the
mortgage business prior to closing that were identified in the purchase and sale
agreement. We retained contingent liabilities, primarily relating to litigation,
arising from our operation of the mortgage business before closing that were not
specifically assumed by the buyer. The proceeds from the sale exceeded $1
billion, subject to closing adjustments, resulting in an estimated gain

                                       23
<PAGE>   24
of approximately $60 million before transaction expenses, severance expenses and
other costs. We used part of the proceeds from the sale of mortgage assets to
pay off a portion of our outstanding medium-term notes via a tender offer to
repurchase the outstanding notes at par value plus accrued interest. The tender
offer was completed April 6, 2001. Although the sale of our mortgage business
resulted in a gain for financial reporting purposes, due to book/tax
differences, we will not pay any material federal income tax as a result of the
sale.

On January 23, 2001, we announced that after a thorough review of strategic
alternatives available for our leasing business, Advanta Leasing Services, we
decided to cease originating leases. We will continue to service the existing
portfolio rather than sell the business or the portfolio. In connection with the
discontinuance of the leasing business, we recorded a $4.3 million pretax loss
effective December 31, 2000, representing the estimated operating results
through the remaining term of the leasing portfolio. In the first quarter of
2001, we recorded an additional $4.0 million pretax loss due to a change in
estimate of those operating results. This change in estimate was needed due to
an increase in estimated credit losses expected throughout the remaining term of
the leasing portfolio based on recent credit loss experience in 2001.

INTEREST INCOME AND EXPENSE

Interest income on receivables and investments increased by $3.6 million for the
three months ended March 31, 2001 as compared to the three months ended March
31, 2000. Interest expense increased by $4.1 million for the three months ended
March 31, 2001 as compared to the three months ended March 31, 2000. The
increase in interest income was due to an increase in yields on business credit
card receivables as well as an increase in average on-balance sheet business
credit card receivables. The increase in interest expense was due to an increase
in our cost of funds. Our cost of funds increased to 7.26% for the three months
ended March 31, 2001 from 6.41% during the same period of 2000. The increase in
the cost of funds was attributable to the increase in debt as a percentage of
total interest-bearing liabilities and an increase in the interest rate on debt
funding. Debt represented 38% of total average interest-bearing liabilities for
the three months ended March 31, 2001 as compared to 25% for the same period of
2000. The average interest rate on debt funding was 8.59% for the three months
ended March 31, 2001 as compared to 7.54% for the same period of 2000.

The following table provides an analysis of owned interest income and expense
data, average balance sheet data, net interest spread and net interest margin.
Net interest spread represents the difference between the yield on
interest-earning assets and the average rate paid on interest-bearing
liabilities. Net interest margin represents the difference between the yield on
interest-earning assets and the average rate paid to fund interest-earning
assets. Average owned receivables and the related interest revenues include
certain loan fees and costs.

                                       24
<PAGE>   25
INTEREST RATE ANALYSIS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED MARCH 31,
                                                        ----------------------------
                                               2001                                        2000
                                               ----                                        ----
                              AVERAGE                        YIELD/       AVERAGE                        YIELD/
NET INTEREST INCOME          BALANCE(1)      INTEREST         RATE       BALANCE(1)       INTEREST        RATE
-------------------          ----------      --------         ----       ----------       --------        ----
<S>                          <C>             <C>             <C>         <C>             <C>             <C>
ON-BALANCE SHEET
Receivables:
 Business credit cards       $  370,465      $   18,186      19.91%      $  346,231      $   15,686      18.22%
 Other receivables               28,547             210       2.99           20,752             243       4.71
                             ----------      ----------                  ----------      ----------
Total owned receivables         399,012          18,396      18.70          366,983          15,929      17.46
Investments(2)                1,119,174          15,719       5.62          917,601          14,471       6.30
Interest-earning assets
 of discontinued
 operations                     585,161          22,803      15.65        1,817,738          51,969      11.47
                             ----------      ----------                  ----------      ----------
Total interest-earning
 assets                      $2,103,347      $   56,918      10.89%      $3,102,322      $   82,369      10.65%

Interest-bearing
 liabilities(3)              $2,089,883      $   37,518       7.26%      $2,920,683      $   46,649       6.41%


Net interest spread                                           3.63%                                       4.24%
Net interest margin                                           3.74%                                       4.63%
</TABLE>

(1)   Includes assets held and available for sale and nonaccrual receivables.

