##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-Q

|    |  |                                                                                                                                  
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------
|[X] |  | Quarterly report under section 13 or 15(d) of the Securities Exchange
Act of 1934 for the quarterly period ended June 30, 2003 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
(State or other jurisdiction of
incorporation or organization) |  | 23-1462070
(I.R.S. Employer
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 [  ]

Indicate by check mark whether the registrant is an accelerated filer (as
defined in Rule 12b-2 of the Exchange Act).

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
Common Stock, $.01 par value |  | Outstanding at August 4, 2003
9,864,385 shares

|                                     |  |                                                
|------------------------------------ |  | -----------------------------------------------
|Class B
Common Stock, $.01 par value |  | Outstanding at August 4, 2003
17,389,454 shares





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TABLE OF CONTENTS



|                                   |                                                                                               |                                                                        |  |  |  |  |  | 
|---------------------------------- | --------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- |  |  |  |  |  | 
|PART I  FINANCIAL INFORMATION    
|                                   | ITEM 1. FINANCIAL STATEMENTS                                                                 
|                                   |                                                                                               | CONSOLIDATED BALANCE SHEETS (Unaudited)                               
|                                   |                                                                                               | CONSOLIDATED INCOME STATEMENTS  (Unaudited)                           
|                                   |                                                                                               | CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)
|                                   |                                                                                               | CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)                     
|                                   |                                                                                               | NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)                
|                                   | ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|                                   | ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK                           
|                                   | ITEM 4. CONTROLS AND PROCEDURES                                                              
|PART II  OTHER INFORMATION       
|                                   | ITEM 1. LEGAL PROCEEDINGS                                                                    
|                                   | ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                                  
|                                   | ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K                                                     
|Ex. 10 - Lease Agreement          
|Ratio of Earnings to Fixed Charges
|302 Certification (CEO)           
|302 Certification (CFO)           
|906 Certification (CEO)           
|906 Certification (CFO)           



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##### Table of Contents



TABLE OF CONTENTS

|                                                                                              |                                                                        |  |      |     | 
|--------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------- |  | ---- | --- | 
|                                                                                              |                                                                        |  | Page
|                                                                                              |                                                                        |  |     
|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 |                                                                        |  | 23   |    
|Item 3. Quantitative and Qualitative Disclosures
About Market Risk                            |                                                                        |  | 42   |    
|Item 4. Controls and Procedures                                                               |                                                                        |  | 43   |    
|PART
II  OTHER INFORMATION                                                                   |                                                                        |  |      |    
|Item 1. Legal Proceedings                                                                     |                                                                        |  | 43   |    
|Item 4. Submission of Matters to a Vote of Security Holders                                   |                                                                        |  | 43   |    
|Item 6. Exhibits and Reports on Form 8-K                                                      |                                                                        |  | 44   |    

2



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##### Table of Contents









ITEM 1. FINANCIAL STATEMENTS

ADVANTA CORP. AND SUBSIDIARIES




CONSOLIDATED BALANCE SHEETS (Unaudited)


|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |       |         | 
|------------------------------------------------------------------------------------------------------------------------------------------------ | ------------------------------------------------------------------------------------------------- | ------------- | --------- | -------- | ------- | ------------ | --------- | ----- | ------- | 
|                                                                                                                                                 |                                                                                                   |               |           | June 30, |         | December 31,
|(In thousands, except share data)                                                                                                                |                                                                                                   | 2003          |           | 2002    
|                                                                                                                                                 |                                                                                                   |               |           |         
|ASSETS                                                                                                                                           |                                                                                                   |               |           |          |         |              |           |      
|Cash                                                                                                                                             |                                                                                                   | $             | 44,919    |          |         | $            | 14,834    |      
|Federal funds sold                                                                                                                               |                                                                                                   |               | 280,902   |          |         |              | 332,257   |      
|Restricted interest-bearing deposits                                                                                                             |                                                                                                   |               | 77,880    |          |         |              | 79,449    |      
|Investments available for sale                                                                                                                   |                                                                                                   |               | 201,049   |          |         |              | 171,222   |      
|Receivables, net:                                                                                                                                |                                                                                                   |               |           |          |         |              |           |      
|                                                                                                                                                 |                                                                                                   | Held for sale |           |          | 158,557 |              |           |       | 177,065 | 
|                                                                                                                                                 |                                                                                                   | Other         |           |          | 282,483 |              |           |       | 278,282 | 
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|Total receivables, net                                                                                                                           |                                                                                                   |               | 441,040   |          |         |              | 455,347   |      
|Accounts receivable from securitizations                                                                                                         |                                                                                                   |               | 831,191   |          |         |              | 198,238   |      
|Premises and equipment, net                                                                                                                      |                                                                                                   |               | 18,592    |          |         |              | 25,496    |      
|Other assets                                                                                                                                     |                                                                                                   |               | 294,828   |          |         |              | 277,658   |      
|Assets of discontinued operations, net                                                                                                           |                                                                                                   |               | 90,075    |          |         |              | 127,112   |      
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|Total assets                                                                                                                                     |                                                                                                   | $             | 2,280,476 |          |         | $            | 1,681,613 |      
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|LIABILITIES                                                                                                                                      |                                                                                                   |               |           |          |         |              |           |      
|Deposits                                                                                                                                         |                                                                                                   | $             | 1,205,001 |          |         | $            | 714,028   |      
|Debt                                                                                                                                             |                                                                                                   |               | 319,428   |          |         |              | 315,886   |      
|Other liabilities                                                                                                                                |                                                                                                   |               | 329,188   |          |         |              | 230,386   |      
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|Total liabilities                                                                                                                                |                                                                                                   |               | 1,853,617 |          |         |              | 1,260,300 |      
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|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 2003 and 2002                                |               |           | 1,010    |         |              |           | 1,010 |        
|Class A voting common stock, $.01 par value:                                                                                                     |                                                                                                   |               |           |          |         |              |           |      
|                                                                                                                                                 | Authorized
 200,000,000 shares; issued  10,041,017
shares in 2003 and 2002                      |               |           | 100      |         |              |           | 100   |        
|Class B non-voting common stock, $.01 par value:                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|                                                                                                                                                 | Authorized
 200,000,000 shares; issued  20,471,162
shares in 2003 and 20,326,289 shares in 2002 |               |           | 205      |         |              |           | 204   |        
|Additional paid-in capital                                                                                                                       |                                                                                                   |               | 245,071   |          |         |              | 243,910   |      
|Deferred compensation                                                                                                                            |                                                                                                   |               | (16,235   | )        |         |              | (17,837   | )    
|Unearned ESOP shares                                                                                                                             |                                                                                                   |               | (10,606   | )        |         |              | (10,831   | )    
|Accumulated other comprehensive income                                                                                                           |                                                                                                   |               | 328       |          |         |              | 186       |      
|Retained earnings                                                                                                                                |                                                                                                   |               | 153,504   |          |         |              | 147,205   |      
|Less: Treasury stock at cost, 154,632 Class A common
shares and 3,197,614 Class B common shares in 2003;
2,896,112 Class B common shares in 2002 |                                                                                                   |               | (46,518   | )        |         |              | (42,634   | )    
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|Total stockholders equity                                                                                                                       |                                                                                                   |               | 326,859   |          |         |              | 321,313   |      
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      
|Total liabilities and stockholders equity                                                                                                       |                                                                                                   | $             | 2,280,476 |          |         | $            | 1,681,613 |      
|                                                                                                                                                 |                                                                                                   |               |           |          |         |              |           |      

See Notes to Consolidated Financial Statements

3



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##### Table of Contents



ADVANTA CORP. AND SUBSIDIARIES




CONSOLIDATED INCOME STATEMENTS (Unaudited)


|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |        | 
|--------------------------------------------------------------------------- | ------------------------------------------------------ | -------- | ------ | ------------------ | ------ | ---------------- | ------ | ------ | ------ | - | ------- | ------- | ------ | - | ------- | ------ | ------ | 
|                                                                            |                                                        |          |        | Three Months Ended |        | Six Months Ended
|                                                                            |                                                        |          |        | June 30,           |        | June 30,        
|                                                                            |                                                        |          |        |                    |        |                 
|(In thousands, except per share data)                                       |                                                        | 2003     |        | 2002               |        | 2003             |        | 2002  
|                                                                            |                                                        |          |        |                    |        |                  |        |       
|Interest income:                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            | Receivables                                            |          | $      | 18,914             |        |                  | $      | 21,007 |        |   | $       | 36,387  |        |   | $       | 41,483 |       
|                                                                            | Investments                                            |          |        | 2,163              |        |                  |        | 2,576  |        |   |         | 4,089   |        |   |         | 5,846  |       
|                                                                            | Other interest income                                  |          |        | 4,373              |        |                  |        | 2,652  |        |   |         | 7,965   |        |   |         | 5,312  |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Total interest income                                                       |                                                        |          | 25,450 |                    |        |                  | 26,235 |        |        |   | 48,441  |         |        |   | 52,641  |       
|Interest expense:                                                           |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            | Deposits                                               |          |        | 7,419              |        |                  |        | 6,023  |        |   |         | 13,640  |        |   |         | 12,288 |       
|                                                                            | Debt                                                   |          |        | 5,692              |        |                  |        | 6,346  |        |   |         | 10,741  |        |   |         | 13,132 |       
|                                                                            | Other borrowings                                       |          |        | 0                  |        |                  |        | 0      |        |   |         | 1       |        |   |         | 59     |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Total interest expense                                                      |                                                        |          | 13,111 |                    |        |                  | 12,369 |        |        |   | 24,382  |         |        |   | 25,479  |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Net interest income                                                         |                                                        |          | 12,339 |                    |        |                  | 13,866 |        |        |   | 24,059  |         |        |   | 27,162  |       
|Provision for credit losses                                                 |                                                        |          | 9,265  |                    |        |                  | 11,341 |        |        |   | 18,711  |         |        |   | 22,041  |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Net interest income after provision for
credit losses                       |                                                        |          | 3,074  |                    |        |                  | 2,525  |        |        |   | 5,348   |         |        |   | 5,121   |       
|Noninterest revenues:                                                       |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            | Securitization income                                  |          |        | 31,752             |        |                  |        | 30,023 |        |   |         | 61,362  |        |   |         | 59,670 |       
|                                                                            | Servicing revenues                                     |          |        | 9,873              |        |                  |        | 8,143  |        |   |         | 19,900  |        |   |         | 16,085 |       
|                                                                            | Other revenues, net                                    |          |        | 24,929             |        |                  |        | 22,999 |        |   |         | 50,361  |        |   |         | 40,877 |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Total noninterest revenues                                                  |                                                        |          | 66,554 |                    |        |                  | 61,165 |        |        |   | 131,623 |         |        |   | 116,632 |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Expenses:                                                                   |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            | Operating expenses                                     |          |        | 57,195             |        |                  |        | 49,887 |        |   |         | 112,717 |        |   |         | 98,845 |       
|                                                                            | Minority interest in income of
consolidated subsidiary |          |        | 2,220              |        |                  |        | 2,220  |        |   |         | 4,440   |        |   |         | 4,440  |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Total expenses                                                              |                                                        |          | 59,415 |                    |        |                  | 52,107 |        |        |   | 117,157 |         |        |   | 103,285 |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Income before income taxes                                                  |                                                        |          | 10,213 |                    |        |                  | 11,583 |        |        |   | 19,814  |         |        |   | 18,468  |       
|Income tax expense                                                          |                                                        |          | 3,932  |                    |        |                  | 4,459  |        |        |   | 7,628   |         |        |   | 7,110   |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Income from continuing operations                                           |                                                        |          | 6,281  |                    |        |                  | 7,124  |        |        |   | 12,186  |         |        |   | 11,358  |       
|Loss, net, on discontinuance of mortgage
and leasing businesses, net of tax |                                                        |          | (1,968 | )                  |        |                  | (8,610 | )      |        |   | (1,968  | )       |        |   | (8,610  | )     
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Net
income (loss)                                                           |                                                        | $        | 4,313  |                    |        | $                | (1,486 | )      |        | $ | 10,218  |         |        | $ | 2,748   |       
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Basic income from continuing operations
per
common share                    |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            |                                                        | Class A  |        | $                  | 0.25   |                  |        | $      | 0.27   |   |         | $       | 0.47   |   |         | $      | 0.41   | 
|                                                                            |                                                        | Class B  |        |                    | 0.27   |                  |        |        | 0.29   |   |         |         | 0.52   |   |         |        | 0.46   | 
|                                                                            |                                                        | Combined |        |                    | 0.26   |                  |        |        | 0.28   |   |         |         | 0.50   |   |         |        | 0.44   | 
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Diluted income from continuing operations
per common share                  |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            |                                                        | Class A  |        | $                  | 0.24   |                  |        | $      | 0.26   |   |         | $       | 0.46   |   |         | $      | 0.40   | 
|                                                                            |                                                        | Class B  |        |                    | 0.26   |                  |        |        | 0.27   |   |         |         | 0.51   |   |         |        | 0.44   | 
|                                                                            |                                                        | Combined |        |                    | 0.26   |                  |        |        | 0.27   |   |         |         | 0.49   |   |         |        | 0.42   | 
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Basic net income (loss) per common share                                    |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            |                                                        | Class A  |        | $                  | 0.16   |                  |        | $      | (0.07  | ) |         | $       | 0.39   |   |         | $      | 0.07   | 
|                                                                            |                                                        | Class B  |        |                    | 0.19   |                  |        |        | (0.05  | ) |         |         | 0.44   |   |         |        | 0.12   | 
|                                                                            |                                                        | Combined |        |                    | 0.18   |                  |        |        | (0.06  | ) |         |         | 0.42   |   |         |        | 0.10   | 
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Diluted net income (loss) per common share                                  |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            |                                                        | Class A  |        | $                  | 0.16   |                  |        | $      | (0.06  | ) |         | $       | 0.38   |   |         | $      | 0.08   | 
|                                                                            |                                                        | Class B  |        |                    | 0.18   |                  |        |        | (0.05  | ) |         |         | 0.43   |   |         |        | 0.11   | 
|                                                                            |                                                        | Combined |        |                    | 0.18   |                  |        |        | (0.06  | ) |         |         | 0.41   |   |         |        | 0.10   | 
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Basic weighted average common shares
outstanding                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            |                                                        | Class A  |        |                    | 9,151  |                  |        |        | 9,144  |   |         |         | 9,168  |   |         |        | 9,138  | 
|                                                                            |                                                        | Class B  |        |                    | 14,893 |                  |        |        | 16,176 |   |         |         | 14,854 |   |         |        | 16,239 | 
|                                                                            |                                                        | Combined |        |                    | 24,044 |                  |        |        | 25,320 |   |         |         | 24,022 |   |         |        | 25,377 | 
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       
|Diluted weighted average common shares
outstanding                          |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |       
|                                                                            |                                                        | Class A  |        |                    | 9,151  |                  |        |        | 9,150  |   |         |         | 9,168  |   |         |        | 9,144  | 
|                                                                            |                                                        | Class B  |        |                    | 15,445 |                  |        |        | 17,640 |   |         |         | 15,329 |   |         |        | 17,312 | 
|                                                                            |                                                        | Combined |        |                    | 24,596 |                  |        |        | 26,790 |   |         |         | 24,497 |   |         |        | 26,456 | 
|                                                                            |                                                        |          |        |                    |        |                  |        |        |        |   |         |         |        |   |         |        |       

