<PAGE>

                                    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 September 30, 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 November 2, 2001
<S>                                             <C>
         Common Stock, $.01 par value                  10,041,017 shares
</TABLE>

<TABLE>
<CAPTION>
                    Class B                     Outstanding at November 2, 2001
<S>                                             <C>
         Common Stock, $.01 par value                    16,752,850 shares
</TABLE>

                                       1
<PAGE>
                                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                         22

Item 3.   Quantitative and Qualitative Disclosures
            About Market Risk                                           36

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                             37

Item 6.   Exhibits and Reports on Form 8-K                              39
</TABLE>


                                       2
<PAGE>
ITEM 1.   FINANCIAL STATEMENTS

                         ADVANTA CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS




<TABLE>
($ IN THOUSANDS)                                           SEPTEMBER 30,     DECEMBER 31,
                                                               2001             2000
                                                               ----             ----
                                                            (UNAUDITED)
<S>                                                        <C>               <C>
ASSETS
Cash                                                       $    27,152       $     1,716
Federal funds sold                                             381,225           107,584
Restricted interest-bearing deposits                           118,776            16,398
Investments available for sale                                 139,843           758,792
Receivables, net:
  Held for sale                                                162,884           154,265
  Other                                                        216,337           186,026
                                                           -----------       -----------
Receivables, net                                               379,221           340,291
Retained interests in securitizations                           88,658            72,908
Amounts due from securitizations                                76,102            61,610
Premises and equipment, net                                     24,633            26,185
Other assets                                                   264,932           256,658
Net assets of discontinued operations                          154,386         1,201,330
                                                           -----------       -----------
TOTAL ASSETS                                               $ 1,654,928       $ 2,843,472
                                                           -----------       -----------
LIABILITIES
Deposits:
  Noninterest-bearing                                      $    10,963       $     4,546
  Interest-bearing                                             664,755         1,342,430
                                                           -----------       -----------
Total deposits                                                 675,718         1,346,976
Long-term debt                                                 313,024           755,184
Other borrowings                                                     0             4,289
Other liabilities                                              199,184           196,121
                                                           -----------       -----------
TOTAL LIABILITIES                                            1,187,926         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 - 10,041,017
 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 - 17,911,517
 shares in 2001 and 17,613,166 shares in 2000                      179               176
Additional paid-in capital                                     227,118           220,371
Deferred compensation                                           (2,184)           (7,336)
Unearned ESOP shares                                           (11,400)          (11,714)
Accumulated other comprehensive income (loss)                    1,873            (1,302)
Retained earnings                                              173,456           257,562
Less: Treasury stock at cost, 928,668 Class B
  common shares in 2001 and 527,168 Class B
  common shares in 2000                                        (23,150)          (17,965)
                                                           -----------       -----------
TOTAL STOCKHOLDERS' EQUITY                                     367,002           440,902
                                                           -----------       -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                 $ 1,654,928       $ 2,843,472
                                                           -----------       -----------
</TABLE>

See Notes to Consolidated Financial Statements

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

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT                                   THREE MONTHS ENDED              NINE MONTHS ENDED
   PER SHARE DATA)                                         SEPTEMBER 30,                  SEPTEMBER 30,
                                                       2001            2000            2001            2000
                                                       ----            ----            ----            ----
                                                           (UNAUDITED)                     (UNAUDITED)
<S>                                                 <C>             <C>             <C>             <C>
Interest income                                     $  26,388       $  39,449       $  93,228       $ 103,913
Interest expense                                       16,919          24,457          67,314          66,195
                                                    ---------       ---------       ---------       ---------
Net interest income                                     9,469          14,992          25,914          37,718
Provision for credit losses                             9,528          16,806          25,852          29,476
                                                    ---------       ---------       ---------       ---------
NET INTEREST AFTER PROVISION FOR
 CREDIT LOSSES                                            (59)         (1,814)             62           8,242
NONINTEREST REVENUES:
 Securitization income                                 30,120          19,195          77,902          50,433
 Servicing revenues                                     7,726           3,525          21,287          11,911
 Interchange income                                    20,932          16,349          59,140          44,348
 Other revenues, net                                   (9,487)            147         (33,209)         14,273
                                                    ---------       ---------       ---------       ---------
TOTAL NONINTEREST REVENUES                             49,291          39,216         125,120         120,965
                                                    ---------       ---------       ---------       ---------
EXPENSES:
 Operating expenses                                    44,742          34,493         131,911          98,819
 Minority interest in income of
  consolidated subsidiary                               2,220           2,220           6,660           6,660
 Unusual charges                                            0               0          41,750               0
                                                    ---------       ---------       ---------       ---------
TOTAL EXPENSES                                         46,962          36,713         180,321         105,479
                                                    ---------       ---------       ---------       ---------
Income (loss) before income taxes                       2,270             689         (55,139)         23,728
Income tax benefit                                          0               0         (16,880)              0
                                                    ---------       ---------       ---------       ---------
INCOME (LOSS) FROM CONTINUING
 OPERATIONS                                             2,270             689         (38,259)         23,728
Income (loss) from discontinued
 operations, net of tax                                     0          15,055          (8,438)       (183,610)
Loss, net, on discontinuance
 of mortgage and leasing
 businesses, net of tax                               (44,000)              0         (31,639)              0
                                                    ---------       ---------       ---------       ---------
NET INCOME (LOSS)                                   $ (41,730)      $  15,744       $ (78,336)      $(159,882)
                                                    ---------       ---------       ---------       ---------
Basic income (loss) from continuing
 operations per common share
  Class A                                           $    0.08       $    0.02       $   (1.53)      $    0.90
  Class B                                                0.09            0.03           (1.48)           0.96
  Combined                                               0.09            0.03           (1.50)           0.94
                                                    ---------       ---------       ---------       ---------
Diluted income (loss) from
 continuing operations per common
 share
  Class A                                           $    0.08       $    0.02       $   (1.53)      $    0.90
  Class B                                                0.09            0.03           (1.48)           0.95
  Combined                                               0.09            0.03           (1.50)           0.93
                                                    ---------       ---------       ---------       ---------
Basic net income (loss) per common
 share
  Class A                                           $   (1.62)      $    0.61       $   (3.09)      $   (6.41)
  Class B                                               (1.60)           0.63           (3.04)          (6.36)
  Combined                                              (1.61)           0.62           (3.06)          (6.38)
                                                    ---------       ---------       ---------       ---------
Diluted net income (loss) per
 common share
  Class A                                           $   (1.60)      $    0.61       $   (3.09)      $   (6.34)
  Class B                                               (1.59)           0.63           (3.04)          (6.29)
  Combined                                              (1.59)           0.62           (3.06)          (6.31)
                                                    ---------       ---------       ---------       ---------
Basic weighted average common
 shares outstanding
  Class A                                               9,116           9,109           9,094           9,098
  Class B                                              16,820          16,150          16,590          15,995
  Combined                                             25,936          25,259          25,684          25,093
                                                    ---------       ---------       ---------       ---------
Diluted weighted average common
 shares outstanding
  Class A                                               9,120           9,158           9,094           9,151
  Class B                                              17,121          16,168          16,590          16,220
  Combined                                             26,241          25,326          25,684          25,371
                                                    ---------       ---------       ---------       ---------
</TABLE>

See Notes to Consolidated Financial Statements

                                       4
<PAGE>
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                                               $ (78,336)
Other comprehensive income:
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  expense of $1,710                                        3,175
                                                       ---------
Comprehensive loss                                     $ (75,161)
                                                       =========
Preferred and common cash
 dividends declared
Exercise of stock options                                                                                 4            3,460
Stock option exchange for restricted stock and
  restricted stock tender offer                                                                                        5,519
Issuance of stock-
 Benefit plans                                                                                            1              594
Stock buyback
Amortization of deferred
 compensation
Termination benefit-
 Benefit plans                                                                                           (2)          (2,866)
ESOP shares committed to be released                                                                                      40
                                                                         ------          ----          ----         --------
BALANCE AT SEPTEMBER 30, 2001                                            $1,010          $100          $179         $227,118
                                                                         ------          ----          ----         --------
</TABLE>

See Notes to Consolidated Financial Statements

                                       5
<PAGE>
<TABLE>
<CAPTION>
($ IN THOUSANDS)

                                                     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                                                                                  (78,336)                        (78,336)
Other comprehensive income:
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  expense of $1,710                                                         3,175                                           3,175
Comprehensive loss
Preferred and common cash
 dividends declared                                                                        (5,770)                         (5,770)
Exercise of stock options                                                                                                   3,464
Stock option exchange for restricted stock and
 restricted stock tender offer                                                                                              5,519
Issuance of stock-
 Benefit plans                                            (595)                                                                 0
Stock buyback                                                                                             (5,185)          (5,185)
Amortization of deferred
 compensation                                            2,879                                                              2,879
Termination benefit-
 Benefit plans                                           2,868                                                                  0
ESOP shares committed to be released                       314                                                                354
                                                      --------           --------        --------       --------         --------
BALANCE AT SEPTEMBER 30, 2001                         $(13,584)          $  1,873        $173,456       $(23,150)        $367,002
                                                      --------           --------        --------       --------         --------
</TABLE>