(2)   Interest and average rate for tax-free securities are computed on a tax
      equivalent basis using a statutory rate of 35%.

(3)   Includes funding of assets for both continuing and discontinued
      operations.


OTHER REVENUES

<TABLE>
<CAPTION>
($ in thousands)                                    THREE MONTHS ENDED
                                                        MARCH 31,
                                                        ---------
                                                   2001           2000
                                                   ----           ----
<S>                                             <C>            <C>
Investment securities gains (losses), net       $ (8,197)      $ 10,914
Insurance revenues (losses), net and other        (8,251)           561
                                                --------       --------
  Total other revenues, net                     $(16,448)      $ 11,475
                                                ========       ========
</TABLE>

Investment securities gains (losses) include changes in the fair value and
realized gains (losses) on venture capital investments. Investment securities
gains (losses) for the three months ended March 31, 2001 include a $4.9 million
loss on the sale of a venture capital investment, $6.5 million of net decreases
in valuations of venture capital investments, and $3.2 million of realized gains
on other investments. Investment securities gains (losses) for the three months
ended March 31, 2000 included $10.9 million in gains on venture capital
investments.

In the first quarter of 2001, we successfully negotiated an early termination of
our strategic alliance with Progressive Casualty Insurance Company to direct
market auto insurance. The loss of $8.3 million in insurance revenues (losses),
net and other for the three months ended March 31, 2001 includes operating
results of insurance operations, the impact of the termination of the strategic
alliance with Progressive Casualty Insurance Company and charges related to the
write-off of certain assets previously associated with the auto insurance
strategic alliance.

                                       25
<PAGE>   26
OPERATING EXPENSES

<TABLE>
<CAPTION>
($ in thousands)                                        THREE MONTHS ENDED
                                                            MARCH 31,
                                                            ---------
                                                        2001         2000
                                                        ----         ----
<S>                                                   <C>          <C>
Salaries and employee benefits                        $14,995      $12,556
Amortization of business credit card deferred
     origination costs, net                             7,794        4,271
Marketing expense                                       4,824        1,785
External processing                                     3,863        3,001
Professional/consulting fees                            3,064        3,489
Equipment expense                                       2,024        1,842
Occupancy expense                                       1,583        2,326
Telephone expense                                       1,473        1,058
Other                                                   3,433        2,597
                                                      -------      -------
Total operating expenses                              $43,053      $32,925
                                                      =======      =======
</TABLE>

Salaries and employee benefits, amortization of credit card deferred origination
costs, net, external processing expense, and marketing expenses have increased
for the three months ended March 31, 2001 as compared to the same period of
2000, due primarily to increased marketing and account origination activities in
Advanta Business Cards as well as the resulting growth in managed business
credit card receivables. Average managed business credit card receivables have
increased from $1.1 billion in the three months ended March 31, 2000 to $1.7
billion in the same period of 2001.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

At March 31, 2001, the allowance for credit losses on a consolidated basis was
$35.4 million, or 9.2% of owned receivables, as compared to $33.4 million, or
9.3% of owned receivables, at December 31, 2000. The provision for credit losses
of $7.9 million for the three months ended March 31, 2001 increased slightly in
comparison with the provision for credit losses of $7.6 million in the same
period of 2000.

The allowance for credit losses on business credit card receivables was $35.2
million at March 31, 2001 as compared to $33.2 million at December 31, 2000. The
allowance for credit losses on business credit card receivables was consistent
at 9.9% of owned receivables at both March 31, 2001 and December 31, 2000. Total
owned business credit card receivables 30 days or more delinquent at March 31,
2001 were also relatively consistent at 5.4% of gross receivables as compared to
5.5% at December 31, 2000. We have experienced a trend of increasing charge-off
rates, which is consistent with our expectations, and has been factored into our
estimate of allowance for credit losses. Charge-off rates on owned business
credit card receivables by quarter were 4.1% for the first quarter of 2000, 3.7%
for the second quarter of 2000, 4.9% for the third quarter of 2000, 5.1% for the
fourth quarter of 2000 and 6.4% for the first quarter of 2001. The charge-off
rate for the fourth quarter of 2000 includes a 0.5% acceleration of charge-offs
to adopt a 60-day charge-off policy for bankrupt accounts. See discussion below.

