<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 June 30, 2002 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)

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

          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.

             Class A                          Outstanding at August 5, 2002
  Common Stock, $.01 par value                      10,041,017 shares

             Class B                          Outstanding at August 5, 2002
  Common Stock, $.01 par value                      18,449,568 shares


                                       1
<PAGE>
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                           PAGE

<S>                                                                        <C>
PART I - FINANCIAL INFORMATION

Item 1.   Financial Statements

          Consolidated Balance Sheets (Unaudited)                            3
          Consolidated Income Statements (Unaudited)                         4
          Consolidated Statements of Changes in
            Stockholders' Equity (Unaudited)                               5-6
          Consolidated Statements of Cash Flows (Unaudited)                  7
          Notes to Consolidated Financial Statements (Unaudited)             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                                               38

PART II - OTHER INFORMATION

Item 1.   Legal Proceedings                                                 39

Item 4.   Submission of Matters to a Vote of Security Holders               41

Item 6.   Exhibits and Reports on Form 8-K                                  42
</TABLE>


                                       2
<PAGE>
ITEM 1.   FINANCIAL STATEMENTS

                         ADVANTA CORP. AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS (UNAUDITED)

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT SHARE DATA)                         JUNE 30,     DECEMBER 31,
                                                           2002           2001
                                                        -----------    -----------
<S>                                                     <C>            <C>
ASSETS
Cash                                                    $    10,750    $    20,952
Federal funds sold                                          221,695        229,889
Restricted interest-bearing deposits                         79,126        113,956
Investments available for sale                              203,430        246,679
Receivables, net:
  Held for sale                                             218,603        202,612
  Other                                                     229,880        220,795
                                                        -----------    -----------
Total receivables, net                                      448,483        423,407
Retained interests in securitizations                        88,658         88,658
Amounts due from securitizations                             82,013         80,325
Premises and equipment, net                                  25,222         25,722
Other assets                                                258,262        264,689
Net assets of discontinued operations                       147,184        142,403
                                                        -----------    -----------
TOTAL ASSETS                                            $ 1,564,823    $ 1,636,680
                                                        -----------    -----------
LIABILITIES
Deposits:
  Noninterest-bearing                                   $     5,367    $     6,500
  Interest-bearing                                          609,016        630,415
                                                        -----------    -----------
Total deposits                                              614,383        636,915
Debt                                                        301,386        323,582
Other borrowings                                                  0         32,317
Other liabilities                                           186,254        177,567
                                                        -----------    -----------
TOTAL LIABILITIES                                         1,102,023      1,170,381
                                                        -----------    -----------

Commitments and contingencies

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 2002 and 2001                                      1,010          1,010
Class A voting common stock, $.01 par value:
 authorized - 200,000,000 shares; issued - 10,041,017
 shares in 2002 and 2001                                        100            100
Class B non-voting common stock, $.01 par value:
 authorized - 200,000,000 shares; issued - 20,249,454
 shares in 2002 and 17,939,639 shares in 2001                   203            179
Additional paid-in capital                                  242,934        223,362
Deferred compensation                                       (17,623)           (64)
Unearned ESOP shares                                        (11,053)       (11,295)
Accumulated other comprehensive income                          555          1,259
Retained earnings                                           178,051        179,370
Less: Treasury stock at cost, 1,728,253 Class B
  common shares in 2002 and 1,348,079 Class B
  common shares in 2001                                     (31,377)       (27,622)
                                                        -----------    -----------
TOTAL STOCKHOLDERS' EQUITY                                  362,800        366,299
                                                        -----------    -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY              $ 1,564,823    $ 1,636,680
                                                        -----------    -----------
</TABLE>

See Notes to Consolidated Financial Statements


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

<TABLE>
<CAPTION>
(IN THOUSANDS, EXCEPT PER SHARE DATA)            THREE MONTHS ENDED       SIX MONTHS ENDED
                                                      JUNE 30,                 JUNE 30,
                                                --------------------    ----------------------
                                                  2002        2001         2002         2001
                                                --------    --------    ---------    ---------
<S>                                             <C>         <C>         <C>          <C>
Interest income:
 Receivables                                    $ 21,007    $ 19,259    $  41,483    $  37,762
 Investments                                       2,576      13,577        5,846       29,078
 Other interest income                             2,652       2,577        5,312        4,764
                                                --------    --------    ---------    ---------
Total interest income                             26,235      35,413       52,641       71,604
Interest expense:
 Deposits                                          6,023      14,935       12,288       27,593
 Debt                                              6,346      11,184       13,132       21,967
 Other borrowings                                      0           0           59          835
                                                --------    --------    ---------    ---------
Total interest expense                            12,369      26,119       25,479       50,395
                                                --------    --------    ---------    ---------
Net interest income                               13,866       9,294       27,162       21,209
Provision for credit losses                       11,341       8,384       22,041       16,324
                                                --------    --------    ---------    ---------
NET INTEREST INCOME AFTER PROVISION FOR
 CREDIT LOSSES                                     2,525         910        5,121        4,885
NONINTEREST REVENUES:
 Securitization income                            30,023      24,349       59,670       45,610
 Interchange income                               22,737      20,586       42,930       38,208
 Servicing revenues                                8,143       6,909       16,085       13,561
 Other revenues, net                                 262      (8,591)      (2,053)     (26,314)
                                                --------    --------    ---------    ---------
TOTAL NONINTEREST REVENUES                        61,165      43,253      116,632       71,065
                                                --------    --------    ---------    ---------
EXPENSES:
 Operating expenses                               49,887      44,116       98,845       87,169
 Minority interest in income of consolidated
  subsidiary                                       2,220       2,220        4,440        4,440
 Unusual charges                                       0       1,000            0       41,750
                                                --------    --------    ---------    ---------
TOTAL EXPENSES                                    52,107      47,336      103,285      133,359
                                                --------    --------    ---------    ---------
Income (loss) before income taxes                 11,583      (3,173)      18,468      (57,409)
Income tax expense (benefit)                       4,459           0        7,110      (16,880)
                                                --------    --------    ---------    ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS           7,124      (3,173)      11,358      (40,529)
Loss from discontinued operations, net of tax          0           0            0       (8,438)
Gain (loss), net, on discontinuance of
 mortgage and leasing businesses, net of tax      (8,610)     (4,000)      (8,610)      12,361
                                                --------    --------    ---------    ---------
NET INCOME (LOSS)                               $ (1,486)   $ (7,173)   $   2,748    $ (36,606)
                                                --------    --------    ---------    ---------
Basic income (loss) from continuing
 operations per common share
  Class A                                       $   0.27    $  (0.13)   $    0.41    $   (1.61)
  Class B                                           0.29       (0.12)        0.46        (1.58)
  Combined                                          0.28       (0.12)        0.44        (1.59)

Diluted income (loss) from continuing
 operations per common share
  Class A                                       $   0.26    $  (0.13)   $    0.40    $   (1.61)
  Class B                                           0.27       (0.12)        0.44        (1.58)
  Combined                                          0.27       (0.12)        0.42        (1.59)

Basic net income (loss) per common share
  Class A                                       $  (0.07)   $  (0.29)   $    0.07    $   (1.46)
  Class B                                          (0.05)      (0.27)        0.12        (1.43)
  Combined                                         (0.06)      (0.28)        0.10        (1.44)

Diluted net income (loss) per common share
  Class A                                       $  (0.06)   $  (0.29)   $    0.08    $   (1.46)
  Class B                                          (0.05)      (0.27)        0.11        (1.43)
  Combined                                         (0.06)      (0.28)        0.10        (1.44)

Basic weighted average common shares
 outstanding
  Class A                                          9,144       9,098        9,138        9,082
  Class B                                         16,176      16,744       16,239       16,473
  Combined                                        25,320      25,842       25,377       25,555

Diluted weighted average common shares
 outstanding
  Class A                                          9,150       9,098        9,144        9,082
  Class B                                         17,640      16,744       17,312       16,473
  Combined                                        26,790      25,842       26,456       25,555
</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, 2000                                             $1,010          $100          $176         $220,371
                                                                         ------          ----          ----         --------
Net income (loss)                                       $(70,533)
Other comprehensive income (loss):
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  benefit (expense) of ($1,379)                            2,561
                                                        --------
Comprehensive income (loss)                             $(67,972)
                                                        ========
Preferred and common cash
 dividends declared
Exercise of stock options                                                                                 4            3,476
Stock option exchange for stock and restricted
  stock tender offer                                                                                                     934
Modification of stock options                                                                                          1,966
Issuance of restricted stock                                                                              1              720
Amortization of deferred
 compensation
Retirement of restricted stock                                                                           (2)          (4,118)
Stock buyback

ESOP shares committed to be released                                                                                      13

                                                                         ------          ----          ----         --------
BALANCE AT DECEMBER 31, 2001                                             $1,010          $100          $179         $223,362
                                                                         ------          ----          ----         --------

Net income (loss)                                         $2,748
Other comprehensive income (loss):
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  benefit (expense) of $379                                 (704)
                                                          -------
Comprehensive income (loss)                               $2,044
                                                          ======
Preferred and common cash
 dividends declared
Exercise of stock options                                                                                 1              350
Stock option exchange program
 stock distribution
Issuance of restricted stock                                                                             24           19,342
Amortization of deferred
 compensation
Retirement of restricted stock                                                                           (1)            (105)
Stock buyback

ESOP shares committed to be released                                                                                     (15)
                                                                         ------          ----          ----         --------
BALANCE AT JUNE 30, 2002                                                 $1,010          $100          $203         $242,934
                                                                         ------          ----          ----         --------
</TABLE>

See Notes to Consolidated Financial Statements


                                       5
<PAGE>
($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                               DEFERRED          ACCUMULATED
                                             COMPENSATION           OTHER                                              TOTAL
                                              & UNEARNED        COMPREHENSIVE      RETAINED       TREASURY         STOCKHOLDERS'
                                             ESOP SHARES        INCOME (LOSS)      EARNINGS         STOCK             EQUITY
<S>                                          <C>                <C>                <C>              <C>               <C>
                                                --------            -------         --------         --------          --------
BALANCE AT DECEMBER 31, 2000                    $(19,050)           $(1,302)        $257,562         $(17,965)         $440,902
                                                --------            -------         --------         --------          --------

Net income (loss)                                                                    (70,533)                           (70,533)
Other comprehensive income (loss):
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  benefit (expense) of ($1,379)                                       2,561                                               2,561
Comprehensive income (loss)
Preferred and common cash
 dividends declared                                                                   (7,659)                            (7,659)
Exercise of stock options                                                                                                 3,480
Stock option exchange for stock
 and restricted stock tender offer                   618                                               (2,152)             (600)
Modification of stock options                                                                                             1,966
Issuance of restricted stock                        (721)                                                                     0
Amortization of deferred
 compensation                                      3,256                                                                  3,256
Retirement of restricted stock                     4,120                                                                      0
Stock buyback                                                                                          (7,505)           (7,505)

ESOP shares committed to be released                 418                                                                    431
                                                --------            -------         --------         --------          --------
BALANCE AT DECEMBER 31, 2001                    $(11,359)           $ 1,259         $179,370         $(27,622)         $366,299
                                                --------            -------         --------         --------          --------
Net income (loss)                                                                      2,748                              2,748
Other comprehensive income (loss):
 Change in unrealized
  appreciation (depreciation)
  of investments, net of tax
  benefit (expense) of $379                                            (704)                                               (704)
Comprehensive income (loss)
Preferred and common cash
 dividends declared                                                                   (4,067)                            (4,067)
Exercise of stock options                                                                                                   351
Stock option exchange program
 stock distribution                                                                                       542               542
Issuance of restricted stock                     (19,366)                                                                     0
Amortization of deferred
 compensation                                      1,807                                                                  1,807
Retirement of restricted stock                                                                                             (106)
Stock buyback                                                                                          (4,297)           (4,297)

ESOP shares committed to be released                 242                                                                    227
                                                --------            -------         --------         --------          --------
BALANCE AT JUNE 30, 2002                        $(28,676)           $   555         $178,051         $(31,377)         $362,800
                                                --------            -------         --------         --------          --------
</TABLE>

