##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-Q
 þ
    
    Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
 for the quarterly period ended March 31, 2009
 or
 o
    
    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.
  Delaware
    
    23-1462070(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 
 
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o þ
   o o
   Class
    
    Outstanding at May 5, 2009Class A Common Stock, $.01 par value per share
    
    14,410,133 sharesClass B Common Stock, $.01 par value per share
    
    30,694,571 shares




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##### 



TABLE OF CONTENTS
 PagePART I  FINANCIAL INFORMATION
    
    
    3Item 1. Financial Statements
    
    
    3Consolidated Balance Sheets (Unaudited)
    
    
    3Consolidated Income Statements (Unaudited)
    
    
    4Consolidated Statements of Changes in
Stockholders Equity (Unaudited)
    
    
    56Consolidated Statements of Cash Flows (Unaudited)
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2. Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    29Item 3. Quantitative and Qualitative Disclosures
About Market Risk
    
    
    57Item 4. Controls and Procedures
    
    
    57PART II OTHER INFORMATION
    
    
    57Item 1. Legal Proceedings
    
    
    57Item 1A. Risk Factors
    
    
    58Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
    
    
    63Item 5. Other Information
    
    
    64Item 6. Exhibits
    
    
    70Exhibit Index
    
    
    72COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGESCERTIFICATION OF CEO, SECTION 302CERTIFICATION OF CFO, SECTION 302CERTIFICATION OF CEO, SECTION 906CERTIFICATION OF CFO, SECTION 906
  2




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PART I  FINANCIAL INFORMATION
 
  ADVANTA CORP. AND SUBSIDIARIES
 
 CONSOLIDATED BALANCE SHEETS (Unaudited)
 March 31,
    
    
    December 31,(In thousands, except share amounts)
    
    2009
    
    
    2008ASSETSCash
    
    $
    32,700
    
    
    $
    31,716Federal funds sold
    
    
    41,442
    
    
    
    32,277Interest-bearing deposits
    
    
    1,422,002
    
    
    
    1,595,138Investments available for sale
    
    
    818,950
    
    
    
    977,245Receivables, net:Held for sale
    
    
    0
    
    
    
    0Other
    
    
    439,277
    
    
    
    414,844Total receivables, net
    
    
    439,277
    
    
    
    414,844Accounts receivable from securitizations
    
    
    402,819
    
    
    
    301,118Premises and equipment, net
    
    
    15,180
    
    
    
    16,762Other assets
    
    
    226,503
    
    
    
    215,945Total assets
    
    $
    3,398,873
    
    
    $
    3,585,045LIABILITIESDeposits
    
    $
    2,392,805
    
    
    $
    2,541,406Debt
    
    
    183,306
    
    
    
    206,598Other borrowings
    
    
    0
    
    
    
    50,000Subordinated debt payable to preferred securities trust
    
    
    103,093
    
    
    
    103,093Other liabilities
    
    
    291,964
    
    
    
    176,587Total liabilities
    
    
    2,971,168
    
    
    
    3,077,684Commitments and contingenciesSTOCKHOLDERS EQUITYClass A preferred stock, $1,000 par value:Authorized, issued and outstanding  1,010 shares in
2009 and 2008
    
    
    1,010
    
    
    
    1,010Class A voting common stock, $.01 par value:Authorized  200,000,000 shares; issued  14,410,133
shares in 2009 and 2008
    
    
    144
    
    
    
    144Class B non-voting common stock, $.01 par value:Authorized  200,000,000 shares; issued  32,331,772
shares in 2009 and 32,776,722 shares in 2008
    
    
    323
    
    
    
    328Additional paid-in capital
    
    
    247,397
    
    
    
    250,042Unearned ESOP shares
    
    
    (8,259
    )
    
    
    (8,367
    )Accumulated other comprehensive loss
    
    
    (13,461
    )
    
    
    (13,447
    )Retained earnings
    
    
    238,029
    
    
    
    315,072Treasury stock at cost, 1,661,780 Class B common shares
in 2009 and 1,563,736 Class B common shares in 2008
    
    
    (37,478
    )
    
    
    (37,421
    )Total stockholders equity
    
    
    427,705
    
    
    
    507,361Total liabilities and stockholders equity
    
    $
    3,398,873
    
    
    $
    3,585,045
 See accompanying notes to consolidated financial statements.
 3




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ADVANTA CORP. AND SUBSIDIARIES
 
 CONSOLIDATED INCOME STATEMENTS (Unaudited)
 Three Months Ended(In thousands, except per share amounts)
    
    March 31,2009
    
    2008Interest income:Receivables
    
    $
    16,014
    
    
    $
    29,130Investments
    
    
    6,105
    
    
    
    9,932Other interest income
    
    
    12,089
    
    
    
    6,985Total interest income
    
    
    34,208
    
    
    
    46,047Interest expense:Deposits
    
    
    25,527
    
    
    
    21,919Debt and other borrowings
    
    
    2,968
    
    
    
    3,908Subordinated debt payable to preferred securities
trust
    
    
    2,317
    
    
    
    2,317Total interest expense
    
    
    30,812
    
    
    
    28,144Net interest income
    
    
    3,396
    
    
    
    17,903Provision for credit losses
    
    
    41,277
    
    
    
    28,382Net interest income after provision for credit losses
    
    
    (37,881
    )
    
    
    (10,479
    )Noninterest (losses) revenues:Securitization (loss) income
    
    
    (59,907
    )
    
    
    16,997Servicing revenues
    
    
    20,847
    
    
    
    26,092Other revenues, net
    
    
    35,047
    
    
    
    66,568Total noninterest (losses) revenues
    
    
    (4,013
    )
    
    
    109,657Operating expenses
    
    
    74,879
    
    
    
    69,488(Loss) income before income taxes
    
    
    (116,773
    )
    
    
    29,690Income tax (benefit) expense
    
    
    (40,868
    )
    
    
    11,328Net (loss) income
    
    $
    (75,905
    )
    
    $
    18,362Basic net (loss) income per common shareClass A
    
    $
    (1.88
    )
    
    $
    0.41Class B
    
    
    (1.87
    )
    
    
    0.45Diluted net (loss) income per common shareClass A
    
    $
    (1.88
    )
    
    $
    0.41Class B
    
    
    (1.87
    )
    
    
    0.43Basic weighted average common shares outstandingClass A
    
    
    13,418
    
    
    
    13,368Class B
    
    
    27,192
    
    
    
    27,022Nonvested Class B
    
    
    3,861
    
    
    
    1,517Diluted weighted average common shares outstandingClass A
    
    
    13,418
    
    
    
    13,368Class B
    
    
    27,192
    
    
    
    28,126Nonvested Class B
    
    
    3,861
    
    
    
    1,517
 See accompanying notes to consolidated financial statements.
 4




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ADVANTA CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)
 Class A
    
    
    Class A
    
    
    Class B
    
    
    AdditionalComprehensive
    
    
    Preferred
    
    
    Common
    
    
    Common
    
    
    Paid-In($ in thousands)
    
    Income (Loss)
    
    
    Stock
    
    
    Stock
    
    
    Stock
    
    
    CapitalBalance at December 31, 2007
    
    
    
    
    
    $
    1,010
    
    
    $
    144
    
    
    $
    296
    
    
    $
    238,416Net loss
    
    $
    (43,823
    )Other comprehensive income (loss):Unrealized appreciation
(depreciation) of investments,
net of tax benefit (expense)
of $6,172
    
    
    (11,462
    )Actuarial gain (loss), net of
tax benefit 
(expense) of $161
    
    
    (299
    )Currency translation adjustment
    
    
    (12
    )Comprehensive loss
    
    $
    (55,596
    )Preferred and common cash
dividends declaredExercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85Employee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,437Nonemployee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Excess tax benefits from ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    341Issuance of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34
    
    
    
    (34
    )Amortization of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,729Forfeitures of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2
    )
    
    
    (27
    )ESOP shares committed to be released
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99Balance at December 31, 2008
    
    
    
    
    
    $
    1,010
    
    
    $
    144
    
    
    $
    328
    
    
    $
    250,042Net loss
    
    $
    (75,905
    )Other comprehensive income (loss):Unrealized appreciation
(depreciation) of investments,
net of tax benefit (expense)
of $3
    
    
    (5
    )Currency translation adjustment
    
    
    (9
    )Comprehensive loss
    
    $
    (75,919
    )Preferred and common cash
dividends declaredEmployee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,212Excess tax benefits from ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115Issuance of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    (4
    )Amortization of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,816
    )Forfeitures of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9
    )
    
    
    (119
    )Treasury stock acquiredESOP shares committed to be
released
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (33
    )Balance at March 31, 2009
    
    
    
    
    
    $
    1,010
    
    
    $
    144
    
    
    $
    323
    
    
    $
    247,397
 See accompanying notes to consolidated financial statements.
 5




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ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)  continued
 AccumulatedOther
    