Nonperforming assets include receivables past due 90 days or more, and bankrupt,
decedent and fraudulent business credit card accounts. We charge losses on
business credit card accounts against the allowance at 180 days contractually
delinquent. Business credit card accounts suspected of being fraudulent are
charged-off after a 90-day investigative period, unless our investigation shows
no evidence of fraud. Effective October 1, 2000, bankrupt business credit cards
are charged off within a 60-day investigative period after receipt of
notification. The previous policy provided a 90-day investigative period.

The following tables provide a summary of nonperforming assets, delinquencies
and charge-offs as of and for the year-to-date periods indicated ($ in
thousands).

                                       26
<PAGE>   27
<TABLE>
<CAPTION>
                                                                 MARCH 31,       DEC. 31,        MARCH 31,
CREDIT QUALITY                                                     2001          2000 (A)          2000
--------------                                                     ----          --------          ----
<S>                                                             <C>             <C>             <C>
CONSOLIDATED - MANAGED
Nonperforming assets                                            $  54,016       $  45,160       $  26,845
Receivables 30 days or more delinquent                             93,478          83,798          43,113
As a percentage of gross receivables:
 Nonperforming assets                                                 3.0%            2.7%            2.2%
 Receivables 30 days or more  delinquent                              5.2             5.0             3.5
Net charge-offs:
 Amount                                                         $  27,489       $  64,638       $  12,379
 As a percentage of average gross receivables (annualized)            6.4%            4.6%            4.3%

CONSOLIDATED - OWNED
Allowance for credit losses                                     $  35,368       $  33,367       $  18,954
Nonperforming assets                                               11,961          10,700           7,607
Receivables 30 days or more delinquent                             19,917          19,395          12,038
As a percentage of gross receivables:
 Allowance for credit losses                                          9.2%            9.3%            5.9%
 Nonperforming assets                                                 3.1             3.0             2.4
 Receivables 30 days or more delinquent                               5.2             5.4             3.8
Net charge-offs:
 Amount                                                         $   5,939       $  17,807       $   3,531
 As a percentage of average gross receivables (annualized)            6.0%            4.2%            3.8%

BUSINESS CREDIT CARDS - MANAGED
Nonperforming assets                                            $  53,556       $  44,600       $  26,393
Receivables 30 days or more delinquent                             92,692          82,915          42,198
As a percentage of gross receivables:
 Nonperforming assets                                                 3.0%            2.7%            2.2%
 Receivables 30 days or more delinquent                               5.2             5.0             3.4
Net charge-offs:
 Amount                                                         $  27,489       $  64,636       $  12,379
 As a percentage of average gross receivables (annualized)            6.5%            4.7%            4.4%

BUSINESS CREDIT CARDS - OWNED
Allowance for credit losses                                     $  35,166       $  33,165       $  18,752
Nonperforming assets                                               11,501          10,140           7,155
Receivables 30 days or more delinquent                             19,131          18,512          11,123
As a percentage of gross receivables:
 Allowance for credit losses                                          9.9%            9.9%            6.2%
 Nonperforming assets                                                 3.2             3.0             2.4
 Receivables 30 days or more delinquent                               5.4             5.5             3.7
Net charge-offs:
 Amount                                                         $   5,939       $  17,805       $   3,531
 As a percentage of average gross receivables (annualized)            6.4%            4.5%            4.1%
</TABLE>


(A) Beginning in the fourth quarter of 2000, business credit card charge-off
statistics reflect the adoption of a new charge-off policy for bankruptcies.
Bankrupt business credit cards are charged off within a 60-day investigative
period after receipt of notification. The previous policy provided a 90-day
investigative period. Business credit card charge-offs for the year ended
December 31, 2000 include a 0.2% acceleration of charge-offs in connection with
the adoption of this policy.

                                       27
<PAGE>   28
UNUSUAL CHARGES

Subsequent to the sale of the mortgage business and discontinuance of our
leasing business in the first quarter of 2001, we implemented a plan to
restructure our corporate functions to a size commensurate with our ongoing
businesses and incurred certain other unusual charges related to employee costs.
The restructuring activities had no significant impact on operations while they
were ongoing. Due to the termination of employees and the write-off of certain
assets no longer used, we expect to realize lower personnel expenses in the 12
months following the charges, and expect to realize lower depreciation and
amortization expense over the next 5-7 years.