See Notes to Consolidated Financial Statements


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

<TABLE>
<CAPTION>
                                                              SIX MONTHS ENDED
($ IN THOUSANDS)                                                   JUNE 30,
                                                           ------------------------
                                                              2002           2001
                                                           ---------    -----------
<S>                                                        <C>          <C>
OPERATING ACTIVITIES - CONTINUING OPERATIONS
Net income (loss)                                          $   2,748    $   (36,606)
Adjustments to reconcile net income (loss) to net cash
  provided by (used in) operating activities:
   Loss from discontinued operations, net of tax                   0          8,438
   (Gain) loss, net, on discontinuance of mortgage and
      leasing businesses, net of tax                           8,610        (12,361)
   Investment securities losses                                2,093         14,316
   Loss on sale of deposits                                        0          2,835
   Depreciation                                                4,684          5,198
   Provision for credit losses                                22,041         16,324
   Change in deferred origination costs, net of deferred
     fees                                                     (1,435)        (4,950)
   Change in receivables held for sale                      (130,991)      (197,033)
   Proceeds from sale of receivables held for sale           115,000        197,549
   Change in amounts due from securitizations, other
     assets and other liabilities                             16,263         (4,344)
   Change in retained interests in securitizations                 0        (15,750)
                                                           ---------    -----------
Net cash provided by (used in) operating activities           39,013        (26,384)
                                                           ---------    -----------
INVESTING ACTIVITIES - CONTINUING OPERATIONS
   Change in federal funds sold and restricted interest-
     bearing deposits                                         43,024       (443,290)
   Purchase of investments available for sale               (191,490)    (1,001,643)
   Proceeds from sales of investments available for sale     162,337        844,566
   Proceeds from maturing investments available for sale      69,226        749,182
   Change in receivables not held for sale                   (29,691)       (35,579)
   Purchases of premises and equipment, net                   (4,184)        (3,843)
                                                           ---------    -----------
Net cash provided by investing activities                     49,222        109,393
                                                           ---------    -----------
FINANCING ACTIVITIES - CONTINUING OPERATIONS
   Change in demand and savings deposits                      (3,434)       (11,311)
   Proceeds from issuance of time deposits                   153,936        376,747
   Payments for maturing time deposits                      (178,723)      (676,153)
   Payment for sale of deposits and related accrued
     interest                                                      0       (392,511)
   Proceeds from issuance of debt                             55,955        116,259
   Payments on redemption of debt                            (88,010)      (470,109)
   Change in other borrowings                                (32,317)        (4,289)
   Proceeds from exercise of stock options                       351          2,432
   Stock buyback                                              (4,297)             0
   Cash dividends paid                                        (4,067)        (3,882)
                                                           ---------    -----------
Net cash used in financing activities                       (100,606)    (1,062,817)
                                                           ---------    -----------
DISCONTINUED OPERATIONS
   Proceeds from the exit of our mortgage business                 0      1,093,975
   Other cash provided by (used in) operating activities       2,169        (91,734)
                                                           ---------    -----------
Net cash provided by operating activities of
   discontinued operations                                     2,169      1,002,241
                                                           ---------    -----------
Net increase (decrease) in cash                              (10,202)        22,433
Cash at beginning of period                                   20,952          1,716
                                                           ---------    -----------
Cash at end of period                                      $  10,750    $    24,149
                                                           ---------    -----------
</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)

                                  JUNE 30, 2002
                                   (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 accounting
principles generally accepted in the United States 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 allowance for credit losses, the fair value of venture
capital investments, litigation, income taxes and discontinued operations, 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) RESTRICTED INTEREST-BEARING DEPOSITS AND INVESTMENTS AVAILABLE FOR SALE

Restricted interest-bearing deposits include amounts held in escrow in
connection with our litigation with Fleet Financial Group ("Fleet") of $72.8
million at June 30, 2002 and $72.0 million at December 31, 2001. Restricted
interest-bearing deposits also include amounts held in escrow in connection with
other litigation-related contingencies of $3.1 million at June 30, 2002 and
$36.1 million at December 31, 2001.


                                       8
<PAGE>
Investments available for sale consisted of the following:

<TABLE>
<CAPTION>
                                                             JUNE 30, 2002                        DECEMBER 31, 2001
                                                       ---------------------------           ---------------------------
                                                       AMORTIZED           MARKET            AMORTIZED           MARKET
                                                         COST              VALUE               COST              VALUE
                                                       ---------          --------           ---------          --------
<S>                                                    <C>                <C>                <C>                <C>
U.S. Treasury & other U.S.
  Government securities                                $ 27,909           $ 28,144           $ 85,064           $ 86,202
State and municipal securities                            3,032              3,132              3,889              4,005
Collateralized mortgage obligations                      12,041             12,392             20,909             21,318
Mortgage-backed securities                                6,772              6,940              9,961             10,235
Equity securities(1)                                     21,556             21,556             26,621             26,621
Other                                                   131,266            131,266             98,299             98,298
                                                       --------           --------           --------           --------
        Total investments available for sale           $202,576           $203,430           $244,743           $246,679
                                                       ========           ========           ========           ========
</TABLE>

(1)   Includes venture capital investments of $17.1 million at June 30, 2002 and
      $18.6 million at December 31, 2001. The amount shown as amortized cost
      represents fair value for these investments.

NOTE 3) RECEIVABLES

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

<TABLE>
<CAPTION>
                                                                  JUNE 30,             DECEMBER 31,
                                                                   2002                   2001
                                                                -----------            -----------
<S>                                                             <C>                    <C>
Business credit card receivables                                $   443,377            $   416,265
Other receivables                                                    27,753                 28,189
                                                                -----------            -----------
       Gross receivables                                            471,130                444,454
                                                                -----------            -----------
Add: Deferred origination costs, net of deferred fees                22,359                 20,924
Less: Allowance for credit losses
  Business credit cards                                             (43,777)               (41,169)
  Other receivables                                                  (1,229)                  (802)
                                                                -----------            -----------
       Total allowance                                              (45,006)               (41,971)
                                                                -----------            -----------
Receivables, net                                                $   448,483            $   423,407
                                                                ===========            ===========
</TABLE>

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

<TABLE>
<CAPTION>
                                                                   JUNE 30,            DECEMBER 31,
                                                                    2002                   2001
                                                                -----------            -----------
<S>                                                             <C>                    <C>
Owned business credit card receivables                          $   443,377            $   416,265
Owned other receivables                                              27,753                 28,189
Securitized business credit card receivables                      1,744,669              1,626,709
                                                                -----------            -----------
Total managed receivables                                         2,215,799              2,071,163
                                                                -----------            -----------
Nonperforming assets - managed                                      105,088                 81,666
Receivables 90 days or more delinquent - managed                     74,203                 67,465
Receivables 30 days or more delinquent - managed                    145,711                137,517
Net charge-offs year-to-date - managed                               95,769                143,593
</TABLE>


                                       9
<PAGE>
NOTE 4) ALLOWANCE FOR CREDIT LOSSES

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

<TABLE>
<CAPTION>
                                            SIX MONTHS ENDED
                                                JUNE 30,
                                      ----------------------------
                                        2002                2001
                                      --------            --------
<S>                                   <C>                 <C>
Beginning balance                     $ 41,971            $ 33,367
Provision for credit losses             22,041              16,324
Gross charge-offs                      (21,201)            (14,374)
Recoveries                               2,195               2,251
                                      --------            --------
Net charge-offs                        (19,006)            (12,123)
                                      --------            --------
Ending balance                        $ 45,006            $ 37,568
                                      ========            ========
</TABLE>

NOTE 5) SECURITIZATION ACTIVITIES

The following represents business credit card securitization data for the three
and six months ended June 30, 2002 and 2001, and the key assumptions used in
measuring the fair value of retained interests at the time of each new
securitization or replenishment during those periods.

<TABLE>
<CAPTION>
                                                           THREE MONTHS ENDED                          SIX MONTHS ENDED
                                                    -------------------------------           --------------------------------
                                                       JUNE 30,            JUNE 30,             JUNE 30,              JUNE 30,
                                                        2002                2001                 2002                  2001
                                                    ----------           ----------           ----------            ----------
<S>                                                  <C>                 <C>                  <C>                   <C>
Average securitized
   receivables                                      $1,638,410           $1,476,660           $1,627,096            $1,399,267
Securitization income                                   30,023               24,349               59,670                45,610
Interchange income                                      17,215               15,740               32,870                28,864
Servicing revenues                                       8,143                6,909               16,085                13,561

Proceeds from new securitizations                      110,000               97,549              115,000               197,549

Proceeds from collections reinvested in
   revolving-period securitizations                    915,671              805,607            1,819,439             1,523,245
Cash flows received on
   retained interests                                   48,611               39,582              100,005                78,332

KEY ASSUMPTIONS:
  Discount rate                                      9.0% - 15.0%         12.0% - 15.0%         9.0% - 15.0%         12.0% - 15.0%
  Monthly payment rate                              18.2% - 21.0%         17.9% - 21.0%        18.2% - 21.0%         10.8% - 21.0%
  Loss rate                                          9.6% - 12.8%          7.8% -  9.5%         9.6% - 12.8%          7.8% -  9.5%
  Finance charge yield, net
   of interest paid to
   note holders                                     14.9% - 15.9%         12.1% - 13.2%        14.9% - 15.9%         10.8% - 13.2%
</TABLE>

There were no purchases of delinquent accounts during the three or six months
ended June 30, 2002 or 2001.


                                       10
<PAGE>
The following assumptions were used in measuring the fair value of retained
interests in business credit card securitizations at June 30, 2002 and December
31, 2001. The assumptions listed represent weighted averages of assumptions used
for each securitization.

<TABLE>
<CAPTION>
                                                                                  JUNE 30,                     DECEMBER 31,
                                                                                    2002                           2001
<S>                                                                            <C>                            <C>
Discount rate                                                                   9.0% - 14.3%                  12.0% - 15.0%
Monthly payment rate                                                           18.2% - 21.0%                  18.2% - 21.0%
Loss rate                                                                       9.6% - 11.5%                  10.4% - 12.4%
Finance charge yield, net of interest
  paid to note holders                                                                 14.9%                          15.8%
</TABLE>

In addition to the assumptions identified above, management also considered
qualitative factors such as the impact of the current economic environment on
the performance of the business credit card receivables sold and the potential
volatility of the current market for similar instruments in assessing the fair
value of retained interests in business credit card securitizations.

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 June 30, 2002.

<TABLE>
<S>                                                                                                             <C>
             Fair value at June 30, 2002                                                                        $ 88,658
             Effect on fair value of the following
              hypothetical changes in key assumptions:
                 Discount rate increased by 2%                                                                  $   (905)
                 Discount rate increased by 4%                                                                    (1,800)
                 Monthly payment rate at 110% of base assumption                                                  (1,016)
                 Monthly payment rate at 125% of base assumption                                                  (2,897)
                 Loss rate at 110% of base assumption                                                             (4,615)
                 Loss rate at 125% of base assumption                                                            (11,537)
                 Finance charge yield, net of interest paid to note
                   holders, decreased by 1%                                                                       (4,832)
                 Finance charge yield, net of interest paid to note
                   holders, decreased by 2%                                                                       (9,664)
</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.


                                       11
<PAGE>
NOTE 6) SELECTED BALANCE SHEET INFORMATION

<TABLE>
<CAPTION>
                                                       JUNE 30,         DECEMBER 31,
OTHER ASSETS                                             2002               2001
<S>                                                    <C>              <C>
Current and deferred income taxes, net                 $ 94,893           $ 94,922
Amounts due from transfer of consumer credit
  card business                                          70,545             70,545
Cash surrender value of insurance contracts              23,370             26,065
Investment in Fleet Credit Card LLC                      20,000             20,000
Other                                                    49,454             53,157
                                                       --------           --------
Total other assets                                     $258,262           $264,689
                                                       ========           ========
</TABLE>

<TABLE>
<CAPTION>
                                                       JUNE 30,         DECEMBER 31,
OTHER LIABILITIES                                        2002               2001
<S>                                                    <C>              <C>
Accounts payable and accrued expenses                  $ 49,460           $ 43,554
Accrued interest payable                                 12,877              9,095
Business credit card rewards                             12,653             10,389
Other                                                   111,264            114,529
                                                       --------           --------
Total other liabilities                                $186,254           $177,567
                                                       ========           ========
</TABLE>

NOTE 7) CAPITAL STOCK

In 2001, the Board of Directors of Advanta Corp. authorized the purchase of up
to 1.5 million shares of Advanta Corp. common stock or the equivalent dollar
amount of our capital securities, or some combination thereof. In August 2002,
the Board of Directors authorized the purchase of up to an additional 1.5
million shares of Advanta Corp. common stock, bringing the total authorization
to up to 3.0 million shares. During the year ended December 31, 2001, we
repurchased 693,300 shares of our Class B Common Stock. In the six months ended
June 30, 2002 we repurchased 386,900 shares of our Class B Common Stock.