See Notes to Consolidated Financial Statements

4



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##### Table of Contents



ADVANTA CORP. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (Unaudited)


($ in thousands)


|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |   | 
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | - | ------------- | ------ | --------- | - | ------- |  | ------- | - | ------- |  | ---------- | - | --- | - |  | - | ------- | - | 
|                                                 |                                                                                                        |   |               |        |           |   | Class A |  | Class A |   | Class B |  | Additional
|                                                 |                                                                                                        |   | Comprehensive |        | Preferred |   | Common  |  | Common  |   | Paid-In
|                                                 |                                                                                                        |   | Income (Loss) |        | Stock     |   | Stock   |  | Stock   |   | Capital
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |        
|Balance at December 31, 2001                     |                                                                                                        |   |               |        |           | $ | 1,010   |  |         | $ | 100     |  |            | $ | 179 |   |  | $ | 223,362 |  
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Net income (loss)                                |                                                                                                        | $ | (24,182       | )      |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Other comprehensive income (loss):               |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|                                                 | Change in unrealized
appreciation (depreciation)
of investments, net of tax
benefit (expense) of $577  |   |               | (1,073 | )         |   |         |  |         |   |         |  |            |   |     |   |  |   |         |   | 
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Comprehensive income (loss)                      |                                                                                                        | $ | (25,255       | )      |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Preferred and common cash
dividends declared     |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Exercise of stock options                        |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   | 1   |   |  |   | 362     |  
|Stock option exchange program
stock distribution |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Issuance of restricted stock                     |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   | 28  |   |  |   | 22,529  |  
|Amortization of deferred
compensation            |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Forfeitures of restricted stock                  |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   | (4  | ) |  |   | (2,275  | )
|Stock buyback                                    |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|ESOP shares committed to be
released             |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   | (68     | )
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Balance at December 31, 2002                     |                                                                                                        |   |               |        |           | $ | 1,010   |  |         | $ | 100     |  |            | $ | 204 |   |  | $ | 243,910 |  
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Net income (loss)                                |                                                                                                        | $ | 10,218        |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Other comprehensive income (loss):               |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|                                                 | Change in unrealized
appreciation (depreciation)
of investments, net of tax
benefit (expense) of $(76) |   |               | 142    |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |   | 
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Comprehensive income (loss)                      |                                                                                                        | $ | 10,360        |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Preferred and common cash
dividends declared     |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Exercise of stock options                        |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   | 1   |   |  |   | 849     |  
|Stock option exchange program
stock distribution |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Issuance of restricted stock                     |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   | 1   |   |  |   | 1,538   |  
|Amortization of deferred
compensation            |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Forfeitures of restricted stock                  |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   | (1  | ) |  |   | (1,149  | )
|Stock buyback                                    |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|ESOP shares committed to be
released             |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   | (77     | )
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  
|Balance at June 30, 2003                         |                                                                                                        |   |               |        |           | $ | 1,010   |  |         | $ | 100     |  |            | $ | 205 |   |  | $ | 245,071 |  
|                                                 |                                                                                                        |   |               |        |           |   |         |  |         |   |         |  |            |   |     |   |  |   |         |  

See Notes to Consolidated Financial Statements

5



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##### Table of Contents



($ in thousands)

|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |        |  
|------------------------------------------------ | ------------------------------------------------------------------------------------------------------ | - | ------------ | - | ------------- | - | -------- | ------ | -------- | - | ------------- | - |  | - | ------- | - |  | - | ------- | ------ | -
|                                                 |                                                                                                        |   | Deferred     |   | Accumulated   |   |          |        |          |   |               |   |  |   |         |   | 
|                                                 |                                                                                                        |   | Compensation |   | Other         |   |          |        |          |   |               |   |  |   | Total  
|                                                 |                                                                                                        |   | & Unearned   |   | Comprehensive |   | Retained |        | Treasury |   | Stockholders
|                                                 |                                                                                                        |   | ESOP Shares  |   | Income (Loss) |   | Earnings |        | Stock    |   | Equity       
|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |              
|Balance at December 31, 2001                     |                                                                                                        | $ | (11,359      | ) |               | $ | 1,259    |        |          | $ | 179,370       |   |  | $ | (27,622 | ) |  | $ | 366,299 |       
|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|Net income (loss)                                |                                                                                                        |   |              |   |               |   |          |        |          |   | (24,182       | ) |  |   |         |   |  |   | (24,182 | )     
|Other comprehensive income (loss):               |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|                                                 | Change in unrealized
appreciation (depreciation)
of investments, net of tax
benefit (expense) of $577  |   |              |   |               |   |          | (1,073 | )        |   |               |   |  |   |         |   |  |   |         | (1,073 | )
|Comprehensive income (loss)                      |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|Preferred and common cash
dividends declared     |                                                                                                        |   |              |   |               |   |          |        |          |   | (7,983        | ) |  |   |         |   |  |   | (7,983  | )     
|Exercise of stock options                        |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 363     |       
|Stock option exchange program
stock distribution |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   | 542     |   |  |   | 542     |       
|Issuance of restricted stock                     |                                                                                                        |   | (22,557      | ) |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 0       |       
|Amortization of deferred
compensation            |                                                                                                        |   | 2,842        |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 2,842   |       
|Forfeitures of restricted stock                  |                                                                                                        |   | 1,941        |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | (338    | )     
|Stock buyback                                    |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   | (15,554 | ) |  |   | (15,554 | )     
|ESOP shares committed to be released             |                                                                                                        |   | 465          |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 397     |       
|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|Balance at December 31, 2002                     |                                                                                                        | $ | (28,668      | ) |               | $ | 186      |        |          | $ | 147,205       |   |  | $ | (42,634 | ) |  | $ | 321,313 |       
|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|Net income (loss)                                |                                                                                                        |   |              |   |               |   |          |        |          |   | 10,218        |   |  |   |         |   |  |   | 10,218  |       
|Other comprehensive income (loss):               |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|                                                 | Change in unrealized
appreciation (depreciation)
of investments, net of tax
benefit (expense) of $(76) |   |              |   |               |   |          | 142    |          |   |               |   |  |   |         |   |  |   |         | 142    |  
|Comprehensive income (loss)                      |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|Preferred and common cash
dividends declared     |                                                                                                        |   |              |   |               |   |          |        |          |   | (3,919        | ) |  |   |         |   |  |   | (3,919  | )     
|Exercise of stock options                        |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 850     |       
|Stock option exchange program
stock distribution |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   | 183     |   |  |   | 183     |       
|Issuance of restricted stock                     |                                                                                                        |   | (1,539       | ) |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 0       |       
|Amortization of deferred
compensation            |                                                                                                        |   | 2,152        |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 2,152   |       
|Forfeitures of restricted stock                  |                                                                                                        |   | 989          |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | (161    | )     
|Stock buyback                                    |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   | (4,067  | ) |  |   | (4,067  | )     
|ESOP shares committed to be released             |                                                                                                        |   | 225          |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   | 148     |       
|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       
|Balance at June 30, 2003                         |                                                                                                        | $ | (26,841      | ) |               | $ | 328      |        |          | $ | 153,504       |   |  | $ | (46,518 | ) |  | $ | 326,859 |       
|                                                 |                                                                                                        |   |              |   |               |   |          |        |          |   |               |   |  |   |         |   |  |   |         |       

See Notes to Consolidated Financial Statements

6



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##### Table of Contents



ADVANTA CORP. AND SUBSIDIARIES




CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)