EMPLOYEE COSTS

In the first quarter of 2001, we recorded a $4.1 million charge for severance
and outplacement costs associated with the restructuring of corporate functions.
There were 69 employees severed who were entitled to benefits. These employees
worked in corporate support functions including accounting and finance, human
resources, information technology, legal and facilities management. Employees
were notified in March 2001, and we expect to pay severance amounts over the
following twelve-month period.

Additionally, during the first quarter of 2001, we incurred $21.6 million of
other employee costs. This amount includes approximately $10 million
attributable to bonuses to certain key employees in recognition of their efforts
on behalf of Advanta in the strategic alternatives process. It also includes
approximately $4.5 million of bonuses in recognition of the restructuring of the
company and other significant transitional efforts. These bonuses will be paid
over a twelve-month period. In 2001, we accelerated vesting of 32% of
outstanding options that were not vested at the date of the closing of the sale
of our mortgage business. This acceleration resulted in a non-cash charge of
$1.3 million. In connection with reviewing our compensation plans after the sale
of the mortgage business and restructuring of corporate functions, management
identified certain programs that would not be continued including stock
appreciation rights and phantom stock programs. We recorded charges of $3.6
million associated with the settlement of outstanding stock appreciation rights
and phantom stock with employees and directors. In addition, due to the
restructuring of the company, we implemented a program whereby
certain out-of-the money options are exchanged for shares of restricted stock.
Non-cash charges associated with the issuance of the restricted stock under this
program totaled $2.2 million.

EXPENSES ASSOCIATED WITH EXITED BUSINESSES/PRODUCTS

In 1998, in connection with the Consumer Credit Card Transaction, we made major
organizational changes to reduce corporate expenses incurred in the past: (a) to
support the business contributed to Fleet LLC in the Consumer Credit Card
Transaction, and (b) associated with the business and products no longer being
offered or not directly associated with our mortgage, business credit card and
leasing units. As of December 31, 2000, the remaining accrual related to charges
associated with these organizational changes was $13.0 million. This accrual
related to contractual commitments to certain customers, and non-related
financial institutions that were providing benefits to those customers, under a
product that was no longer offered and for which no future revenues or benefits
would be received. A third party assumed the liabilities associated with these
commitments in the first quarter of 2001, and we

                                       28
<PAGE>   29
recorded an additional charge relating to the settlement of these commitments of
$10.3 million.

In addition, in the three months ended March 31, 2001, there were charges of
$2.2 million recorded related to other products exited in the first quarter of
2001 for which no future revenues or benefits would be received. We expect to
pay these costs, which include lease and other commitments, over the next 15
months.

ASSET IMPAIRMENTS

In connection with our plan to restructure our corporate functions to a size
commensurate with our ongoing businesses during the first quarter of 2001, we
identified certain assets that would no longer be used, and the carrying costs
of these assets were written off resulting in a charge of $2.6 million. We
estimated the realizable value of these assets to be zero due to the nature of
the assets, which include leasehold improvements and capitalized software.

INCOME TAXES

Income tax expense (benefit) is based on the estimated annual effective tax rate
of 31% for the three months ended March 31, 2001, compared to a 38% tax rate for
the comparable 2000 period. The income tax benefit for the three months ended
March 31, 2001 represents the benefit we expect to realize over the remaining
nine months of fiscal year 2001.

ASSET/LIABILITY MANAGEMENT

We manage our financial condition with a focus on maintaining disciplined
management of market risks and prudent levels of leverage and liquidity.

MARKET RISK SENSITIVITY

We measure our interest rate risk using a rising rate scenario and a declining
rate scenario. Net interest income is estimated using a third party software
model that uses standard income modeling techniques. We estimate that at March
31, 2001, our net interest income over a twelve-month period would increase by
approximately 25% if interest rates were to rise by 200 basis points, and that
our net interest income over a twelve-month period would decrease by
approximately 12% if interest rates were to fall by 200 basis points. We also
measure the effect of interest rate risk on our managed interest income, which
includes net interest income on owned receivables and net interest income on
securitized receivables. We estimate that at March 31, 2001, our managed net
interest income over a twelve-month period would increase by approximately 3% if
interest rates were to rise by 200 basis points, and that our managed net
interest income over a twelve-month period would increase by approximately 14%
if interest rates were to fall by 200 basis points. Our business credit card
receivables include interest rate floors that cause our managed net interest
income to rise in the declining rate scenario. Both increasing and decreasing
rate scenarios assume an instantaneous shift in rates and measure the
corresponding change in expected net interest income over one year.