Our management incentive programs give eligible employees the opportunity to
elect to take portions of their anticipated or target bonus payments for future
years in the form of restricted shares of Advanta Corp. Class B Common Stock. In
the six months ended June 30, 2002, 2.4 million restricted shares were issued in
connection with the current program covering the performance years 2002-2005.

Cash dividends per share of common stock declared during the three months ended
June 30, 2002 and 2001 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 six
months ended June 30, 2002 and 2001 were $0.126 for Class A Common Stock and
$0.151 for Class B Common Stock.


                                       12
<PAGE>
NOTE 8) SEGMENT INFORMATION

<TABLE>
<CAPTION>
                                                           ADVANTA
                                                           BUSINESS            VENTURE
                                                             CARDS              CAPITAL             OTHER (1)             TOTAL
<S>                                                       <C>                  <C>                 <C>                  <C>
THREE MONTHS ENDED JUNE 30, 2002
Interest income                                           $   23,358           $      0            $     2,877          $    26,235
Interest expense                                               8,775                181                  3,413               12,369
Noninterest revenues (losses), net                            61,087                (31)                   109               61,165
Pretax income (loss) from continuing operations               14,562               (779)                (2,200)              11,583
Average managed receivables                                2,110,420                  0                 28,483            2,138,903
Total assets                                                 625,633             18,129                921,061            1,564,823
                                                          ----------           --------            -----------          -----------
THREE MONTHS ENDED JUNE 30, 2001
Interest income                                           $   21,690           $      2            $    13,721          $    35,413
Interest expense                                               7,998                421                 17,700               26,119
Noninterest revenues (losses), net                            51,021             (5,607)                (2,161)              43,253
Unusual charges                                                    0                  0                  1,000                1,000
Pretax income (loss) from continuing operations               14,243             (6,551)               (10,865)              (3,173)
Average managed receivables                                1,848,424                  0                 28,184            1,876,608
Total assets                                                 545,015             30,447              1,196,864            1,772,326
                                                          ----------           --------            -----------          -----------
SIX MONTHS ENDED JUNE 30, 2002
Interest income                                           $   46,136           $      2            $     6,503          $    52,641
Interest expense                                              17,546                386                  7,547               25,479
Noninterest revenues (losses), net                           119,226             (2,610)                    16              116,632
Pretax income (loss) from continuing operations               28,306             (4,214)                (5,624)              18,468
Average managed receivables                                2,062,030                  0                 28,338            2,090,368
                                                          ----------           --------            -----------          -----------
SIX MONTHS ENDED JUNE 30, 2001
Interest income                                           $   42,370           $     33            $    29,201          $    71,604
Interest expense                                              15,218                839                 34,338               50,395
Noninterest revenues (losses), net                            96,010            (16,962)                (7,983)              71,065
Unusual charges                                                    0                  0                 41,750               41,750
Pretax income (loss) from continuing operations               27,691            (19,266)               (65,834)             (57,409)
Average managed receivables                                1,770,385                  0                 28,364            1,798,749
                                                          ----------           --------            -----------          -----------
</TABLE>

(1)   Other includes insurance operations and assets, investment and other
      activities not attributable to reportable segments. Total assets in the
      "Other" segment include net assets of discontinued operations.


                                       13
<PAGE>
NOTE 9) UNUSUAL CHARGES

Subsequent to the Mortgage Transaction 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. Costs
associated with this restructuring activity and other employee costs are
included in unusual charges in the consolidated income statements. Accruals
related to these costs are included in other liabilities in the consolidated
balance sheets. The details of these costs are as follows:

<TABLE>
<CAPTION>
                                                           CHARGED          DEC. 31,          CHARGED         JUNE 30,
                                          ACCRUED IN      TO ACCRUAL          2001           TO ACCRUAL         2002
                                            2001           IN 2001       ACCRUAL BALANCE      IN 2002      ACCRUAL BALANCE
<S>                                       <C>             <C>            <C>                <C>            <C>
Employee costs                            $27,296           $24,768           $2,528           $1,954           $574
Expenses associated with exited
    businesses/products                    11,895            11,266              629              335            294
Asset impairments                           2,559             2,559                0                0              0
                                          -------           -------           ------           ------           ----
Total                                     $41,750           $38,593           $3,157           $2,289           $868
                                          =======           =======           ======           ======           ====
</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 severance amounts were payable over a 12-month
period following the employee's termination date. These payments will be
completed in the third quarter of 2002.

Additionally, during 2001, we incurred $23.2 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 were 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 Mortgage Transaction. This acceleration
resulted in a noncash charge of $1.3 million. In connection with reviewing our
compensation plans after the Mortgage Transaction and restructuring of corporate
functions, we implemented a program whereby all outstanding stock appreciation
rights and shares of phantom stock were terminated in exchange for cash to be
paid through a deferred compensation arrangement. We recorded charges of $2.9
million associated with this exchange. The charge reflects a $0.7 million
reduction recorded in the three months ended September 30, 2001, as actual cash
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 stock, and whereby certain shares of restricted stock
were exchanged for cash and stock options in a tender offer, subject to certain
performance conditions and vesting requirements. Noncash charges associated with
the issuance of the stock, stock options and the tender offer totaled $3.6
million. This charge reflects a $1.4 million increase recorded


                                       14
<PAGE>
in the three months ended September 30, 2001, as actual noncash charges
associated with the tender offer were more than estimated.

Expenses associated with exited businesses/products

In the first quarter of 2001, we recorded charges of $2.2 million related to
other products exited for which no future revenues or benefits would be
received. In the third quarter of 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, in the third quarter of 2002.

In 1998, in connection with the transfer of our consumer credit card business to
Fleet Credit Card LLC (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 Credit Card 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.

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.

NOTE 10) DISCONTINUED OPERATIONS

Effective February 28, 2001, we completed the exit of our mortgage business,
Advanta Mortgage, through a purchase and sale agreement with Chase Manhattan
Mortgage Corporation as buyer (the "Mortgage Transaction"). Loss from
discontinued operations, net of tax, for the period from January 1, 2001 through
February 28, 2001, the effective date of the Mortgage Transaction, was $8.4
million. 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.

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 are continuing to service the existing
leasing portfolio rather than sell the business or the portfolio.


                                       15
<PAGE>
The exit 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. Estimates are used in the
accounting for discontinued operations, including estimates of the future costs
of mortgage business-related litigation and estimates of operating results
through the remaining term of the leasing portfolio. As all estimates used are
influenced by factors outside our control, there is uncertainty inherent in
these estimates, making it reasonably possible that they could change in the
near term.

The following tables summarize the components of the gain (loss) on
discontinuance of our mortgage and leasing businesses for the three and six
months ended June 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                                                                    THREE MONTHS ENDED
                                                                                    ------------------
                                                                  JUNE 30, 2002                             JUNE 30, 2001
                                                                  -------------                             -------------
                                                                           ADVANTA LEASING                           ADVANTA LEASING
                                                      ADVANTA MORTGAGE         SERVICES         ADVANTA MORTGAGE         SERVICES
                                                      ----------------     ---------------      ----------------     ---------------
<S>                                                   <C>                  <C>                  <C>                  <C>
Pretax gain (loss) on discontinuance of mortgage
   and leasing businesses                                $(25,300)             $11,300              $(2,000)             $(2,000)
Income tax (expense) benefit                                9,740               (4,350)                   0                    0
                                                         --------              -------              -------              -------
Gain (loss) on discontinuance of mortgage and
   leasing businesses, net of tax                        $(15,560)             $ 6,950              $(2,000)             $(2,000)
                                                         ========              =======              =======              =======
</TABLE>

<TABLE>
<CAPTION>
                                                                                    SIX MONTHS ENDED
                                                                                    ----------------
                                                                  JUNE 30, 2002                             JUNE 30, 2001
                                                                  -------------                             -------------
                                                                           ADVANTA LEASING                           ADVANTA LEASING
                                                      ADVANTA MORTGAGE         SERVICES         ADVANTA MORTGAGE         SERVICES
                                                      ----------------     ---------------      ----------------     ---------------
<S>                                                   <C>                  <C>                  <C>                  <C>
Pretax gain (loss) on discontinuance of mortgage
   and leasing businesses                                $(25,300)             $11,300              $25,753              $(6,000)
Income tax (expense) benefit                                9,740               (4,350)              (8,637)               1,245
                                                         --------              -------              -------              -------
Gain (loss) on discontinuance of mortgage and
   leasing businesses, net of tax                        $(15,560)             $ 6,950              $17,116              $(4,755)
                                                         ========              =======              =======              =======
</TABLE>

The proceeds from the Mortgage Transaction exceeded $1 billion, subject to
closing adjustments, resulting in an estimated pretax gain in the year ended
December 31, 2001 of $20.8 million after transaction expenses, severance
expenses and other costs. The gain does not reflect any impact from the
post-closing adjustment process. See Note 12 to the consolidated financial
statements for a discussion of litigation related to the Mortgage Transaction.
The pretax gain of $20.8 million in the year ended December 31, 2001 included a
$2.0 million increase in our estimate of transaction expenses in the three
months ended June 30, 2001, and a $5.0 million increase in the estimated future
costs of mortgage business-related litigation in the three months ended
September 30, 2001.

In the three months ended June 30, 2002, we increased our estimate of other
costs related to the exit of our mortgage business by $25.3 million, comprised
of $7.5 million for a litigation settlement in July 2002 related to a mortgage
loan servicing agreement termination fee collected in December 2000, and $17.8
million primarily related to an increase in our estimated future costs of
mortgage business-related contingent liabilities.


                                       16
<PAGE>
The $17.8 million relates primarily to an increase in our estimated future costs
of mortgage business-related contingent liabilities in connection with (a)
contingent liabilities and litigation costs arising from the operation of the
mortgage business prior to the Mortgage Transaction that were not assumed by the
buyer, and (b) costs related to Advanta's litigation with Chase Manhattan
Mortgage Corporation in connection with the Mortgage Transaction. The change in
estimate reflects the legal and consulting fees and other costs that we expect
to incur based on current levels of contingent liabilities and expense rates,
and considers the status of the discovery process associated with the Mortgage
Transaction litigation.

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. Estimated
operating results of the leasing business included estimated valuations of
retained interests in leasing securitizations, estimated cash flows from
on-balance sheet lease receivables, interest expense and operating expenses. In
the year ended December 31, 2001, we recorded an additional $45.0 million pretax
loss due to a change in estimate of those operating results based on credit loss
experience in 2001. As of June 30, 2001, we had revised our estimate of the loss
by $6.0 million. A principal factor contributing to the increased credit losses
was that one of our former leasing vendors had filed for bankruptcy protection
and this vendor's financial problems were impacting its ability to service the
leased equipment in a segment of our leasing portfolio.

In the three months ended June 30, 2002, we recorded an $11.3 million pretax
gain on leasing discontinuance representing a revision in the estimated
operating results of the leasing segment over the remaining life of the lease
portfolio due primarily to favorable credit performance. The leasing portfolio
performed favorably as compared to the expectations and assumptions established
in 2001. This improvement was the result of successfully obtaining a replacement
vendor to service leased equipment for the former leasing vendor that had filed
for bankruptcy protection, as described above, and operational improvements in
the leasing collections area.