See Notes to Consolidated Financial Statements

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

<TABLE>
<CAPTION>
                                                                       NINE MONTHS ENDED
($ IN THOUSANDS)                                                          SEPTEMBER 30,
----------------                                                          -------------
                                                                      2001              2000
                                                                      ----              ----
                                                                           (UNAUDITED)
<S>                                                               <C>               <C>
OPERATING ACTIVITIES - CONTINUING OPERATIONS
Net loss                                                          $   (78,336)      $  (159,882)
Adjustments to reconcile net loss to net cash used in
   operating activities:
   Loss from discontinued operations, net of tax                        8,438           183,610
   Loss, net, on discontinuance of mortgage and leasing
     businesses, net of tax                                            31,639                 0
   Investment securities (gains) losses                                24,316           (10,422)
   Loss on sale of deposits                                             2,835                 0
   Depreciation and amortization                                        7,173             8,243
   Provision for credit losses                                         25,852            29,476
   Change in receivables held for sale                               (281,168)         (412,659)
   Proceeds from sale of receivables held for sale                    272,549           285,251
   Change in other assets and other liabilities                        (5,046)          (20,302)
   Change in retained interests in securitizations                    (15,750)          (12,572)
                                                                  -----------       -----------
Net cash used in operating activities                                  (7,498)         (109,257)
                                                                  -----------       -----------
INVESTING ACTIVITIES - CONTINUING OPERATIONS
   Change in federal funds sold and interest-
     bearing deposits                                                (376,019)           60,299
   Purchase of investments available for sale                      (1,012,516)       (1,449,619)
   Proceeds from sales of investments available for sale              845,658           630,969
   Proceeds from maturing investments available for sale              766,376           784,392
   Change in receivables not held for sale                            (56,163)          (68,943)
   Purchases of premises and equipment, net                            (5,591)          (13,719)
                                                                  -----------       -----------
Net cash provided by (used in) investing activities                   161,745           (56,621)
                                                                  -----------       -----------
FINANCING ACTIVITIES - CONTINUING OPERATIONS
   Change in demand and savings deposits                               (6,738)         (148,113)
   Proceeds from issuance of time deposits                            664,856         1,110,682
   Payments for maturing time deposits                               (947,345)         (944,643)
   Payment for sale of deposits and related accrued interest         (392,511)                0
   Change in repurchase agreements, term fed funds and
     FHLB advances                                                          0          (324,191)
   Proceeds from issuance of long-term debt                           140,310           197,831
   Payments on redemption of long-term debt                          (582,470)         (226,439)
   Change in other borrowings                                          (4,289)           (2,945)
   Proceeds from issuance of stock                                      3,464               155
   Stock buyback                                                       (5,185)                0
   Cash dividends paid                                                 (5,770)           (5,632)
                                                                  -----------       -----------
Net cash used in financing activities                              (1,135,678)         (343,295)
                                                                  -----------       -----------
DISCONTINUED OPERATIONS
   Proceeds from sale of mortgage business                          1,093,975                 0
   Other cash (used in) provided by operating activities              (87,108)          288,942
                                                                  -----------       -----------
   Net cash provided by operating activities                        1,006,867           288,942
   Net cash provided by investing activities                                0           327,882
   Net cash used in financing activities                                    0           (76,435)
                                                                  -----------       -----------
Net cash provided by discontinued operations                        1,006,867           540,389
                                                                  -----------       -----------
Net increase in cash                                                   25,436            31,216
Cash at beginning of period                                             1,716             5,784
                                                                  -----------       -----------
Cash at end of period                                             $    27,152       $    37,000
                                                                  -----------       -----------
</TABLE>

See Notes to Consolidated Financial Statements

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

                               SEPTEMBER 30, 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 gross gain of
approximately $60 million before transaction expenses, severance expenses and
other costs. 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 nine months ended
September 30, 2001, we incurred an additional $45.0

                                       8
<PAGE>
million pretax loss due to changes in the estimate of those operating results.
These changes in estimate were 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 primary factor contributing to the
increased credit losses is that one of our former leasing vendors recently filed
for bankruptcy protection and this vendor's financial problems have impacted its
ability to service a segment of our leasing portfolio.

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 $10.4 million for the three
months ended September 30, 2000, including revenues of $4.7 million, interest
expense of $3.3 million, and other expenses of $11.8 million. For the nine
months ended September 30, 2000, Advanta Leasing Services incurred a net loss of
$24.6 million, including revenues of $14.8 million, interest expense of $9.4
million, and other expenses of $30.0 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 and
nine months ended September 30, 2000:

<TABLE>
<CAPTION>
                                          JANUARY 1 THROUGH       THREE MONTHS ENDED     NINE MONTHS ENDED
                                             FEBRUARY 28,            SEPTEMBER 30,          SEPTEMBER 30,
                                                2001                    2000                   2000
                                                ----                    ----                   ----
<S>                                       <C>                     <C>                    <C>
Revenues                                     $  36,631               $ 105,532               $ 104,878
Interest expense                               (11,160)                (24,240)                (75,878)
Other expenses                                 (37,721)                (55,865)               (188,011)
Income tax benefit                               3,812                       0                       0
Income (loss) from discontinued
 operations                                  $  (8,438)              $  25,427               $(159,011)
                                             ---------               ---------               ---------
</TABLE>

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 $45.0 million loss
was recorded in the nine months ended September 30, 2001 as a loss on
discontinuance.

In the three months ended September 30, 2001, we increased our estimate of
mortgage transaction expenses by $5.0 million for legal expenses, a substantial
portion of which is attributable to legal fees that we estimate will be incurred
in defense of the lawsuit filed by Chase Manhattan Mortgage. See Note 13 to the
consolidated financial statements for a discussion of litigation related to the
sale of our mortgage business. The gain on the sale of the mortgage business
does not reflect any impact from the post-closing adjustment process that has
been extended by agreement of the parties.

The components of the gain (loss) on discontinuance of our mortgage and leasing
businesses were as follows:

<TABLE>
<CAPTION>
                                                THREE MONTHS ENDED                     NINE MONTHS ENDED
                                                SEPTEMBER 30, 2001                     SEPTEMBER 30, 2001
                                                ------------------                     ------------------
                                                             ADVANTA                                 ADVANTA
                                               ADVANTA       LEASING                ADVANTA          LEASING
                                              MORTGAGE       SERVICES               MORTGAGE         SERVICES
                                              --------       --------               --------         --------
<S>                                           <C>            <C>                    <C>              <C>
Pretax gain (loss) on discontinuance
   of mortgage and leasing businesses         $ (5,000)      $(39,000)              $ 20,753         $(45,000)
Income tax (expense) benefit                         0              0                 (8,637)           1,245
Gain (loss) on discontinuance of
   mortgage and leasing businesses,
   net of tax                                 $ (5,000)      $(39,000)              $ 12,116         $(43,755)
                                              --------       --------               --------         --------
</TABLE>

                                       9
<PAGE>
Per share data was as follows:

<TABLE>
<CAPTION>
                    THREE MONTHS ENDED SEPTEMBER 30,                  NINE MONTHS ENDED SEPTEMBER 30,
                    --------------------------------                  -------------------------------
                                            ADVANTA                                            ADVANTA
                     ADVANTA                LEASING                   ADVANTA                  LEASING
                    MORTGAGE                SERVICES                  MORTGAGE                 SERVICES
                    --------                --------                  --------                 --------
                2001        2000        2001        2000         2001         2000         2001        2000
                ----        ----        ----        ----         ----         ----         ----        ----
<S>           <C>         <C>         <C>         <C>          <C>          <C>          <C>         <C>
Basic income (loss) from discontinued operations per common share

Class A       $ 0.00      $ 1.01      $ 0.00      $(0.41)      $(0.33)      $(6.34)      $ 0.00      $(0.98)
Class B         0.00        1.01        0.00       (0.41)       (0.33)       (6.34)        0.00       (0.98)
Combined        0.00        1.01        0.00       (0.41)       (0.33)       (6.34)        0.00       (0.98)

Diluted income (loss) from discontinued operations per common share

Class A       $ 0.00       $1.00      $ 0.00      $(0.41)      $(0.33)      $(6.27)      $ 0.00      $(0.97)
Class B         0.00        1.00        0.00       (0.41)       (0.33)       (6.27)        0.00       (0.97)
Combined        0.00        1.00        0.00       (0.41)       (0.33)       (6.27)        0.00       (0.97)

Basic gain (loss), net, on discontinuance of mortgage and leasing businesses,
net of tax, per common share

Class A       $(0.19)      $0.00      $(1.50)     $ 0.00       $ 0.47       $ 0.00       $(1.70)     $ 0.00
Class B        (0.19)       0.00       (1.50)       0.00         0.47         0.00        (1.70)       0.00
Combined       (0.19)       0.00       (1.50)       0.00         0.47         0.00        (1.70)       0.00

Diluted gain (loss), net, on discontinuance of mortgage and leasing businesses,
net of tax, per common share

Class A       $(0.19)      $0.00      $(1.49)     $ 0.00       $ 0.47       $ 0.00       $(1.70)     $ 0.00
Class B        (0.19)       0.00       (1.49)       0.00         0.47         0.00        (1.70)       0.00
Combined       (0.19)       0.00       (1.49)       0.00         0.47         0.00        (1.70)       0.00
</TABLE>


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

<TABLE>
<CAPTION>
                                                SEPTEMBER 30,        DECEMBER 31,
                                                    2001                2000
                                                    ----                ----
<S>                                             <C>                  <C>
Loans and leases, net                               $ 58,559          $  370,682
Other assets                                         108,717             887,168
Liabilities                                           12,890              56,520
                                                    --------          ----------
Net assets of discontinued operations               $154,386          $1,201,330
                                                    ========          ==========
</TABLE>

As discussed above, we will continue to service the existing lease portfolio. At
September 30, 2001, there were $438 million of securitized leases outstanding,
and we had retained interests in leasing securitizations of $34 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 September 30,
2001, the fair value of the retained interests in leasing securitizations was
estimated using a 12.0% discount rate on future cash flows, a 9.8% loss rate and
a weighted average life of 1.1 years. Actual results may vary from our
estimates, and the impact of any differences will be recognized in income when
determined.