|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |          |          |  
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------------- | --------------------------------------------------------------------------- | ------- | ---------------- | -------- | - | -------- | -------- | -------- | -
|                                                                                            |                                                                       |                                                                             |         | Six Months Ended
|                                                                                            |                                                                       |                                                                             |         | June 30,        
|                                                                                            |                                                                       |                                                                             |         |                 
|($ in
thousands)                                                                            |                                                                       | 2003                                                                        |         | 2002            
|                                                                                            |                                                                       |                                                                             |         |                 
|OPERATING ACTIVITIES  CONTINUING OPERATIONS                                                |                                                                       |                                                                             |         |                  |          |   |          |         
|Net income                                                                                  |                                                                       | $                                                                           | 10,218  |                  |          | $ | 2,748    |         
|Adjustments to reconcile net income to net cash provided by
(used in) operating activities: |                                                                       |                                                                             |         |                  |          |   |          |         
|                                                                                            |                                                                       | Loss, net, on discontinuance of mortgage and leasing businesses,
net of tax |         |                  | 1,968    |   |          |          | 8,610    |  
|                                                                                            |                                                                       | Investment securities losses                                                |         |                  | 1,766    |   |          |          | 2,093    |  
|                                                                                            |                                                                       | Depreciation and amortization                                               |         |                  | 4,217    |   |          |          | 4,026    |  
|                                                                                            |                                                                       | Provision for credit losses                                                 |         |                  | 18,711   |   |          |          | 22,041   |  
|                                                                                            |                                                                       | Provision for interest and fee losses                                       |         |                  | 5,013    |   |          |          | 2,945    |  
|                                                                                            |                                                                       | Change in deferred origination costs, net of deferred fees                  |         |                  | 8,546    |   |          |          | (1,435   | )
|                                                                                            |                                                                       | Change in receivables held for sale                                         |         |                  | (279,261 | ) |          |          | (130,991 | )
|                                                                                            |                                                                       | Proceeds from sale of receivables held for sale                             |         |                  | 299,376  |   |          |          | 115,000  |  
|                                                                                            |                                                                       | Change in accounts receivable from securitizations                          |         |                  | (632,953 | ) |          |          | (1,688   | )
|                                                                                            |                                                                       | Change in other assets and other liabilities                                |         |                  | 89,753   |   |          |          | 17,951   |  
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|                                                                                            | Net cash provided by (used in) operating activities                   |                                                                             |         | (472,646         | )        |   |          | 41,300   |         
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|INVESTING ACTIVITIES  CONTINUING OPERATIONS                                                |                                                                       |                                                                             |         |                  |          |   |          |         
|                                                                                            | Change in federal funds sold and restricted interest-bearing
deposits |                                                                             |         | 52,924           |          |   |          | 43,024   |         
|                                                                                            | Purchase of investments available for sale                            |                                                                             |         | (314,625         | )        |   |          | (191,490 | )       
|                                                                                            | Proceeds from sales of investments available for sale                 |                                                                             |         | 246,686          |          |   |          | 162,337  |         
|                                                                                            | Proceeds from maturing investments available for sale                 |                                                                             |         | 36,564           |          |   |          | 69,226   |         
|                                                                                            | Change in receivables not held for sale                               |                                                                             |         | (38,078          | )        |   |          | (32,636  | )       
|                                                                                            | Sales (purchases) of premises and equipment, net                      |                                                                             |         | 2,820            |          |   |          | (3,526   | )       
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|Net cash provided by (used in) investing activities                                         |                                                                       |                                                                             | (13,709 | )                |          |   | 46,935   |         
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|FINANCING ACTIVITIES  CONTINUING OPERATIONS                                                |                                                                       |                                                                             |         |                  |          |   |          |         
|                                                                                            | Change in demand and savings deposits                                 |                                                                             |         | (3,519           | )        |   |          | (3,434   | )       
|                                                                                            | Proceeds from issuance of time deposits                               |                                                                             |         | 561,659          |          |   |          | 153,936  |         
|                                                                                            | Payments for maturing time deposits                                   |                                                                             |         | (71,629          | )        |   |          | (178,723 | )       
|                                                                                            | Proceeds from issuance of debt                                        |                                                                             |         | 50,621           |          |   |          | 55,955   |         
|                                                                                            | Payments on redemption of debt                                        |                                                                             |         | (50,224          | )        |   |          | (88,010  | )       
|                                                                                            | Change in other borrowings                                            |                                                                             |         | 0                |          |   |          | (32,317  | )       
|                                                                                            | Proceeds from exercise of stock options                               |                                                                             |         | 850              |          |   |          | 351      |         
|                                                                                            | Cash dividends paid                                                   |                                                                             |         | (3,919           | )        |   |          | (4,067   | )       
|                                                                                            | Stock buyback                                                         |                                                                             |         | (4,067           | )        |   |          | (4,297   | )       
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|Net cash provided by (used in) financing activities                                         |                                                                       |                                                                             | 479,772 |                  |          |   | (100,606 | )       
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|DISCONTINUED OPERATIONS                                                                     |                                                                       |                                                                             |         |                  |          |   |          |         
|                                                                                            | Net cash provided by operating activities                             |                                                                             |         | 10,109           |          |   |          | 2,169    |         
|                                                                                            | Net cash provided by investing activities                             |                                                                             |         | 26,559           |          |   |          | 0        |         
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|Net cash provided by discontinued operations                                                |                                                                       |                                                                             | 36,668  |                  |          |   | 2,169    |         
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|Net increase (decrease) in cash                                                             |                                                                       |                                                                             | 30,085  |                  |          |   | (10,202  | )       
|Cash at beginning of period                                                                 |                                                                       |                                                                             | 14,834  |                  |          |   | 20,952   |         
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         
|Cash at end of period                                                                       |                                                                       | $                                                                           | 44,919  |                  |          | $ | 10,750   |         
|                                                                                            |                                                                       |                                                                             |         |                  |          |   |          |         

See Notes to Consolidated Financial Statements

7



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##### Table of Contents



ADVANTA CORP. AND SUBSIDIARIES




NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


(IN THOUSANDS EXCEPT PER SHARE DATA, UNLESS OTHERWISE NOTED)


June 30, 2003
(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 accounting
principles generally accepted in the United States 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. Actual results could differ
from those estimates. Material estimates that are particularly
susceptible to significant changes in the near term relate to the
accounting for the fair value of venture capital investments, allowance
for receivable losses, securitization income, business credit card
rewards programs, litigation contingencies, income taxes, and
discontinued operations.

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

8



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##### Table of Contents



Statement of Financial Accounting Standards (SFAS) No. 123, Accounting
for Stock Based Compensation, as amended by SFAS No. 148, Accounting
for Stock-Based Compensation  Transition and Disclosure, defines a fair
value based method of accounting for employee stock compensation plans,
whereby compensation cost is measured at the grant date based on the
value of the award and is recognized over the service period, which is
usually the vesting period. However, it permits entities to continue to
measure compensation cost for those plans using the intrinsic value based
method of accounting prescribed by Accounting Principles Board Opinion
No. 25, Accounting for Stock Issued to Employees, whereby compensation
cost is the excess, if any, of the quoted market price of the stock at
the grant date or other measurement date over the amount an employee must
pay to acquire the stock. We have elected to continue with the
accounting methodology in Opinion No. 25 and, as a result, have provided
pro forma disclosures of compensation expense for stock option plans, net
of related tax effects, net income and earnings per share and other
disclosures, as if the fair value based method of accounting had been
applied. Had compensation cost for these plans been determined using the
fair value method, our compensation expense for stock option plans, net
of related tax effects, net income (loss) and net income (loss) per common share would
have changed to the following pro forma amounts:

|                                                                        |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |      | 
|----------------------------------------------------------------------- | ----------- | -------- | - | ------------------ | ---- | ---------------- | - | ------ | ----- | ---- | - | ------ | ---- |  | - | ----- | ---- | 
|                                                                        |             |          |   | Three Months Ended |      | Six Months Ended
|                                                                        |             |          |   | June 30,           |      | June 30,        
|                                                                        |             |          |   |                    |      |                 
|                                                                        |             |          |   | 2003               |      | 2002             |   | 2003   |       | 2002
|                                                                        |             |          |   |                    |      |                  |   |        |       |     
|Compensation expense for stock
option plans, net of related tax
effects |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |      
|                                                                        | As reported |          | $ | 0                  |      |                  | $ | 0      |       |      | $ | 0      |      |  | $ | 0     |     
|                                                                        | Pro forma   |          |   | 603                |      |                  |   | 787    |       |      |   | 1,216  |      |  |   | 1,540 |     
|                                                                        |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|Net
income (loss)                                                      
|                                                                        | As reported |          | $ | 4,313              |      |                  | $ | (1,486 | )     |      | $ | 10,218 |      |  | $ | 2,748 |     
|                                                                        | Pro forma   |          |   | 3,710              |      |                  |   | (2,273 | )     |      |   | 9,002  |      |  |   | 1,208 |     
|                                                                        |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|Basic
net income (loss) per common share                                |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |      
|                                                                        | As reported |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|                                                                        |             | Class A  |   | $                  | 0.16 |                  |   | $      | (0.07 | )    |   | $      | 0.39 |  |   | $     | 0.07 | 
|                                                                        |             | Class B  |   |                    | 0.19 |                  |   |        | (0.05 | )    |   |        | 0.44 |  |   |       | 0.12 | 
|                                                                        |             | Combined |   |                    | 0.18 |                  |   |        | (0.06 | )    |   |        | 0.42 |  |   |       | 0.10 | 
|                                                                        | Pro forma   |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|                                                                        |             | Class A  |   | $                  | 0.14 |                  |   | $      | (0.10 | )    |   | $      | 0.34 |  |   | $     | 0.01 | 
|                                                                        |             | Class B  |   |                    | 0.16 |                  |   |        | (0.08 | )    |   |        | 0.39 |  |   |       | 0.06 | 
|                                                                        |             | Combined |   |                    | 0.15 |                  |   |        | (0.09 | )    |   |        | 0.37 |  |   |       | 0.04 | 
|                                                                        |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|Diluted
net income (loss) per common
share                              |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |      
|                                                                        | As reported |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|                                                                        |             | Class A  |   | $                  | 0.16 |                  |   | $      | (0.06 | )    |   | $      | 0.38 |  |   | $     | 0.08 | 
|                                                                        |             | Class B  |   |                    | 0.18 |                  |   |        | (0.05 | )    |   |        | 0.43 |  |   |       | 0.11 | 
|                                                                        |             | Combined |   |                    | 0.18 |                  |   |        | (0.06 | )    |   |        | 0.41 |  |   |       | 0.10 | 
|                                                                        | Pro forma   |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     
|                                                                        |             | Class A  |   | $                  | 0.14 |                  |   | $      | (0.09 | )    |   | $      | 0.33 |  |   | $     | 0.02 | 
|                                                                        |             | Class B  |   |                    | 0.16 |                  |   |        | (0.08 | )    |   |        | 0.38 |  |   |       | 0.05 | 
|                                                                        |             | Combined |   |                    | 0.15 |                  |   |        | (0.08 | )    |   |        | 0.36 |  |   |       | 0.04 | 
|                                                                        |             |          |   |                    |      |                  |   |        |       |      |   |        |      |  |   |       |     

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Note 2) Recently Issued Accounting Standards

In November 2002, the Financial Accounting Standards Board (FASB)
issued Interpretation No. 45, Guarantors Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others, which modifies the recognition and disclosure
requirements of a companys guarantee arrangements. Effective January 1,
2003, we adopted this interpretation, which requires a company that
enters into or modifies existing guarantee arrangements to recognize a
liability for the fair value of the obligation undertaken in issuing the
guarantee. The adoption of this interpretation did not have a material
impact on our financial position or results of operations.

In January 2003, the FASB issued Interpretation No. 46, Consolidation of
Variable Interest Entities  An Interpretation of ARB No. 51. This
interpretation requires a company to consolidate a variable interest
entity if the company has variable interests that give it a majority of
the expected losses or a majority of the expected residual returns of the
entity. The consolidation requirements apply to all variable interest
entities created after January 31, 2002. In addition, public companies
must apply the consolidation requirements to variable interest entities
that existed prior to February 1, 2003 and remain in existence as of the
beginning of annual or interim periods beginning after June 15, 2003.
The adoption of this interpretation did not have a material effect on our
financial position or results of operations since qualifying
special-purpose entities, as defined in SFAS No. 140, Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities  a Replacement of FASB Statement No. 125
(SFAS 140), are
exempt from the consolidation requirements of this interpretation.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and
Equity (SFAS 150). SFAS 150 establishes standards for how an issuer
classifies and measures in its statement of financial position certain
financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that
is within its scope as a liability (or an asset in some circumstances)
because that financial instrument embodies an obligation of the issuer.
This statement is effective for financial instruments entered into or
modified after May 31, 2003, and otherwise is effective at the beginning
of the first interim period beginning after June 15, 2003, except for
mandatorily redeemable financial instruments of nonpublic entities. Our
adoption of this standard will result in a reclassification of our
company-obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely subordinated debentures of Advanta Corp.
(the capital securities) to liabilities, and payments on the capital
securities, currently classified as minority interest in income of
consolidated subsidiary, to be reclassified to interest expense. We do
not expect the adoption of this standard to impact net income.

In June 2003, the FASB issued an exposure draft that would amend SFAS
140. The changes and clarifications in the proposed statement would
prevent derecognition by transferors that may continue to retain
effective control of transferred assets by providing financial support
other than a subordinated retained interest or making decisions about
beneficial interests. They would also help to ensure that special
purpose entities will not qualify for the exception to FASB
Interpretation No. 46 if any party involved is in a position to enhance
or protect the value of its own subordinated interest by providing
financial support for or making decisions about reissuing beneficial
interests. For public entities, this proposed statement would apply
prospectively to transfers of assets occurring after the beginning of the
first interim period after the issuance of the final statement.
Management is

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still evaluating any potential impact this proposed statement, if
finalized in its current form, may have on our financial position or
results of operations.