    
    
    
    
    
    
    
    
    TotalUnearned
    
    Comprehensive
    
    Retained
    
    Treasury
    
    Stockholders($ in thousands)
    
    ESOP Shares
    
    Income (Loss)
    
    Earnings
    
    Stock
    
    EquityBalance at December 31, 2007
    
    $
    (8,785
    )
    
    $
    (1,674
    )
    
    $
    393,795
    
    
    $
    (37,421
    )
    
    $
    585,781Net loss
    
    
    
    
    
    
    
    
    
    
    (43,823
    )
    
    
    
    
    
    
    (43,823
    )Other comprehensive income (loss):Unrealized appreciation (depreciation)
of 
investments, net of tax benefit
(expense) of $6,172
    
    
    
    
    
    
    (11,462
    )
    
    
    
    
    
    
    
    
    
    
    (11,462
    )Actuarial gain (loss), net of tax
benefit 
(expense) of $161
    
    
    
    
    
    
    (299
    )
    
    
    
    
    
    
    
    
    
    
    (299
    )Currency translation adjustment
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    
    
    
    
    (12
    )Comprehensive lossPreferred and common cash
dividends declared
    
    
    
    
    
    
    
    
    
    
    (34,900
    )
    
    
    
    
    
    
    (34,900
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    85Employee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,437Nonemployee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4
    )Excess tax benefits from ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    341Issuance of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0Amortization of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,729Forfeitures of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (29
    )ESOP shares committed to be
released
    
    
    418
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    517Balance at December 31, 2008
    
    $
    (8,367
    )
    
    $
    (13,447
    )
    
    $
    315,072
    
    
    $
    (37,421
    )
    
    $
    507,361Net loss
    
    
    
    
    
    
    
    
    
    
    (75,905
    )
    
    
    
    
    
    
    (75,905
    )Other comprehensive income (loss):Unrealized appreciation
(depreciation) of investments,
net of tax benefit (expense)
of $3
    
    
    
    
    
    
    (5
    )
    
    
    
    
    
    
    
    
    
    
    (5
    )Currency translation adjustment
    
    
    
    
    
    
    (9
    )
    
    
    
    
    
    
    
    
    
    
    (9
    )Comprehensive lossPreferred and common cash
dividends declared
    
    
    
    
    
    
    
    
    
    
    (1,138
    )
    
    
    
    
    
    
    (1,138
    )Employee stock option expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,212Excess tax benefits from ESOP
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    115Issuance of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0Amortization of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,816
    )Forfeitures of nonvested shares
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (128
    )Treasury stock acquired
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (57
    )
    
    
    (57
    )ESOP shares committed to be
released
    
    
    108
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    75Balance at March 31, 2009
    
    $
    (8,259
    )
    
    $
    (13,461
    )
    
    $
    238,029
    
    
    $
    (37,478
    )
    
    $
    427,705
 See accompanying notes to consolidated financial statements.
 6




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ADVANTA CORP. AND SUBSIDIARIES
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
 Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008OPERATING ACTIVITIES  CONTINUING OPERATIONSNet  (loss) income
    
    $
    (75,905
    )
    
    $
    18,362Adjustments
to reconcile net  (loss) income to net cash used in
operating activities:Investment securities losses (gains), net
    
    
    860
    
    
    
    (18,013
    )Amortization of discount on investment securities
    
    
    (2,279
    )
    
    
    (64
    )Depreciation and amortization
    
    
    1,852
    
    
    
    1,559Stock-based compensation (benefit) expense
    
    
    (2,732
    )
    
    
    2,502Provision for credit losses
    
    
    41,277
    
    
    
    28,382Provision for interest and fee losses
    
    
    7,765
    
    
    
    4,361Change in deferred origination costs, net of deferred fees
    
    
    2,481
    
    
    
    1,484Change in receivables held for sale
    
    
    (125,000
    )
    
    
    (66,478
    )Proceeds from sale of receivables held for sale
    
    
    125,000
    
    
    
    124,700Change in accounts receivable from securitizations
    
    
    (101,701
    )
    
    
    (290,106
    )Change in amounts due to the securitization trust
    
    
    112,688
    
    
    
    68,696Excess tax benefits from stock-based compensation
    
    
    0
    
    
    
    (163
    )Change in other assets and other liabilities
    
    
    (19,085
    )
    
    
    34,154Net cash used in operating activities
    
    
    (34,779
    )
    
    
    (90,624
    )INVESTING ACTIVITIES  CONTINUING OPERATIONSChange in federal funds sold and interest-bearing
deposits
    
    
    163,971
    
    
    
    (68,698
    )Purchase of investments available for sale
    
    
    (322,226
    )
    
    
    (277,164
    )Proceeds from sales of investments available for sale
    
    
    232,083
    
    
    
    157,102Proceeds from sales of other investments
    
    
    0
    
    
    
    18,015Proceeds from maturing investments available for sale
    
    
    279,323
    
    
    
    36,688Change in receivables not held for sale
    
    
    (75,956
    )
    
    
    (12,909
    )Purchases of premises and equipment, net
    
    
    (269
    )
    
    
    (925
    )Net cash provided by (used in) investing activities
    
    
    276,926
    
    
    
    (147,891
    )FINANCING ACTIVITIES  CONTINUING OPERATIONSChange in demand and savings deposits
    
    
    14,615
    
    
    
    (8,507
    )Proceeds from issuance of time deposits
    
    
    129,135
    
    
    
    412,079Payments for maturing time deposits
    
    
    (305,474
    )
    
    
    (136,901
    )Proceeds from issuance of debt
    
    
    10,089
    
    
    
    14,142Payments on redemption of debt
    
    
    (33,779
    )
    
    
    (20,592
    )Change in cash overdraft and other borrowings
    
    
    (54,492
    )
    
    
    3,027Proceeds from exercise of stock options
    
    
    0
    
    
    
    13Cash dividends paid
    
    
    (1,138
    )
    
    
    (8,501
    )Excess tax benefits from stock-based compensation
    
    
    0
    
    
    
    163Treasury stock acquired
    
    
    (57
    )
    
    
    0Net cash (used in) provided by financing activities
    
    
    (241,101
    )
    
    
    254,923Effect of foreign exchange rates on cash
    
    
    (9
    )
    
    
    0DISCONTINUED OPERATIONSNet cash used in operating activities of
discontinued operations
    
    
    (53
    )
    
    
    (273
    )Net increase in cash
    
    
    984
    
    
    
    16,135Cash at beginning of period
    
    
    31,716
    
    
    
    90,228Cash at end of period
    
    $
    32,700
    
    
    $
    106,363SUPPLEMENTAL DISCLOSURESIncome taxes paid, net
    
    $
    886
    
    
    $
    1,258Interest paid
    
    
    7,035
    
    
    
    5,844
 See accompanying notes to consolidated financial statements.
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ADVANTA CORP. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS, UNLESS OTHERWISE NOTED)
 March 31, 2009
(Unaudited)
  Note 1) Basis of Presentation and Current Operating Environment
    8




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Note 2) Recently Issued Accounting Standards
 Determining Whether Instruments Granted in Share-Based
Payment Transactions Are Participating Securities Earnings Per
Share,
 9




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Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, Consolidation of Variable Interest
Entities.
 Determining Fair Value When Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly.
 Recognition and Presentation of
Other-Than-Temporary Impairments
 Interim Disclosure about Fair
Value of Financial Instruments Disclosures about the
Fair Value of Financial Instruments
 10




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Note 3) Interest-Bearing Deposits and Investments Available for Sale
   March 31, 2009
    
    December 31, 2008Amortized
    
    Fair
    
    Amortized
    
    FairCost
    
    Value
    
    Cost
    
    ValueU.S. Treasury and government
agency securities
    
    $
    244,280
    
    
    $
    244,493
    
    
    $
    312,112
    
    
    $
    313,209State and municipal securities
    
    
    16,641
    
    
    
    16,320
    
    
    
    18,015
    
    
    
    17,064Corporate bonds
    
    
    5,000
    
    
    
    4,997
    
    
    
    0
    
    
    
    0Commercial paper
    
    
    2,000
    
    
    
    1,999
    
    
    
    8,796
    
    
    
    8,799Asset-backed securities:Credit card asset-backed securities(1)
    
    
    182,190
    
    
    
    175,005
    
    
    
    291,919
    
    
    
    281,601Mortgage and home equity line of credit-backed
securities
    
    
    31,541
    
    
    
    18,354
    
    
    
    32,692
    
    
    
    22,467Equity securities(2)
    
    
    8,211
    
    
    
    8,239
    
    
    
    8,245
    
    
    
    8,191Money market funds(3)
    
    
    349,177
    
    
    
    349,177
    
    
    
    325,548
    
    
    
    325,548Other
    
    
    367
    
    
    
    366
    
    
    
    367
    
    
    