                                       10
<PAGE>
NOTE 3) RESTRICTED INTEREST-BEARING DEPOSITS AND INVESTMENTS AVAILABLE FOR SALE

Restricted interest-bearing deposits at September 30, 2001 include $71.4 million
of amounts held in escrow in connection with our litigation with Fleet Financial
Group ("Fleet"), and $39.7 million held in escrow in connection with other
litigation-related contingencies.

Investments available for sale consisted of the following:

<TABLE>
<CAPTION>
                                           SEPTEMBER 30, 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                   $ 58,733      $ 60,289      $401,168      $401,225
State and municipal securities               3,882         3,990         4,280         4,436
Collateralized mortgage obligations         24,989        25,812       165,689       162,897
Mortgage-backed securities                  10,691        11,088        91,520        91,973
Equity securities(1)                        28,153        28,153        72,403        72,403
Other(2)                                    10,513        10,511        25,735        25,858
                                          --------      --------      --------      --------
Total investments available for sale      $136,961      $139,843      $760,795      $758,792
                                          ========      ========      ========      ========
</TABLE>

(1)  Includes venture capital investments of $20.2 million at September 30, 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 September 30, 2001 include $10.4 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>
                                                         SEPTEMBER 30,     DECEMBER 31,
                                                             2001             2000
                                                             ----             ----
<S>                                                      <C>               <C>
Business credit card receivables                           $ 368,881       $ 335,087
Other receivables                                             28,113          24,203
                                                           ---------       ---------
       Gross receivables                                     396,994         359,290
                                                           ---------       ---------
Add: Deferred origination costs, net of deferred fees         21,999          14,368
Less: Allowance for credit losses
  Business credit cards                                      (39,170)        (33,165)
  Other receivables                                             (602)           (202)
                                                           ---------       ---------
       Total allowance                                       (39,772)        (33,367)
                                                           ---------       ---------
Receivables, net                                           $ 379,221       $ 340,291
                                                           =========       =========
</TABLE>

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

<TABLE>
                                                             SEPTEMBER 30,     DECEMBER 31,
                                                                 2001             2000
                                                                 ----             ----
<S>                                                           <C>              <C>
Owned business credit card receivables                        $  368,881       $  335,087
Owned other receivables                                           28,113           24,203
Securitized business credit card receivables                   1,628,082        1,324,137
Total managed receivables                                      2,025,076        1,683,427
Nonperforming assets - managed                                    68,807           45,160
Receivables 30 days or more delinquent - managed                 119,793           83,798
Net charge-offs year-to-date - managed                           100,301           64,638
                                                              ----------       ----------
</TABLE>

                                       11
<PAGE>
NOTE 5) ALLOWANCE FOR CREDIT LOSSES

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

<TABLE>
<CAPTION>
                                   NINE MONTHS ENDED     YEAR ENDED
                                     SEPTEMBER 30,       DECEMBER 31,
                                        2001                2000
<S>                                <C>                   <C>
Beginning balance                       $ 33,367            $ 14,865
Provision for credit losses               25,852              36,309
Gross charge-offs                        (23,067)            (20,176)
Recoveries                                 3,620               2,369
                                        --------             -------
Net charge-offs                          (19,447)            (17,807)
                                        --------             -------
Ending balance                          $ 39,772            $ 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 was effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The statement was
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. The adoption of SFAS No. 140 did not have a material
effect on our financial position or results of operations.

The following represents business credit card securitization data for the three
and nine months ended September 30, 2001 and 2000.

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED               NINE MONTHS ENDED
                                            SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,    SEPTEMBER 30,
                                                2001            2000            2001            2000
                                                ----            ----            ----            ----
<S>                                          <C>             <C>             <C>             <C>
Securitization income                        $   30,120      $   19,195      $   77,902      $   50,433
Servicing revenues                                7,726           3,525          21,287          11,911
Proceeds from new securitizations                75,000         138,538         272,549         285,251
Proceeds from collections reinvested in
   revolving-period securitizations             850,575         448,543       2,373,820       1,368,580
Cash flows received on retained
  interests                                      44,387          20,639         122,719          63,564
                                             ----------      ----------      ----------      ----------
</TABLE>

There were no purchases of delinquent accounts during the three or nine months
ended September 30, 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 September 30, 2001 and
December 31, 2000. The assumptions listed represent weighted averages of
assumptions used for each securitization.

                                       12
<PAGE>
<TABLE>
<CAPTION>
                               SEPTEMBER 30,      DECEMBER 31,
                                    2001              2000
                                    ----              ----
<S>                            <C>                <C>
Discount rate                       12.0%             12.0%
Monthly payment rate                17.9              19.0
Loss rate                            9.8               7.8
Net interest margin                 14.8              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 September 30, 2001.

<TABLE>
<S>                                                      <C>
Fair value at September 30, 2001                         $ 88,658
Effect on fair value of the following
 hypothetical changes in key assumptions:
    Discount rate increased by 2%                        $   (881)
    Discount rate increased by 4%                          (1,751)
    Monthly payment rate at 110% of base assumption        (1,385)
    Monthly payment rate at 125% of base assumption        (2,778)
    Loss rate at 110% of base assumption                   (4,417)
    Loss rate at 125% of base assumption                  (10,998)
    Net interest margin decreased by 1%                    (4,496)
    Net interest margin decreased by 2%                    (9,003)
</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>
                                                   SEPTEMBER 30,            DECEMBER 31,
OTHER ASSETS                                           2001                     2000
------------                                           ----                     ----
<S>                                                <C>                      <C>
Current and deferred income taxes, net                 $100,616                $ 87,794
Cash surrender value of insurance contracts              21,915                  20,432
Other                                                   142,401                 148,432
                                                       --------                --------
Total other assets                                     $264,932                $256,658
                                                       ========                ========
</TABLE>

<TABLE>
<CAPTION>
                                                   SEPTEMBER 30,            DECEMBER 31,
OTHER LIABILITIES                                      2001                     2000
                                                       ----                     ----
<S>                                                <C>                      <C>
Accounts payable and accrued expenses                  $ 46,185                $ 70,041
Accrued interest payable                                 29,781                  31,048
Other                                                   123,218                  95,032
                                                       --------                --------
Total other liabilities                                $199,184                $196,121
                                                       ========                ========
</TABLE>

                                       13
<PAGE>
NOTE 8) LONG-TERM DEBT

Long-term debt consists of borrowings having an original maturity of over one
year. The composition of long-term debt was as follows:

<TABLE>
<CAPTION>
                                                         SEPTEMBER 30,    DECEMBER 31,
                                                             2001            2000
                                                             ----            ----
<S>                                                      <C>              <C>
SENIOR DEBT:
12 month senior notes, fixed (7.47%-11.33%)                 $126,845        $152,553
18 month senior notes, fixed (7.70%-11.38%)                    9,667           9,229
24 month senior notes, fixed (7.93%-11.42%)                   74,571          86,109
30 month senior notes, fixed (8.02%-11.47%)                   14,228          14,684
48 month senior notes, fixed (7.56%-11.51%)                    9,138           8,384
60 month senior notes, fixed (6.67%-11.56%)                   34,880          34,849
Value notes, fixed                                                 0           3,271
Medium-term notes, fixed (6.92%-6.98%)                           199         313,100
Medium-term notes, floating                                        0          30,500
Medium-term bank notes, fixed                                      0           3,404
Other senior notes, fixed (5.00%-11.33%)                      42,875          98,387
                                                            --------        --------
Total senior debt                                            312,403         754,470
Subordinated notes, fixed (9.08%-9.94%)                          621             714
                                                            --------        --------
Total long-term debt                                        $313,024        $755,184
                                                            ========        ========
</TABLE>

We used part of the proceeds from the sale of mortgage assets in the first
quarter of 2001 to pay off substantially all of our outstanding medium-term
notes and to reduce our outstanding senior notes. In addition, in the second
quarter of 2001, we sold $389.7 million of deposit liabilities to E*TRADE Bank,
a wholly owned subsidiary of E*TRADE Group, Inc.

NOTE 9) 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 our capital securities, or some combination thereof. As of September
30, 2001, we have repurchased approximately 401,500 shares of our Class B Common
Stock.

Cash dividends per share of common stock declared during the three months ended
September 30, 2001 and 2000 were $0.063 for Class A Common Stock and $0.076 for
Class B Common Stock. Cash dividends per share of common stock declared during
the nine months ended September 30, 2001 and 2000 were $0.189 for Class A Common
Stock and $0.227 for Class B Common Stock.