Note 3) Receivables

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

|                                                      |                       |                   |         |          |         |              |         |         |         |  
|----------------------------------------------------- | --------------------- | ----------------- | ------- | -------- | ------- | ------------ | ------- | ------- | ------- | -
|                                                      |                       |                   |         | June 30, |         | December 31,
|                                                      |                       |                   |         | 2003     |         | 2002        
|                                                      |                       |                   |         |          |         |             
|Business credit card receivables                      |                       | $                 | 442,769 |          |         | $            | 445,083 |        
|Other receivables                                     |                       |                   | 23,309  |          |         |              | 25,589  |        
|                                                      |                       |                   |         |          |         |              |         |        
|                                                      |                       | Gross receivables |         |          | 466,078 |              |         |         | 470,672 |  
|                                                      |                       |                   |         |          |         |              |         |        
|Add: Deferred origination costs, net of deferred fees |                       |                   | 22,288  |          |         |              | 30,834  |        
|Less: Allowance for receivable losses                 |                       |                   |         |          |         |              |         |        
|                                                      | Business credit cards |                   |         | (45,914  | )       |              |         | (44,466 | )      
|                                                      | Other receivables     |                   |         | (1,412   | )       |              |         | (1,693  | )      
|                                                      |                       |                   |         |          |         |              |         |        
|                                                      |                       | Total allowance   |         |          | (47,326 | )            |         |         | (46,159 | )
|                                                      |                       |                   |         |          |         |              |         |        
|Receivables, net                                      |                       | $                 | 441,040 |          |         | $            | 455,347 |        
|                                                      |                       |                   |         |          |         |              |         |        

Note 4) Allowance for Receivable Losses

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

|                                      |                       |                                   |         |                  |         |      |         |         |         |  
|------------------------------------- | --------------------- | --------------------------------- | ------- | ---------------- | ------- | ---- | ------- | ------- | ------- | -
|                                      |                       |                                   |         | Six Months Ended
|                                      |                       |                                   |         | June 30,        
|                                      |                       |                                   |         |                 
|                                      |                       |                                   |         | 2003             |         | 2002
|                                      |                       |                                   |         |                  |         |     
|Beginning balance                     |                       | $                                 | 46,159  |                  |         | $    | 41,971  |        
|Provision for credit losses           |                       |                                   | 18,711  |                  |         |      | 22,041  |        
|Provision for interest and fee losses |                       |                                   | 5,013   |                  |         |      | 2,945   |        
|Gross principal charge-offs:          |                       |                                   |         |                  |         |      |         |        
|                                      | Business credit cards |                                   |         | (19,442          | )       |      |         | (21,188 | )      
|                                      | Other receivables     |                                   |         | (28              | )       |      |         | (13     | )      
|                                      |                       |                                   |         |                  |         |      |         |        
|                                      |                       | Total gross principal charge-offs |         |                  | (19,470 | )    |         |         | (21,201 | )
|                                      |                       |                                   |         |                  |         |      |         |        
|Principal recoveries:                 |                       |                                   |         |                  |         |      |         |        
|                                      | Business credit cards |                                   |         | 1,479            |         |      |         | 2,195   |        
|                                      |                       |                                   |         |                  |         |      |         |        
|Net principal charge-offs             |                       |                                   | (17,991 | )                |         |      | (19,006 | )      
|                                      |                       |                                   |         |                  |         |      |         |        
|Interest and fee charge-offs:         |                       |                                   |         |                  |         |      |         |        
|                                      | Business credit cards |                                   |         | (4,566           | )       |      |         | (2,945  | )      
|                                      |                       |                                   |         |                  |         |      |         |        
|Ending balance                        |                       | $                                 | 47,326  |                  |         | $    | 45,006  |        
|                                      |                       |                                   |         |                  |         |      |         |        

Prior to October 1, 2002, the billing and recognition of interest and
fees was discontinued when the related receivable became 90 days past due
or when the account was classified as fraudulent, bankrupt, deceased,
hardship or credit counseling. Effective October 1, 2002, we continue to
bill and recognize interest and fees on accounts when they become 90 days
past due, and an additional allowance for receivable losses is
established for the additional billings estimated to be uncollectible
through a provision for interest and fee losses. The billing and
recognition of interest and fees is still discontinued when the account
is classified as fraudulent, bankrupt, deceased, hardship or credit
counseling. Provision for interest and fee losses are recorded as
direct reductions to interest and fee income.

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Note 5) Securitization Activities

Accounts receivable from securitizations consisted of the following:

|                                                          |  |          |         |              |  |   |         | 
|--------------------------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                                                          |  | June 30, |         | December 31,
|                                                          |  | 2003     |         | 2002        
|                                                          |  |          |         |             
|Retained interests in securitizations                     |  | $        | 156,373 |              |  | $ | 113,422 | 
|Accrued interest and fees on securitized
receivables, net |  |          | 58,926  |              |  |   | 56,171  | 
|Amounts due from the trust                                |  |          | 615,892 |              |  |   | 28,645  | 
|                                                          |  |          |         |              |  |   |         | 
|Total accounts receivable from securitizations            |  | $        | 831,191 |              |  | $ | 198,238 | 
|                                                          |  |          |         |              |  |   |         | 

On July 21, 2003, we received $600 million of receivables from the
securitization trust after the note holders in the Series 2000-B business
credit card securitization had been paid in full with accumulated
principal collections on the securitized receivables and the noteholders
claim on the receivables had been released.

The following represents business credit card securitization data and the
key assumptions used in estimating the fair value of retained interests
in securitizations at the time of each new securitization or
replenishment if quoted market prices were not available.

|                                                                         |                                                            |  |                    |              |                  |  |            |              |          |  |            |              |   |  |            |              |  
|------------------------------------------------------------------------ | ---------------------------------------------------------- |  | ------------------ | ------------ | ---------------- |  | ---------- | ------------ | -------- |  | ---------- | ------------ | - |  | ---------- | ------------ | -
|                                                                         |                                                            |  | Three Months Ended |              | Six Months Ended
|                                                                         |                                                            |  |                    |              |                 
|                                                                         |                                                            |  | June 30,           |              | June 30,         |  | June 30,   |              | June 30,
|                                                                         |                                                            |  | 2003               |              | 2002             |  | 2003       |              | 2002    
|                                                                         |                                                            |  |                    |              |                  |  |            |              |         
|Average securitized
receivables                                          |                                                            |  | $2,290,671         |              |                  |  | $1,638,410 |              |          |  | $2,231,572 |              |   |  | $1,627,096 |             
|Securitization income                                                    |                                                            |  | 31,752             |              |                  |  | 30,023     |              |          |  | 61,362     |              |   |  | 59,670     |             
|Discount accretion                                                       |                                                            |  | 4,373              |              |                  |  | 2,652      |              |          |  | 7,965      |              |   |  | 5,312      |             
|Interchange income                                                       |                                                            |  | 23,521             |              |                  |  | 17,215     |              |          |  | 43,925     |              |   |  | 32,870     |             
|Servicing revenues                                                       |                                                            |  | 9,873              |              |                  |  | 8,143      |              |          |  | 19,900     |              |   |  | 16,085     |             
|Proceeds from new
securitizations                                        |                                                            |  | 226,851            |              |                  |  | 110,000    |              |          |  | 299,376    |              |   |  | 115,000    |             
|Proceeds from collections
reinvested in
revolving-period
securitizations |                                                            |  | 710,553            |              |                  |  | 915,671    |              |          |  | 1,768,945  |              |   |  | 1,819,439  |             
|Cash flows received on
retained interests                                |                                                            |  | 84,702             |              |                  |  | 48,611     |              |          |  | 133,002    |              |   |  | 100,005    |             
|Key assumptions:                                                         |                                                            |  |                    |              |                  |  |            |              |          |  |            |              |   |  |            |             
|                                                                         | Discount rate                                              |  |                    | 12.1% - 14.6 | %                |  |            | 9.0% - 15.0  | %        |  |            | 11.4% - 14.6 | % |  |            | 9.0% - 15.0  | %
|                                                                         | Monthly payment rate                                       |  |                    | 18.8% - 21.0 | %                |  |            | 18.2% - 21.0 | %        |  |            | 18.8% - 21.0 | % |  |            | 18.2% - 21.0 | %
|                                                                         | Loss rate                                                  |  |                    | 8.6% -   9.7 | %                |  |            | 9.6% - 12.8  | %        |  |            | 8.6% - 10.3  | % |  |            | 9.6% - 12.8  | %
|                                                                         | Finance charge yield, net
of interest paid to
note holders |  |                    | 14.3% - 15.0 | %                |  |            | 14.9% - 15.9 | %        |  |            | 14.3% - 15.0 | % |  |            | 14.9% - 15.9 | %

Beginning in the fourth quarter of 2002, our interest yield assumption includes
both finance charge and late fee yield. Previously, the interest yield
assumption included only finance charge yield.

There were no purchases of delinquent
accounts during the three or six months
ended June 30, 2003 or 2002.

The following assumptions were used in estimating the fair value of
retained interests in business credit card securitizations at June 30,
2003 and December 31,

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2002 if quoted market prices were not available. The assumptions listed
represent weighted averages of assumptions used for each securitization.

|                                                       |  |          |              |              |  |  |              |  
|------------------------------------------------------ |  | -------- | ------------ | ------------ |  |  | ------------ | -
|                                                       |  | June 30, |              | December 31,
|                                                       |  | 2003     |              | 2002        
|                                                       |  |          |              |             
|Discount rate                                          |  |          | 12.1% - 13.8 | %            |  |  | 11.4% - 14.0 | %
|Monthly payment rate                                   |  |          | 18.8% - 21.0 | %            |  |  | 19.3% - 21.0 | %
|Loss rate                                              |  |          | 8.6% -   9.4 | %            |  |  | 9.4% - 10.3  | %
|Interest yield, net of interest
earned by note holders |  |          | 15.0         | %            |  |  | 15.0         | %

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 estimated using the assumptions identified
above. 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, 2003.

|                                                                               |                                                                         |  |   |         |  
|------------------------------------------------------------------------------ | ----------------------------------------------------------------------- |  | - | ------- | -
|Effect on fair value of the following
hypothetical changes in key assumptions: |                                                                         |  |   |        
|                                                                               | Discount rate increased by 2%                                           |  | $ | (2,055  | )
|                                                                               | Discount rate increased by 4%                                           |  |   | (4,027  | )
|                                                                               | Monthly payment rate at 110% of base assumption                         |  |   | (1,465  | )
|                                                                               | Monthly payment rate at 125% of base assumption                         |  |   | (2,786  | )
|                                                                               | Loss rate at 110% of base assumption                                    |  |   | (4,278  | )
|                                                                               | Loss rate at 125% of base assumption                                    |  |   | (10,695 | )
|                                                                               | Interest yield, net of interest earned by note
holders, decreased by 1% |  |   | (5,004  | )
|                                                                               | Interest yield, net of interest earned by note
holders, decreased by 2% |  |   | (10,007 | )

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
estimate the fair value of the retained interests when quoted market
prices are not available 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.

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Managed receivable data

Our managed business credit card receivable portfolio is comprised of
both owned and securitized business credit card receivables. Performance
on a managed receivable portfolio basis is useful and relevant because we
retain interests in the securitized receivables and, therefore, we have a
financial interest in and exposure to the performance of the securitized
receivables. Credit quality data on the managed business credit card
receivable portfolio is as follows:

|                                                                                                |               |   |           |         |              |   |           |         |  |   |           |         | 
|----------------------------------------------------------------------------------------------- | ------------- | - | --------- | ------- | ------------ | - | --------- | ------- |  | - | --------- | ------- | 
|                                                                                                |               |   | June 30,  |         | December 31, |   | June 30, 
|                                                                                                |               |   | 2003(1)   |         | 2002(1)      |   | 2002     
|                                                                                                |               |   |           |         |              |   |          
|Owned business credit card receivables                                                          |               | $ | 442,769   |         |              | $ | 445,083   |         |  | $ | 443,377   |        
|Securitized business credit card receivables                                                    |               |   | 2,365,176 |         |              |   | 2,149,147 |         |  |   | 1,744,669 |        
|                                                                                                |               |   |           |         |              |   |           |         |  |   |           |        
|Total managed receivables                                                                       |               |   | 2,807,945 |         |              |   | 2,594,230 |         |  |   | 2,188,046 |        
|                                                                                                |               |   |           |         |              |   |           |         |  |   |           |        
|Receivables 30 days or more delinquent:                                                         |               |   |           |         |              |   |           |         |  |   |           |        
|                                                                                                | Owned         |   |           | 25,839  |              |   |           | 23,406  |  |   |           | 28,739  | 
|                                                                                                | Securitized   |   |           | 150,380 |              |   |           | 136,128 |  |   |           | 115,500 | 
|                                                                                                | Total managed |   |           | 176,219 |              |   |           | 159,534 |  |   |           | 144,239 | 
|Receivables 90 days or more delinquent:                                                         |               |   |           |         |              |   |           |         |  |   |           |        
|                                                                                                | Owned         |   |           | 13,184  |              |   |           | 11,959  |  |   |           | 14,703  | 
|                                                                                                | Securitized   |   |           | 76,459  |              |   |           | 69,335  |  |   |           | 58,836  | 
|                                                                                                | Total managed |   |           | 89,643  |              |   |           | 81,294  |  |   |           | 73,539  | 
|Nonaccrual receivables:                                                                         |               |   |           |         |              |   |           |         |  |   |           |        
|                                                                                                | Owned         |   |           | 7,091   |              |   |           | 4,729   |  |   |           | 21,111  | 
|                                                                                                | Securitized   |   |           | 42,162  |              |   |           | 27,688  |  |   |           | 83,313  | 
|                                                                                                | Total managed |   |           | 49,253  |              |   |           | 32,417  |  |   |           | 104,424 | 
|Accruing receivables past due 90 days or more:                                                  |               |   |           |         |              |   |           |         |  |   |           |        
|                                                                                                | Owned         |   |           | 11,741  |              |   |           | 10,535  |  |   |           | 0       | 
|                                                                                                | Securitized   |   |           | 67,804  |              |   |           | 61,045  |  |   |           | 0       | 
|                                                                                                | Total managed |   |           | 79,545  |              |   |           | 71,580  |  |   |           | 0       | 
|Net principal charge-offs for the six months
ended June 30 and twelve months ended
December 31: |               |   |           |         |              |   |           |         |  |   |           |        
|                                                                                                | Owned         |   |           | 17,963  |              |   |           | 37,400  |  |   |           | 18,993  | 
|                                                                                                | Securitized   |   |           | 92,060  |              |   |           | 156,282 |  |   |           | 76,762  | 
|                                                                                                | Total managed |   |           | 110,023 |              |   |           | 193,682 |  |   |           | 95,755  | 
|                                                                                                |               |   |           |         |              |   |           |         |  |   |           |        

|(1) |  | See Note 4 for a discussion of the change in income billing
practice effective October 1, 2002.
|--- |  | -----------------------------------------------------------------------------------------------