    366Total investments available for sale
    
    $
    839,407
    
    
    $
    818,950
    
    
    $
    997,694
    
    
    $
    977,245
 (1)
    
    Amounts at March 31, 2009 represent AdvantaSeries Class A notes issued in our
securitizations and purchased by one of our bank subsidiaries. Amortized cost includes
$150 million of AdvantaSeries 2008-A3 and $32.2 million of AdvantaSeries 2005-A5.(2)
    
    Includes venture capital investments of $123 thousand at March 31, 2009 and
December 31, 2008. The amount shown as amortized cost represents fair value for
venture capital investments.(3)
    
    Money market funds at March 31, 2009 include investments in Federated Prime Cash
Obligations Fund of $100.9 million, Dreyfus Cash Management Fund of $89.1 million, JP
Morgan 829 Fund of $52.5 million, Blackrock Liquidity Funds TempFund of $52.5 million,
and Barclays Prime Money Market Fund of $52.5 million.
  Less Than 12 Months in
    
    12 Months or Longer inan Unrealized Loss
    
    an Unrealized LossPosition
    
    Position
    
    TotalGross
    
    
    
    
    
    Gross
    
    
    
    
    
    GrossUnrealized
    
    Fair
    
    Unrealized
    
    Fair
    
    Unrealized
    
    FairAmount
    
    Value
    
    Amount
    
    Value
    
    Amount
    
    ValueU.S. Treasury and
government agency
securities
    
    $
    (1
    )
    
    $
    4,120
    
    
    $
    0
    
    
    $
    0
    
    
    $
    (1
    )
    
    $
    4,120State and municipal
securities
    
    
    (49
    )
    
    
    3,426
    
    
    
    (381
    )
    
    
    6,475
    
    
    
    (430
    )
    
    
    9,901Corporate bonds
    
    
    (3
    )
    
    
    4,997
    
    
    
    0
    
    
    
    0
    
    
    
    (3
    )
    
    
    4,997Commercial paper
    
    
    (1
    )
    
    
    1,999
    
    
    
    0
    
    
    
    0
    
    
    
    (1
    )
    
    
    1,999Credit card
asset-backed
securities
    
    
    (7,185
    )
    
    
    175,005
    
    
    
    0
    
    
    
    0
    
    
    
    (7,185
    )
    
    
    175,005Mortgage and home
equity line of
credit-backed
securities
    
    
    0
    
    
    
    0
    
    
    
    (13,358
    )
    
    
    13,493
    
    
    
    (13,358
    )
    
    
    13,493Other securities
    
    
    (1
    )
    
    
    36
    
    
    
    0
    
    
    
    0
    
    
    
    (1
    )
    
    
    36Total
    
    $
    (7,240
    )
    
    $
    189,583
    
    
    $
    (13,739
    )
    
    $
    19,968
    
    
    $
    (20,979
    )
    
    $
    209,551
 11




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12




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##### Table of Contents



Note 4) Receivables
  March 31,
    
    December 31,2009
    
    2008Business credit card receivables
    
    $
    549,363
    
    
    $
    505,578Other receivables
    
    
    7,653
    
    
    
    8,583Gross receivables
    
    
    557,016
    
    
    
    514,161Add: Deferred origination costs, net of deferred fees
    
    
    2,105
    
    
    
    4,586Less: Allowance for receivable lossesBusiness credit cards
    
    
    (118,618
    )
    
    
    (102,700
    )Other receivables
    
    
    (1,226
    )
    
    
    (1,203
    )Total allowance for receivable losses
    
    
    (119,844
    )
    
    
    (103,903
    )Receivables, net
    
    $
    439,277
    
    
    $
    414,844
  Note 5) Allowance for Receivable Losses
  2009
    
    2008Balance at January 1
    
    $
    103,903
    
    
    $
    68,540Provision for credit losses
    
    
    41,277
    
    
    
    28,382Provision for interest and fee losses
    
    
    7,765
    
    
    
    4,361Gross principal charge-offs:Business credit cards
    
    
    (27,119
    )
    
    
    (16,579
    )Principal recoveries:Business credit cards
    
    
    486
    
    
    
    273Net principal charge-offs
    
    
    (26,633
    )
    
    
    (16,306
    )Interest and fee charge-offs:Business credit cards
    
    
    (6,468
    )
    
    
    (3,832
    )Balance at March 31
    
    $
    119,844
    
    
    $
    81,145
 Note 6) Securitization Activities
  13




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14




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##### Table of Contents



March 31,
    
    December 31,2009
    
    2008Retained interests in securitizations
    
    $
    121,939
    
    
    $
    125,601Amounts due from the securitization trust
    
    
    188,751
    
    
    
    65,041Accrued interest and fees on securitized
receivables, net(1)
    
    
    92,129
    
    
    
    110,476Total accounts receivable from securitizations
    
    $
    402,819
    
    
    $
    301,118
 (1)
    
    Reduced by an estimate for uncollectible interest and fees of $41.7 million at March
31, 2009 and $31.0 million at December 31, 2008.
  15




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Three Months EndedMarch 31,2009
    
    2008Average securitized receivables
    
    
    $4,353,007
    
    
    
    $5,350,034Securitization (loss) income
    
    
    (59,907
    )
    
    
    16,997Discount accretion
    
    
    12,089
    
    
    
    6,985Interchange income
    
    
    47,183
    
    
    
    55,445Servicing revenues
    
    
    20,847
    
    
    
    26,092Proceeds from new
securitizations
    
    
    125,000
    
    
    
    124,700Proceeds from collections
reinvested in revolving-period securitizations
    
    
    1,825,086
    
    
    
    2,552,077Cash flows received on
retained interests(1)
    
    
    51,582
    
    
    
    79,935Key assumptions:Discount rate
    
    
    39.33%  66.12
    %
    
    
    12.21%  17.62
    %Monthly payment rate
    
    
    19.96%  22.20
    %
    
    
    18.84%  20.46
    %Loss rate
    
    
    14.54%  21.32
    %
    
    
    6.20%    9.02
    %Interest yield, net of
interest earned by
noteholders
    
    
    13.62%  15.06
    %
    
    
    8.79%  11.36
    %
 (1)
    
    Amounts reported for the three months ended March 31, 2009 exclude interest on
AdvantaSeries Class A notes that is classified as interest income on the consolidated
income statements.
   March 31,
    
    December 31,2009
    
    2008Discount rate
    
    
    66.12
    %
    
    
    39.63%  43.96
    %Monthly payment rate
    
    
    19.96
    %
    
    
    21.13%  22.20
    %Loss rate
    
    
    21.32
    %
    
    
    14.54%  16.72
    %Interest yield, net of interest earned by
noteholders
    
    
    13.62
    %
    
    
    14.70
    %
  16




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##### Table of Contents



Effect on estimated fair value of the following
hypothetical changes in key assumptions(1):Discount rate increased 200 basis points
    
    $
    (1,409
    )Discount rate increased 400 basis points
    
    
    (2,778
    )Monthly payment rate at 90% of base assumption
    
    
    (5,973
    )Monthly payment rate at 80% of base assumption
    
    
    (11,026
    )Loss rate at 110% of base assumption
    
    
    (20,328
    )Loss rate at 125% of base assumption
    
    
    (50,820
    )Interest yield, net of interest earned by noteholders,
decreased 100 basis points
    
    
    (9,551
    )Interest yield, net of interest earned by noteholders,
decreased 200 basis points
    
    
    (19,103
    )
 (1)
    
    The amounts reported represent the decrease in discounted cash flows (interest yield
net of interest paid to noteholders, servicing fees and credit losses) that would
result from the stated change in assumption. These amounts do not consider future
interchange and other fee cash flows that are not modeled as part of the retained
interest valuation and may be available to absorb a portion of the reported unfavorable
variations in cash flows.
  17




---



##### Table of Contents



Managed business credit card receivable data
  March 31,
    
    December 31,
    
    March 31,2009
    
    2008
    
    2008Owned business credit card receivables
    
    $
    549,363
    
    
    $
    505,578
    
    
    $
    966,145Securitized business credit card receivables
    
    
    4,152,309
    
    
    
    4,511,650
    
    
    
    5,303,936Total managed receivables
    
    $
    4,701,672
    
    
    $
    5,017,228
    
    
    $
    6,270,081Receivables 30 days or more delinquent:Owned
    
    $
    68,265
    
    
    $
    52,997
    
    
    $
    51,900Securitized
    
    
    495,008
    
    
    
    425,271
    
    
    
    280,208Total managed
    
    
    563,273
    
    
    
    478,268
    
    
    
    332,108Receivables 90 days or more delinquent:Owned
    
    
    34,246
    
    
    
    24,132
    
    
    
    24,028Securitized
    
    
    247,390
    
    
    
    188,424
    
    
    
    130,436Total managed
    
    
    281,636
    
    
    
    212,556
    
    
    
    154,464Nonaccrual receivables:Owned
    
    
    12,198
    
    
    
    9,688
    
    
    
    11,008Securitized
    
    
    92,440
    
    
    
    85,277
    
    
    
    66,120Total managed
    
    
    104,368
    
    
    
    94,965
    
    
    
    77,128Accruing receivables past due 90 days or more:Owned
    
    
    31,808
    
    
    
    22,166
    
    
    
    21,835Securitized
    
    
    228,904
    
    
    
    170,876
    
    
    
    117,118Total managed
    
    
    260,712
    
    
    
    193,042
    
    
    
    138,953Net principal charge-offs for the three months
ended March 31 and December 31:Owned
    
    
    26,633
    
    
    
    24,092
    
    
    
    16,306Securitized
    
    
    166,962
    
    
    
    135,270
    
    
    
    85,753Total managed
    
    
    193,595
    
    
    
    159,362
    
    
    
    102,059
  18




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##### Table of Contents



Note 7) Other Assets and Liabilities
  March 31,
    
    December 31,2009
    
    2008Net deferred tax asset
    
    $
    95,831
    
    
    $
    71,219Investment in Fleet Credit Card Services, L.P.
    