NOTE 10) 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 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.

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

                                       14
<PAGE>
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 SEPTEMBER 30, 2001
Interest income                                      $    19,625       $         2       $     6,761       $    26,388
Interest expense                                           8,791               435             7,693            16,919
Noninterest revenues (losses), net                        59,148            (9,988)              131            49,291
Pretax income (loss) from continuing operations           17,250           (11,019)           (3,961)            2,270
Average managed receivables                            1,946,737                 0            28,328         1,975,065
Total assets                                             555,344            22,641         1,076,943         1,654,928
                                                     -----------       -----------       -----------       -----------
THREE MONTHS ENDED SEPTEMBER 30, 2000
Interest income                                      $    24,007       $         6       $    15,436       $    39,449
Interest expense                                           9,101               424            14,932            24,457
Noninterest revenues (losses), net                        41,060               760            (2,604)           39,216
Pretax income (loss) from continuing operations            8,205              (394)           (7,122)              689
Average managed receivables                            1,472,729                 0            24,250         1,496,979
Total assets                                             558,411            49,051         2,429,099         3,036,561
                                                     -----------       -----------       -----------       -----------
NINE MONTHS ENDED SEPTEMBER 30, 2001
Interest income                                      $    57,231       $        35       $    35,962       $    93,228
Interest expense                                          24,009             1,274            42,031            67,314
Noninterest revenues (losses), net                       159,922           (26,950)           (7,852)          125,120
Unusual charges                                                0                 0            41,750            41,750
Pretax income (loss) from continuing operations           44,941           (30,285)          (69,795)          (55,139)
Average managed receivables                            1,829,815                 0            28,352         1,858,167
                                                     -----------       -----------       -----------       -----------
NINE MONTHS ENDED SEPTEMBER 30, 2000
Interest income                                      $    59,027       $        60       $    44,826       $   103,913
Interest expense                                          22,893             1,083            42,219            66,195
Noninterest revenues (losses), net                       111,443            13,038            (3,516)          120,965
Pretax income (loss) from continuing operations           32,790            10,068           (19,130)           23,728
Average managed receivables                            1,304,881                 0            21,657         1,326,538
                                                     -----------       -----------       -----------       -----------
</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.


                                       15
<PAGE>
NOTE 11) 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>
                                                                                 SEPTEMBER 30,
                                                                     CHARGED        2001
                                                       ACCRUED IN   TO ACCRUAL     ACCRUAL
                                                          2001       IN 2001       BALANCE
                                                          ----       -------       -------
<S>                                                    <C>          <C>          <C>
Employee costs                                           $27,296      $20,813      $ 6,483
Expenses associated with exited businesses/products       11,895       10,671        1,224
Asset impairments                                          2,559        2,559            0
                                                         -------      -------      -------
Total                                                    $41,750      $34,043      $ 7,707
                                                         =======      =======      =======
</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 a
12-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 12-month period. In the second quarter of 2001, we recorded a $1.0
million increase in employee costs related to a revision in estimate associated
with these bonuses. 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 $2.9
million associated with the settlement of outstanding stock appreciation rights
and phantom stock with employees and directors. This charge reflects a $0.7
million reduction recorded in the three months ended September 30, 2001, as
actual settlement costs were less than estimated. Due to the restructuring of
the company, we implemented programs whereby certain out-of-the money options
were exchanged for shares of restricted stock, and whereby certain restricted
stock was exchanged for cash and stock options in a tender offer, subject to
certain performance conditions and vesting requirements. Non-cash charges
associated with the issuance of the restricted stock, stock options and the
tender offer totaled $3.6 million. This charge reflects a $1.4 million increase
recorded in the three months ended September 30, 2001, as actual charges were
more than estimated.

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

                                       16
<PAGE>
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.

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. In the three
months ended September 30, 2001, we were able to settle some of these
commitments for less than originally estimated, and reduced the charge by $0.7
million. We expect to pay the remaining costs, which include lease and other
commitments, over the next nine 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.


                                       17
<PAGE>
NOTE 12) 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              NINE MONTHS ENDED
                                                                        SEPTEMBER 30,                   SEPTEMBER 30,
                                                                    2001            2000            2001            2000
                                                                    ----            ----            ----            ----
<S>                                                              <C>             <C>             <C>             <C>
Income (loss) from continuing operations                         $   2,270       $     689       $ (38,259)      $  23,728
 Less: Preferred A dividends                                             0               0            (141)           (141)
                                                                 ---------       ---------       ---------       ---------
Income (loss) from continuing operations
 available to common shareholders                                    2,270             689         (38,400)         23,587
Income (loss) from discontinued
 operations, net of tax                                                  0          15,055          (8,438)       (183,610)
Loss, net, on discontinuance of mortgage and
leasing businesses, net of tax                                     (44,000)              0         (31,639)              0
                                                                 ---------       ---------       ---------       ---------
Net loss available to common shareholders                          (41,730)         15,744         (78,477)       (160,023)
 Less: Class A dividends declared                                     (574)           (573)         (1,720)         (1,665)
 Less: Class B dividends declared                                   (1,314)         (1,299)         (3,909)         (3,826)
                                                                 ---------       ---------       ---------       ---------
Undistributed net income (loss)                                  $ (43,618)      $  13,872       $ (84,106)      $(165,514)
                                                                 ---------       ---------       ---------       ---------
Basic income (loss) from continuing
 operations per common share
  Class A                                                        $    0.08       $    0.02       $   (1.53)      $    0.90
  Class B                                                             0.09            0.03           (1.48)           0.96
  Combined(1)                                                         0.09            0.03           (1.50)           0.94
Diluted income (loss) from continuing
 operations per common share
  Class A                                                        $    0.08       $    0.02       $   (1.53)      $    0.90
  Class B                                                             0.09            0.03           (1.48)           0.95
  Combined(1)                                                         0.09            0.03           (1.50)           0.93
Basic net income (loss) per common share
  Class A                                                        $   (1.62)      $    0.61       $   (3.09)      $   (6.41)
  Class B                                                            (1.60)           0.63           (3.04)          (6.36)
  Combined(1)                                                        (1.61)           0.62           (3.06)          (6.38)
Diluted net income (loss) per common
 share
  Class A                                                        $   (1.60)      $    0.61       $   (3.09)      $   (6.34)
  Class B                                                            (1.59)           0.63           (3.04)          (6.29)
  Combined(1)                                                        (1.59)           0.62           (3.06)          (6.31)
                                                                 ---------       ---------       ---------       ---------
Basic weighted average common shares
 outstanding
  Class A                                                            9,116           9,109           9,094           9,098
  Class B                                                           16,820          16,150          16,590          15,995
  Combined                                                          25,936          25,259          25,684          25,093
Options Class A                                                          0               1               0               1
Options Class B                                                        205              18               0             127
Restricted shares Class A                                                4              48               0              52
Restricted shares Class B                                               96               0               0              98
Diluted weighted average common shares
 outstanding
  Class A                                                            9,120           9,158           9,094           9,151
  Class B                                                           17,121          16,168          16,590          16,220
  Combined                                                          26,241          25,326          25,684          25,371
Antidilutive shares
  Options Class B                                                    1,266           1,952           2,539           2,555
  Restricted shares Class A                                             10              46              28              45
  Restricted shares Class B                                            269           1,030             595           1,090
                                                                 ---------       ---------       ---------       ---------
</TABLE>

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

                                       18
<PAGE>
NOTE 13) 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. The Court recently issued a ruling on summary judgment in
favor of Fleet on certain positions on legal issues advocated by Fleet and
against others that Fleet advocated. Many issues remain to be determined at
trial, including the dollar effects of all of the issues in dispute. Trial in
this matter is scheduled to begin in November 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. On
September 7, 2001, the District Court Judge issued orders denying both parties'
post-trial motions. A judgment in the amount of approximately $6 million was
entered against Advanta. On September 28, 2001, Advanta filed an appeal to the
United States Court of Appeals for the Third Circuit from the Judgment.
Plaintiff filed a cross-appeal from the order adverse to him. Advanta will
vigorously pursue its appeal. The District Court Judge has not yet ruled on the
executive's petition for attorney's fees and costs in the amount of
approximately $1.2 million, which Advanta has contested. Plaintiff also has
asserted that he is entitled to a non-jury trial on his ERISA claim for
severance pay and that Advanta's appeal is premature. The District Court has
scheduled argument on this issue in November 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 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. We
dispute these claims and allegations. An answer to Banc One's second amended
complaint was filed July 3, 2001 denying liability, raising affirmative defenses
and asserting a counterclaim. Various motions are pending, including Advanta's
motion for partial summary judgment and Banc One's motion for summary judgment.
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

                                       19
<PAGE>
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, $71.4 million including interest, 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.