Per share data was as follows:

<TABLE>
<CAPTION>
                                       THREE MONTHS ENDED JUNE 30,                            SIX MONTHS ENDED JUNE 30,
                                -------------------------------------------          -------------------------------------------
                                ADVANTA MORTGAGE           ADVANTA LEASING           ADVANTA MORTGAGE            ADVANTA LEASING
                                                               SERVICES                                             SERVICES
                                ----------------           ---------------           ----------------           ----------------
                                2002        2001           2002       2001           2002        2001           2002        2001
                                ----        ----           ----       ----           ----        ----           ----        ----
<S>                            <C>         <C>            <C>         <C>           <C>         <C>            <C>         <C>
Basic loss from discontinued operations per common share
    Class A                    $ 0.00      $ 0.00         $ 0.00      $ 0.00        $ 0.00      $(0.33)        $ 0.00      $ 0.00
    Class B                      0.00        0.00           0.00        0.00          0.00       (0.33)          0.00        0.00
    Combined                     0.00        0.00           0.00        0.00          0.00       (0.33)          0.00        0.00

Diluted loss from discontinued operations per common share
    Class A                    $ 0.00      $ 0.00         $ 0.00      $ 0.00        $ 0.00      $(0.33)        $ 0.00      $ 0.00
    Class B                      0.00        0.00           0.00        0.00          0.00       (0.33)          0.00        0.00
    Combined                     0.00        0.00           0.00        0.00          0.00       (0.33)          0.00        0.00

Basic gain (loss), net, on discontinuance of mortgage and leasing businesses, net of tax, per common share
    Class A                    $(0.61)     $(0.08)        $ 0.27      $(0.08)       $(0.61)     $ 0.67         $ 0.27      $(0.19)
    Class B                     (0.61)      (0.08)          0.27       (0.08)        (0.61)       0.67           0.27       (0.19)
    Combined                    (0.61)      (0.08)          0.27       (0.08)        (0.61)       0.67           0.27       (0.19)

Diluted gain (loss), net, on discontinuance of mortgage and leasing businesses, net of tax, per common share
    Class A                    $(0.58)     $(0.08)        $ 0.26      $(0.08)       $(0.59)     $ 0.67         $ 0.26      $(0.19)
    Class B                     (0.58)      (0.08)          0.26       (0.08)        (0.59)       0.67           0.26       (0.19)
    Combined                    (0.58)      (0.08)          0.26       (0.08)        (0.59)       0.67           0.26       (0.19)
</TABLE>


                                       17
<PAGE>
The components of net assets of discontinued operations were as follows:

<TABLE>
<CAPTION>
                                                 JUNE 30,           DECEMBER 31,
                                                   2002                 2001
<S>                                             <C>                 <C>
Loans and leases, net                           $  41,877            $  52,739
Other assets                                      114,180              100,061
Liabilities                                        (8,873)             (10,397)
                                                ---------            ---------
Net assets of discontinued operations           $ 147,184            $ 142,403
                                                =========            =========
</TABLE>

As discussed above, we are continuing to service the existing lease portfolio.
At June 30, 2002, there were $249 million of securitized leases outstanding, and
we had retained interests in leasing securitizations of $66 million. At December
31, 2001, there were $365 million of securitized leases outstanding, and we had
retained interests in leasing securitizations of $44 million. The retained
interests in leasing securitizations are included in net assets of discontinued
operations in the consolidated balance sheets. At June 30, 2002, the fair value
of the retained interests in leasing securitizations was estimated using a 12.0%
discount rate on future cash flows, loss rates ranging from 5.0% to 5.4% and a
weighted average life of 1.0 year. At December 31, 2001, the fair value of the
retained interests in leasing securitizations was estimated using a 12.0%
discount rate on future cash flows, loss rates ranging from 9.0% to 9.9% and a
weighted average life of 1.1 years.


                                       18
<PAGE>
NOTE 11) EARNINGS (LOSS) PER SHARE

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

<TABLE>
<CAPTION>
                                                  THREE MONTHS ENDED             SIX MONTHS ENDED
                                                       JUNE 30,                      JUNE 30,
                                              -----------------------       -----------------------
                                                2002           2001           2002           2001
                                              --------       --------       --------       --------
<S>                                           <C>            <C>            <C>            <C>
Income (loss) from continuing operations      $  7,124       $ (3,173)      $ 11,358       $(40,529)
 Less: Preferred A dividends                         0              0           (141)          (141)

Income (loss) from continuing operations
 available to common shareholders                7,124         (3,173)        11,217        (40,670)
Loss from discontinued operations,
 net of tax                                          0              0              0         (8,438)

Gain (loss), net, on discontinuance of
   mortgage and leasing
   businesses, net of tax                       (8,610)        (4,000)        (8,610)        12,361
                                              --------       --------       --------       --------

Net income (loss) available to common
 shareholders                                   (1,486)        (7,173)         2,607        (36,747)
 Less: Class A dividends declared                 (576)          (574)        (1,150)        (1,146)
 Less: Class B dividends declared               (1,295)        (1,302)        (2,775)        (2,595)
                                              --------       --------       --------       --------

Undistributed net income (loss)               $ (3,357)      $ (9,049)      $ (1,318)      $(40,488)

Basic income (loss) from continuing
 operations per common share
  Class A                                     $   0.27       $  (0.13)      $   0.41       $  (1.61)
  Class B                                         0.29          (0.12)          0.46          (1.58)
  Combined(1)                                     0.28          (0.12)          0.44          (1.59)
Diluted income (loss) from continuing
 operations per common share
  Class A                                     $   0.26       $  (0.13)      $   0.40       $  (1.61)
  Class B                                         0.27          (0.12)          0.44          (1.58)
  Combined(1)                                     0.27          (0.12)          0.42          (1.59)
Basic net income (loss) per common share
  Class A                                     $  (0.07)      $  (0.29)      $   0.07       $  (1.46)
  Class B                                        (0.05)         (0.27)          0.12          (1.43)
  Combined(1)                                    (0.06)         (0.28)          0.10          (1.44)
Diluted net income (loss) per common
 share
  Class A                                     $  (0.06)      $  (0.29)      $   0.08       $  (1.46)
  Class B                                        (0.05)         (0.27)          0.11          (1.43)
  Combined(1)                                    (0.06)         (0.28)          0.10          (1.44)

Basic weighted average common shares
 outstanding
  Class A                                        9,144          9,098          9,138          9,082
  Class B                                       16,176         16,744         16,239         16,473
  Combined                                      25,320         25,842         25,377         25,555
Options Class B                                    828              0            588              0
Restricted shares Class A                            6              0              6              0
Restricted shares Class B                          636              0            485              0
Diluted weighted average common shares
 outstanding
  Class A                                        9,150          9,098          9,144          9,082
  Class B                                       17,640         16,744         17,312         16,473
  Combined                                      26,790         25,842         26,456         25,555
Antidilutive shares
  Options Class B                                1,133          2,663          1,360          2,755
  Restricted shares Class A                          5             24              6             36
  Restricted shares Class B                      1,708            513          1,843            712
</TABLE>

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


                                       19
<PAGE>
NOTE 12) CONTINGENCIES

On January 22, 1999, Fleet and certain of its affiliates filed a lawsuit against
Advanta Corp. and certain of its subsidiaries in Delaware Chancery Court.
Fleet's allegations, which we deny, center around Fleet's assertions that we
failed to complete certain post-closing adjustments to the value of the assets
and liabilities we contributed to Fleet Credit Card LLC in connection with the
Consumer Credit Card Transaction in 1998. Fleet seeks damages of approximately
$141 million. We 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 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. In October 2001, the court issued a ruling
on summary judgment in favor of Fleet on certain legal issues and positions
advocated by Fleet and against others that Fleet advocated. As a result, for
purposes of trial only, the parties stipulated to a number of issues relating to
the court's orders including certain amounts that would be owed by each party to
the other, while preserving their rights to appeal. Many issues remained to be
determined at trial, including the financial impact of all issues in dispute.
The trial took place in November and December 2001. Post-trial briefing is
complete and on April 10, 2002, the Court heard oral argument. As a result of
related litigation with Fleet, $70.1 million of our reserves in connection with
this litigation were funded in an escrow account in February 2001. Taking into
account amounts that Fleet owes to us and the amount escrowed, including
interest, we have funded our estimated maximum net exposure to Fleet in the
litigation. Management expects that the ultimate resolution of this litigation
will not have a material adverse effect on our financial position or future
operating results given the amount escrowed, our reserves and amounts that Fleet
owes us. Our litigation reserves are included in other liabilities on the
consolidated balance sheets.

On December 5, 2000, a former executive of Advanta obtained a jury verdict
against Advanta in the amount of $3.9 million in the United States District
Court for the Eastern District of Pennsylvania, in connection with various
claims against Advanta related to the executive's termination of employment. In
September 2001, the District Court Judge issued orders denying both parties'
post-trial motions. A judgment in the amount of approximately $6 million, which
includes the $3.9 million described above, was entered against Advanta. In
September 2001, Advanta filed an appeal to the United States Court of Appeals
for the Third Circuit. Advanta has posted a supersedeas bond in the amount of $8
million. The plaintiff filed a cross-appeal from the order adverse to him. On
July 8, 2002, the Court of Appeals issued a Judgment and Opinion affirming in
part and reversing in part the District Court judgment. The Court of Appeals
affirmed the judgment on liability but determined that the jury award of damages
was excessive. The Court of Appeals reduced the jury verdict by $1.1 million and
also ordered the District Court to recalculate liquidated damages based on the
reduced award. Other operating expenses in the three months ended June 30, 2002
include a $1.1 million decrease in litigation reserves resulting from this
reduced jury verdict. On July 22, 2002, Advanta filed a motion for rehearing
and/or rehearing en banc asserting that a new trial was required to remedy the
error found by the Court of Appeals. The motion was denied by Order dated August
8, 2002, and Advanta is now considering further appellate review. 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. Management expects that the ultimate resolution of this litigation
will not have a material adverse effect on our financial position or future
operating results.


                                       20
<PAGE>
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 alleged, 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. An
answer to Banc One's second amended complaint was filed in July 2001 denying
liability, raising affirmative defenses and asserting a counterclaim. Various
motions were filed. While the motions were pending, the parties pursued
settlement discussions, and on July 29, 2002, a settlement was reached. In
connection with this settlement, Advanta recorded a $7.5 million pretax charge,
representing the amount of the settlement in excess of our reserve. This charge
was classified in loss from discontinuance of the mortgage business in the three
months ended June 30, 2002.

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 Mortgage
Transaction. Chase claims that Advanta misled Chase concerning the value of
certain of the assets sold to Chase. In September 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 not anticipated before September 2003.
We believe that the lawsuit is without merit and will vigorously defend Advanta
in this litigation. 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 on Advanta or
the named subsidiaries.

In addition to the cases described above, Advanta Corp. and its subsidiaries are
involved in class action lawsuits, other litigation, claims and legal
proceedings arising in the ordinary course of business or discontinued
operations, including litigation arising from our operation of the mortgage
business prior to the Mortgage Transaction in the first quarter of 2001.
Management believes that the aggregate liabilities, if any, resulting from all
litigation, claims and other legal proceedings will not have a material adverse
effect on the consolidated financial position or results of our operations based
on the level of litigation reserves we have established and our expectations
regarding the ultimate resolutions of these actions. However, due to the
inherent uncertainty in litigation and since the ultimate resolutions of our
litigation, claims and other legal proceedings are influenced by factors outside
of our control, it is reasonably possible that our estimated liability under
these proceedings may change or that actual results will differ from our
estimates.