Note 6) Selected Balance Sheet Information

Other assets consisted of the following:

|                                                           |  |          |         |              |  |   |         | 
|---------------------------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                                                           |  | June 30, |         | December 31,
|                                                           |  | 2003     |         | 2002        
|                                                           |  |          |         |             
|Current and deferred income taxes, net                     |  | $        | 79,752  |              |  | $ | 84,684  | 
|Amounts due from transfer of consumer credit
card business |  |          | 70,545  |              |  |   | 70,545  | 
|Investment in Fleet Credit Card Services, L.P.             |  |          | 34,642  |              |  |   | 34,000  | 
|Cash surrender value of insurance contracts                |  |          | 22,824  |              |  |   | 24,437  | 
|Intangible assets                                          |  |          | 3,953   |              |  |   | 3,085   | 
|Other assets                                               |  |          | 83,112  |              |  |   | 60,907  | 
|                                                           |  |          |         |              |  |   |         | 
|Total other assets                                         |  | $        | 294,828 |              |  | $ | 277,658 | 
|                                                           |  |          |         |              |  |   |         | 

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Other liabilities consisted of the following:

|                                        |  |          |         |              |  |   |         | 
|--------------------------------------- |  | -------- | ------- | ------------ |  | - | ------- | 
|                                        |  | June 30, |         | December 31,
|                                        |  | 2003     |         | 2002        
|                                        |  |          |         |             
|Amounts due to the securitization trust |  | $        | 91,244  |              |  | $ | 3,255   | 
|Accounts payable and accrued expenses   |  |          | 29,225  |              |  |   | 33,486  | 
|Business credit card rewards            |  |          | 20,454  |              |  |   | 16,416  | 
|Accrued interest payable                |  |          | 15,245  |              |  |   | 5,641   | 
|Other(1)                                |  |          | 173,020 |              |  |   | 171,588 | 
|                                        |  |          |         |              |  |   |         | 
|Total other liabilities                 |  | $        | 329,188 |              |  | $ | 230,386 | 
|                                        |  |          |         |              |  |   |         | 



|(1) |  | A substantial portion of other liabilities represents our litigation
reserves.
|--- |  | ------------------------------------------------------------------------------

Note 7) Deposits

Deposit accounts consist of the following:

|                                    |  |          |           |              |  |   |         | 
|----------------------------------- |  | -------- | --------- | ------------ |  | - | ------- | 
|                                    |  | June 30, |           | December 31,
|                                    |  | 2003     |           | 2002        
|                                    |  |          |           |             
|Demand deposits                     |  | $        | 3,792     |              |  | $ | 6,561   | 
|Money market savings                |  |          | 1,631     |              |  |   | 2,380   | 
|Time deposits of $100,000 or less   |  |          | 624,417   |              |  |   | 441,611 | 
|Time deposits of more than $100,000 |  |          | 575,161   |              |  |   | 263,476 | 
|                                    |  |          |           |              |  |   |         | 
|Total deposits                      |  | $        | 1,205,001 |              |  | $ | 714,028 | 
|                                    |  |          |           |              |  |   |         | 

Time deposit maturities are as follows:

|                        |  |   |        
|----------------------- |  | - | -------
|Year Ended December 31, |  |   |        
|2003                    |  | $ | 593,876
|2004                    |  |   | 534,612
|2005                    |  |   | 61,823 
|2006                    |  |   | 9,068  
|2007                    |  |   | 199    

Note 8) Commitments and Contingencies

On January 22, 1999, Fleet Financial Group, Inc. (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 Services, L.P. in connection with the
transfer of our consumer credit card business to Fleet Credit Card
Services, L.P. (the Consumer Credit Card Transaction) in 1998. We
filed an answer to the complaint, and we also filed a countercomplaint
against Fleet for damages we believe have been caused by certain actions
of Fleet. 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. On January 22, 2003, the trial court issued a
decision ruling on all but one of the remaining issues, and ordered
further briefing on the remaining outstanding issue. In the year ended
December 31, 2002, we recognized a $43.0 million pretax loss on the
transfer of our consumer credit card business, representing the estimated
impact of implementing the courts decisions. This amount represented
the amount in excess of the reserves we had been carrying for the
litigation, which was based on our expectations of the outcome of the
litigation. In 2003, we provided for interest on the liability at a
rate consistent with the estimation methodology used effective December 31,
2002. We estimate that the courts decisions will have a favorable
impact to our liquidity since we would recoup approximately $8 million in
cash from the escrow account funded in February 2001, after payment of
amounts due to Fleet. The courts ruling on the remaining outstanding
issue and/or the ultimate resolution of any issues that may be appealed
could reduce or eliminate the charge to our earnings,

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although there can be no assurance as to the potential benefit, if any,
to earnings at this time.

In an ongoing element of Fleets disputes with us, Fleet has claimed $508
million of tax deductions from its partnership with us in connection with
the Consumer Credit Card Transaction, which are required under the law to
be allocated solely to Advanta. As required, we reported these
deductions on our 1998 corporate tax return. However, we have not used
or booked the benefit from most of these deductions because for tax
purposes we have a very substantial net operating loss carryforward. The
deductions are attributable to deductions for bad debt reserves that we
expensed in computing our book income or loss before the Consumer Credit
Card Transaction, but which were not deductible by Advanta for tax
purposes until after the closing of the transaction in 1998. The tax law
requires built in losses like these to be deducted by the party who
contributed the assets to the partnership, in this case, Advanta. The
Internal Revenue Service agents who have examined the returns at issue
have to ensure that both parties do not obtain the deductions and
therefore, following standard practice, proposed to disallow the
deductions to both parties until there is a final resolution. The
deductions, as well as the allocation of a gain from the sale of a
partnership asset of approximately $47 million, are now before the IRS
Regional Office of Appeals.

On January 15, 2003, Fleet filed a complaint in Rhode Island Superior
Court seeking a declaratory judgment that we indemnify Fleet under the
applicable partnership agreement for any damage Fleet incurs by not being
entitled to the $508 million of tax deductions. Fleet is also seeking a
declaratory judgment that it should not indemnify us for any damages that
we incur due to any allocation to Advanta of the $47 million gain on the
sale of a partnership asset. Fleets claim for indemnification appears
to be brought by Fleet in the hope that we will advise the IRS that we
will agree with a substantial part of Fleets tax position. On February
28, 2003, we filed a motion to dismiss the complaint. We believe that
the indemnification provision in the partnership agreement does not
indemnify Fleet for damages incurred related to the tax deductions and
that the lawsuit is frivolous, having no legal basis whatsoever. We do
not expect this lawsuit or the tax issues discussed above to have a
material adverse effect on our financial condition or results of
operations.

On December 5, 2000, a former executive of Advanta obtained a jury
verdict against us 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 and a judgment in the amount of approximately
$6 million was entered against Advanta. On July 8, 2002, the Court of
Appeals partially reversed the judgment. On May 6, 2003, the District
Court entered an amended judgment in the amount of approximately $4.7
million plus interest from December 7, 2000, and on May 12, 2003, we paid
the amended judgment in full. On May 29, 2003, the parties settled the
former executives claims for attorneys fees and costs, resulting in the
resolution of this litigation. The amended judgment and settlement
payments had no impact on our operating results, due to the reserves we
had established in connection with this litigation.

On July 26, 2001, Chase Manhattan Mortgage Corporation (Chase) filed a
complaint against Advanta Corp. and certain of its subsidiaries in the
United States District Court for the District of Delaware alleging, among
other things, that we breached our contract with Chase in connection with
the Mortgage Transaction. Chase claims that we misled Chase concerning
the value of certain of the assets sold to Chase. In September 2001, we
filed an answer to the complaint in which we denied all of the
substantive allegations of the complaint and asserted a counterclaim
against

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Chase for breach of contract relating to funds owed by Chase to us in
connection with the transaction. The matter is in discovery and the
parties extended the discovery period. The trial was originally
scheduled to begin in January 2004. In the second quarter of 2003, the
parties further extended the discovery period and the scheduled date for
trial to begin was moved to April 2004. 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 our 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 litigation arising from our
operation of the mortgage business prior to our exit from that business
in the first quarter of 2001.

Management believes that the aggregate loss, if any, resulting from these
actions will not have a material adverse effect on our financial position
or results of our operations based on the level of litigation reserves we
have established and our current expectations regarding the ultimate
resolutions of these existing actions. Our litigation reserves are
estimated based on the status of litigation and our assessment of the
ultimate resolution of each action after consultation with our attorneys.
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.

In February 2003, we entered into an operating lease agreement for
additional office space to be used for certain business card operations
and general business purposes. The minimum lease payments on the lease
are $566 thousand in 2003, $1.4 million in 2004, $1.7 million in 2005,
$1.8 million in each of the years 2006 through 2008 and $3.6 million
thereafter.

Note 9) Capital Stock

The Board of Directors of Advanta Corp. has authorized management to
purchase up to 3.0 million shares of Advanta Corp. common stock. We
repurchased 693,300 shares of our Class B Common Stock in the year ended
December 31, 2001 and 1,554,759 shares of our Class B Common Stock in the
year ended December 31, 2002. In the six months ended June 30, 2003, we
repurchased 154,632 shares of our Class A Common Stock and 315,250 shares of our
Class B Common Stock.

Cash dividends per share of common stock declared during the three months
ended June 30, 2003 and 2002 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, 2003 and 2002 were
$0.126 for Class A Common Stock and $0.151 for Class B Common Stock.

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Note 10) Segment Information

|                                                |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 
|----------------------------------------------- |  | -------- | --------- | ------- |  | -------- | ------ | ----- |  | - | ------- | - |  | - | --------- | 
|                                                |  | Advanta  |           |         |  |          |        |       |  |   |         |   |  |  
|                                                |  | Business |           | Venture |  |          |        |       |  |   |         |  
|                                                |  | Cards    |           | Capital |  | Other(1) |        | Total
|                                                |  |          |           |         |  |          |        |      
|Three months ended June 30, 2003                |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 
|Interest income                                 |  | $        | 23,007    |         |  | $        | 1      |       |  | $ | 2,442   |   |  | $ | 25,450    | 
|Interest expense                                |  |          | 11,269    |         |  |          | 135    |       |  |   | 1,707   |   |  |   | 13,111    | 
|Noninterest revenues (losses), net              |  |          | 66,283    |         |  |          | (1,242 | )     |  |   | 1,513   |   |  |   | 66,554    | 
|Pretax income (loss) from continuing
operations |  |          | 12,647    |         |  |          | (2,434 | )     |  |   | 0       |   |  |   | 10,213    | 
|Total assets                                    |  |          | 1,329,072 |         |  |          | 12,695 |       |  |   | 938,709 |   |  |   | 2,280,476 | 
|                                                |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 
|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    | 
|Total assets                                    |  |          | 625,633   |         |  |          | 18,129 |       |  |   | 921,061 |   |  |   | 1,564,823 | 
|                                                |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 
|Six months ended June 30, 2003                  |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 
|Interest income                                 |  | $        | 43,761    |         |  | $        | 1      |       |  | $ | 4,679   |   |  | $ | 48,441    | 
|Interest expense                                |  |          | 22,003    |         |  |          | 275    |       |  |   | 2,104   |   |  |   | 24,382    | 
|Noninterest revenues (losses), net              |  |          | 131,232   |         |  |          | (1,852 | )     |  |   | 2,243   |   |  |   | 131,623   | 
|Pretax income (loss) from continuing
operations |  |          | 23,624    |         |  |          | (3,810 | )     |  |   | 0       |   |  |   | 19,814    | 
|                                                |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 
|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    | 
|                                                |  |          |           |         |  |          |        |       |  |   |         |   |  |   |           | 



|(1) |  | Other includes investment and other activities not attributable to
reportable segments. Total assets in the Other segment include assets of
discontinued operations.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------