    
    32,095
    
    
    
    32,095Current income taxes receivable
    
    
    20,883
    
    
    
    4,962Securities sold receivable
    
    
    4,558
    
    
    
    33,620Investment in preferred securities trust
    
    
    3,163
    
    
    
    3,093Other
    
    
    69,973
    
    
    
    70,956Total other assets
    
    $
    226,503
    
    
    $
    215,945
    March 31,
    
    December 31,2009
    
    2008Amounts due to the securitization trust
    
    $
    118,131
    
    
    $
    5,443Liability for unrecognized tax benefits
    
    
    37,300
    
    
    
    38,659Accounts payable and accrued expenses
    
    
    32,650
    
    
    
    31,781Business rewards liability
    
    
    29,153
    
    
    
    30,563Cash back rewards liability
    
    
    22,646
    
    
    
    23,174Cash overdraft
    
    
    7,792
    
    
    
    12,284Liabilities of discontinued operations
    
    
    1,582
    
    
    
    1,635Current income taxes payable
    
    
    701
    
    
    
    681Other
    
    
    42,009
    
    
    
    32,367Total other liabilities
    
    $
    291,964
    
    
    $
    176,587
 19




---



##### Table of Contents



December 31,
    
    
    
    
    
    
    
    
    
    March 31,Six Months Ended
    
    2008
    
    Three Months Ended
    
    2009December 31, 2008
    
    Accrual
    
    March 31, 2009
    
    AccrualAccrued
    
    Paid
    
    Balance
    
    Accrued
    
    Paid
    
    BalanceOutsourcing of
business processes
    
    $
    913
    
    
    $
    495
    
    
    $
    418
    
    
    $
    2,583
    
    
    $
    1,037
    
    
    $
    1,964Other reduction in
workforce
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    10,288
    
    
    
    3,371
    
    
    
    6,917Total
    
    $
    913
    
    
    $
    495
    
    
    $
    418
    
    
    $
    12,871
    
    
    $
    4,408
    
    
    $
    8,881
 20




---



##### Table of Contents



Note 8) Commitments and Contingencies
    Note 9) Capital Stock
  Three Months EndedMarch 31,2009
    
    2008Class A Common Stock
    
    $
    0.0200
    
    
    $
    0.1771Class B Common Stock
    
    
    0.0250
    
    
    
    0.2125
  21




---



##### Table of Contents



Note 10) Stock-Based Compensation
   WeightedAverage GrantNumber of
    
    Date Fair(Shares in thousands)
    
    Shares
    
    ValueOutstanding at January 1
    
    
    4,052
    
    
    $
    9.95Granted
    
    
    454
    
    
    
    1.18Forfeited
    
    
    (899
    )
    
    
    9.67Outstanding at March 31
    
    
    3,607
    
    
    $
    8.91
   Three Months EndedMarch 31,2009
    
    2008Compensation (benefit) expense
    
    $
    (3,935
    )
    
    $
    1,082Income tax (expense) benefit
    
    
    (1,377
    )
    
    
    413
  WeightedWeighted
    
    
    
    
    
    AverageAverage
    
    Aggregate
    
    RemainingNumber of
    
    Exercise
    
    Intrinsic
    
    Contractual(Shares in thousands)
    
    Options
    
    Price
    
    Value
    
    LifeOutstanding at January 1
    
    
    9,393
    
    
    $
    12.89Granted
    
    
    95
    
    
    
    3.36Forfeited
    
    
    (829
    )
    
    
    17.55Outstanding at March 31
    
    
    8,659
    
    
    $
    12.33
    
    
    $
    0
    
    
    7.2 yearsOptions exercisable at March 31
    
    
    5,865
    
    
    $
    9.97
    
    
    $
    0
    
    
    6.6 years
  22




---



##### Table of Contents



Three Months EndedMarch 31,2009
    
    2008Compensation expense
    
    $
    1,212
    
    
    $
    1,420Income tax benefit
    
    
    424
    
    
    
    542Weighted average fair value of options granted
    
    $
    0.14
    
    
    $
    1.36
 Note 11) Segment Information
  AdvantaBusinessCards
    
    Other(1)
    
    TotalThree months ended March 31, 2009Interest income
    
    $
    28,012
    
    
    $
    6,196
    
    
    $
    34,208Interest expense
    
    
    25,374
    
    
    
    5,438
    
    
    
    30,812Noninterest losses
    
    
    (3,436
    )
    
    
    (577
    )
    
    
    (4,013
    )Pretax income (loss)
    
    
    (116,806
    )
    
    
    33
    
    
    
    (116,773
    )Three months ended March 31, 2008Interest income
    
    $
    36,016
    
    
    $
    10,031
    
    
    $
    46,047Interest expense
    
    
    18,198
    
    
    
    9,946
    
    
    
    28,144Noninterest revenues
    
    
    96,201
    
    
    
    13,456
    
    
    
    109,657Pretax income
    
    
    10,783
    
    
    
    18,907
    
    
    
    29,690
 (1)
    
    Other includes investment and other activities not attributable to the Advanta
Business Cards segment. In addition, pretax income in the three months ended March 31,
2008 includes a $13.4 million gain on the redemption of Visa Inc. shares and the
benefit of a $5.5 million decrease in Visa indemnification reserves.
 23




---



##### Table of Contents



Note 12) Income Taxes
  Three Months EndedMarch 31,2009
    
    2008Current:Federal
    
    $
    (15,811
    )
    
    $
    2,596State
    
    
    (448
    )
    
    
    429Total current
    
    
    (16,259
    )
    
    
    3,025Deferred:Federal
    
    
    (22,599
    )
    
    
    8,255State
    
    
    (2,010
    )
    
    
    48Total deferred
    
    
    (24,609
    )
    
    
    8,303Income tax (benefit) expense
    
    $(40,868)
    
    $
    11,328
  Three Months EndedMarch 31,2009
    
    2008Statutory federal income tax
    
    $
    (40,870
    )
    
    $
    10,392State income taxes, net of
federal income tax benefit
    
    
    (1,638
    )
    
    
    298Difference in estimated full year rate and
year-to-date actual rate
    
    
    1,266
    
    
    
    0Compensation limitation
    
    
    44
    
    
    
    99Nondeductible expenses
    
    
    151
    
    
    
    140Other
    
    
    179
    
    
    
    399Income tax (benefit) expense
    
    $
    (40,868
    )
    
    $
    11,328
   March 31,
    
    December 31,2009
    
    2008Deferred tax assets
    
    $
    111,145
    
    
    $
    90,373Deferred tax liabilities
    
    
    (15,314
    )
    
    
    (19,154
    )Net deferred tax asset
    
    $
    95,831
    
    
    $
    71,219
 24




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##### Table of Contents



March 31,
    
    December 31,2009
    
    2008Securitization income
    
    $
    27,760
    
    
    $
    21,590Rewards programs
    
    
    18,063
    
    
    
    18,796Alternative minimum tax credit carryforwards
    
    
    13,763
    
    
    
    0Deferred revenue
    
    
    (11,635
    )
    
    
    (14,519
    )Federal tax benefit of state tax positions
    
    
    10,552
    
    
    
    10,982Incentive and deferred compensation
    
    
    7,623
    
    
    
    8,388Unrealized investment losses
    
    
    7,160
    
    
    
    7,157Receivable losses
    
    
    3,534
    
    
    
    6,892Visa indemnification
    
    
    2,062
    
    
    
    2,062Deferred origination costs, net of deferred fees
    
    
    (773
    )
    
    
    (1,652
    )Other
    
    
    17,722
    
    
    
    11,523Net deferred tax asset
    
    $
    95,831
    
    
    $
    71,219
   March 31,
    
    December 31,2009
    
    2008Balance at January 1
    
    $
    16,106
    
    
    $
    17,732Additions based on tax positions related
to the current year
    
    
    0
    
    
    