The above estimates of net interest income sensitivity alone do not provide a
comprehensive view of our exposure to interest rate risk. The quantitative risk
information is limited by the parameters and assumptions utilized in generating
the results. These analyses are useful only when viewed within the context of
the parameters and assumptions used. The above rate scenarios in no way reflect

                                       29
<PAGE>   30
management's expectation regarding the future direction of interest rates, and
they depict only two possibilities out of a large set of possible scenarios.

LIQUIDITY AND CAPITAL RESOURCES

Our goal is to maintain an adequate level of liquidity, for both long-term and
short-term needs, through active management of both assets and liabilities.
During the three months ended March 31, 2001, we securitized approximately $100
million of business credit card receivables. At March 31, 2001, we had $416
million of federal funds sold, $168 million of receivables held for sale, and
$1.1 billion of investments, which could be sold to generate additional
liquidity. Components of funding were as follows:

<TABLE>
<CAPTION>
                                                  March 31, 2001              December 31, 2000
                                                  --------------              -----------------
                                               Amount             %          Amount             %
                                               ------             -          ------             -
<S>                                          <C>                  <C>      <C>                  <C>
Off-balance sheet business credit
   card receivables                          $1,425,078           37%      $1,324,137           33%
Deposits                                      1,138,716           29        1,346,976           34
Debt and other borrowings                       819,296           21          759,473           19
Equity, including capital securities            518,882           13          540,902           14
                                             ----------          ---       ----------          ---
Total                                        $3,901,972          100%      $3,971,488          100%
                                             ==========          ===       ==========          ===
</TABLE>

At March 31, 2001, we had a $280 million committed commercial paper conduit
facility secured by business credit card receivables, of which $50 million was
unused at March 31, 2001. We also had an uncommitted securities repurchase
agreement facility secured by business credit card receivables of $200 million,
all of which was unused at March 31, 2001.

The sale of the mortgage business in the first quarter of 2001 resulted in
liquidity in excess of the needs of our continuing businesses. Under the
purchase and sale agreement, we received in excess of $1 billion in cash.
Proceeds from the sale are being held in short-term, high-quality investments
earning money market rates until they can be deployed. We expect to have
interest expense in excess of interest income on this excess liquidity for the
next several quarters due to the time required to reduce interest-bearing
liabilities.

We have taken significant steps in reducing our leverage. We used part of the
proceeds from the sale of mortgage assets to pay off a portion of our
outstanding medium-term notes via a tender offer that was completed on April 6,
2001. When $80.9 million of additional medium-term notes that were not tendered
mature on May 1, 2001, we will have reduced our outstanding institutional debt
by approximately $319 million since December 31, 2000. Of the remaining $25.0
million of institutional debt outstanding after May 1, 2001, $24.8 million
matures between June 2001 and September 2001. We also intend to use a portion of
the proceeds to significantly reduce our outstanding retail notes. In addition,
because of the liquidity resulting from the sale of the mortgage business in the
first quarter of 2001, Advanta Corp. is temporarily not originating or renewing
retail notes and Advanta National Bank has suspended originations of deposit
accounts.

In the first quarter of 2001, we successfully negotiated an early termination of
our strategic alliance with Progressive Casualty Insurance Company to direct
market auto insurance and received regulatory approval for a dividend from our
insurance subsidiary to the parent company. The insurance dividend,

                                       30
<PAGE>   31
along with other payments from the insurance subsidiary, increased parent
liquidity by $62.5 million.

After consideration of the parent liquidity and the capital requirements for the
ongoing business, the Board of Directors of Advanta Corp. has authorized
management to purchase up to 1.5 million shares of Advanta Corp. common stock or
the equivalent dollar amount of capital securities, or some combination thereof.
We intend to make purchases modestly and when we believe it is prudent to do so
while we analyze evolving capital requirements.