Note 11) Selected Income Statement Information

|                                          |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |        |  
|----------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                          |  | Three Months Ended |        | Six Months Ended
|                                          |  | June 30,           |        | June 30,        
|                                          |  |                    |        |                 
|Other Revenues                            |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                          |  |                    |        |                  |  |      |        |     
|Interchange income                        |  | $                  | 29,289 |                  |  | $    | 22,737 |      |  | $ | 55,427  |   |  | $ | 42,930 |  
|Business credit card rewards              |  |                    | (7,534 | )                |  |      | (3,023 | )    |  |   | (11,666 | ) |  |   | (5,027 | )
|Investment securities gains
(losses), net |  |                    | (1,158 | )                |  |      | 534    |      |  |   | (1,766  | ) |  |   | (2,093 | )
|Balance transfer fees                     |  |                    | 865    |                  |  |      | 486    |      |  |   | 2,216   |   |  |   | 780    |  
|Cash advance fees                         |  |                    | 616    |                  |  |      | 883    |      |  |   | 1,371   |   |  |   | 1,691  |  
|Other fee revenues                        |  |                    | 1,644  |                  |  |      | 1,854  |      |  |   | 3,047   |   |  |   | 3,118  |  
|Other                                     |  |                    | 1,207  |                  |  |      | (472   | )    |  |   | 1,732   |   |  |   | (522   | )
|                                          |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |        |  
|Total other revenues, net                 |  | $                  | 24,929 |                  |  | $    | 22,999 |      |  | $ | 50,361  |   |  | $ | 40,877 |  
|                                          |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |        |  

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|                                                |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |        | 
|----------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------ | 
|                                                |  | Three Months Ended |        | Six Months Ended
|                                                |  | June 30,           |        | June 30,        
|                                                |  |                    |        |                 
|Operating Expenses                              |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                                |  |                    |        |                  |  |      |        |     
|Salaries and employee benefits                  |  | $                  | 18,891 |                  |  | $    | 16,533 |      |  | $ | 36,882  |  |  | $ | 33,664 | 
|Amortization of deferred
origination costs, net |  |                    | 12,973 |                  |  |      | 12,410 |      |  |   | 27,157  |  |  |   | 24,432 | 
|External processing                             |  |                    | 5,005  |                  |  |      | 4,082  |      |  |   | 9,625   |  |  |   | 8,259  | 
|Marketing                                       |  |                    | 4,444  |                  |  |      | 3,653  |      |  |   | 7,371   |  |  |   | 5,564  | 
|Professional fees                               |  |                    | 3,284  |                  |  |      | 3,412  |      |  |   | 6,718   |  |  |   | 7,247  | 
|Equipment                                       |  |                    | 2,533  |                  |  |      | 2,466  |      |  |   | 5,927   |  |  |   | 5,067  | 
|Occupancy                                       |  |                    | 2,473  |                  |  |      | 1,687  |      |  |   | 4,262   |  |  |   | 3,298  | 
|Fraud                                           |  |                    | 1,036  |                  |  |      | 694    |      |  |   | 1,951   |  |  |   | 1,435  | 
|Credit                                          |  |                    | 997    |                  |  |      | 1,622  |      |  |   | 2,182   |  |  |   | 3,295  | 
|Insurance                                       |  |                    | 976    |                  |  |      | 297    |      |  |   | 1,727   |  |  |   | 1,114  | 
|Postage                                         |  |                    | 902    |                  |  |      | 831    |      |  |   | 1,804   |  |  |   | 1,622  | 
|Telephone                                       |  |                    | 772    |                  |  |      | 1,111  |      |  |   | 1,846   |  |  |   | 1,738  | 
|Other                                           |  |                    | 2,909  |                  |  |      | 1,089  |      |  |   | 5,265   |  |  |   | 2,110  | 
|                                                |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |        | 
|Total operating expenses                        |  | $                  | 57,195 |                  |  | $    | 49,887 |      |  | $ | 112,717 |  |  | $ | 98,845 | 
|                                                |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |        | 

Note 12) Discontinued Operations

The components of the gain (loss) on discontinuance of our mortgage and
leasing businesses for the three and six months ended June 30, 2003 and
2002 were as follows:

|                                                                             |  |                            |        |               |  |          |      |          |  |   |         |         |  |   |        |  
|---------------------------------------------------------------------------- |  | -------------------------- | ------ | ------------- |  | -------- | ---- | -------- |  | - | ------- | ------- |  | - | ------ | -
|                                                                             |  | Three and Six Months Ended
|                                                                             |  |                           
|                                                                             |  | June 30, 2003              |        | June 30, 2002
|                                                                             |  |                            |        |              
|                                                                             |  |                            |        |               |  | Advanta  |      |          |  |   |         | Advanta
|                                                                             |  | Advanta                    |        | Leasing       |  | Advanta  |      | Leasing 
|                                                                             |  | Mortgage                   |        | Services      |  | Mortgage |      | Services
|                                                                             |  |                            |        |               |  |          |      |         
|Pretax gain (loss) on
discontinuance of mortgage
and leasing businesses      |  | $                          | (2,600 | )             |  | $        | (600 | )        |  | $ | (25,300 | )       |  | $ | 11,300 |  
|Income tax (expense) benefit                                                 |  |                            | 1,001  |               |  |          | 231  |          |  |   | 9,740   |         |  |   | (4,350 | )
|                                                                             |  |                            |        |               |  |          |      |          |  |   |         |         |  |   |        |  
|Gain (loss) on
discontinuance of mortgage
and leasing businesses, net
of tax |  | $                          | (1,599 | )             |  | $        | (369 | )        |  | $ | (15,560 | )       |  | $ | 6,950  |  
|                                                                             |  |                            |        |               |  |          |      |          |  |   |         |         |  |   |        |  

In the three months ended June 30, 2003, we recorded a $2.6 million
pretax loss on discontinuance of the mortgage business for an increase in
our estimated future costs of mortgage business-related contingent
liabilities, primarily due to a lengthening of the anticipated timeframe
of the resolution for those contingent liabilities, including an extension of the discovery
process and a delay in the scheduled trial date in the litigation with
Chase Manhattan Mortgage Corporation.

In the three months ended June 30, 2002, we revised our estimate of costs
related to our exit from the mortgage business by $25.3 million,
comprised of $7.5 million for a litigation settlement 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. The
$17.8 million charge related primarily to an increase in our estimated
future costs of mortgage business-related contingent liabilities in
connection with (1) 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 (2) costs related to Advantas litigation with
Chase Manhattan Mortgage Corporation in connection with the Mortgage
Transaction. The

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changes in estimates reflected the legal and consulting
fees and other costs that we expected to incur based on the levels of
contingent liabilities and expense rates, and considered the status of
the discovery process associated with the Mortgage Transaction
litigation.

In the three months ended June 30, 2003, we adjusted our estimate of
operating results of the leasing segment over the remaining life of the
lease portfolio and recorded a $600 thousand pretax loss on leasing
discontinuance. The decrease in estimated operating results was
principally associated with an unfavorable sales tax assessment,
partially offset by favorable credit performance on the 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 a former leasing vendor that had filed for
bankruptcy protection, and operational improvements in the leasing
collections area.

Per share data was as follows:

|                                                                                                             |          |  |                             |       |                 |  |      |       |      |  |   |       |   |  |   |      | 
|------------------------------------------------------------------------------------------------------------ | -------- |  | --------------------------- | ----- | --------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ---- | 
|                                                                                                             |          |  | Three Months Ended June 30,
|                                                                                                             |          |  |                            
|                                                                                                             |          |  | Advanta                     |       | Advanta Leasing
|                                                                                                             |          |  | Mortgage                    |       | Services       
|                                                                                                             |          |  |                             |       |                
|                                                                                                             |          |  | 2003                        |       | 2002            |  | 2003 |       | 2002
|                                                                                                             |          |  |                             |       |                 |  |      |       |     
|Basic gain (loss), net, on
discontinuance of mortgage and
leasing businesses, net of tax,
per common share   |          |  |                             |       |                 |  |      |       |      |  |   |       |   |  |   |     
|                                                                                                             | Class A  |  | $                           | (0.07 | )               |  | $    | (0.61 | )    |  | $ | (0.02 | ) |  | $ | 0.27 | 
|                                                                                                             | Class B  |  |                             | (0.07 | )               |  |      | (0.61 | )    |  |   | (0.02 | ) |  |   | 0.27 | 
|                                                                                                             | Combined |  |                             | (0.07 | )               |  |      | (0.61 | )    |  |   | (0.02 | ) |  |   | 0.27 | 
|Diluted gain (loss), net, on
discontinuance of mortgage and leasing
businesses, net of tax, per common share |          |  |                             |       |                 |  |      |       |      |  |   |       |   |  |   |     
|                                                                                                             | Class A  |  | $                           | (0.07 | )               |  | $    | (0.58 | )    |  | $ | (0.02 | ) |  | $ | 0.26 | 
|                                                                                                             | Class B  |  |                             | (0.07 | )               |  |      | (0.58 | )    |  |   | (0.02 | ) |  |   | 0.26 | 
|                                                                                                             | Combined |  |                             | (0.07 | )               |  |      | (0.58 | )    |  |   | (0.02 | ) |  |   | 0.26 | 

|                                                                                                             |          |  |                           |       |                 |  |      |       |      |  |   |       |   |  |   |      | 
|------------------------------------------------------------------------------------------------------------ | -------- |  | ------------------------- | ----- | --------------- |  | ---- | ----- | ---- |  | - | ----- | - |  | - | ---- | 
|                                                                                                             |          |  | Six Months Ended June 30,
|                                                                                                             |          |  |                          
|                                                                                                             |          |  | Advanta                   |       | Advanta Leasing
|                                                                                                             |          |  | Mortgage                  |       | Services       
|                                                                                                             |          |  |                           |       |                
|                                                                                                             |          |  | 2003                      |       | 2002            |  | 2003 |       | 2002
|                                                                                                             |          |  |                           |       |                 |  |      |       |     
|Basic gain (loss), net, on discontinuance
of mortgage and leasing businesses, net of
tax, per common share   |          |  |                           |       |                 |  |      |       |      |  |   |       |   |  |   |     
|                                                                                                             | Class A  |  | $                         | (0.07 | )               |  | $    | (0.61 | )    |  | $ | (0.02 | ) |  | $ | 0.27 | 
|                                                                                                             | Class B  |  |                           | (0.07 | )               |  |      | (0.61 | )    |  |   | (0.02 | ) |  |   | 0.27 | 
|                                                                                                             | Combined |  |                           | (0.07 | )               |  |      | (0.61 | )    |  |   | (0.02 | ) |  |   | 0.27 | 
|Diluted gain (loss), net, on discontinuance
of mortgage and leasing businesses, net of
tax, per common share |          |  |                           |       |                 |  |      |       |      |  |   |       |   |  |   |     
|                                                                                                             | Class A  |  | $                         | (0.07 | )               |  | $    | (0.59 | )    |  | $ | (0.02 | ) |  | $ | 0.26 | 
|                                                                                                             | Class B  |  |                           | (0.07 | )               |  |      | (0.59 | )    |  |   | (0.02 | ) |  |   | 0.26 | 
|                                                                                                             | Combined |  |                           | (0.07 | )               |  |      | (0.59 | )    |  |   | (0.02 | ) |  |   | 0.26 | 

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

|                                       |  |          |        |              |  |   |         |  
|-------------------------------------- |  | -------- | ------ | ------------ |  | - | ------- | -
|                                       |  | June 30, |        | December 31,
|                                       |  | 2003     |        | 2002        
|                                       |  |          |        |             
|Lease receivables, net                 |  | $        | 66,348 |              |  | $ | 40,064  |  
|Other assets                           |  |          | 29,049 |              |  |   | 91,686  |  
|Liabilities                            |  |          | (5,322 | )            |  |   | (4,638  | )
|                                       |  |          |        |              |  |   |         |  
|Assets of discontinued operations, net |  | $        | 90,075 |              |  | $ | 127,112 |  
|                                       |  |          |        |              |  |   |         |  

We are continuing to service the existing lease portfolio. At June 30,
2003, there were $53 million of securitized leases outstanding, and we had
retained interests in leasing securitizations of $27 million. At December
31, 2002, there were $152 million of securitized leases outstanding, and
we had retained interests in leasing securitizations of $57 million. At
June 30, 2003, the fair value of the retained interests in leasing
securitizations was estimated using a 12% discount rate on future cash
flows, a loss rate of 3.7% and a weighted average life of 0.9 years. At
December 31, 2002, the fair value of the retained interests in leasing
securitizations was estimated using a 12% discount rate on future cash
flows, loss rates ranging from 5.0% to 5.4% and a weighted average life of
0.9 years.