    714Additions for tax positions of prior years
    
    
    197
    
    
    
    104Reductions for tax positions of prior years
    
    
    (685
    )
    
    
    (1,989
    )Settlements
    
    
    (713
    )
    
    
    (455
    )Unrecognized tax benefits
    
    $
    14,905
    
    
    $
    16,106
   25




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Note 13) Calculation of Earnings Per Share
  Three Months EndedMarch 31,2009
    
    2008Net (loss) income
    
    $
    (75,905
    )
    
    $
    18,362Less: Preferred A dividends
    
    
    (141
    )
    
    
    (141
    )Net (loss) income allocable to common stockholders
    
    
    (76,046
    )
    
    
    18,221Less: Class A dividends declared
    
    
    (269
    )
    
    
    (2,368
    )Less: Class B dividends declared
    
    
    (684
    )
    
    
    (5,743
    )Less: Nonvested Class B dividends declared
    
    
    (44
    )
    
    
    (249
    )Undistributed net (loss) income
    
    $
    (77,043
    )
    
    $
    9,861Basic net (loss) income per common shareClass A
    
    $
    (1.88
    )
    
    $
    0.41Class B
    
    
    (1.87
    )
    
    
    0.45Diluted net (loss) income per common shareClass A
    
    $
    (1.88
    )
    
    $
    0.41Class B
    
    
    (1.87
    )
    
    
    0.43Basic weighted average common shares outstandingClass A
    
    
    13,418
    
    
    
    13,368Class B
    
    
    27,192
    
    
    
    27,022Nonvested Class B
    
    
    3,861
    
    
    
    1,517Dilutive effect ofOptions Class B
    
    
    0
    
    
    
    1,104Diluted weighted average common shares outstandingClass A
    
    
    13,418
    
    
    
    13,368Class B
    
    
    27,192
    
    
    
    28,126Nonvested Class B
    
    
    3,861
    
    
    
    1,517Antidilutive sharesOptions Class B
    
    
    9,044
    
    
    
    3,920
 26




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Note 14) Fair Value of Financial Instruments
 Fair Value Hierarchy
  
    
    Level 1  Quoted prices for identical instruments in active markets accessible
at the measurement date.
    
    Level 2  Quoted prices for similar instruments in active markets; quoted prices
for identical or similar instruments in markets that are not active; and valuations
in which all significant inputs are observable in active markets. Inputs are
observable for substantially the full term of the financial instrument.
    
    Level 3  Valuations derived from one or more significant inputs that are unobservable.
 Assets and Liabilities Measured at Fair Value on a Recurring Basis
  March 31, 2009QuotedPrices inActive
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableInstruments
    
    Inputs
    
    Inputs(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TotalInvestments available for sale:U.S. Treasury and government
agency securities
    
    $
    234,493
    
    
    $
    10,000
    
    
    $
    0
    
    
    $
    244,493State and municipal securities
    
    
    0
    
    
    
    16,320
    
    
    
    0
    
    
    
    16,320Corporate bonds
    
    
    0
    
    
    
    4,997
    
    
    
    0
    
    
    
    4,997Commercial paper
    
    
    0
    
    
    
    1,999
    
    
    
    0
    
    
    
    1,999Asset-backed securities:Credit card asset-backed
securities
    
    
    0
    
    
    
    0
    
    
    
    175,005
    
    
    
    175,005Mortgage and home equity
line of credit-backed
securities
    
    
    0
    
    
    
    4,861
    
    
    
    13,493
    
    
    
    18,354Equity securities
    
    
    8,116
    
    
    
    0
    
    
    
    123
    
    
    
    8,239Money market funds
    
    
    349,177
    
    
    
    0
    
    
    
    0
    
    
    
    349,177Other
    
    
    0
    
    
    
    366
    
    
    
    0
    
    
    
    366Retained interests in
securitizations
    
    
    0
    
    
    
    0
    
    
    
    121,939
    
    
    
    121,939Total assets measured at
fair value
    
    $
    591,786
    
    
    $
    38,543
    
    
    $
    310,560
    
    
    $
    940,889
 27




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##### Table of Contents



December 31, 2008QuotedPrices inActive
    
    SignificantMarkets for
    
    Other
    
    SignificantIdentical
    
    Observable
    
    UnobservableInstruments
    
    Inputs
    
    Inputs(Level 1)
    
    (Level 2)
    
    (Level 3)
    
    TotalInvestments available for sale:U.S. Treasury and government
agency securities
    
    $
    306,309
    
    
    $
    6,900
    
    
    $
    0
    
    
    $
    313,209State and municipal securities
    
    
    0
    
    
    
    17,064
    
    
    
    0
    
    
    
    17,064Commercial paper
    
    
    0
    
    
    
    8,799
    
    
    
    0
    
    
    
    8,799Asset-backed securities:Credit card asset-backed
securities
    
    
    0
    
    
    
    0
    
    
    
    281,601
    
    
    
    281,601Mortgage and home equity
line of credit-backed
securities
    
    
    0
    
    
    
    5,065
    
    
    
    17,402
    
    
    
    22,467Equity securities
    
    
    8,068
    
    
    
    0
    
    
    
    123
    
    
    
    8,191Money market funds
    
    
    325,548
    
    
    
    0
    
    
    
    0
    
    
    
    325,548Other
    
    
    0
    
    
    
    366
    
    
    
    0
    
    
    
    366Retained interests in
securitizations
    
    
    0
    
    
    
    0
    
    
    
    125,601
    
    
    
    125,601Total assets measured at
fair value
    
    $
    639,925
    
    
    $
    38,194
    
    
    $
    424,727
    
    
    $
    1,102,846
 Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis
 Mortgage andHome Equity Line
    
    Credit Card
    
    
    
    
    
    Retainedof Credit-Backed
    
    Asset-Backed
    
    Equity
    
    Interests inSecurities
    
    Securities
    
    Securities
    
    Securitizations
    
    TotalFair value at January 1, 2009
    
    $
    17,402
    
    
    $
    281,601
    
    
    $
    123
    
    
    $
    125,601
    
    
    $
    424,727Unrealized loss(1)
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    (17,628
    )
    
    
    (17,628
    )Unrealized loss in other
comprehensive income (loss)
    
    
    (3,013
    )
    
    
    3,132
    
    
    
    0
    
    
    
    0
    
    
    
    119Purchases, sales, issuances,
settlements, net
    
    
    (896
    )
    
    
    (109,728
    )
    
    
    0
    
    
    
    13,966
    
    
    
    (96,658
    )Transfers in and/or out of
Level 3
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0
    
    
    
    0Fair value at March 31, 2009
    
    $
    13,493
    
    
    $
    175,005
    
    
    $
    123
    
    
    $
    121,939
    
    
    $
    310,560
 (1)
    
    Unrealized gains or losses on retained interests in securitizations are included
in securitization income (loss) on the consolidated income statements.
  28




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##### Table of Contents



ITEM 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
  OVERVIEW
  Three Months Ended($ in thousands, except per share data)
    
    March 31,2009
    
    2008Pretax (loss) income:Advanta Business Cards
    
    $
    (116,806
    )
    
    $
    10,783Other
    
    
    33
    
    
    
    18,907Total pretax (loss) income
    
    
    (116,773
    )
    
    
    29,690Income tax (benefit) expense
    
    
    (40,868
    )
    
    
    11,328Net (loss) income
    
    $
    (75,905
    )
    
    $
    18,362Diluted net (loss) income per
common share:Class A
    
    $
    (1.88
    )
    
    $
    0.41Class B
    
    $
    (1.87
    )
    
    $
    0.43
    (1)
    
    Our securitization trust will go into early amortization based on Mays performance.
 Early amortization will officially be determined on June 10.(2)
    
    Since the securitizations will
 not be permitted to fund new receivables after June 10, all
credit card accounts will be shut down to future use at that time.
Neither Advanta Bank Corp. nor any other Advanta-related entity will fund
activity on our balance sheet from the accounts.  Therefore, we will not take any
off-balance sheet receivables onto our balance sheet.  Shutting down the
accounts will not accelerate payments required from cardholders on existing balances.(3)
    
    In early amortization almost all of the receipts from cardholders
are required to be paid to the trust's noteholders and to our seller's interest.  The trusts
 notes are obligations of the trust and not of any Advanta entity. We are only at risk with
respect to the off-balance sheet obligations to the extent of our residual interests.(4)
    
    Advanta Bank Corp. will use up to $1.4 billion to
make a cash tender offer for the Advanta Business Card Master Trust
Class A  senior notes at a discount to their face value.(5)
    
    Advanta Corp. will make a cash tender offer for any or all of the 8.99% capital securities issued by Advanta
Capital Trust I at a price related to recent market trades of these securities.(6)
    