On July 26, 2001, Chase Manhattan Mortgage Corporation ("Chase") filed a
complaint against Advanta and certain of its subsidiaries in the United States
District Court for the District of Delaware alleging, among other things, that
Advanta breached its contract with Chase in connection with the sale of
Advanta's mortgage business to Chase. Chase claims that Advanta misled Chase
concerning the value of certain of the assets sold to Chase. On September 12,
2001, Advanta filed an answer to the complaint in which Advanta denied all of
the substantive allegations of the complaint and asserted a counterclaim against
Chase for breach of contract relating to funds owed by Chase to Advanta in
connection with the transaction. The matter is in discovery and trial is
scheduled for April 2003. We believe that the lawsuit is without merit and will
vigorously defend Advanta. We do not expect this lawsuit to have any impact on
our continuing business and, based on the complete lack of merit, we do not
anticipate that the lawsuit will have a material adverse impact to Advanta or
the named subsidiaries.

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 14) 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.

                                       20
<PAGE>
We have used 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 medium-term
notes to a LIBOR-based variable rate. There were no interest rate swaps
outstanding at September 30, 2001 because of the substantial reduction in
outstanding medium-term notes during the second quarter of 2001. The notional
amount of interest rate swaps outstanding was $194.5 million at December 31,
2000, and the estimated fair value was $379 thousand.

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 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 or nine
months ended September 30, 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.

                                       21
<PAGE>
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 September 30, 2001, we reported net income from
continuing operations of $2.3 million or $0.09 per combined diluted common
share, compared to net income from continuing operations of $0.7 million or
$0.03 per combined diluted common share for the same period of 2000. For the
nine months ended September 30, 2001, we reported a net loss from continuing
operations of $38.3 million or $1.50 per combined common share, assuming
dilution, compared to net income from continuing operations of $23.7 million or
$0.93 per combined diluted common share for the same period of 2000. The losses
from continuing operations in the nine months ended September 30, 2001 include
$41.8 million of pretax unusual charges 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.

Net income for Advanta Business Cards was $10.6 million for the three months
ended September 30, 2001 and $8.2 million for the same period of 2000. Net
income for Advanta Business Cards for the nine months ended September 30, 2001
was $27.6 million, compared to $32.8 for the same period of 2000. Our venture
capital segment had a net loss of $6.8 million for the three months ended
September 30, 2001, and net loss of $0.4 million for the same period of 2000.
For the nine months ended September 30, 2001 our venture capital segment had a
net loss of $18.6 million, compared to net income of $10.1 million for the same
period of 2000.

Loss from discontinued operations, net of tax, was $8.4 million for the period
from January 1, 2001 through February 28, 2001, the effective date of the sale
of our mortgage business. In the prior year, we had income from discontinued
operations, net of tax, of $15.1 million for the three months ended September
30, 2000 and loss of $183.6 million for the nine months ended September 30,
2000. In addition to the operating results of discontinued operations, we
recorded an after-tax loss on the discontinuance of our mortgage and leasing
businesses of $31.6 million for the nine months ended September 30, 2001. The
components of this net loss include a pretax gain on the sale of our mortgage
business of $20.8 million, a pretax loss on the discontinuance of our leasing
business of $45.0 million, and tax expense of $7.4 million. The gain on the sale
of our mortgage business includes a $5.0 million pretax charge in the three
months ended September 30, 2001 for legal expenses, a substantial portion of
which is attributable to legal fees that we estimate will be incurred in defense
of the lawsuit filed by Chase Manhattan Mortgage. The loss on the discontinuance
of our leasing business includes a $39.0 million pretax charge in the three
months ended September 30, 2001 reflecting a revision to the valuation of
leasing assets and a decrease in the estimated pretax operating results over the
remaining life of the lease portfolio, due primarily to the continued impact of
a former leasing vendor's bankruptcy.

                                       22
<PAGE>
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)      political, social and/or general economic conditions that
                  affect the level of new account acquisitions, customer
                  spending, delinquencies and charge-offs;

         (4)      interest rate fluctuations;

         (5)      the level of expenses;

         (6)      the timing of the securitizations of our receivables;

         (7)      factors affecting the value of investments that we hold;

         (8)      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;

         (9)      relationships with significant vendors and business partners;

         (10)     the amount and cost of financing available to us;

         (11)     the completion of the post-closing process following the sale
                  of our mortgage business and the ultimate amount of
                  restructuring and other related charges associated with the
                  conclusion of the strategic alternatives process for our
                  mortgage and leasing businesses; and

         (12)     the impact of litigation.

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 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 $1.5 billion at
September 30, 2000 to $1.7 billion at December 31, 2000 and to $2.0 billion at
September 30, 2001. Advanta Business Cards originated 57,394 new accounts in the
three months ended September 30, 2001, compared to 55,895 new accounts for the
same period of 2000. Originations for the nine months ended September 30, 2001
were 192,711 new accounts, compared to 257,536 new accounts in the same period
of 2000. The growth in receivables and origination results for 2001 reflect our
plan to grow our portfolio in a controlled manner that we believe is prudent in
the present economic environment.

Pretax income for Advanta Business Cards was $17.3 million for the three months
ended September 30, 2001 as compared to $8.2 million for the same period of
2000. Pretax income for the nine months ended September 30, 2001 was $44.9
million as compared to $32.8 million for the same period of 2000. The components
of pretax income for Advanta Business Cards for the three and nine months ended
September 30, 2001 and 2000 were as follows:

                                       23
<PAGE>
<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED                         NINE MONTHS ENDED
                                                               SEPTEMBER 30,                              SEPTEMBER 30,
                                                               -------------                              -------------
                                                        2001                  2000                 2001                 2000
                                                        ----                  ----                 ----                 ----
<S>                                                   <C>                   <C>                 <C>                   <C>
Net interest income on owned receivables              $ 10,834              $ 14,906            $  33,222             $ 36,134
Noninterest revenues                                    59,148                41,060              159,922              111,443
Provision for credit losses                             (9,325)              (16,806)             (25,449)             (29,476)
Operating expenses                                     (43,407)              (30,955)            (122,754)             (85,311)
Pretax income                                         $ 17,250              $  8,205            $  44,941             $ 32,790
                                                      --------              --------            ---------             --------
</TABLE>

The increase in noninterest revenues in both periods is due primarily to growth
in managed receivables and increased interchange income. The increases in
operating expenses in both periods resulted from growth in managed receivables
and account origination activities. Pretax income for Advanta Business Cards for
the three and nine months ended September 30, 2000 includes an $8 million
increase in the provision for credit losses attributable to a revision of our
estimate of the allowance for credit losses as a result of the following
factors: (1) discussions with our banking regulators relating to the
implementation of the agreement between Advanta Bank Corp. and the FDIC that was
disclosed in June 2000; (2) changes in the economic environment; and (3) the use
of more conservative loss estimates for certain segments of the loan portfolio.
The remainder of the increase in allowance is due to the maturing and growth of
the portfolio. See further discussion in the "Provision and Allowance for Credit
Losses" section of Management's Discussion and Analysis of Financial Condition
and Results of Operations.

SECURITIZATION INCOME

Advanta Business Cards recognized securitization income of $30.1 million for the
three months ended September 30, 2001 and $77.9 million for the nine months
ended September 30, 2001. This compares to $19.2 million of securitization
income recognized for the three months ended September 30, 2000 and $50.4
million of securitization income recognized for the nine months ended September
30, 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 volume of securitized
receivables and increased yields on the 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>
                                                                   SEPTEMBER 30,
                                                                   -------------
MANAGED PORTFOLIO DATA ($ IN THOUSANDS)                      2001                 2000
---------------------------------------                      ----                 ----
<S>                                                       <C>                  <C>
Average managed business credit card receivables:
  Three months ended September 30                         $1,946,737           $1,472,729
  Nine months ended September 30                           1,829,815            1,304,881
Ending managed business credit card receivables            1,996,963            1,529,783
Ending number of accounts managed                            689,678              552,544
Managed net interest margin:
  Three months ended September 30                               15.2%                13.0%
  Nine months ended September 30                                14.5                 12.7
As a percentage of gross managed receivables
  Receivables 30 days or more delinquent                         5.9%                 4.3%
  Net charge-offs (annualized):
    Three months ended September 30                              7.9%                 4.8%
    Nine months ended September 30                               7.3                  4.4
                                                          ----------           ----------
</TABLE>

In September 2000, the FASB issued Statement of Financial Accounting Standards
("SFAS") No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments

                                       24
<PAGE>
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 was
effective for transfers and servicing of financial assets and extinguishments of
liabilities occurring after March 31, 2001. The statement was effective for
recognition and reclassification of collateral and for disclosures relating to
securitization transactions and collateral for fiscal years ending after
December 15, 2000. The adoption of SFAS No. 140 did not have a material effect
on our financial position or results of operations.

SERVICING REVENUES

Advanta Business Cards recognized servicing revenue of $7.7 million for the
three months ended September 30, 2001 and $21.3 million for the nine months
ended September 30, 2001. This compares to servicing revenue of $3.5 million for
the three months ended September 30, 2000 and $11.9 million for the nine months
ended September 30, 2000. The increase in servicing revenue was due to increased
volume of securitized receivables.