In June 2003, we exercised a clean-up call option on a leasing
securitization transaction with $46 million of securitized leases
outstanding, resulting in an increase in on-balance sheet lease
receivables and a decrease in retained interests in leasing
securitizations. Both on-balance sheet lease receivables and retained
interests in leasing securitizations are classified as assets of
discontinued operations in the consolidated balance sheets. In addition,
in May 2003, we sold two buildings formerly used in our mortgage business
that were classified as assets from discontinued operations on the
consolidated balance sheet. Proceeds from the sale were approximately $27
million.

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Note 13) Calculation of Earnings Per Share

The following table shows the calculation of basic earnings per common
share and diluted earnings per common share.

|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |        |        | 
|--------------------------------------------------------------------------- | -------------------------------- | ------------------------- | ------ | ------------------ | ------ | ---------------- | ------ | ------ | ------ | ---- | ------ | ------ | ------ | - | ------ | ------ | ------ | 
|                                                                            |                                  |                           |        | Three Months Ended |        | Six Months Ended
|                                                                            |                                  |                           |        | June 30,           |        | June 30,        
|                                                                            |                                  |                           |        |                    |        |                 
|                                                                            |                                  |                           |        | 2003               |        | 2002             |        | 2003   |        | 2002
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |     
|Income from continuing operations                                           |                                  | $                         | 6,281  |                    |        | $                | 7,124  |        |        | $    | 12,186 |        |        | $ | 11,358 |       
|                                                                            | Less: Preferred A dividends      |                           |        | 0                  |        |                  |        | 0      |        |      |        | (141   | )      |   |        | (141   | )     
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Income from continuing operations
available to common shareholders          |                                  |                           | 6,281  |                    |        |                  | 7,124  |        |        |      | 12,045 |        |        |   | 11,217 |       
|Loss, net, on discontinuance of mortgage
and leasing businesses, net of tax |                                  |                           | (1,968 | )                  |        |                  | (8,610 | )      |        |      | (1,968 | )      |        |   | (8,610 | )     
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Net income (loss) available to common
shareholders                          |                                  |                           | 4,313  |                    |        |                  | (1,486 | )      |        |      | 10,077 |        |        |   | 2,607  |       
|                                                                            | Less: Class A dividends declared |                           |        | (579               | )      |                  |        | (576   | )      |      |        | (1,155 | )      |   |        | (1,150 | )     
|                                                                            | Less: Class B dividends declared |                           |        | (1,303             | )      |                  |        | (1,295 | )      |      |        | (2,623 | )      |   |        | (2,775 | )     
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Undistributed net income (loss)                                             |                                  | $                         | 2,431  |                    |        | $                | (3,357 | )      |        | $    | 6,299  |        |        | $ | (1,318 | )     
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Basic income from continuing
operations per common share                    |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Class A                   |        | $                  | 0.25   |                  |        | $      | 0.27   |      |        | $      | 0.47   |   |        | $      | 0.41   | 
|                                                                            |                                  | Class B                   |        |                    | 0.27   |                  |        |        | 0.29   |      |        |        | 0.52   |   |        |        | 0.46   | 
|                                                                            |                                  | Combined(1)               |        |                    | 0.26   |                  |        |        | 0.28   |      |        |        | 0.50   |   |        |        | 0.44   | 
|Diluted income from continuing
operations per common share                  |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Class A                   |        | $                  | 0.24   |                  |        | $      | 0.26   |      |        | $      | 0.46   |   |        | $      | 0.40   | 
|                                                                            |                                  | Class B                   |        |                    | 0.26   |                  |        |        | 0.27   |      |        |        | 0.51   |   |        |        | 0.44   | 
|                                                                            |                                  | Combined(1)               |        |                    | 0.26   |                  |        |        | 0.27   |      |        |        | 0.49   |   |        |        | 0.42   | 
|Basic net income (loss) per common share                                    |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Class A                   |        | $                  | 0.16   |                  |        | $      | (0.07  | )    |        | $      | 0.39   |   |        | $      | 0.07   | 
|                                                                            |                                  | Class B                   |        |                    | 0.19   |                  |        |        | (0.05  | )    |        |        | 0.44   |   |        |        | 0.12   | 
|                                                                            |                                  | Combined(1)               |        |                    | 0.18   |                  |        |        | (0.06  | )    |        |        | 0.42   |   |        |        | 0.10   | 
|Diluted net income (loss) per common share                                  |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Class A                   |        | $                  | 0.16   |                  |        | $      | (0.06  | )    |        | $      | 0.38   |   |        | $      | 0.08   | 
|                                                                            |                                  | Class B                   |        |                    | 0.18   |                  |        |        | (0.05  | )    |        |        | 0.43   |   |        |        | 0.11   | 
|                                                                            |                                  | Combined(1)               |        |                    | 0.18   |                  |        |        | (0.06  | )    |        |        | 0.41   |   |        |        | 0.10   | 
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|Basic weighted average common shares
outstanding                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Class A                   |        |                    | 9,151  |                  |        |        | 9,144  |      |        |        | 9,168  |   |        |        | 9,138  | 
|                                                                            |                                  | Class B                   |        |                    | 14,893 |                  |        |        | 16,176 |      |        |        | 14,854 |   |        |        | 16,239 | 
|                                                                            |                                  | Combined                  |        |                    | 24,044 |                  |        |        | 25,320 |      |        |        | 24,022 |   |        |        | 25,377 | 
|Dilutive effect of:                                                         |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Options Class B           |        |                    | 218    |                  |        |        | 828    |      |        |        | 168    |   |        |        | 588    | 
|                                                                            |                                  | Restricted shares Class A |        |                    | 0      |                  |        |        | 6      |      |        |        | 0      |   |        |        | 6      | 
|                                                                            |                                  | Restricted shares Class B |        |                    | 334    |                  |        |        | 636    |      |        |        | 307    |   |        |        | 485    | 
|Diluted weighted average common shares
outstanding                          |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Class A                   |        |                    | 9,151  |                  |        |        | 9,150  |      |        |        | 9,168  |   |        |        | 9,144  | 
|                                                                            |                                  | Class B                   |        |                    | 15,445 |                  |        |        | 17,640 |      |        |        | 15,329 |   |        |        | 17,312 | 
|                                                                            |                                  | Combined                  |        |                    | 24,596 |                  |        |        | 26,790 |      |        |        | 24,497 |   |        |        | 26,456 | 
|Antidilutive shares                                                         |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       
|                                                                            |                                  | Options Class B           |        |                    | 1,663  |                  |        |        | 1,133  |      |        |        | 2,197  |   |        |        | 1,360  | 
|                                                                            |                                  | Restricted shares Class B |        |                    | 113    |                  |        |        | 1,708  |      |        |        | 127    |   |        |        | 1,843  | 
|                                                                            |                                  |                           |        |                    |        |                  |        |        |        |      |        |        |        |   |        |       



|(1) |  | Combined represents net income available to common shareholders
divided by the combined total of Class A and Class B weighted
average common shares outstanding.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------

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|        |  |                                                                                      
|------- |  | -------------------------------------------------------------------------------------
|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

Income from continuing operations included the following business
segment results ($ in thousands):

|                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|--------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                  |  | Three Months Ended |        | Six Months Ended
|                                  |  | June 30,           |        | June 30,        
|                                  |  |                    |        |                 
|                                  |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                  |  |                    |        |                  |  |      |        |     
|Pretax income (loss):             |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Advanta Business Cards            |  | $                  | 12,647 |                  |  | $    | 14,562 |      |  | $ | 23,624 |   |  | $ | 28,306 |  
|Venture Capital                   |  |                    | (2,434 | )                |  |      | (779   | )    |  |   | (3,810 | ) |  |   | (4,214 | )
|Other(1)                          |  |                    | 0      |                  |  |      | (2,200 | )    |  |   | 0      |   |  |   | (5,624 | )
|                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Total pretax income               |  |                    | 10,213 |                  |  |      | 11,583 |      |  |   | 19,814 |   |  |   | 18,468 |  
|Income tax expense                |  |                    | (3,932 | )                |  |      | (4,459 | )    |  |   | (7,628 | ) |  |   | (7,110 | )
|                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  
|Income from continuing operations |  | $                  | 6,281  |                  |  | $    | 7,124  |      |  | $ | 12,186 |   |  | $ | 11,358 |  
|                                  |  |                    |        |                  |  |      |        |      |  |   |        |   |  |   |        |  



|(1) |  | Other includes investment and other activities not attributable to
the Advanta Business Cards or Venture Capital segments.
|--- |  | --------------------------------------------------------------------------------------------------------------------------

For the three months ended June 30, 2003, we reported income from
continuing operations of $6.3 million or $0.26 per combined diluted
common share, compared to income from continuing operations of $7.1
million or $0.27 per combined diluted common share for the same period
of 2002. The decrease in income from continuing operations for the
three months ended June 30, 2003 as compared to the same period of 2002
is the result of a decrease in Advanta Business Cards net income and
higher unrealized losses on our venture capital investments, partially
offset by the reduction in net interest expense on excess liquidity not
attributable to the Advanta Business Cards or Venture Capital segments.
For the six months ended June 30, 2003, we reported income from
continuing operations of $12.2 million or $0.49 per combined diluted
common share, compared to income from continuing operations of $11.4
million or $0.42 per combined diluted share for the same period of 2002.
The increase in income from continuing operations for the six months
ended June 30, 2003 as compared to the same period of 2002 is the result of the reduction
in net interest expense on excess liquidity not attributable to the
Advanta Business Cards or Venture Capital segments and lower unrealized
losses on our venture capital investments. These favorable variances
are partially offset by a decrease in Advanta Business Cards net income.

For the three months ended June 30, 2003, we recorded an after-tax
loss on the discontinuance of our mortgage and leasing businesses of
$2.0 million, or $0.08 per combined diluted
common share. For 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.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with accounting
principles generally accepted in the United States 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

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statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from those
estimates. We have identified accounting for the fair value of venture
capital investments, allowance for receivable losses, securitization
income, business credit card rewards programs, litigation
contingencies, income taxes, and discontinued operations as our most
critical accounting policies and estimates in that they require
managements most difficult, subjective or complex judgments as a
result of the need to make estimates about the effect of matters that
are inherently uncertain. Changes in such estimates could have a
material impact on our financial condition or results of operations.
These accounting policies are described in our Annual Report on Form
10-K for the year ended December 31, 2002.

ADVANTA BUSINESS CARDS

Advanta Business Cards originated, directly and through the use of third
parties, new accounts as follows:

|                           |  |      |        |      |  |  |         | 
|-------------------------- |  | ---- | ------ | ---- |  |  | ------- | 
|                           |  | 2003 |        | 2002
|                           |  |      |        |     
|Three months ended June 30 |  |      | 36,162 |      |  |  | 62,258  | 
|Six months ended June 30   |  |      | 90,093 |      |  |  | 104,549 | 

Our originations in 2002 and 2003 have included a broad array of
competitively-priced offerings and products, including promotional
pricing and rewards programs, designed to selectively attract and
retain more higher credit quality customers and to respond to the
competitive environment in the credit card industry. In the second
quarter of 2003, we enhanced our targeting and decision models to
assist us in identifying prospective customers that are interested in
an active relationship with Advanta, rather than only a promotional
balance transfer. We expect this will result in acquiring a higher
level of active customers, but may result in somewhat lower growth in
the second half of 2003 as compared to the growth rate experienced in
the six months ended June 30, 2003.

Pretax income for Advanta Business Cards consisted of the following
components
($ in thousands):

|                                                     |  |                    |         |                  |  |      |         |      |  |   |          |   |  |   |         |  
|---------------------------------------------------- |  | ------------------ | ------- | ---------------- |  | ---- | ------- | ---- |  | - | -------- | - |  | - | ------- | -
|                                                     |  | Three Months Ended |         | Six Months Ended
|                                                     |  | June 30,           |         | June 30,        
|                                                     |  |                    |         |                 
|                                                     |  | 2003               |         | 2002             |  | 2003 |         | 2002
|                                                     |  |                    |         |                  |  |      |         |     
|Net interest income on
owned interest-earning
assets |  | $                  | 11,738  |                  |  | $    | 14,583  |      |  | $ | 21,758   |   |  | $ | 28,590  |  
|Noninterest revenues                                 |  |                    | 66,283  |                  |  |      | 61,087  |      |  |   | 131,232  |   |  |   | 119,226 |  
|Provision for credit losses                          |  |                    | (9,555  | )                |  |      | (11,100 | )    |  |   | (18,963  | ) |  |   | (21,600 | )
|Operating expenses                                   |  |                    | (55,819 | )                |  |      | (50,008 | )    |  |   | (110,403 | ) |  |   | (97,910 | )
|                                                     |  |                    |         |                  |  |      |         |      |  |   |          |   |  |   |         |  
|Pretax income                                        |  | $                  | 12,647  |                  |  | $    | 14,562  |      |  | $ | 23,624   |   |  | $ | 28,306  |  
|                                                     |  |                    |         |                  |  |      |         |      |  |   |          |   |  |   |         |  

Net interest income on owned interest-earning assets decreased by $2.8
million in the three months ended June 30, 2003 as compared to the same
period of 2002 and decreased by $6.8 million for the six months ended
June 30, 2003 as compared to the same period of 2002. The decreases were
due primarily to decreases in the average yield earned on our business
credit card receivables, partially offset by increases in average owned
business credit card receivables of $34 million for the three months
ended June 30, 2003 and $76 million for the six months ended June 30,
2003 as compared to the same periods of 2002. The decreases in yields
are a result of the competitively-priced offerings and products.