    We will continue to service and collect the trusts credit
card receivables and our own receivables.  This will be our first priority after early
 amortization begins, and we will take appropriate actions to adjust our expenses consistent
with these activities.  We will be free to do new business in the future to the extent we choose, but we do not
expect to do so in a significant way until implementation of the plan is well under way.
  29




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Determining Whether
Instruments Granted in Share-Based Payment Transactions Are Participating Securities Earnings Per Share,
 30




---



##### Table of Contents



CRITICAL ACCOUNTING POLICIES AND ESTIMATES
  ADVANTA BUSINESS CARDS
  Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Average owned receivables
    
    $
    530,921
    
    
    $
    999,130Average securitized receivables
    
    $
    4,353,007
    
    
    $
    5,350,034Customer transaction volume:Merchandise sales
    
    $
    2,260,811
    
    
    $
    2,839,494Balance transfers
    
    
    65,255
    
    
    
    238,337Cash usage
    
    
    209,589
    
    
    
    360,282Total customer transaction volume
    
    $
    2,535,655
    
    
    $
    3,438,113New account originations
    
    
    3,961
    
    
    
    67,094Average number of active
accounts(1)
    
    
    781,091
    
    
    
    956,100Ending number of accounts at
March 31
    
    
    995,327
    
    
    
    1,331,496
 (1)
    
    Active accounts are defined as accounts with a balance at month-end. Active account
statistics do not include charged-off accounts. The statistics reported above are the
average number of active accounts for the three months ended March 31.
  31




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##### Table of Contents



Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Net interest income on owned
interest-earning assets
    
    $
    2,638
    
    
    $
    17,818Noninterest (losses) revenues
    
    
    (3,436
    )
    
    
    96,201Provision for credit losses
    
    
    (41,254
    )
    
    
    (28,382
    )Operating expenses
    
    
    (74,754
    )
    
    
    (74,854
    )Pretax (loss) income
    
    $
    (116,806
    )
    
    $
    10,783
     32




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##### Table of Contents



INTEREST INCOME AND EXPENSE
 Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Interest income
    
    $
    34,208
    
    
    $
    46,047Interest expense
    
    
    30,812
    
    
    
    28,144
    33




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##### Table of Contents



INTEREST RATE ANALYSIS AND AVERAGE BALANCES
 Three Months Ended March 31,2009
    
    
    2008Average
    
    
    
    
    
    
    Average
    
    
    Average
    
    
    
    
    
    
    Average($ in thousands)
    
    Balance
    
    
    Interest
    
    
    Rate
    
    
    Balance
    
    
    Interest
    
    
    RateInterest-earning assets:Owned receivables:Business credit cards(1)
    
    $
    530,921
    
    
    $
    15,923
    
    
    
    12.16
    %
    
    $
    999,130
    
    
    $
    29,031
    
    
    
    11.69
    %Other receivables
    
    
    8,453
    
    
    
    91
    
    
    
    4.34
    
    
    
    7,331
    
    
    
    99
    
    
    
    5.44Total receivables
    
    
    539,374
    
    
    
    16,014
    
    
    
    12.04
    
    
    
    1,006,461
    
    
    
    29,130
    
    
    
    11.64Investments(2)
    
    
    2,322,313
    
    
    
    6,105
    
    
    
    1.05
    
    
    
    1,204,163
    
    
    
    9,934
    
    
    
    3.27Retained interests in
securitizations
    
    
    122,018
    
    
    
    12,089
    
    
    
    39.63
    
    
    
    221,002
    
    
    
    6,985
    
    
    
    12.64Total interest-earning
assets(3)
    
    
    2,983,705
    
    
    $
    34,208
    
    
    
    4.62
    %
    
    
    2,431,626
    
    
    $
    46,049
    
    
    
    7.58
    %Noninterest-earning assets
    
    
    522,534
    
    
    
    
    
    
    
    
    
    
    
    516,086Total assets
    
    $
    3,506,239
    
    
    
    
    
    
    
    
    
    
    $
    2,947,712Interest-bearing liabilities:Deposits
    
    $
    2,460,433
    
    
    $
    25,527
    
    
    
    4.21
    %
    
    $
    1,771,414
    
    
    $
    21,919
    
    
    
    4.98
    %Debt
    
    
    193,187
    
    
    
    2,415
    
    
    
    5.07
    
    
    
    215,675
    
    
    
    3,441
    
    
    
    6.42Subordinated debt
payable to preferred
securities trust
    
    
    103,093
    
    
    
    2,317
    
    
    
    8.99
    
    
    
    103,093
    
    
    
    2,317
    
    
    
    8.99Other borrowings
    
    
    62,544
    
    
    
    553
    
    
    
    3.54
    
    
    
    25,220
    
    
    
    467
    
    
    
    7.33Total interest-bearing
liabilities
    
    
    2,819,257
    
    
    $
    30,812
    
    
    
    4.43
    %
    
    
    2,115,402
    
    
    $
    28,144
    
    
    
    5.35
    %Noninterest-bearing
liabilities
    
    
    212,714
    
    
    
    
    
    
    
    
    
    
    
    240,454Total liabilities
    
    
    3,031,971
    
    
    
    
    
    
    
    
    
    
    
    2,355,856Stockholders equity
    
    
    474,268
    
    
    
    
    
    
    
    
    
    
    
    591,856Total liabilities and
stockholders equity
    
    $
    3,506,239
    
    
    
    
    
    
    
    
    
    
    $
    2,947,712Net interest spread
    
    
    
    
    
    
    
    
    
    
    0.19
    %
    
    
    
    
    
    
    
    
    
    
    2.23
    %Net interest margin
    
    
    
    
    
    
    
    
    
    
    0.46
    %
    
    
    
    
    
    
    
    
    
    
    2.96
    %
 
 (1)
    
    Interest income includes late fees for owned business credit card receivables of
$1.0 million for the three months ended March 31, 2009 and $1.8 million for the same
period of 2008.(2)
    
    Includes federal funds sold, interest-bearing deposits and investments available for
sale. Interest and average rate for tax-free securities are computed on a tax
equivalent basis using a statutory rate of 35%.(3)
    
    Includes assets held and available for sale and nonaccrual receivables.
 34




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PROVISION AND ALLOWANCE FOR RECEIVABLE LOSSES
 Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Provision for credit losses
    
    $
    41,277
    
    
    $
    28,382Provision for interest and fee losses
    
    
    7,765
    
    
    
    4,361
   35




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##### Table of Contents



March 31,
    
    December 31,
    
    March 31,($ in thousands)
    
    2009
    
    2008
    
    2008Business Credit Cards  OwnedAllowance for receivable losses
    
    $
    118,618
    
    
    $
    102,700
    
    
    $
    79,972Receivables 30 days or more delinquent
    
    
    68,265
    
    
    
    52,997
    
    
    
    51,900Receivables 90 days or more delinquent
    
    
    34,246
    
    
    
    24,132
    
    
    
    24,028Nonaccrual receivables
    
    
    12,198
    
    
    
    9,688
    
    
    
    11,008Accruing receivables past due 90 days or more
    
    
    31,808
    
    
    
    22,166
    
    
    
    21,835As a percentage of receivables:Allowance for receivable losses
    
    
    21.59
    %
    
    
    20.31
    %
    
    
    8.28
    %Receivables 30 days or more delinquent
    
    
    12.43
    
    
    
    10.48
    
    
    
    5.37Receivables 90 days or more delinquent
    
    
    6.23
    
    
    
    4.77
    
    
    
    2.49Nonaccrual receivables
    
    
    2.22
    
    
    
    1.92
    
    
    
    1.14Accruing receivables past due 90 days or more
    
    
    5.79
    
    
    
    4.38
    
    
    
    2.26As a percentage of 12 month lagged receivables:Receivables 30 days or more delinquent
    
    
    7.07
    %
    
    
    5.14
    %
    
    
    4.54
    %Receivables 90 days or more delinquent
    
    
    3.54
    
    
    
    2.34
    
    
    
    2.10Nonaccrual receivables
    
    
    1.26
    
    
    
    0.94
    
    
    
    0.96Accruing receivables past due 90 days or more
    
    
    3.29
    
    
    
    2.15
    
    
    
    1.91Net principal charge-offs for the three months
ended March 31 and December 31
    
    $
    26,633
    
    
    $
    24,092
    
    
    $
    16,306As a percentage of average receivables
(annualized)
    
    
    20.07
    %
    
    
    14.09
    %
    
    
    6.53
    %As a percentage of 12 month lagged average
receivables (annualized)
    
    
    10.66
    
    
    
    8.27
    
    
    
    5.08
 SECURITIZATION INCOME (LOSS)
  Jan. 2009
    

Feb. 2009
    

Mar. 2009
    

Jan. 2008
    

Feb. 2008
    

Mar.
2008Monthly excess
spread percentages
    
    
    3.80
    %
    
    
    1.58
    %
    
    
    1.36
    %
    
    
    5.36
    %
    
    
    5.67
    %
    
    
    6.55
    %
   36




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37




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##### Table of Contents



Managed Receivable Data
   Managed Financial Measures and StatisticsAdvanta
    
    
    