INTERCHANGE INCOME

Business credit card interchange income was $20.9 million for the three months
ended September 30, 2001 and $59.1 million for the nine months ended September
30, 2001. This compares to business credit card interchange income of $16.3
million for the three months ended September 30, 2000 and $44.3 million for the
nine months ended September 30, 2000. The increase in interchange income was
primarily due to higher purchase volume related to the increase in average
managed business credit card accounts and receivables. The average interchange
rate was 2.2% in the three months ended September 30, 2001, compared to 2.1% in
the same period of 2000. The average interchange rate was 2.1% for the nine
months ended September 30, 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. Consistent with market conditions,
pretax loss for the venture capital segment was $11.0 million for the three
months ended September 30, 2001, and included $10.0 million of decreases in
valuations of venture capital investments. Pretax loss for the venture capital
segment was $0.4 million for the three months ended September 30, 2000, and
included $0.6 million in gains on venture capital investments. For the nine
months ended September 30, 2001, pretax loss for the venture capital segment was
$30.3 million as compared to pretax income of $10.1 million for the same period
of 2000. The pretax loss for the nine months ended September 30, 2001 included
$27.0 million of decreases in valuations and losses on venture capital
investments as compared to $12.9 million in gains realized on venture capital
investments in the same period of 2000.

DISCONTINUED OPERATIONS

Loss from discontinued operations, net of tax, was $8.4 million for the period
from January 1, 2001 through February 28, 2001, the effective date of the sale
of our mortgage business. In the prior year, we had income from discontinued
operations, net of tax, of $15.1 million for the three months ended September
30, 2000 and loss of $183.6 million for the nine months ended September 30,
2000. Loss from discontinued operations for the nine months ended September 30,
2000 includes charges which were made in response to our regulatory review
process, including the implementation of the agreements with the bank regulators
that were signed during the second and third quarters of 2000, and changes
during the second quarter in the market and the political and regulatory
environment for subprime lending. These charges include a pretax reduction in
the valuation of Advanta National Bank's retained interests in mortgage
securitizations of $214.0 million and an

                                       25
<PAGE>
increase in Advanta National Bank's on-balance sheet allowance for credit losses
related to mortgage loans of $22.0 million. These Advanta National Bank charges
reduced net income by $236.0 million or $9.31 per combined common diluted share.

In addition to the operating results through February 28, 2001 of discontinued
operations, we recorded an after-tax loss on the discontinuance of our mortgage
and leasing businesses of $31.6 million for the nine months ended September 30,
2001. The components of this net loss include a pretax gain on the sale of our
mortgage business of $20.8 million, a pretax loss on the discontinuance of our
leasing business of $45.0 million, and tax expense 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 gross gain of
approximately $60 million before transaction expenses, severance expenses and
other costs. The pretax net gain of $20.8 million in the nine months ended
September 30, 2001 includes a $5.0 million pretax charge in the three months
ended September 30, 2001 for legal expenses, a substantial portion of which is
attributable to legal fees that we estimate will be incurred in defense of the
lawsuit filed by Chase Manhattan Mortgage. See Note 13 to the consolidated
financial statements for a discussion of litigation related to the sale of our
mortgage business. The gain on the sale of the mortgage business does not
reflect any impact from the post-closing adjustment process that has been
extended by agreement of the parties. 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 nine months ended
September 30, 2001, we incurred an additional $45.0 million pretax loss due to
changes in the estimate of those operating results. These changes in estimate
were 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 primary factor contributing to the increased credit
losses is that one of our former leasing vendors recently filed for bankruptcy
protection and this vendor's financial problems have impacted its ability to
service a segment of our leasing portfolio. This vendor is unique from our other
leasing vendors in that it had a significant servicing relationship with our
customers and the equipment under lease provided fee revenue to our customers
for usage. Also, our contract with the vendor provided that the vendor would
provide a guaranty if the performance of the leases did not meet certain
criteria. This guaranty was considered when underwriting the leases.

                                       26
<PAGE>
INTEREST INCOME AND EXPENSE

Interest income on receivables and investments decreased $13.1 million for the
three months ended September 30, 2001 as compared to the same period of 2000.
The decrease in interest income for the three months ended September 30, 2001
was due primarily to a decrease in on-balance sheet business credit card
receivables and investments. Also contributing to the decreased interest income
was a decrease in the average yield earned on our investment portfolio caused by
the interest rate environment and a shift in the composition of the portfolio.
Short-term investments, including federal funds sold and interest-bearing
deposits, represented 83% of the average investment portfolio in the three
months ended September 30, 2001 as compared to 37% in the same period of 2000.
Excess liquid assets resulting from the sale of the mortgage business in 2001
are being held in short-term, high quality investments until they can be
deployed. See further discussion in the "Liquidity and Capital Resources"
section of Management's Discussion and Analysis of Financial Condition and
Results of Operations. Interest income on receivables and investments decreased
$10.7 million for the nine months ended September 30, 2001 as compared to the
same period of 2000. The decrease in interest income for the nine months ended
September 30, 2001 was due primarily to decreased yields on the investment
portfolio.

During the three months ended September 30, 2001, interest expense decreased by
$7.5 million as compared to the same period of 2000, and increased $1.1 million
for the nine months ended September 30, 2001 as compared to the same period of
2000. The decrease in interest expense for the three months ended September 30,
2001 was due to a decrease in interest-bearing liabilities, offset by an
increase in our cost of funds. The increase in interest expense for the nine
months ended September 30, 2001 was due to an increase in our cost of funds. Our
cost of funds increased to 7.35% for the three months ended September 30, 2001
from 7.15% during the same period of 2000, and increased to 7.33% for the nine
months ended September 30, 2001 from 6.77% for the same period of 2000. The
increase in the cost of funds in 2001 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 35% of total average
interest-bearing liabilities for the three months ended September 30, 2001 as
compared to 27% for the same period of 2000, and represented 35% for the nine
months ended September 30, 2001 as compared to 26% for the same period of 2000.
The average interest rate on debt funding was 10.28% for the three months ended
September 30, 2001 as compared to 8.44% for the same period of 2000, and was
9.33% for the nine months ended September 30, 2001 as compared to 7.98% 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. Interest income includes late fees on business credit card receivables.
Average owned receivables include certain loan fees and costs.

                                       27
<PAGE>
INTEREST RATE ANALYSIS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED SEPTEMBER 30,
                                                          --------------------------------
                                                 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       $  401,822       $   19,361       19.12%      $  473,210      $   23,789      20.00%
 Other receivables               28,328              349        4.89           24,250             233       3.82
                             ----------       ----------                   ----------      ----------      -----
Total owned receivables         430,150           19,710       18.18          497,460          24,022      19.21
Investments(2)                  618,018            6,340        4.03          958,083          15,469       6.40
Interest-earning assets
 of discontinued
 operations                      85,788            1,898        8.84        1,288,445          41,110      12.73
                             ----------       ----------                   ----------      ----------      -----
Total interest-earning
 assets                      $1,133,956       $   27,948        9.76%      $2,743,988      $   80,601      11.70%


Interest-bearing
 liabilities(3)              $1,010,311       $   18,720        7.35%      $2,833,029      $   50,876       7.15%


Net interest spread                                             2.41%                                       4.55%
Net interest margin                                             3.23%                                       4.31%
</TABLE>

<TABLE>
<CAPTION>
                                                           NINE MONTHS ENDED SEPTEMBER 30,
                                                           -------------------------------
                                                 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       $  381,465       $   56,388       19.76%      $  407,266      $   58,369      19.14%
 Other receivables               28,352              907        4.28           21,657             629       3.88
                             ----------       ----------                   ----------      ----------      -----
Total owned receivables         409,817           57,295       18.69          428,923          58,998      18.37
Investments(2)                  962,599           35,398        4.87          935,691          45,016       6.39
Interest-earning assets
 of discontinued
 operations                     253,676           27,618       14.52        1,631,021         145,687      11.92
                             ----------       ----------                   ----------      ----------      -----
Total interest-earning
 assets                      $1,626,092       $  120,311        9.86%      $2,995,635      $  249,701      11.12%


Interest-bearing
 liabilities(3)              $1,530,501       $   83,999        7.33%      $2,920,584      $  148,117       6.77%


Net interest spread                                             2.53%                                       4.35%
Net interest margin                                             2.99%                                       4.53%
</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.

                                       28
<PAGE>
OTHER REVENUES

<TABLE>
<CAPTION>
($ in thousands)                                   THREE MONTHS ENDED            NINE MONTHS ENDED
                                                      SEPTEMBER 30,                 SEPTEMBER 30,
                                                      -------------                 -------------
                                                   2001           2000           2001           2000
                                                   ----           ----           ----           ----
<S>                                             <C>            <C>            <C>            <C>
Investment securities gains (losses), net       $(10,000)      $    556       $(24,316)      $ 10,422
Loss on sale of deposits                               0              0         (2,835)             0
Insurance revenues (losses), net and other           513           (409)        (6,058)         3,851
                                                --------       --------       --------       --------
  Total other revenues, net                     $ (9,487)      $    147       $(33,209)      $ 14,273
                                                ========       ========       ========       ========
</TABLE>

Investment securities gains (losses) include changes in the fair value and
realized gains (losses) on venture capital investments. Investment securities
losses for the three months ended September 30, 2001 include $10.0 million of
decreases in valuations of venture capital investments. Investment securities
losses for the nine months ended September 30, 2001 also include a $4.9 million
loss on the sale of a venture capital investment, $12.1 million of decreases in
valuations of venture capital investments, and $2.7 million of realized gains on
other investments. Investment securities gains for the nine months ended
September 30, 2000 include $0.6 million in gains on venture capital investments
in the third quarter of 2000, $12.3 million in gains on venture capital
investments in the six months ended June 30, 2000, and $2.4 million of realized
losses on other investments.