                                       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

Our primary business segment is Advanta Business Cards, one of the nation's
largest issuers of business credit cards to small businesses. In addition to our
business credit card lending business, we have venture capital investments.
Through the first quarter of 2001, we had two additional lending businesses,
Advanta Mortgage and Advanta Leasing Services. In the first quarter of 2001, we
exited 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 June 30, 2002, we reported net income from continuing
operations of $7.1 million or $0.27 per combined diluted common share, compared
to net loss from continuing operations of $3.2 million or $0.12 per combined
diluted common share for the same period of 2001. For the six months ended June
30, 2002, we reported net income from continuing operations of $11.4 million
or $0.42 per combined diluted common share, compared to net loss from continuing
operations of $40.5 million or $1.59 per combined diluted common share for the
six months ended June 30, 2001. The net loss from continuing operations for the
six months ended June 30, 2001 included pretax unusual charges of $41.8 million,
representing costs associated with the restructure of our corporate functions to
a size commensurate with our ongoing businesses and certain other unusual
charges related to employee costs. Net income (loss) from continuing operations
included the following business segment results ($ in thousands):

<TABLE>
<CAPTION>
                              THREE MONTHS ENDED              SIX MONTHS ENDED
                                    JUNE 30,                     JUNE 30,
                            -----------------------       -----------------------
                              2002           2001           2002           2001
                            --------       --------       --------       --------
<S>                         <C>            <C>            <C>            <C>
ADVANTA BUSINESS CARDS
Pretax income               $ 14,562       $ 14,243       $ 28,306       $ 27,691
Income tax (expense)          (5,606)        (5,483)       (10,898)       (10,660)
                            --------       --------       --------       --------
Net income                  $  8,956       $  8,760       $ 17,408       $ 17,031
                            --------       --------       --------       --------
VENTURE CAPITAL
Pretax loss                 $   (779)      $ (6,551)      $ (4,214)      $(19,266)
Income tax benefit               300          2,522          1,623          7,417
                            --------       --------       --------       --------
Net loss                    $   (479)      $ (4,029)      $ (2,591)      $(11,849)
                            --------       --------       --------       --------
</TABLE>

In the three months ended June 30, 2002, we recorded an after-tax loss on the
discontinuance of our mortgage and leasing businesses of $8.6 million, or $0.32
per combined diluted common share. In the six months ended June 30, 2001, we
recorded an after-tax gain on the discontinuance of our mortgage and leasing
businesses of $12.4 million, or $0.48 per combined diluted common share. Loss
from discontinued operations, net of tax, was $8.4 million, or $0.33 per
combined diluted share, for the period from January 1, 2001 through February 28,
2001, the effective date of the Mortgage Transaction.


                                       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 or phrases. 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)   factors affecting fluctuations in the number of accounts or loan
            balances;
      (5)   interest rate fluctuations;
      (6)   the level of expenses;
      (7)   the timing of the securitizations of our receivables;
      (8)   factors affecting the value of investments that we hold;
      (9)   the effects of government regulation, including restrictions and
            limitations imposed by banking laws, regulators, examinations,
            audits, and agreements between our bank subsidiaries and their
            regulators;
      (10)  relationships with customers, significant vendors and business
            partners;
      (11)  the amount and cost of financing available to us;
      (12)  the ratings on our debt and the debt of our subsidiaries;
      (13)  revisions to estimates associated with the discontinued
            operations of our mortgage and leasing businesses; and
      (14)  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, 2001 and in our other filings with the Securities and
Exchange Commission.

ADVANTA BUSINESS CARDS

OVERVIEW

Advanta Business Cards offers 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 $1.9 billion at
June 30, 2001 to $2.0 billion at December 31, 2001 and to $2.2 billion at June
30, 2002. Advanta Business Cards originated 62,258 new accounts in the three
months ended June 30, 2002, compared to 66,546 new accounts for the same period
of 2001. Originations for the six months ended June 30, 2002 were 104,549 new
accounts, compared to 135,317 new accounts for the same period of 2001. The
level of originations in the three and six months ended June 30, 2002 reflects
our strategic initiative to attract and retain more higher credit quality
customers and the competitive market environment.


                                       23
<PAGE>
Pretax income for Advanta Business Cards was $14.6 million for the three months
ended June 30, 2002 as compared to $14.2 million for the same period of 2001.
Pretax income for the six months ended June 30, 2002 was $28.3 million as
compared to $27.7 million for the same period of 2001. The components of pretax
income for Advanta Business Cards for the three and six months ended June 30,
2002 and 2001 were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                 THREE MONTHS ENDED             SIX MONTHS ENDED
                                                       JUNE 30,                      JUNE 30,
                                              -----------------------       ------------------------
                                                2002           2001            2002           2001
                                              --------       --------       ---------       --------
<S>                                           <C>            <C>            <C>             <C>
Net interest income on owned receivables      $ 14,583       $ 13,692       $  28,590       $ 27,152
Noninterest revenues                            61,087         51,021         119,226         96,010
Provision for credit losses                    (11,100)        (8,184)        (21,600)       (16,124)
Operating expenses                             (50,008)       (42,286)        (97,910)       (79,347)
                                              --------       --------       ---------       --------
Pretax income                                 $ 14,562       $ 14,243       $  28,306       $ 27,691
                                              --------       --------       ---------       --------
</TABLE>

The increase in noninterest revenues in both periods is due primarily to growth
in managed receivables and increased interchange income. The increase in the
provision for credit losses in both periods reflects an increase in average
owned business credit cards, the seasoning of the business credit card portfolio
and the prevailing economic environment. The increase in operating expenses in
both periods resulted from growth in managed receivables and additional
investments in initiatives to strengthen our position as a leading issuer of
business credit cards to the small business market.

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

<TABLE>
<CAPTION>
                                                                                                      JUNE 30,
MANAGED PORTFOLIO DATA ($ IN THOUSANDS)                                                        2002                2001
                                                                                            ----------           ----------
<S>                                                                                         <C>                  <C>
Average managed business credit card receivables:
  Three months ended June 30                                                                $2,110,420           $1,848,424
  Six months ended June 30                                                                   2,062,030            1,770,385
Ending managed business credit card receivables                                              2,188,046            1,899,304
Ending number of accounts - managed                                                            710,071              658,668
As a percentage of average managed receivables:
  Net interest margin
    Three months ended June 30                                                                    15.6%                14.3%
    Six months ended June 30                                                                      16.2                 14.1
  Fee revenues
    Three months ended June 30                                                                     5.9%                 5.8%
    Six months ended June 30                                                                       5.6                  5.5
  Net charge-offs
    Three months ended June 30                                                                     9.0%                 7.4%
    Six months ended June 30                                                                       9.3                  7.0
  Risk-adjusted revenues (1)
    Three months ended June 30                                                                    12.5%                12.7%
    Six months ended June 30                                                                      12.5                 12.6
  Total receivables 90 days or more delinquent at June 30                                          3.4%                 2.8%
  Total receivables 30 days or more delinquent at June 30                                          6.6%                 5.8%
</TABLE>

(1)   Risk-adjusted revenues represent net interest margin and fee revenues,
      less net charge-offs.


                                       24
<PAGE>
SECURITIZATION INCOME

Advanta Business Cards recognized securitization income of $30.0 million for the
three months ended June 30, 2002 and $59.7 million for the six months ended June
30, 2002. This compares to $24.3 million of securitization income recognized for
the three months ended June 30, 2001 and $45.6 million of securitization income
recognized for the six months ended June 30, 2001. 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 cardholders. The increases in securitization income in the three and six
months ended June 30, 2002 as compared to the same periods of 2001, were due to
increased volume of securitized receivables and a decrease in the securitized
cost of funds, partially offset by increased credit losses on securitized
receivables.

INTERCHANGE INCOME

Business credit card interchange income on managed business credit card
receivables was $22.7 million for the three months ended June 30, 2002 and $42.9
million for the six months ended June 30, 2002. This compares to business credit
card interchange income on managed business credit card receivables of $20.6 for
the three months ended June 30, 2001 and $38.2 million for the six months ended
June 30, 2001. 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 2.1% for the three
months ended June 30, 2002, compared to 2.2% for the same period of 2001. The
average interchange rate was 2.1% for the six months ended June 30, 2002 and
2001.

SERVICING REVENUES

Advanta Business Cards recognized servicing revenue of $8.1 million for the
three months ended June 30, 2002 and $16.1 million for the six months ended June
30, 2002. This compares to servicing revenue of $6.9 million for the three
months ended June 30, 2001 and $13.6 million for the six months ended June 30,
2001. The increase in servicing revenue was due to increased volume of
securitized receivables.

VENTURE CAPITAL

Our venture capital segment makes venture capital investments through certain of
our affiliates. The investment objective is to earn attractive returns by
building the long-term values of the businesses in which we invest. The
estimated fair value of our venture capital investments was $17.1 million at
June 30, 2002 and $18.6 million at December 31, 2001. The fair values of these
equity investments are subject to significant volatility. Our investments in
specific companies and industry segments may vary over time, and changes in
concentrations may affect fair value volatility. We primarily invest in
privately-held companies, including early stage companies. These investments are
inherently risky as the market for the technologies or products the investees
have under development may never materialize.

Pretax loss for the venture capital segment was $0.8 million for the three
months ended June 30, 2002, representing primarily operating expenses of the
unit. Pretax loss for the venture capital segment was $6.6 million for the three
months ended June 30, 2001, and included $5.6 million of decreases in valuations
of venture capital investments. For the six months ended June 30, 2002, pretax
loss for the venture capital segment was $4.2 million as compared to pretax loss
of $19.3 million for the same period of 2001. The


                                       25
<PAGE>
pretax loss for the six months ended June 30, 2002 included $2.6 million of
decreases in valuations of venture capital investments recorded in the first
quarter of 2002. The pretax loss for the six months ended June 30, 2001 included
$17.0 million of decreases in valuations and losses on venture capital
investments.

INTEREST INCOME AND EXPENSE

Interest income decreased by $9.2 million for the three months ended June 30,
2002 as compared to the same period of 2001. Interest income decreased by $19.0
million for the six months ended June 30, 2002 as compared to the same period of
2001. The decrease in interest income for the three and six months ended June
30, 2002 was due primarily to a decrease in investments. Excess liquid assets
resulting from the Mortgage Transaction in 2001 were held in short-term, high
quality investments until they could be deployed. Also contributing to the
decreased interest income in both periods was a decrease in the average yield
earned on our investment portfolio and receivables as a result of the prevailing
interest rate environment.

In the three and six months ended June 30, 2002, we began to see a shift in
business credit card revenue components represented by a decrease in interest
income on business credit card receivables offset by an increase in other
revenues, principally driven by higher interchange revenues due to higher
merchandise volume. In 2002, our marketing campaigns have offered a broader
array of competitively-priced products geared specifically toward attracting
more higher credit quality customers. We believe that the changes in revenue
components are consistent with the shift in the business credit card portfolio
towards higher credit quality customers and anticipate that this trend towards
fee income will continue in future periods.

During the three months ended June 30, 2002, interest expense decreased by $13.8
million as compared to the same period of 2001. Interest expense decreased by
$24.9 million during the six months ended June 30, 2002 as compared to the same
period of 2001. The decrease in interest expense for the three and six months
ended June 30, 2002 was due to a reduction in outstanding deposits and debt and
a decrease in our cost of funds. Our cost of funds decreased to 5.29% for the
three months ended June 30, 2002 from 7.41% during the same period of 2001, and
decreased to 5.57% for the six months ended June 30, 2002 from 7.33% for the
same period of 2001. The decrease in our cost of funds is primarily a result of
the prevailing interest rate environment.

The following table provides an analysis of interest income and expense data,
average balance sheet data, net interest spread and net interest margin for both
continuing and discontinued operations. The net interest spread represents the
difference between the yield on interest-earning assets and the average rate
paid on interest-bearing liabilities. The 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 receivables include deferred
origination costs, net of deferred fees.