Our regulatory agreements with the Office of the Comptroller of the Currency
(the "OCC") and the Federal Deposit Insurance Corporation prohibit the payment
of dividends by Advanta National Bank or Advanta Bank Corp. without prior
regulatory approval. In connection with the sale of our mortgage business
discussed in Note 2 to the consolidated financial statements, Advanta National
Bank sought approval of the OCC for a return of capital to Advanta Corp. in the
amount of $261 million. On February 28, 2001, the OCC approved the amount
requested and, at the same time, Advanta National Bank entered into an agreement
with the OCC regarding restrictions on new business activities and product lines
at Advanta National Bank after the sale of the mortgage business and the
resolution of outstanding Advanta National Bank liabilities. The agreement also
reduces the existing capital requirements for Advanta National Bank to 12.7% for
Tier 1 and Total capital to risk-weighted assets, and to 5% for Tier 1 capital
to adjusted total assets as defined in the agreement. In addition, the agreement
provides for prior OCC approval of any future dividends. Advanta Bank Corp. is
unaffected by the agreement with the OCC.

At March 31, 2001, Advanta National Bank's combined total capital ratio
(combined Tier I and Tier II capital) was 15.84%, and Advanta Bank Corp.'s
combined total capital ratio was 16.81%. At December 31, 2000, Advanta National
Bank's combined total capital ratio (combined Tier I and Tier II capital) was
15.08% and Advanta Bank Corp.'s combined total capital ratio was 14.60%. In each
case, Advanta National Bank and Advanta Bank Corp. had capital at levels a bank
is required to maintain to be classified as "well-capitalized" under the
regulatory framework for prompt corrective action. However, Advanta National
Bank does not meet the definition of "well-capitalized" because of the existence
of our agreement with the OCC, even though we have achieved the higher imposed
capital ratios required by the agreement.

Recently, guidelines were issued jointly by the federal bank regulatory agencies
regarding additional requirements for subprime lenders, including additional
capital requirements. Under the guidelines, regulatory capital required to be
held for certain loan classes included in Advanta Bank Corp.'s portfolio could
be increased.

In addition, in a draft proposal recently issued jointly by the federal bank
regulatory agencies, capital requirements associated with certain residual
interests would be amended to require capital equal to the residual retained,
regardless of retained recourse levels. Further, the proposal requires residuals
in excess of 25% of Tier 1 capital to be treated as a deduction of Tier 1
capital for purposes of risk-based and leverage capital calculations. In another
draft proposal recently issued jointly by the federal bank regulatory agencies,
the agencies would use credit ratings and certain alternative approaches to
match the risk-based capital requirement more closely to a banking
organization's relative risk of loss in asset securitizations. The proposal also
requires the sponsor of a revolving credit

                                       31
<PAGE>   32
securitization that involves an early amortization feature to hold capital
against the amount of assets under management (the off-balance sheet securitized
receivables). The proposal treats recourse obligations and direct credit
substitutes more consistently than under the agencies' current risk-based
capital standards. The ultimate resolution of these proposals and their impact
on financial results is uncertain at this time.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The information required by this item is set forth in "Item 2-Management's
Discussion and Analysis of Financial Condition and Results of Operations" in
this Report on Form 10-Q. See "Asset/Liability Management-Market Risk
Sensitivity."

                                       32
<PAGE>   33
PART II - OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS

On January 22, 1999, Fleet and certain of its affiliates filed a lawsuit against
Advanta Corp. and certain of its subsidiaries in Delaware Chancery Court.
Fleet's allegations, which we deny, center around Fleet's assertions that we
failed to complete certain post-closing adjustments to the value of the assets
and liabilities we contributed to Fleet LLC in connection with the Consumer
Credit Card Transaction. Fleet seeks damages of approximately $141 million. We
have filed an answer to the complaint denying the material allegations of the
complaint, but acknowledging that we contributed $1.8 million in excess
liabilities in the post-closing adjustment process, after taking into account
the liabilities we have already assumed. We also have filed a countercomplaint
against Fleet for approximately $101 million in damages we believe have been
caused by certain actions of Fleet following the closing of the Consumer Credit
Card Transaction. Formal discovery has begun and is ongoing. The court has
scheduled trial in this matter to begin in October 2001. Management expects that
the ultimate resolution of this litigation will not have a material adverse
effect on our financial position or future operating results.