In the second quarter of 2001, we sold $389.7 million of deposit liabilities to
E*TRADE Bank, a wholly owned subsidiary of E*TRADE Group, Inc., resulting in a
$2.8 million loss.

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 in insurance revenues (losses), net and other
for the nine months ended September 30, 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. Insurance revenues, net and other in the three months ended September
30, 2000 includes a charge of approximately $3 million in the insurance business
relating to a large policy claim settled during the quarter.


                                       29
<PAGE>
OPERATING EXPENSES

<TABLE>
<CAPTION>
($ in thousands)                       THREE MONTHS ENDED           NINE MONTHS ENDED
                                          SEPTEMBER 30,               SEPTEMBER 30,
                                          -------------               -------------
                                       2001          2000          2001          2000
                                       ----          ----          ----          ----
<S>                                  <C>           <C>           <C>           <C>
Salaries and employee benefits       $ 15,172      $  9,205      $ 45,049      $ 29,638
Amortization of business credit
  card deferred origination
  costs, net                           10,492         6,720        27,601        16,279
External processing                     4,493         3,327        12,747         9,725
Professional/consulting fees            4,029         3,743        10,251        11,018
Marketing expense                       1,752         3,067         8,726         8,363
Occupancy expense                       1,733         2,314         4,968         6,743
Equipment expense                       1,489         2,141         5,148         6,178
Telephone expense                         815         1,209         3,045         3,451
Other                                   4,767         2,767        14,376         7,424
                                     --------      --------      --------      --------
Total operating expenses             $ 44,742      $ 34,493      $131,911      $ 98,819
                                     ========      ========      ========      ========
</TABLE>

Salaries and employee benefits, amortization of business credit card deferred
origination costs, net, and external processing expense have increased for the
three and nine months ended September 30, 2001 as compared to the same periods
of 2000, due primarily to increased 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 increased to $1.9
billion for the three months ended September 30, 2001 from $1.5 billion for the
same period of 2000, and increased to $1.8 billion for the nine months ended
September 30, 2001 from $1.3 billion for the same period of 2000.

PROVISION AND ALLOWANCE FOR CREDIT LOSSES

The provision for credit losses of $9.5 million for the three months ended
September 30, 2001 decreased by $7.3 million as compared to the provision for
credit losses of $16.8 million for the same period of 2000. The provision for
credit losses of $25.9 million for the nine months ended September 30, 2001
decreased by $3.6 million in comparison to the provision for credit losses of
$29.5 million for the same period of 2000. As of September 30, 2000, we had
modified our estimate of the allowance for credit losses on business credit card
receivables. The revised estimate for the overall portfolio was developed based
on discussions with our banking regulators, changes in the economic environment
and the use of more conservative loss estimates for certain segments of the loan
portfolio. Those segments included accounts with lower credit scores, accounts
held by businesses in operation less than twelve months, and accounts in which
cash borrowings comprise a significant portion of the outstanding balance. As a
result of these changes in estimate in 2000, we increased our allowance for
credit losses by approximately $8 million, which increased the provision for
credit losses and decreased net income by approximately $8 million or $0.32 per
diluted combined share for both the three and nine months ended September 30,
2000.

At September 30, 2001, the allowance for credit losses on a consolidated basis
was $39.8 million, or 10.0% of owned receivables, as compared to $33.4 million,
or 9.3% of owned receivables, at December 31, 2000. The allowance for credit
losses on business credit card receivables was $39.2 million at September 30,
2001 as compared to $33.2 million at December 31, 2000. The allowance for credit
losses on business credit card receivables represented 10.6% of owned
receivables at September 30, 2001 and 9.9% of owned receivables at December 31,
2000. The increase in allowance for credit losses on business credit card
receivables is due to the maturing and growth of the portfolio and the current
economic environment. As shown in the following table, we have experienced a
trend of increasing charge-off rates, consistent with our expectations of the
seasoning portfolio and the current economic environment, which has been
factored into our estimate of the allowance for credit losses. These factors
were also reflected in the delinquency rates. Total owned business credit

                                       30
<PAGE>
card receivables 30 days or more delinquent at September 30, 2001 were 5.7% of
gross receivables as compared to 5.5% at December 31, 2000.

<TABLE>
<CAPTION>
CHARGE-OFF RATE TREND- OWNED                                                    THREE MONTHS ENDED
                                                             MAR.     JUN.    SEPT.    DEC.    MAR.    JUN.    SEPT.
                                                             2000     2000    2000    2000     2001    2001    2001
                                                             ----     ----    ----    ----     ----    ----    ----
<S>                                                         <C>      <C>     <C>     <C>      <C>     <C>     <C>
Net charge-offs as a % of owned business
   credit card receivables (annualized)                      4.1%     3.7%    4.9%    5.1% *   6.4%    6.7%    7.3%
                                                             ---      ---     ---     ---      ---     ---     ---
</TABLE>

* 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.


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.

                                       31
<PAGE>
The following table provides a summary of nonperforming assets, delinquencies
and charge-offs as of and for the year-to-date periods indicated ($ in
thousands).

<TABLE>
<CAPTION>
                                                  SEPTEMBER 30,     DECEMBER 31,    SEPTEMBER 30,
CREDIT QUALITY                                         2001          2000 (A)           2000
--------------                                         ----          --------           ----
<S>                                               <C>               <C>             <C>
CONSOLIDATED - MANAGED
Nonperforming assets                               $   68,807       $   45,160       $   35,916
Receivables 30 days or more delinquent                119,793           83,798           67,051
As a percentage of gross receivables:
 Nonperforming assets                                     3.4%             2.7%             2.3%
 Receivables 30 days or more delinquent                   5.9              5.0              4.3
Net charge-offs:
 Amount                                            $  100,301       $   64,638       $   42,834
 As a percentage of average gross receivables
  (annualized)                                            7.2%             4.6%             4.3%

CONSOLIDATED - OWNED
Allowance for credit losses                        $   39,772       $   33,367       $   31,366
Nonperforming assets                                   15,715           10,700           11,483
Receivables 30 days or more delinquent                 22,629           19,395           21,737
As a percentage of gross receivables:
 Allowance for credit losses                             10.0%             9.3%             6.4%
 Nonperforming assets                                     4.0              3.0              2.4
 Receivables 30 days or more delinquent                   5.7              5.4              4.4
Net charge-offs:
 Amount                                            $   19,447       $   17,807       $   12,974
 As a percentage of average gross receivables
  (annualized)                                            6.3%             4.2%             4.0%

BUSINESS CREDIT CARDS - MANAGED
Nonperforming assets                               $   68,277       $   44,600       $   35,355
Receivables 30 days or more delinquent                118,163           82,915           66,036
As a percentage of gross receivables:
 Nonperforming assets                                     3.4%             2.7%             2.3%
 Receivables 30 days or more delinquent                   5.9              5.0              4.3
Net charge-offs:
 Amount                                            $  100,298       $   64,636       $   42,834
 As a percentage of average gross receivables
  (annualized)                                            7.3%             4.7%             4.4%

BUSINESS CREDIT CARDS - OWNED
Allowance for credit losses                        $   39,170       $   33,165       $   31,164
Nonperforming assets                                   15,185           10,140           10,922
Receivables 30 days or more delinquent                 20,999           18,512           20,722
As a percentage of gross receivables:
 Allowance for credit losses                             10.6%             9.9%             6.7%
 Nonperforming assets                                     4.1              3.0              2.4
 Receivables 30 days or more delinquent                   5.7              5.5              4.5
Net charge-offs:
 Amount                                            $   19,444       $   17,805       $   12,974
 As a percentage of average gross receivables
  (annualized)                                            6.8%             4.5%             4.2%
</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. Managed and owned 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.

                                       32
<PAGE>
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 a
12-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 12-month period. In the second quarter of 2001, we recorded a $1.0
million increase in employee costs related to a revision in estimate associated
with these bonuses. 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 $2.9
million associated with the settlement of outstanding stock appreciation rights
and phantom stock with employees and directors. This charge reflects a $0.7
million reduction recorded in the three months ended September 30, 2001, as
actual settlement costs were less than estimated. Due to the restructuring of
the company, we implemented programs whereby certain out-of-the money options
were exchanged for shares of restricted stock, and whereby certain restricted
stock was exchanged for cash and stock options in a tender offer, subject to
certain performance conditions and vesting requirements. Non-cash charges
associated with the issuance of the restricted stock, stock options and the
tender offer totaled $3.6 million. This charge reflects a $1.4 million increase
recorded in the three months ended September 30, 2001, as actual charges were
more than estimated.

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 recorded an additional charge
relating to the settlement of these commitments of $10.3 million.

                                       33
<PAGE>
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. In the three
months ended September 30, 2001, we were able to settle some of these
commitments for less than originally estimated, and reduced the charge by $0.7
million. We expect to pay the remaining costs, which include lease and other
commitments, over the next nine 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

As a result of unusual charges, valuation adjustments on venture capital
investments and the loss on the discontinuance of the leasing business in 2001,
we reported a pretax loss for the three and nine months ended September 30,
2001. A valuation allowance has been provided against a portion of the resulting
deferred tax asset given our pre-existing net operating loss carryforwards and
the uncertainty of the realizability of the incremental deferred tax asset. The
valuation allowance resulted in a 0% tax rate for the three months ended
September 20, 2001 and 2000. In establishing the valuation allowance, management
considered (1) the level of expected future taxable income, (2) existing and
projected book/tax differences, (3) tax planning strategies available, and (4)
the general and industry specific economic outlook. Based on this analysis,
management believes the net deferred tax asset will be realized.