                                       26
<PAGE>
INTEREST RATE ANALYSIS
($ IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                       THREE MONTHS ENDED JUNE 30,
                                            -----------------------------------------------------------------------------------
                                                               2002                                          2001
                                            --------------------------------------         ------------------------------------
                                             AVERAGE                       AVERAGE           AVERAGE                    AVERAGE
                                            BALANCE(1)       INTEREST       RATE            BALANCE(1)      INTEREST      RATE
                                            ---------        --------      -------         -----------      --------    -------
<S>                                        <C>               <C>           <C>             <C>              <C>           <C>
ON-BALANCE SHEET
Receivables:
 Business credit cards(2)                  $  472,010        $ 20,706      17.60%          $  371,764       $ 18,841     20.33%
 Other receivables                             28,483             288       4.06               28,184            348      4.95
                                           ----------        --------                      ----------       --------
Total owned receivables                       500,493          20,994      16.82              399,948         19,189     19.24
Investments(3)                                491,060           2,573       2.10            1,156,111         13,340      4.58
Retained interests in
 securitizations                               88,403           2,652      12.00               85,889          2,577     12.00
Interest-earning assets of
 discontinued operations                       49,991           1,074       8.59               95,565          2,917     12.21
                                           ----------        --------                      ----------       --------
Total interest-earning
  assets                                   $1,129,947        $ 27,293       9.69%          $1,737,513       $ 38,023      8.74%
                                           ----------        --------                      ----------       --------

Interest-bearing
 liabilities(4)                            $  938,406        $ 12,385       5.29%          $1,503,172       $ 27,759      7.41%

Net interest spread                                                         4.40%                                         1.33%
Net interest margin                                                         5.29%                                         2.37%

OFF-BALANCE SHEET
Average securitized
 business credit cards                     $1,638,410                                      $1,476,660

INCLUDING SECURITIZED
 BUSINESS CREDIT CARD
 ASSETS:
Interest-earning assets(5)                 $2,768,357        $104,619      15.16%          $3,214,173       $109,041     13.61%
Interest-bearing
 liabilities                               $2,576,816        $ 21,761       3.39%          $2,979,832       $ 46,194      6.22%
Net interest spread                                                        11.77%                                         7.39%
Net interest margin                                                        12.01%                                         7.84%
</TABLE>


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

<TABLE>
<CAPTION>
                                                                        SIX MONTHS ENDED JUNE 30,
                                            -----------------------------------------------------------------------------------
                                                               2002                                          2001
                                            --------------------------------------         ------------------------------------
                                             AVERAGE                       AVERAGE           AVERAGE                    AVERAGE
                                            BALANCE(1)       INTEREST       RATE            BALANCE(1)      INTEREST      RATE
                                            ---------        --------      -------         -----------      --------    -------
<S>                                        <C>               <C>           <C>             <C>              <C>           <C>
ON-BALANCE SHEET
Receivables:
 Business credit cards(2)                  $  434,934        $ 40,825      18.93%          $  371,118       $ 37,027     20.12%
 Other receivables                             28,338             624       4.44               28,364            558      3.97
                                           ----------        --------                      ----------       --------
Total owned receivables                       463,272          41,449      18.04              399,482         37,585     18.97
Investments(3)                                529,644           5,867       2.22            1,137,745         29,058      5.10
Retained interests in
 securitizations                               88,525           5,312      12.00               79,398          4,764     12.00
Interest-earning assets of
 discontinued operations                       52,251           2,233       8.55              339,011         25,720     15.20
                                           ----------        --------                      ----------       --------
Total interest-earning
  assets                                   $1,133,692        $ 54,861       9.74%          $1,955,636       $ 97,127      9.96%

Interest-bearing
 liabilities(4)                            $  944,704        $ 26,101       5.57%          $1,794,907       $ 65,279      7.33%

Net interest spread                                                         4.17%                                         2.63%
Net interest margin                                                         5.12%                                         3.28%

OFF-BALANCE SHEET
Average securitized
 business credit cards                     $1,627,096                                      $1,399,267

INCLUDING SECURITIZED
 BUSINESS CREDIT CARD
 ASSETS:
Interest-earning assets(5)                 $2,760,788        $211,830      15.47%          $3,354,903       $232,714     13.99%
Interest-bearing
 liabilities                               $2,571,800        $ 44,536       3.49%          $3,194,174       $103,599      6.54%
Net interest spread                                                        11.98%                                         7.45%
Net interest margin                                                        12.22%                                         7.76%
</TABLE>

(1)   Includes assets held and available for sale and non-accrual receivables.

(2)   Interest income includes late fees for on-balance sheet business credit
      card receivables of $1.6 million for the three months ended June 30, 2002
      and $1.7 million for the three months ended June 30, 2001. Interest income
      includes late fees for on-balance sheet business credit card receivables
      of $4.4 million for the six months ended June 30, 2002 and $3.8 million
      for the six months ended June 30, 2001.

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

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

(5)   Interest income on managed (owned and securitized) business credit card
      receivables includes late fees of $7.5 million for the three months ended
      June 30, 2002 and $8.7 million for the three months ended June 30, 2001.
      Interest income on managed business credit card receivables includes late
      fees of $17.2 million for the six months ended June 30, 2002 and $17.6
      million for the six months ended June 30, 2001.


                                       28
<PAGE>
PROVISION AND ALLOWANCE FOR CREDIT LOSSES

The provision for credit losses of $11.3 million for the three months ended June
30, 2002 increased by $2.9 million as compared to the provision for credit
losses of $8.4 million for the same period of 2001. The provision for credit
losses of $22.0 million for the six months ended June 30, 2002 increased by $5.7
million as compared to the provision for credit losses of $16.3 million for the
same period of 2001. These increases reflect an increase in average owned
business credit card receivables during those periods, the seasoning of the
business credit card portfolio and the prevailing economic environment.
Charge-off rates and average owned credit card receivables for those periods
were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                                            THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                 JUNE 30,                      JUNE 30,
                                                          ----------------------      ------------------------
                                                            2002          2001          2002            2001
                                                          --------      --------      --------      ----------
<S>                                                       <C>           <C>           <C>           <C>
Net charge-offs as a % of owned business credit card
    receivables                                                8.2%          6.7%          8.7%            6.5%

Average owned business credit card receivables            $472,010      $371,764      $434,935      $  371,118
                                                          --------      --------      --------      ----------
</TABLE>

The allowance for credit losses on business credit card receivables was $43.8
million at June 30, 2002, or 9.9% of owned receivables, which was consistent
with the allowance of $41.2 million, or 9.9% of owned receivables at December
31, 2001. The charge-off rate on owned business credit card receivables for the
three months ended June 30, 2002 was 8.2%, an improvement as compared to the
charge-off rate in the three months ended March 31, 2002 of 9.4%, and consistent
with the charge-off rate in the three months ended December 31, 2001 of 8.2%.
Business credit card receivables 30 days or more delinquent represented 6.5% of
the owned business credit card portfolio at June 30, 2002, as compared to 7.1%
at March 31, 2002 and 6.7% at December 31, 2002.

The improvement in 30 day delinquency and charge-off rates in the three months
ended June 30, 2002 as compared to the three months ended March 31, 2002
primarily reflects enhancements in the collections area of operations and the
current composition of the portfolio. In June 2000, we ceased origination of
business credit card accounts with credit scores of less than 661. We estimate
that charge-offs for accounts with credit scores at origination of less than 661
reached their peak in the first quarter of 2001, based on the average age of
that segment of the portfolio. Although charge-off levels are not always
predictable since they are impacted by the economic environment and other
factors, we anticipate improvements in charge-off rates for business credit card
receivables through the remainder of 2002, based on the current composition of
the portfolio.

In July 2002, the bank regulatory agencies issued draft guidance on account
management and loss allowance for credit card lending. It describes the
agencies' expectations for prudent risk management practices for credit card
activities, particularly with regard to credit line management, over-limit
accounts, and workouts. The draft guidance also addresses income recognition and
loss allowance practices for credit card lending. The agencies intend to issue
this interagency guidance on August 16, 2002. We anticipate that the
implementation of this guidance will not have a material effect on our financial
position or results of operations.


                                       29
<PAGE>
The following table provides a summary of allowance for credit losses,
nonperforming assets, delinquencies and charge-offs as of and for the
year-to-date periods indicated ($ in thousands). Consolidated data includes
business credit cards and other receivables.

<TABLE>
<CAPTION>
                                                     JUNE 30,       DECEMBER 31,      JUNE 30,
CREDIT QUALITY                                        2002              2001             2001
<S>                                                <C>              <C>              <C>
CONSOLIDATED - MANAGED
Nonperforming assets                               $  105,088       $   81,666       $   63,009
Receivables 90 days or more delinquent                 74,203           67,465           53,078
Receivables 30 days or more delinquent                145,711          137,517          110,867
As a percentage of gross receivables:
 Nonperforming assets                                     4.7%             3.9%             3.3%
 Receivables 90 days or more delinquent                   3.4              3.3              2.8
 Receivables 30 days or more delinquent                   6.6              6.6              5.8
Net charge-offs:
 Amount                                            $   95,769       $  143,593       $   61,852
 As a percentage of average gross receivables
  (annualized)                                            9.2%             7.6%             6.9%

CONSOLIDATED - OWNED
Allowance for credit losses                        $   45,006       $   41,971       $   37,568
Nonperforming assets                                   21,775           20,052           12,669
Receivables 90 days or more delinquent                 15,367           14,474           10,850
Receivables 30 days or more delinquent                 30,211           29,520           22,482
As a percentage of gross receivables:
 Allowance for credit losses                              9.6%             9.4%             9.8%
 Nonperforming assets                                     4.6              4.5              3.3
 Receivables 90 days or more delinquent                   3.3              3.3              2.8
 Receivables 30 days or more delinquent                   6.4              6.6              5.9
Net charge-offs:
 Amount                                            $   19,006       $   27,372       $   12,123
 As a percentage of average gross receivables
  (annualized)                                            8.2%             6.7%             6.1%

BUSINESS CREDIT CARDS - MANAGED
Nonperforming assets                               $  104,424       $   81,083       $   62,606
Receivables 90 days or more delinquent                 73,539           66,882           52,675
Receivables 30 days or more delinquent                144,239          136,037          109,877
As a percentage of gross receivables:
 Nonperforming assets                                     4.8%             4.0%             3.3%
 Receivables 90 days or more delinquent                   3.4              3.3              2.8
 Receivables 30 days or more delinquent                   6.6              6.7              5.8
Net charge-offs:
 Amount                                            $   95,755       $  143,590       $   61,852
 As a percentage of average gross receivables
  (annualized)                                            9.3%             7.7%             7.0%

BUSINESS CREDIT CARDS - OWNED
Allowance for credit losses                        $   43,777       $   41,169       $   37,166
Nonperforming assets                                   21,111           19,469           12,266
Receivables 90 days or more delinquent                 14,703           13,891           10,447
Receivables 30 days or more delinquent                 28,739           28,040           21,492
As a percentage of gross receivables:
 Allowance for credit losses                              9.9%             9.9%            10.5%
 Nonperforming assets                                     4.8              4.7              3.5
 Receivables 90 days or more delinquent                   3.3              3.3              3.0
 Receivables 30 days or more delinquent                   6.5              6.7              6.1
Net charge-offs:
 Amount                                            $   18,993       $   27,369       $   12,123
 As a percentage of average gross receivables
  (annualized)                                            8.7%             7.2%             6.5%
</TABLE>


                                       30
<PAGE>
OTHER REVENUES

<TABLE>
<CAPTION>
($ in thousands)                    THREE MONTHS ENDED           SIX MONTHS ENDED
                                         JUNE 30,                   JUNE 30,
                                  ---------------------       ----------------------
                                    2002          2001          2002          2001
                                  -------       -------       -------       --------
<S>                               <C>           <C>           <C>           <C>
Investment securities gains
  (losses), net                   $   534       $(6,119)      $(2,093)      $(14,316)
Business credit card rewards       (3,023)       (2,365)       (5,027)        (3,908)
Cash advance fees                     883           580         1,691            797
Loss on sale of deposits                0        (2,835)            0         (2,835)
Insurance revenues (losses),
  net, and other                    1,868         2,148         3,376         (6,052)
                                  -------       -------       -------       --------
  Total other revenues, net       $   262       $(8,591)      $(2,053)      $(26,314)
                                  =======       =======       =======       ========
</TABLE>

Investment securities gains (losses), net, include changes in the fair value and
realized gains (losses) on venture capital investments. Investment securities
gains for the three months ended June 30, 2002 include $0.5 million of realized
gains on other investments. Investment securities gains (losses) for the six
months ended June 30, 2002 also include $2.6 million of decreases in valuations
of venture capital investments. Investment securities losses for the three
months ended June 30, 2001 include $5.6 million of decreases in valuations of
venture capital investments and $0.5 million of realized losses on other
investments. Investment securities losses for the six months ended June 30, 2001
also include a $4.9 million loss on the sale of a venture capital investment,
$6.5 million of decreases in valuations of venture capital investments, and $3.2
million of realized gains on other investments.