On December 5, 2000, a former executive of Advanta obtained a jury verdict
against Advanta in the amount of $3.9 million, in connection with various claims
against Advanta related to the executive's termination of employment. Both
parties filed post-trial motions. The former executive has filed a motion for a
new trial with respect to his claims that were dismissed. The former executive
is seeking, among other things, an award of approximately $6 million based upon
the jury verdict and additional amounts, including attorney's fees and costs of
$1.2 million. We will vigorously pursue our post-trial motions, and if
necessary, an appeal to the United States Court of Appeals for the Third Circuit
and will continue to contest the former executive's positions. Management
expects that the ultimate resolution of this litigation will not have a material
adverse effect on our financial position or future operating results.

On December 21, 2000, Banc One Financial Services, Inc. and Bank One, N.A
(together "Banc One") filed a complaint in the United States District Court for
the Northern District of Illinios, Eastern Division, that alleges, among other
things, that Advanta breached two mortgage loan servicing agreements by
wrongfully withholding as termination fees an amount in excess of $23 million,
from amounts that we had collected under the loan servicing agreements, and by
failing to perform under those agreements in certain respects. We dispute these
claims and allegations. An answer to the complaint was filed February 23, 2001
denying liability and raising affirmative defenses. The case is in active
discovery with a discovery cut-off date of April 2, 2002 and a trial ready date
of May 2, 2002. Management expects that the ultimate resolution of this
litigation will not have a material adverse effect on our financial position or
future operating results.

On February 1, 2001, Fleet and certain of its affiliates filed a complaint in
Delaware Chancery Court in an attempt to block the sale of our mortgage business
to Chase Manhattan Mortgage Corporation. The complaint alleged that the terms of
the proposed sale of our mortgage business breach a provision of Fleet's 1998
agreement to acquire our consumer credit card business, as amended (the
"Contribution Agreement"), that essentially requires a buyer of "substantially
all" of our assets to assume any of our remaining obligations

                                       33
<PAGE>   34
under the Contribution Agreement at the time of the sale of "substantially all"
of our assets. In February 2001, we announced that we had reached an agreement
with Fleet, with regard to Fleet's attempt to block the sale. As part of the
agreement, Fleet dismissed its injunction claim and agreed that it would raise
no future issue with respect to the sale of the mortgage business. Under the
agreement, $70.1 million of our reserves in connection with our long-standing
litigation with Fleet were funded in an escrow account. The court presiding over
the claims will order the funds paid to Advanta or to Fleet depending upon the
outcome of that litigation. The amount escrowed, $70.1 million, represents our
maximum exposure to Fleet in the litigation, assuming a court were to rule in
favor of Fleet on every claim involved in the litigation.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

(a)      Advanta Corp. held a Special Meeting of Stockholders on February 27,
         2001.

(b)      Not required.

(c)      The following proposal was submitted to a vote of stockholders.
         Proposal to approve the purchase and sale agreement, dated as of
         January 8, 2001, by and between Advanta Corp. and Chase Manhattan
         Mortgage Corporation, and the transactions provided for in the purchase
         and sale agreement.

         The proposal was approved. FOR: 8,493,688; AGAINST: 29,647;
         ABSTENTIONS: 108,403; BROKER NON-VOTES: 0.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

(a)      Exhibits - The following exhibits are being filed with this report on
         Form 10-Q.

         EXHIBIT
         NUMBER   DESCRIPTION OF DOCUMENT
         ------   -----------------------

         2.1      Purchase and Sale Agreement, dated January 8, 2001, by and
                  between Advanta Corp. and Chase Manhattan Mortgage Corporation
                  (incorporated by reference to Annex I to the Registrant's
                  Definitive Proxy Statement filed January 25, 2001)

         2.2      Amendment, dated February 28, 2001, to the Purchase and Sale
                  Agreement between Advanta Corp. and Chase Manhattan Mortgage
                  Corporation

         2.3      Mortgage Loan Purchase and Sale Agreement, dated February 23,
                  2001, by and among Advanta Corp., Chase Manhattan Mortgage
                  Corporation, and Chase Manhattan Bank USA, National
                  Association (incorporated by reference to the Registrant's
                  Current Report on Form 8-K filed March 14, 2001)