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
September 30, 2001, our net interest income over a 12-month period would change
by less than 1% if interest rates were to rise by 200 basis points, and that our
net interest income over a 12-month period would increase by approximately 3% if
interest rates were to fall by 200 basis points. We also measure the effect of
interest rate risk on our managed net interest income, which includes net
interest income on owned assets and net interest income on securitized
receivables. We estimate that at September 30, 2001, our managed net interest
income over a 12-month period would decrease by approximately 7 to 9% if
interest rates were to rise by 200 basis points, and that our managed net
interest income over a 12-month period would increase by approximately 10 to 12%
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. The interest rate floors also
cause a decrease in managed net interest income in a rising rate scenario.
Current rates are well below certain of the interest rate floors, and a 200
basis point increase in rates would not impact the contractual rate on a
substantial portion of the receivables. 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

                                       34
<PAGE>
only when viewed within the context of the parameters and assumptions used. The
above rate scenarios in no way reflect 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 nine months ended September 30, 2001, we securitized approximately
$290 million of business credit card receivables. At September 30, 2001, we had
$381 million of federal funds sold, $163 million of receivables held for sale,
and $92 million of investments, which could be sold to generate additional
liquidity. Components of funding were as follows:

<TABLE>
<CAPTION>
                                                             SEPTEMBER 30, 2001               DECEMBER 31, 2000
                                                             ------------------               -----------------
                                                          AMOUNT                %          AMOUNT                %
                                                          ------                -          ------                -
<S>                                                     <C>                   <C>        <C>                   <C>
Off-balance sheet business credit card receivables      $1,628,082              53%      $1,324,137              33%
Deposits                                                   675,718              22        1,346,976              34
Debt and other borrowings                                  313,024              10          759,473              19
Equity, including capital securities                       467,002              15          540,902              14
                                                        ----------              --       ----------              --
Total                                                   $3,083,826             100%      $3,971,488             100%
                                                        ----------              --       ----------              --
</TABLE>

At September 30, 2001, we had a $280 million committed commercial paper conduit
facility secured by business credit card receivables, of which $160 million was
unused at September 30, 2001.

In the first quarter of 2001, we received in excess of $1 billion in cash
proceeds from the sale of our mortgage business. We have strategically used the
proceeds to strengthen Advanta for the future, including a significant reduction
in our leverage. In the second quarter of 2001, we sold $389.7 million of our
deposit liabilities to E*TRADE Bank, a wholly owned subsidiary of E*TRADE Group,
Inc. We also paid off substantially all of our outstanding medium-term notes and
reduced our outstanding retail notes. In the period from April 2001 to August
2001, we ceased the origination and renewal of retail notes due to our liquidity
position. In the nine months ended September 30, 2001, we reduced debt and
deposits by $1.1 billion. Also, Advanta National Bank has suspended originations
of deposit accounts.

The sale of the mortgage business in the first quarter of 2001 resulted in
liquidity in excess of the needs of our continuing businesses. Excess liquid
assets are being held in short-term, high-quality investments earning money
market rates until they can be deployed. As a result we had interest expense in
excess of interest income on this excess liquidity in 2001. The deposit sale and
significant debt reduction in the second quarter of 2001 will reduce this net
interest expense and excess liquidity. However, we expect to continue to have
interest expense in excess of interest income on excess liquidity for the next
several quarters due to the time required to reduce interest-bearing
liabilities.

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, along with
other payments from the insurance subsidiary in the first quarter of 2001,
increased parent liquidity by $62.5 million. In the second quarter of 2001,
there was an additional dividend from an insurance subsidiary of $5.6 million.

In the first quarter of 2001, after consideration of the parent liquidity and
the capital requirements for the ongoing business, the Board of Directors of
Advanta Corp. authorized management to purchase up to 1.5 million shares of
Advanta Corp. common stock or the equivalent dollar amount of our capital
securities, or some combination thereof. We

                                       35
<PAGE>
intend to make purchases modestly and when we believe it is prudent to do so
while we analyze evolving capital requirements. As of September 30, 2001, we
have repurchased approximately 401,500 shares of our Class B Common Stock.

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 in the
first quarter of 2001, 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 reduced the 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 September 30, 2001, Advanta National Bank's combined total capital ratio
(combined Tier I and Tier II capital) was 22.02%, and Advanta Bank Corp.'s
combined total capital ratio was 20.67%. 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.

The FDIC recently approved a rule to revise the regulatory capital treatment of
recourse, direct credit substitutes, and residual interests in asset
securitizations. The rule is expected to be approved by the other bank
regulatory agencies during the fourth quarter of 2001 and issued as an
interagency policy statement. As this rule applies to the current business at
our banking subsidiaries, it supercedes the current low-level recourse rules and
requires that an institution hold one dollar in total risk-based capital against
every dollar of residual interest, with some exceptions. It further requires
that credit enhancing interest-only strips in excess of 25% of Tier 1 capital be
deducted from Tier 1 capital for purposes of calculating bank capital ratios.
This rule has an effective date of January 1, 2002. Banks can delay until
December 31, 2002, the application of the final rule to transactions entered
into prior to January 1, 2002 that result in increased capital requirements. We
anticipate the adoption of this rule at our banking subsidiaries will not have a
material effect on our financial position or results of operations.

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."

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<PAGE>
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. The Court recently issued a ruling on summary judgment in
favor of Fleet on certain positions on legal issues advocated by Fleet and
against others that Fleet advocated. Many issues remain to be determined at
trial, including the dollar effects of all of the issues in dispute. Trial in
this matter is scheduled to begin in November 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. On
September 7, 2001, the District Court Judge issued orders denying both parties'
post-trial motions. A judgment in the amount of approximately $6 million was
entered against Advanta. On September 28, 2001, Advanta filed an appeal to the
United States Court of Appeals for the Third Circuit from the Judgment.
Plaintiff filed a cross-appeal from the order adverse to him. Advanta will
vigorously pursue its appeal. The District Court Judge has not yet ruled on the
executive's petition for attorney's fees and costs in the amount of
approximately $1.2 million, which Advanta has contested. Plaintiff also has
asserted that he is entitled to a non-jury trial on his ERISA claim for
severance pay and that Advanta's appeal is premature. The District Court has
scheduled argument on this issue in November 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 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. We
dispute these claims and allegations. An answer to Banc One's second amended
complaint was filed July 3, 2001 denying liability, raising affirmative defenses
and asserting a counterclaim. Various motions are pending, including Advanta's
motion for partial summary judgment and Banc One's motion for summary judgment.
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

                                       37
<PAGE>
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, $71.4 million including interest, 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.

On July 26, 2001, Chase Manhattan Mortgage Corporation ("Chase") filed a
complaint against Advanta and certain of its subsidiaries in the United States
District Court for the District of Delaware alleging, among other things, that
Advanta breached its contract with Chase in connection with the sale of
Advanta's mortgage business to Chase. Chase claims that Advanta misled Chase
concerning the value of certain of the assets sold to Chase. On September 12,
2001, Advanta filed an answer to the complaint in which Advanta denied all of
the substantive allegations of the complaint and asserted a counterclaim against
Chase for breach of contract relating to funds owed by Chase to Advanta in
connection with the transaction. The matter is in discovery and trial is
scheduled for April 2003. We believe that the lawsuit is without merit and will
vigorously defend Advanta. We do not expect this lawsuit to have any impact on
our continuing business and, based on the complete lack of merit, we do not
anticipate that the lawsuit will have a material adverse impact to Advanta or
the named subsidiaries.

                                       38
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

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

<TABLE>
<CAPTION>
     EXHIBIT
     NUMBER       DESCRIPTION OF DOCUMENT
     ------       -----------------------
<S>               <C>
       12         Consolidated Computation of Ratio of Earnings to Fixed Charges
</TABLE>


(b)  Reports on Form 8-K

         (b)(1)   A Current Report on Form 8-K, dated July 24, 2001, was filed
                  by Advanta setting forth the financial highlights of Advanta's
                  results of operations for the three months ended June 30,
                  2001.

         (b)(2)   A Current Report on Form 8-K, dated July 27, 2001, was filed
                  by Advanta announcing that Chase Manhattan Mortgage
                  Corporation ("Chase") had filed a complaint alleging that
                  Advanta breached its contract with Chase in connection with
                  the sale of Advanta's mortgage business to Chase.


                                       39
<PAGE>
         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)

November 14, 2001                         By /s/Philip M. Browne
                                             ----------------------------------
                                             Senior Vice President and
                                             Chief Financial Officer

November 14, 2001                         By /s/David B. Weinstock
                                             ----------------------------------
                                             Vice President and
                                             Chief Accounting Officer


                                       40
<PAGE>
         EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT       DESCRIPTION
-------       -----------
<S>           <C>

  12          Consolidated Computation of Ratio of Earnings to Fixed Charges
</TABLE>

                                       41