Business credit card rewards, which include bonus miles and cash-back rewards,
are earned by eligible cardholders based on net purchases charged to their
accounts. Increases in business credit card rewards in the three and six months
ended June 30, 2002 were due to the increase in average managed business credit
card accounts in the rewards programs and the corresponding purchase activity in
those accounts, partially offset by a reduction in the estimated cost of future
reward redemptions recorded in the three months ended March 31, 2002. Cash
advance fees have increased for the three and six months ended June 30, 2002 as
compared to the same periods of 2001, due primarily to growth in managed
business credit card receivables.

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. Insurance revenues, net, and other for the six months
ended June 30, 2001 includes operating results of insurance operations, the
impact of the termination of the strategic alliance with Progressive Casualty
Insurance Company and $10 million of charges related to the write-off of
insurance-related deferred acquisition costs that were unrealizable subsequent
to the termination of the auto insurance strategic alliance.


                                       31
<PAGE>
OPERATING EXPENSES

<TABLE>
<CAPTION>
($ in thousands)                             THREE MONTHS ENDED        SIX MONTHS ENDED
                                                  JUNE 30,                 JUNE 30,
                                           --------------------      --------------------
                                             2002         2001         2002         2001
                                           -------      -------      -------      -------
<S>                                        <C>          <C>          <C>          <C>
Salaries and employee benefits             $16,533      $14,882      $33,664      $29,877
Amortization of business credit card
  deferred origination costs, net           12,410        9,315       24,432       17,109
External processing                          4,134        4,391        8,359        8,254
Marketing                                    3,653        2,150        5,564        6,974
Professional/consulting fees                 3,412        3,158        7,247        6,222
Equipment                                    2,466        2,064        5,067        4,090
Occupancy                                    1,687        1,676        3,298        2,728
Credit                                       1,622        1,184        3,295        2,342
Telephone                                    1,111          494        1,738        1,027
Insurance                                      297        1,382        1,114        2,798
Other                                        2,562        3,420        5,067        5,748
                                           -------      -------      -------      -------
Total operating expenses                   $49,887      $44,116      $98,845      $87,169
                                           =======      =======      =======      =======
</TABLE>

Salaries and employee benefits, equipment, credit and telephone expense have
increased for the three and six months ended June 30, 2002 as compared to the
same periods of 2001. These increases are due primarily to growth in managed
business credit card receivables. The growth in receivables did not result in a
similar increase in external processing expense for the three months ended June
30, 2002 due to a reduction in the contracted rate for these services that
occurred during the first quarter of 2002. Salaries and employee benefits in the
three and six months ended June 30, 2002 also reflect additional investments in
initiatives to strengthen our position as a leading issuer of business credit
cards to the small business market. We expect our total operating expenses to
continue to increase in 2002 as we continue to make these types of additional
investments. These include initiatives to provide additional value to our
existing customers, customer retention activities, development of additional
products and services, development of affinity cards and partnership
relationships, and enhancement of internet capabilities for servicing our
customers.

The increase in amortization of business credit card deferred origination costs,
net, in the three and six months ended June 30, 2002 as compared to the same
periods of 2001, and the increase in marketing expense in the three months ended
June 30, 2002 as compared to the same period of 2001, are attributable to our
strategic initiative to attract and retain more higher credit quality customers
and the competitive market environment for credit card issuers. The decrease in
marketing expense in the six months ended June 30, 2002 as compared to 2001
reflects our decreased origination activities in our retail note program as a
result of our high liquidity position subsequent to the Mortgage Transaction in
2001.

The decrease in insurance expense in the three and six months ended June 30,
2002 as compared to 2001 is primarily a result of a decrease in FDIC insurance
costs on deposit liabilities. Our FDIC insurance costs decreased due to the
significant reduction in our outstanding deposits at Advanta National Bank
subsequent to the Mortgage Transaction, and due to a decrease in the insurance
assessment rate at Advanta Bank Corp. In addition, insurance expense in the
three months ended June 30, 2002 includes a $0.4 million reduction of our
estimated liability related to worker's compensation insurance.

Other operating expenses in the three months ended June 30, 2002 include a $1.1
million decrease in litigation reserves resulting from a reduction of damages in
a


                                       32
<PAGE>
jury verdict. See further discussion in Note 12 to the consolidated financial
statements.

LITIGATION CONTINGENCIES

Advanta Corp. and its subsidiaries are involved in class action lawsuits, other
litigation, claims and legal proceedings arising in the ordinary course of
business or discontinued operations, including litigation arising from our
operation of the mortgage business prior to the Mortgage Transaction in the
first quarter of 2001. See discussion in Note 12 to the consolidated financial
statements. Management believes that the aggregate liabilities, if any,
resulting from these actions will not have a material adverse effect on the
consolidated financial position or results of our operations based on the level
of litigation reserves we have established and our expectations regarding the
ultimate resolutions of these actions. However, due to the inherent uncertainty
in litigation and since the ultimate resolutions of these proceedings are
influenced by factors outside of our control, it is reasonably possible that our
estimated liability under these proceedings may change or that actual results
will differ from our estimates. Our litigation reserves are included in other
liabilities on the consolidated balance sheets.

UNUSUAL CHARGES

Subsequent to the exit of our 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 expected and realized lower personnel expenses in the
support functions in the 12 months following the charges, and expected to
realize lower depreciation and amortization expense over the following 5-7
years. These decreases were due to the termination of employees and the
write-off or write-down of assets previously deployed in connection with exited
businesses. We also expected and realized the elimination of the costs of the
contractual commitments associated with exited business products from future
operating results over the estimated timeframe of the contracts.

     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 severance amounts were payable over a 12-month
period following the employee's termination date. These payments will be
completed in the third quarter of 2002.

Additionally, during 2001, we incurred $23.2 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 were 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%


                                       33
<PAGE>
of outstanding options that were not vested at the date of the closing of the
Mortgage Transaction. This acceleration resulted in a noncash charge of $1.3
million. In connection with reviewing our compensation plans after the Mortgage
Transaction and restructuring of corporate functions, we implemented a program
whereby all outstanding stock appreciation rights and shares of phantom stock
were terminated in exchange for cash to be paid through a deferred compensation
arrangement. We recorded charges of $2.9 million associated with this exchange.
The charge reflects a $0.7 million reduction recorded in the three months ended
September 30, 2001, as actual cash 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 stock, and whereby certain
shares of restricted stock were exchanged for cash and stock options in a tender
offer, subject to certain performance conditions and vesting requirements.
Noncash charges associated with the issuance of the 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 noncash charges
associated with the tender offer were more than estimated.

     Expenses Associated With Exited Businesses/Products

In the first quarter of 2001, we recorded charges of $2.2 million related to
other products exited for which no future revenues or benefits would be
received. In the third quarter of 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, in the third quarter of 2002.

In 1998, in connection with the transfer of our consumer credit card business to
Fleet Credit Card LLC, we made major organizational changes to reduce corporate
expenses incurred in the past: (a) to support the business contributed to Fleet
Credit Card LLC in the transfer of our consumer credit card business, 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.

     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.

DISCONTINUED OPERATIONS

Effective February 28, 2001, we completed the Mortgage Transaction and exit of
our mortgage business, Advanta Mortgage, through a purchase and sale agreement
with Chase Manhattan Mortgage Corporation as buyer. Loss from discontinued
operations, net of tax, was $8.4 million for the period from January 1, 2001
through February


                                       34
<PAGE>
28, 2001, the effective date of the Mortgage Transaction. 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.

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 are continuing to service the existing
leasing portfolio rather than sell the business or the portfolio.

In the three months ended June 30, 2002, we recorded an after-tax loss on the
discontinuance of our mortgage and leasing businesses of $8.6 million. The
components of this loss include a pretax charge of $7.5 million for a litigation
settlement in July 2002 related to a mortgage loan servicing agreement
termination fee collected in December 2000, a $17.8 million pretax charge
primarily related to an increase in our estimated future costs of mortgage
business-related contingent liabilities, an $11.3 million pretax gain on leasing
discontinuance, and a tax benefit of $5.4 million. The $17.8 million relates
primarily to an increase in our estimated future costs of mortgage
business-related contingent liabilities in connection with (a) contingent
liabilities and litigation costs arising from the operation of the mortgage
business prior to the Mortgage Transaction that were not assumed by the buyer,
and (b) costs related to Advanta's litigation with Chase Manhattan Mortgage
Corporation in connection with the Mortgage Transaction. The change in estimate
reflects the legal and consulting fees and other costs that we expect to incur
based on current levels of contingent liabilities and expense rates, and
considers the status of the discovery process associated with the Mortgage
Transaction litigation. The $11.3 million pretax gain on leasing discontinuance
represents a revision in the estimated operating results of the leasing segment
over the remaining life of the lease portfolio due primarily to favorable credit
performance. The leasing portfolio performed favorably as compared to the
expectations and assumptions established in 2001. This improvement was the
result of successfully obtaining a replacement vendor to service leased
equipment for a former leasing vendor that had filed for bankruptcy protection,
and operational improvements in the leasing collections area.

In the six months ended June 30, 2001, we recorded an after-tax gain on the
discontinuance of our mortgage and leasing businesses of $12.4 million. The
components of this net gain include a pretax gain on the Mortgage Transaction of
$25.8 million, a pretax loss on the discontinuance of our leasing business of
$6.0 million, and a tax provision of $7.4 million. The gain on the Mortgage
Transaction does not reflect any impact from the post-closing adjustment
process. See Note 12 to the consolidated financial statements for a discussion
of litigation related to the Mortgage Transaction.

Estimates are used in the accounting for discontinued operations, including
estimates of the future costs of mortgage business-related litigation and
estimates of operating results through the remaining term of the leasing
portfolio. As all estimates used are influenced by factors outside our control,
there is uncertainty inherent in these estimates, making it reasonably possible
that they could change in the near term.


                                       35
<PAGE>
ASSET/LIABILITY MANAGEMENT

We manage our financial condition with a focus on maintaining high credit
quality standards, disciplined management of market risks and prudent levels of
growth, leverage and liquidity.

MARKET RISK SENSITIVITY

We are exposed to equity price risk on the equity securities in our investments
available for sale portfolio. A 20% adverse change in equity prices would result
in an approximate $4.3 million decrease in the fair value of our equity
investments as of June 30, 2002.

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 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. Both increasing and decreasing rate scenarios assume an
instantaneous shift in rates and measure the corresponding change in expected
net interest income as compared to a base case scenario.

We estimate that at June 30, 2002, our net interest income over a 12-month
period would increase by approximately 18% if interest rates were to rise by 200
basis points, and that our net interest income over a 12-month period would
decrease by approximately 5% if interest rates were to fall by 200 basis points.
We estimate that at June 30, 2002, our managed net interest income over a
12-month period would decrease by approximately 2% 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% 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. This is because market interest rates
at June 30, 2002 were below certain of the interest rate floors, and a 200 basis
point increase in market interest rates would not impact the contractual rate on
a portion of the receivables.

The above estimates of net interest income sensitivity alone do not provide a
comprehensive view of our exposure to interest rate risk. The quantitative risk
information is limited by the parameters and assumptions utilized in generating
the results. These analyses are useful only when viewed within the context of
the parameters and assumptions used. The above rate scenarios in no way reflect
management's expectation regarding the future direction of interest rates, and
they depict only two possibilities out of a large set of possible scenarios.