    
    
    
    
    
    
    AdvantaBusiness Cards
    
    GAAP
    
    Securitization
    
    Business Cards
    
    Managed($ in thousands)
    
    GAAP
    
    Ratio (1)
    
    Adjustments
    
    Managed
    
    Ratio (1)Three months ended March 31, 2009Net interest income
    
    $
    2,638
    
    
    
    1.62
    %
    
    $
    134,020
    
    
    $
    136,658
    
    
    
    11.19
    %Provision for credit losses
    
    
    41,254
    
    
    
    25.27
    
    
    
    184,591
    (2)
    
    
    225,845
    
    
    
    18.50Noninterest (losses) revenues
    
    
    (3,436
    )
    
    
    (2.10
    )
    
    
    50,571
    
    
    
    47,135
    
    
    
    3.86Average business credit card
interest-earning assets
    
    
    652,939
    
    
    
    
    
    
    
    4,230,989
    
    
    
    4,883,928Three months ended March 31, 2008Net interest income
    
    $
    17,818
    
    
    
    5.84
    %
    
    $
    109,848
    
    
    $
    127,666
    
    
    
    8.04
    %Provision for credit losses
    
    
    28,382
    
    
    
    9.30
    
    
    
    81,753
    (2)
    
    
    110,135
    
    
    
    6.94Noninterest (losses) revenues
    
    
    96,201
    
    
    
    31.54
    
    
    
    (28,095
    )
    
    
    68,106
    
    
    
    4.29Average business credit card
interest-earning assets
    
    
    1,220,132
    
    
    
    
    
    
    
    5,129,032
    
    
    
    6,349,164As of March 31, 2009Ending business credit card
receivables
    
    $
    549,363
    
    
    
    
    
    
    $
    4,152,309
    
    
    $
    4,701,672Receivables 30 days or more
delinquent
    
    
    68,265
    
    
    
    12.43
    %
    
    
    495,008
    
    
    
    563,273
    
    
    
    11.98
    %Receivables 90 days or more
delinquent
    
    
    34,246
    
    
    
    6.23
    
    
    
    247,390
    
    
    
    281,636
    
    
    
    5.99As of December 31, 2008Ending business credit card
receivables
    
    $
    505,578
    
    
    
    
    
    
    $
    4,511,650
    
    
    $
    5,017,228Receivables 30 days or more
delinquent
    
    
    52,997
    
    
    
    10.48
    %
    
    
    425,271
    
    
    
    478,268
    
    
    
    9.53
    %Receivables 90 days or more
delinquent
    
    
    24,132
    
    
    
    4.77
    
    
    
    188,424
    
    
    
    212,556
    
    
    
    4.24As of March 31, 2008Ending business credit card
receivables
    
    $
    966,145
    
    
    
    
    
    
    $
    5,303,936
    
    
    $
    6,270,081Receivables 30 days or more
delinquent
    
    
    51,900
    
    
    
    5.37
    %
    
    
    280,208
    
    
    
    332,108
    
    
    
    5.30
    %Receivables 90 days or more
delinquent
    
    
    24,028
    
    
    
    2.49
    
    
    
    130,436
    
    
    
    154,464
    
    
    
    2.46
 (1)
    
    Ratios are as a percentage of average business credit card interest-earning assets except
delinquency ratios which are as a percentage of ending business credit card receivables.(2)
    
    Includes the amount by which the credit losses would have been higher had the securitized
receivables remained as owned and the provision for credit losses on securitized receivables
been equal to actual reported charge-offs. Provision for credit losses also includes an
unfavorable valuation adjustment to retained interests in securitizations of $17.6 million
for the three months ended March 31, 2009 and a favorable adjustment of $4.0 million for the
three months ended March 31, 2008.
 38




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##### Table of Contents



SERVICING REVENUES
  OTHER REVENUES
 Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Interchange income
    
    $
    52,526
    
    
    $
    65,648Cash back rewards
    
    
    (11,441
    )
    
    
    (14,583
    )Business rewards
    
    
    (6,498
    )
    
    
    (6,582
    )Investment
securities (losses) gains, net:The Reserve Primary Fund
    
    
    (860
    )
    
    
    0Visa Inc.
    
    
    0
    
    
    
    13,408MasterCard Incorporated
    
    
    0
    
    
    
    4,607Venture capital investments
    
    
    0
    
    
    
    (2
    )Investment
securities (losses) gains, net
    
    
    (860
    )
    
    
    18,013Balance transfer and cash
usage fees
    
    
    751
    
    
    
    3,006Other business credit card fees
    
    
    318
    
    
    
    909Other, net
    
    
    251
    
    
    
    157Total other revenues, net
    
    $
    35,047
    
    
    $
    66,568
    39




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##### Table of Contents



OPERATING EXPENSES
 Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Salaries and employee benefits
    
    $
    29,783
    
    
    $
    28,528External processing
    
    
    8,921
    
    
    
    8,245Marketing
    
    
    6,574
    
    
    
    5,236Credit
    
    
    6,298
    
    
    
    2,027Professional fees
    
    
    5,341
    
    
    
    5,591Equipment
    
    
    4,595
    
    
    
    3,232Amortization of deferred origination costs, net
    
    
    2,723
    
    
    
    10,944Occupancy
    
    
    2,569
    
    
    
    2,471Insurance
    
    
    1,573
    
    
    
    899Fraud
    
    
    1,497
    
    
    
    2,032Postage
    
    
    1,404
    
    
    
    1,607Telephone
    
    
    1,184
    
    
    
    979Travel and entertainment
    
    
    998
    
    
    
    779Visa indemnification
    
    
    0
    
    
    
    (5,501
    )Other
    
    
    1,419
    
    
    
    2,419Total operating expenses
    
    $
    74,879
    
    
    $
    69,488
   40




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CONTINGENCIES
    42




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INCOME TAXES
  Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Income tax (benefit) expense
    
    $
    (40,868
    )
    
    $
    11,328Effective tax (benefit) expense rate
    
    
    (35.0
    )%
    
    
    38.2
    %
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OFF-BALANCE SHEET ARRANGEMENTS
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##### Table of Contents



Three Months Ended($ in thousands)
    
    March 31,2009
    
    2008Average securitized receivables
    
    $
    4,353,007
    
    
    $
    5,350,034Securitization (loss) income
    
    
    (59,907
    )
    
    
    16,997Discount accretion
    
    
    12,089
    
    
    
    6,985Interchange income
    
    
    47,183
    
    
    
    55,445Servicing revenues
    
    
    20,847
    
    
    
    26,092Proceeds from new securitizations
    
    
    125,000
    
    
    
    124,700Proceeds from collections reinvested
in revolving-period securitizations
    
    
    1,825,086
    
    
    
    2,552,077Cash flows received on retained
interests
    
    
    51,582
    
    
    
    79,935
   Noteholder
    
    End of Revolving
    
    Noteholder($ in thousands)
    
    Principal Balance
    
    Period
    
    Payment DateSeries 2007-A
    
    
    5,691
    
    
    January 2009
    
    February 2009AdvantaSeries:2006-A2
    
    
    250,000
    
    
    December 2008
    
    February 20092008-A1
    
    
    125,000
    
    
    January 2009
    
    March 20092008-A2
    
    
    122,000
    
    
    January 2009
    
    March 20092005-D2
    
    
    25,000
    
    
    February 2009
    
    April 20092005-A5
    
    
    200,000
    
    
    March 2009
    
    May 2009
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Accounting for Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities, Consolidation of Variable Interest Entities.
  46




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MARKET RISK SENSITIVITY
  March 31,
    
    December 31,2009
    
    2008Estimated percentage increase in net interest
income on owned assets:Assuming 200 basis point increase
    
    
    12
    %
    
    
    334
    %Assuming 200 basis point decrease
    
    
    4
    %
    
    
    62
    %Estimated percentage increase (decrease) in
net interest income on securitized
receivables:Assuming 200 basis point increase
    
    
    (7
    )%
    
    
    (8
    )%Assuming 200 basis point decrease
    
    
    4
    %
    
    
    2
    %Estimated percentage increase (decrease) in
net interest income on managed assets:Assuming 200 basis point increase
    
    
    (2
    )%
    
    
    (3
    )%Assuming 200 basis point decrease
    
    
    4
    %
    
    
    2
    %
  47




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LIQUIDITY, CAPITAL RESOURCES AND ANALYSIS OF FINANCIAL CONDITION
     48




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March 31, 2009
    
    December 31, 2008($ in thousands)
    
    Amount
    
    %
    
    Amount
    
    %Off-balance sheet securitized
receivables(1)
    
    $
    3,882,242
    
    
    