         2.4      Mortgage Loan Purchase and Sale Agreement, dated February 28,
                  2001, by and among Advanta Corp., Chase Manhattan Mortgage
                  Corporation, and Chase Manhattan Bank USA, National
                  Association

                                       34
<PAGE>   35
                  (incorporated by reference to the Registrant's Current Report
                  on Form 8-K filed March 14, 2001)

         12       Consolidated Computation of Ratio of Earnings to Fixed Charges


(b)      Reports on Form 8-K

         (b)(1)   A Current Report on Form 8-K, dated January 8, 2001, was filed
                  by Advanta announcing that Chase Manhattan Mortgage
                  Corporation had signed a definitive agreement to acquire the
                  mortgage business of Advanta Corp.

         (b)(2)   A Current Report on Form 8-K, dated January 23, 2001, was
                  filed by Advanta setting forth the financial highlights of
                  Advanta's results of operations for the three months ended
                  December 31, 2000.

         (b)(3)   A Current Report on Form 8-K, dated February 1, 2001, was
                  filed by Advanta announcing that FleetBoston and certain of
                  its subsidiaries had filed a complaint in an attempt to block
                  the previously announced sale of Advanta's mortgage business.

         (b)(4)   A Current Report on Form 8-K, dated February 23, 2001, was
                  filed by Advanta announcing its expectations for fiscal year
                  2001 operating earnings.

         (b)(5)   A Current Report on Form 8-K, dated February 28, 2001, was
                  filed by Advanta announcing that in connection with the sale
                  of Advanta's mortgage business, the Office of the Comptroller
                  of the Currency (the "OCC") had approved a $261 million return
                  of capital from Advanta National Bank to its parent, Advanta
                  Corp., and that at the same time, Advanta National Bank had
                  entered into an agreement with the OCC regarding restrictions
                  on new business activities and product lines and the
                  resolution of outstanding liabilities.

         (b)(6)   A Current Report on Form 8-K, dated February 28, 2001, was
                  filed by Advanta describing Advanta's disposition of mortgage
                  assets in connection with the closing of the sale of its
                  mortgage business to Chase Manhattan Mortgage Corporation. The
                  Current Report on Form 8-K also set forth pro forma financial
                  information to illustrate the estimated effects of the sale of
                  the mortgage business.

         (b)(7)   A Current Report on Form 8-K, dated March 7, 2001, was filed
                  by Advanta announcing an issuer tender offer to purchase its
                  outstanding Medium-Term Promissory Notes, Series B, Series C
                  and Series D at par value, plus any accrued and unpaid
                  interest.

                                       35
<PAGE>   36
         SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.

                  Advanta Corp.
                  (Registrant)

May 15, 2001        By /s/Philip M. Browne
                       --------------------------
                       Senior Vice President and
                       Chief Financial Officer

May 15, 2001        By /s/David B. Weinstock
                       --------------------------
                       Vice President and
                       Chief Accounting Officer

                                       36
<PAGE>   37
         EXHIBIT INDEX

EXHIBIT           DESCRIPTION
-------           -----------

         2.1      Purchase and Sale Agreement, dated January 8, 2001, by and
                  between Advanta Corp. and Chase Manhattan Mortgage Corporation
                  (incorporated by reference to Annex I to the Registrant's
                  Definitive Proxy Statement filed January 25, 2001)

         2.2      Amendment, dated February 28, 2001, to the Purchase and Sale
                  Agreement between Advanta Corp. and Chase Manhattan Mortgage
                  Corporation

         2.3      Mortgage Loan Purchase and Sale Agreement, dated February 23,
                  2001, by and among Advanta Corp., Chase Manhattan Mortgage
                  Corporation, and Chase Manhattan Bank USA, National
                  Association (incorporated by reference to the Registrant's
                  Current Report on Form 8-K filed March 14, 2001)

         2.4      Mortgage Loan Purchase and Sale Agreement, dated February 28,
                  2001, by and among Advanta Corp., Chase Manhattan Mortgage
                  Corporation, and Chase Manhattan Bank USA, National
                  Association (incorporated by reference to the Registrant's
                  Current Report on Form 8-K filed March 14, 2001)

         12       Consolidated Computation of Ratio of Earnings to Fixed Charges

                                       37