                                       36
<PAGE>
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.
Since Advanta Corp.'s debt rating is not investment grade, our access to
unsecured, institutional debt is limited. However, we do have access to a
diversity of funding sources as described below, and had a high level of
liquidity at June 30, 2002. At June 30, 2002, we had $222 million of federal
funds sold, $219 million of receivables held for sale, and $158 million of
investments, which could be sold to generate additional liquidity. Components of
funding were as follows ($ in thousands):

<TABLE>
<CAPTION>
                                           JUNE 30, 2002          DECEMBER 31, 2001
                                         ----------------         -----------------
                                           AMOUNT      %            AMOUNT       %
                                         ----------   ---         ----------    ---
<S>                                      <C>          <C>         <C>           <C>
Off-balance sheet business credit card
   receivables                           $1,744,669    55%        $1,626,709     53%
Deposits                                    614,383    20            636,915     21
Debt and other borrowings                   301,386    10            355,899     11
Equity, including capital securities        462,800    15            466,299     15
                                         ----------   ---         ----------    ---
Total                                    $3,123,238   100%        $3,085,822    100%
                                         ----------   ---         ----------    ---
</TABLE>

At June 30, 2002, we had a $280 million committed commercial paper conduit
facility secured by business credit card receivables, of which $45 million was
unused at June 30, 2002. In June 2002, this facility was renewed through June
2003.

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. In August 2002, the Board of Directors
authorized the purchase of up to an additional 1.5 million shares of Advanta
Corp. common stock, bringing the total authorization to up to 3.0 million
shares. We intend to make purchases modestly and when we believe it is prudent
to do so while we analyze evolving capital requirements. During the year ended
December 31, 2001, we repurchased 693,300 shares of our Class B Common Stock. In
the six months ended June 30, 2002 we repurchased 386,900 shares of our Class B
Common Stock.

In 2000, Advanta Bank Corp. entered into agreements with its bank regulatory
agencies, primarily relating to the bank's subprime lending operations. These
agreements imposed temporary deposit growth limits at Advanta Bank Corp. and
required prior regulatory approval of cash dividends. In April 2002, the
agreements were removed and, as a result, the restrictions in the agreements on
deposit growth and payment of cash dividends are no longer applicable. We
believe that the removal of the agreements is the result of our ongoing efforts
to enhance Advanta Bank Corp.'s practices, procedures and regulatory
relationships. In connection with removing the agreements, Advanta Bank Corp.
has reached an understanding with its regulators which provides for the bank to
continue its ongoing efforts to enhance processes and practices. The
understanding is consistent with the manner in which Advanta Bank Corp. is
currently operating its business and includes no restrictions expected to have
any impact on our financial results.

In 2000, Advanta National Bank also reached agreements with its bank regulatory
agency, primarily relating to the bank's subprime lending operations. The
agreements established temporary asset growth limits at Advanta National Bank,
imposed restrictions on taking brokered deposits and required that Advanta
National Bank maintain certain capital ratios in excess of the minimum
regulatory standards. In 2001, Advanta National Bank entered into an additional
agreement with its regulatory agency regarding restrictions on new business
activities and product lines at Advanta National Bank after the Mortgage
Transaction, and the resolution of outstanding Advanta National Bank
liabilities. The agreement also reduced the


                                       37
<PAGE>
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 prohibits the
payment of dividends by Advanta National Bank without prior regulatory approval.

At June 30, 2002, Advanta Bank Corp.'s combined total capital ratio (combined
Tier I and Tier II capital to risk-weighted assets) was 22.34%, and Advanta
National Bank's combined total capital ratio was 23.36%. At December 31, 2001,
Advanta Bank Corp.'s combined total capital ratio (combined Tier I and Tier II
capital to risk-weighted assets) was 18.80% and Advanta National Bank's combined
total capital ratio was 23.34%. In each case, Advanta Bank Corp. and Advanta
National Bank 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.

In the second quarter of 2002, the bank regulatory agencies issued an
interagency advisory that requires accrued interest receivable relating to
securitized credit cards to be treated as a subordinated residual interest for
regulatory capital calculations no later than December 31, 2002. Advanta Bank
Corp. and Advanta National Bank will adopt this guidance effective December 31,
2002. The adoption of this guidance will not impact the regulatory capital
requirements of Advanta National Bank. We estimate that the adoption of this
interagency guidance, as well as other regulatory guidance, will result in
Advanta Bank Corp.'s combined total capital ratio being approximately nine
percentage points lower. Based on the estimated impact, we anticipate that
Advanta Bank Corp. will remain classified as "well-capitalized" under the
regulatory framework for prompt corrective action after adoption.

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."


                                       38
<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 Credit Card LLC in connection with the
Consumer Credit Card Transaction in 1998. Fleet seeks damages of approximately
$141 million. We 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 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. In October 2001, the court issued a ruling
on summary judgment in favor of Fleet on certain legal issues and positions
advocated by Fleet and against others that Fleet advocated. As a result, for
purposes of trial only, the parties stipulated to a number of issues relating to
the court's orders including certain amounts that would be owed by each party to
the other, while preserving their rights to appeal. Many issues remained to be
determined at trial, including the financial impact of all issues in dispute.
The trial took place in November and December 2001. Post-trial briefing is
complete and on April 10, 2002, the Court heard oral argument. As a result of
related litigation with Fleet, $70.1 million of our reserves in connection with
this litigation were funded in an escrow account in February 2001. Taking into
account amounts that Fleet owes to us and the amount escrowed, including
interest, we have funded our estimated maximum net exposure to Fleet in the
litigation. Management expects that the ultimate resolution of this litigation
will not have a material adverse effect on our financial position or future
operating results given the amount escrowed, our reserves and amounts that Fleet
owes us.

On December 5, 2000, a former executive of Advanta obtained a jury verdict
against Advanta in the amount of $3.9 million in the United States District
Court for the Eastern District of Pennsylvania, in connection with various
claims against Advanta related to the executive's termination of employment. In
September 2001, the District Court Judge issued orders denying both parties'
post-trial motions. A judgment in the amount of approximately $6 million, which
includes the $3.9 million described above, was entered against Advanta. In
September 2001, Advanta filed an appeal to the United States Court of Appeals
for the Third Circuit. Advanta has posted a supersedeas bond in the amount of $8
million. The plaintiff filed a cross-appeal from the order adverse to him. On
July 8, 2002, the Court of Appeals issued a Judgment and Opinion affirming in
part and reversing in part the District Court judgment. The Court of Appeals
affirmed the judgment on liability but determined that the jury award of damages
was excessive. The Court of Appeals reduced the jury verdict by $1.1 million and
also ordered the District Court to recalculate liquidated damages based on the
reduced award. On July 22, 2002, Advanta filed a motion for rehearing and/or
rehearing en banc asserting that a new trial was required to remedy the error
found by the Court of Appeals. The motion was denied by Order dated August 8,
2002, and Advanta is now considering further appellate review. 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. Management expects that the ultimate resolution of this litigation
will not have a material adverse effect on our financial position or future
operating results.


                                       39
<PAGE>
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 alleged, 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. An
answer to Banc One's second amended complaint was filed in July 2001 denying
liability, raising affirmative defenses and asserting a counterclaim. Various
motions were filed. While the motions were pending, the parties pursued
settlement discussions, and on July 29, 2002, a settlement was reached. In
connection with this settlement, Advanta recorded a $7.5 million pretax charge,
representing the amount of the settlement in excess of our reserve.

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 Mortgage
Transaction. Chase claims that Advanta misled Chase concerning the value of
certain of the assets sold to Chase. In September 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 not anticipated before September 2003.
We believe that the lawsuit is without merit and will vigorously defend Advanta
in this litigation. 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 on Advanta or
the named subsidiaries.

On November 8, 2001 and January 28, 2002, the accounting firm of Grant Thornton,
LLP ("Grant Thornton") filed third-party complaints against Advanta Mortgage
Corp., USA ("AMCUSA") in two related lawsuits in the United States District
Court for the Southern District of West Virginia. The third-party claims alleged
negligent misrepresentation, claiming without specificity or factual support
that Grant Thornton received inaccurate information from AMCUSA concerning the
amount of loans that AMCUSA had been servicing for the First National Bank of
Keystone, West Virginia ("Keystone Bank"). Grant Thornton was the former auditor
for Keystone Bank, which failed. Grant Thornton has been sued by the FDIC as
receiver of Keystone Bank and by shareholders and others with purported
ownership interests in Keystone Bank, alleging that Grant Thornton rendered an
unqualified opinion for Keystone Bank's financial statements, when in fact the
financial statements fraudulently overstated the Bank's assets by more than $500
million. In December 2001 and February 2002, AMCUSA filed motions to dismiss the
third-party complaints, both of which were granted (on June 13, 2002 and June
26, 2002, respectively). On June 27, 2002, Grant Thornton again asserted a
third-party claim for negligent misrepresentation very similar to the one that
had just been dismissed, and an additional third-party claim for
"contribution-negligence" based on the same supposed provision of inaccurate
information regarding loans being serviced for Keystone Bank. On July 11, 2002,
AMCUSA again moved to dismiss, and that motion is pending. AMCUSA plans to
vigorously defend this litigation, and because AMCUSA believes that the
likelihood of a final judgment of liability against AMCUSA is remote, it is not
expected that the ultimate resolution of this litigation will have a material
adverse effect on Advanta's financial position or future operating results.

In addition to the cases described above, Advanta Corp. and its subsidiaries are
involved in class action lawsuits, other litigation, claims and legal
proceedings arising in the ordinary course of business or discontinued
operations, including


                                       40
<PAGE>
litigation arising from our operation of the mortgage business prior to the
Mortgage Transaction in the first quarter of 2001. Management believes that the
aggregate liabilities, if any, resulting from all litigation, claims and other
legal proceedings will not have a material adverse effect on the consolidated
financial position or results of our operations based on the level of litigation
reserves we have established and our expectations regarding the ultimate
resolutions of these actions. However, due to the inherent uncertainty in
litigation and since the ultimate resolutions of our litigation, claims and
other legal proceedings are influenced by factors outside of our control, it is
reasonably possible that our estimated liability under these proceedings may
change or that actual results will differ from our estimates.

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

(a)   Advanta Corp. held its Annual Meeting of Stockholders on June 13, 2002.

(b)   Not required.

(c)   The following proposal was submitted to a vote of stockholders.

      (i)   The election of three directors to hold office until the 2005 Annual
            Meeting of Stockholders.

<TABLE>
<CAPTION>
         NOMINEES                       VOTES FOR              VOTES WITHHELD
         --------                       ---------              --------------
<S>                                     <C>                    <C>
         Max Botel                      8,865,235                 586,831
         James E. Ksansnak              8,865,790                 586,276
         Ronald Lubner                  9,130,315                 321,751
</TABLE>


                                       41
<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

      99.1    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

      99.2    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted
              Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

(b) Reports on Form 8-K

<TABLE>
<S>           <C>
      (b)(1)  A Current Report on Form 8-K, dated April 19, 2002, was filed by
              Advanta announcing the removal of regulatory agreements that
              Advanta Bank Corp. entered into in 2000.

      (b)(2)  A Current Report on Form 8-K, dated April 23, 2002, was filed by
              Advanta setting forth the financial highlights of Advanta's
              results of operations for the three months ended March 31, 2002.

      (b)(3)  A Current Report on Form 8-K, dated June 28, 2002, was filed by
              Advanta announcing the decision to engage KPMG LLP as its
              independent public accountants and dismiss Arthur Andersen LLP.

      (b)(4)  A Current Report on Form 8-K, dated June 28, 2002, was filed by
              Advanta, the Administrator of the Advanta Corp. Employee Savings
              Plan, announcing the decision to engage KPMG LLP as its
              independent public accountants and dismiss Arthur Andersen LLP.
</TABLE>


                                       42
<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)

      August 13, 2002                             By /s/Philip M. Browne
                                                     ------------------------
                                                  Senior Vice President and
                                                  Chief Financial Officer


      August 13, 2002                             By /s/David B. Weinstock
                                                     ------------------------
                                                  Vice President and
                                                  Chief Accounting Officer


                                       43
<PAGE>
          EXHIBIT INDEX

<TABLE>
<CAPTION>
                                                                          MANNER OF
EXHIBIT   DESCRIPTION                                                      FILING
-------   -----------                                                     ---------
<S>       <C>                                                             <C>
  12      Consolidated Computation of Ratio of Earnings to Fixed Charges      *

  99.1    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted        *
          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

  99.2    Certification Pursuant to 18 U.S.C. Section 1350, as Adopted        *
          Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
</TABLE>

*     Filed electronically herewith.


                                       44