    56
    %
    
    $
    4,140,596
    
    
    
    55
    %Deposits
    
    
    2,392,805
    
    
    
    34
    
    
    
    2,541,406
    
    
    
    34Debt
    
    
    183,306
    
    
    
    3
    
    
    
    206,598
    
    
    
    3Other borrowings
    
    
    0
    
    
    
    0
    
    
    
    50,000
    
    
    
    0Subordinated debt payable to preferred
securities trust
    
    
    103,093
    
    
    
    1
    
    
    
    103,093
    
    
    
    1Equity
    
    
    427,705
    
    
    
    6
    
    
    
    507,361
    
    
    
    7Total
    
    $
    6,989,151
    
    
    
    100
    %
    
    $
    7,549,054
    
    
    
    100
    %
 (1)
    
    Excludes our ownership interest in the noteholder principal balance of securitizations
that are held on-balance sheet.
    49




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VALUATION OF FINANCIAL INSTRUMENTS
 Fair Value Measurements
 Determining Fair Value When Volume and Level
of Activity for the Asset or Liability Have Significantly Decreased and Identifying
Transactions That Are Not Orderly.
 Recognition and Presentation of
Other-Than-Temporary Impairments
 Interim Disclosure about Fair
Value of Financial Instruments Disclosures about the
Fair Value of Financial Instruments
  51




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CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
   (1)
    
    factors affecting our net interest income on owned and securitized
receivables, including fluctuations in the volume of receivables and
the range and timing of pricing offers to customers;(2)
    
    competitive pressures, including product development and pricing,
among financial institutions;(3)
    
    political conditions, social conditions, monetary and fiscal policies
and general economic and other environmental conditions, including the
impact of the ongoing disruption in the capital markets and
deterioration of the U.S. economy, as well as the potential for
further deterioration and disruption, and the impact of these factors
on customer spending, delinquencies, charge-offs, the value of and
ability to realize expected returns on our investments, and other
results of operations;
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(4)
    
    factors affecting fluctuations in the number of accounts or receivable
balances, including the retention of customers after promotional
pricing periods have expired, changes in terms on their accounts, or
changes in programs or product offerings;(5)
    
    interest rate and credit spread fluctuations;(6)
    
    factors affecting our level of costs and expenses including
difficulties achieving expected operating cost reductions due to,
among other things, changes in personnel and changes in plans for
implementation of outsourcing initiatives;(7)
    
    factors affecting our level of liquidity, including funding decisions,
the potential availability and timing of the securitizations of our
receivables and our ability to monetize our investments;(8)
    
    factors affecting our plan to maximize our capital and our liquidity measures;(9)
    
    government regulation of banking and finance businesses, including the
effects of and changes in the level of scrutiny, regulatory
requirements and regulatory initiatives, certain mandatory and
possibly discretionary action by state and federal regulators,
restrictions and limitations imposed by banking laws, regulators,
examinations and reviews, and the effects of, and changes in,
regulatory policies, guidance, interpretations and initiatives and
agreements between us and our regulators;(10)
    
    effect of, and changes in, tax laws, rates, regulations and policies;(11)
    
    effect of legal and regulatory developments relating to the legality
of certain business methods, practices and policies of credit card
issuers and the ultimate resolution of industry-related judicial
proceedings relating to the legality of certain interchange rates;(12)
    
    relationships with customers, significant vendors and business
partners;(13)
    
    difficulties or delays in the development, acquisition, production,
testing and marketing of products and services, including the ability
and cost to obtain intellectual property rights or a failure to
implement new products or services when anticipated;(14)
    
    the amount and cost of financing available to us;(15)
    
    the ratings on the debt of Advanta Corp. and its subsidiaries;(16)
    
    the effects of changes in accounting policies or practices as may be
required by changes in U.S. generally accepted accounting principles;(17)
    
    the impact of litigation and legal, regulatory, administrative or
other claims, investigations or proceedings including judgments,
settlements and actual or anticipated insurance recoveries for costs
or judgments;
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(18)
    
    factors impacting the successful execution and completion of the
tender offers for the trust preferred securities and the AdvantaSeries notes;(19)
    
    the impact of the Emergency Economic Stabilization Act or other
recent related governmental, legislative and regulatory developments
designed to stimulate the economy;(20)
    
    the proper design and operation of our disclosure controls and
procedures; and(21)
    
    the ability to attract and retain key personnel.
 
 56




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PART II  OTHER INFORMATION
 
    57




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We have incurred net losses in recent quarterly periods and may incur losses in future
periods.
 Negative trends and developments in economic conditions and the financial markets may
continue to adversely impact our business, results of operations, financial condition,
access to various funding sources and the trading price of our common stock.
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We are subject to regulation by a number of different regulatory agencies and authorities,
including bank regulatory authorities, which have broad discretion to take actions that
could affect the manner in which we conduct our business, and could adversely affect our
results of operations and our financial condition.
  Market conditions and other factors beyond our control could negatively impact the
availability and cost of funding for our operations.
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
    
    general conditions in the securities markets;
    
    specific conditions in the asset-backed securities markets;
    
    the quality of our business credit card portfolio; and
    
    the ratings on the asset-backed securities sold in the securitizations.
   The occurrence of certain events could
result in the early amortization of our outstanding securitization transactions and negatively affect
the value of certain of our assets,
our results of operations and financial condition.
  60




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Certain rules adopted by federal bank regulators could, if applicable to us, impact our
business practices and have a negative impact on our business and our results of operations.
 61




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Our earnings may not be sufficient to cover our fixed charges which may impact our ability
to make future principal and interest payments on our indebtedness.
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(a)
    
    None.(b)
    
    None.(c)
    
    The table below provides information with respect to all purchases of equity
securities by us during the period from January 1, 2009 through March 31, 2009. Shares
are in thousands.
 ISSUER PURCHASES OF EQUITY SECURITIES
 (d)Maximum(c)Total
    
    Number (orNumber of
    
    ApproximateShares
    
    Dollar ValuePurchased as
    
    of Shares)Part of
    
    That May Yet(a)Total
    
    
    
    
    
    Publicly
    
    Be PurchasedNumber of
    
    (b)Average
    
    Announced
    
    Under theShares
    
    Price Paid
    
    Plans or
    
    Plans orPeriod
    
    Purchased
    
    per Share
    
    Programs
    
    ProgramsClass A Preferred
Stock:1/1/09-1/31/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.02/1/09-2/28/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.03/1/09-3/31/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.0Subtotal Class A
Preferred Stock
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.0Class A Common
Stock:1/1/09-1/31/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.02/1/09-2/28/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.03/1/09-3/31/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.0Subtotal Class A
Common Stock
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.0Class B Common
Stock:1/1/09-1/31/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.02/1/09-2/28/09
    
    
    0.0
    
    
    
    N/A
    *
    
    
    0.0
    
    
    
    0.03/1/09-3/31/09
    
    
    98.0
    
    
    $
    0.58
    
    
    
    0.0
    
    
    
    0.0Subtotal Class B
Common Stock
    
    
    98.0
    
    
    $
    0.58
    
    
    
    0.0
    
    
    
    0.0Total
    
    
    98.0
    
    
    $
    0.58
    
    
    
    0.0
    
    
    
    0.0
 *
    
    N/A  Not Applicable
 63




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Business  GOVERNMENT REGULATION
 GOVERNMENT REGULATION
 Advanta Corp.
    Advanta Bank Corp.
 Supervision and Regulation
  Capital Requirements
  64




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Prompt Corrective Action
   Dividends
  Advanta Bank
 Supervision and Regulation
  65




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Capital Requirements and Prompt Corrective Action
  Dividends
  Transfers of Funds and Transactions with Affiliates
  Lending Activities
   66




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Privacy
  Regulation of Non-bank Activities
 Insurance
    Legislative and Regulatory Developments
 State-chartered Industrial Banks
  th
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Supervision and Regulation
  Credit Card Industry Practices
   68




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Bankruptcy
  Future Legislation
   69




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ExhibitNumber
    
    Description of Document12
    
    Computation of Ratio of Earnings to Fixed Charges31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200231.2
    
    Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 200232.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 200232.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350,
as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
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SIGNATURES
  Advanta Corp.

(Registrant)By
    
    /s/ Philip M. BrownePhilip M. Browne
Senior Vice President and
Chief Financial Officer
May 11, 2009By
    
    /s/ David B. WeinstockDavid B. Weinstock
Vice President and
Chief Accounting Officer
May 11, 2009
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EXHIBIT INDEX
 Manner ofExhibit
    
    Description
    
    Filing12
    
    Computation of Ratio of Earnings to Fixed Charges
    
    *31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    *31.2
    
    Certification of Chief Financial Officer Pursuant to Section 302
of the Sarbanes-Oxley Act of 2002
    
    *32.1
    
    Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    *32.2
    
    Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
    
    *
 
 *
    
    Filed electronically herewith.
 72