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The increases in noninterest revenues in both periods are comprised of
increased interchange income, servicing revenues and other fee revenues
due to higher transaction volume and growth in average owned and
securitized receivables, and increased securitization income. An
increased volume of securitized receivables, a decrease in the floating
interest rates earned by note holders and a decreased net principal
charge-off rate on securitized receivables more than offset a decrease in
yield on securitized receivables, resulting in increases in
securitization income in both the three and six months ended June 30,
2003 as compared to the same periods of 2002.

The decreases in provision for credit losses in the three and six months
ended June 30, 2003 as compared to the same periods of 2002 reflect
estimates of a lower level of inherent losses in the portfolio, based on
delinquency and net principal charge-off trends and the current
composition of the portfolio as compared to estimates as of June 30,
2002, partially offset by the increases in average owned business credit
card receivables. The increase in operating expenses in both periods
resulted from growth in owned and securitized receivables. In addition,
operating expenses reflect an increase in the amortization of deferred
origination costs in both periods due to the number and timing of new
account originations.

VENTURE CAPITAL

The components of pretax loss for our venture capital segment for the
three and six months ended June 30, 2003 and 2002 were as follows ($ in
thousands):

|                             |  |                    |        |                  |  |      |      |      |  |   |        |   |  |   |        |  
|---------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ---- | ---- |  | - | ------ | - |  | - | ------ | -
|                             |  | Three Months Ended |        | Six Months Ended
|                             |  | June 30,           |        | June 30,        
|                             |  |                    |        |                 
|                             |  | 2003               |        | 2002             |  | 2003 |      | 2002
|                             |  |                    |        |                  |  |      |      |     
|Net interest expense         |  | $                  | (134   | )                |  | $    | (181 | )    |  | $ | (274   | ) |  | $ | (384   | )
|Realized gains (losses), net |  |                    | 197    |                  |  |      | 0    |      |  |   | 197    |   |  |   | (47    | )
|Unrealized losses            |  |                    | (1,439 | )                |  |      | (31  | )    |  |   | (2,049 | ) |  |   | (2,563 | )
|Operating expenses           |  |                    | (1,058 | )                |  |      | (567 | )    |  |   | (1,684 | ) |  |   | (1,220 | )
|                             |  |                    |        |                  |  |      |      |      |  |   |        |   |  |   |        |  
|Pretax loss                  |  | $                  | (2,434 | )                |  | $    | (779 | )    |  | $ | (3,810 | ) |  | $ | (4,214 | )
|                             |  |                    |        |                  |  |      |      |      |  |   |        |   |  |   |        |  

As shown in the table above, pretax loss of our venture capital segment
is comprised primarily of net realized and unrealized losses on our
venture capital investments, which reflect the market conditions for
those investments in each respective period, and operating expenses. The
estimated fair value of our venture capital investments was $11.3 million
at June 30, 2003 and $13.5 million at December 31, 2002. Operating
expenses for the three and six months ended June 30, 2003 include
approximately $410 thousand of lease termination costs paid in June 2003
relating to office space formerly used in our venture capital operations.

INTEREST INCOME AND EXPENSE

Interest income decreased by $785 thousand to $25.5 million for the three
months ended June 30, 2003 as compared to the same period of 2002 and
decreased by $4.2 million to $48.4 million for the six months ended June
30, 2003 as compared to the same period of 2002. The decrease in
interest income for both periods was due primarily to a decrease in the
average yield earned on our investments and receivables as a result of
the prevailing interest rate environment and the competitively-priced
offers described below. Partially offsetting these decreases were
increases in average owned business credit card receivables and
investments. The average owned business card receivables increased $34
million for the three months ended June 30, 2003 and $76 million for the
six months ended June 30, 2003 as compared to the same periods of 2002.
Average investments increased $170

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million for the three months ended June 30, 2003 and $89 million for the
six months ended June 30, 2003 as compared to the same periods of 2002.

In 2002 and 2003, our marketing campaigns have included a broad array of
competitively-priced offerings and products, including promotional
pricing and rewards programs, designed to selectively attract and retain
more higher credit quality customers and to respond to the competitive
environment. These competitively-priced offers have resulted in a
decline in yields on our business credit card receivable portfolio and
are anticipated to result in lower credit losses in future periods. We
expect yields for the remaining two quarters of 2003 to be relatively
consistent with or higher than those experienced in the six months ended
June 30, 2003, due in part to the expiration of promotional pricing
periods on a portion of the business credit card portfolio that we
anticipate will offset or exceed the decline in yields created by new
offers at promotional rates.

For the three months ended June 30, 2003, interest expense increased by
$742 thousand to $13.1 million as compared to the same period of 2002.
The increase in interest expense for the three months ended June 30, 2003
was due primarily to an increase of $457 million in our average deposits
and debt, partially offset by a decrease in our average cost of funds.
Interest expense decreased by $1.1 million for the six months ended June
30, 2003 to $24.4 million as compared to the same period of 2002. The
decrease in interest expense for the six months ended June 30, 2003 was
due primarily to a decrease in our average cost of funds, partially
offset by an increase of $316 million in average deposits and debt. Our
average cost of funds decreased to 3.71% for the three months ended June
30, 2003 from 5.29% in the same period of 2002, and decreased to 3.93%
for the six months ended June 30, 2003 from 5.57% in the same period of
2002. The decrease in our average cost of funds in both periods is
primarily a result of the prevailing interest rate environment.

The following tables provide 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.

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INTEREST RATE ANALYSIS AND AVERAGE BALANCES
($ in thousands)

|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|----------------------------------------------------------------------------------------------------------------------------- | ------------------------ | - | --------------------------- | ------- | -------- | - | ------ | ------ | ------- |  | -------- | ----- | ---- | - | --------- | ------- | ------- | - | ------ | ------ |  |  | ----- | ----- | -
|                                                                                                                              |                          |   | Three Months Ended June 30,
|                                                                                                                              |                          |   |                            
|                                                                                                                              |                          |   | 2003                        |         | 2002    
|                                                                                                                              |                          |   |                             |         |         
|                                                                                                                              |                          |   | Average                     |         |          |   |        |        | Average |  | Average  |       |      |   |           |         | Average
|                                                                                                                              |                          |   | Balance                     |         | Interest |   | Rate   |        | Balance |  | Interest |       | Rate
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |     
|Owned receivables:                                                                                                            |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|                                                                                                                              | Business credit cards(1) |   | $                           | 506,200 |          |   | $      | 18,634 |         |  |          | 14.76 | %    |   | $         | 472,010 |         |   | $      | 20,706 |  |  |       | 17.60 | %
|                                                                                                                              | Other receivables        |   |                             | 23,448  |          |   |        | 281    |         |  |          | 4.81  |      |   |           | 28,483  |         |   |        | 288    |  |  |       | 4.06  |  
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total owned receivables                                                                                                       |                          |   | 529,648                     |         |          |   | 18,915 |        |         |  | 14.32    |       |      |   | 500,493   |         |         |   | 20,994 |        |  |  | 16.82 |      
|Investments(2)                                                                                                                |                          |   | 660,999                     |         |          |   | 2,170  |        |         |  | 1.31     |       |      |   | 491,060   |         |         |   | 2,573  |        |  |  | 2.10  |      
|Retained interests in
securitizations                                                                                         |                          |   | 157,801                     |         |          |   | 4,373  |        |         |  | 11.08    |       |      |   | 88,403    |         |         |   | 2,652  |        |  |  | 12.00 |      
|Interest-earning assets of
discontinued operations                                                                            |                          |   | 39,043                      |         |          |   | 1,412  |        |         |  | 14.47    |       |      |   | 49,991    |         |         |   | 1,074  |        |  |  | 8.59  |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total interest-earning
assets(3)                                                                                              |                          |   | 1,387,491                   |         |          | $ | 26,870 |        |         |  | 7.76     | %     |      |   | 1,129,947 |         |         | $ | 27,293 |        |  |  | 9.69  | %    
|Noninterest-earning assets                                                                                                    |                          |   | 739,807                     |         |          |   |        |        |         |  |          |       |      |   | 445,984   |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total assets                                                                                                                  |                          | $ | 2,127,298                   |         |          |   |        |        |         |  |          |       |      | $ | 1,575,931 |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Deposits                                                                                                                      |                          | $ | 1,076,572                   |         |          | $ | 7,836  |        |         |  | 2.92     | %     |      | $ | 640,219   |         |         | $ | 6,733  |        |  |  | 4.22  | %    
|Debt                                                                                                                          |                          |   | 318,368                     |         |          |   | 5,059  |        |         |  | 6.37     |       |      |   | 298,187   |         |         |   | 5,652  |        |  |  | 7.60  |      
|Other borrowings                                                                                                              |                          |   | 55                          |         |          |   | 0      |        |         |  | 1.62     |       |      |   | 0         |         |         |   | 0      |        |  |  | 0.00  |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total interest-bearing
liabilities(4)                                                                                         |                          |   | 1,394,995                   |         |          | $ | 12,895 |        |         |  | 3.71     | %     |      |   | 938,406   |         |         | $ | 12,385 |        |  |  | 5.29  | %    
|Noninterest-bearing
liabilities                                                                                               |                          |   | 306,032                     |         |          |   |        |        |         |  |          |       |      |   | 170,542   |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Total liabilities                                                                                                             |                          |   | 1,701,027                   |         |          |   |        |        |         |  |          |       |      |   | 1,108,948 |         |         |   |        |        |  |  |       |      
|Company-obligated
mandatorily preferred
securities of subsidiary
trust holding solely
subordinate debentures of
Advanta Corp. |                          |   | 100,000                     |         |          |   |        |        |         |  |          |       |      |   | 100,000   |         |         |   |        |        |  |  |       |      
|Stockholders equity                                                                                                          |                          |   | 326,271                     |         |          |   |        |        |         |  |          |       |      |   | 366,983   |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Total liabilities and
stockholders equity                                                                                    |                          | $ | 2,127,298                   |         |          |   |        |        |         |  |          |       |      | $ | 1,575,931 |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                             |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Net interest spread                                                                                                           |                          |   |                             |         |          |   |        |        |         |  | 4.05     | %     |      |   |           |         |         |   |        |        |  |  | 4.40  | %    
|Net interest margin                                                                                                           |                          |   |                             |         |          |   |        |        |         |  | 4.04     | %     |      |   |           |         |         |   |        |        |  |  | 5.29  | %    



|(1) |  | Interest income includes late fees for owned business credit cards
receivables of $1.5 million for the three months ended June 30, 2003
and $1.6 million for the three months ended June 30, 2002.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Interest and average rate for tax-free securities are computed on a
tax equivalent basis using a statutory rate of 35%.                                                                           
|   
|(3) |  | Includes assets held and available for sale and non-accrual
receivables.                                                                                                                          
|   
|(4) |  | Includes funding of assets for both continuing and discontinued
operations.                                                                                                                       
|   
|    |  |                                                                                                                                                                                                   

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|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|----------------------------------------------------------------------------------------------------------------------------- | ------------------------ | - | ------------------------- | ------- | -------- | - | ------ | ------ | ------- |  | -------- | ----- | ---- | - | --------- | ------- | ------- | - | ------ | ------ |  |  | ----- | ----- | -
|                                                                                                                              |                          |   | Six Months Ended June 30,
|                                                                                                                              |                          |   |                          
|                                                                                                                              |                          |   | 2003                      |         | 2002    
|                                                                                                                              |                          |   |                           |         |         
|                                                                                                                              |                          |   | Average                   |         |          |   |        |        | Average |  | Average  |       |      |   |           |         | Average
|                                                                                                                              |                          |   | Balance                   |         | Interest |   | Rate   |        | Balance |  | Interest |       | Rate
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |     
|Owned receivables:                                                                                                            |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|                                                                                                                              | Business credit cards(1) |   | $                         | 510,800 |          |   | $      | 35,796 |         |  |          | 14.13 | %    |   | $         | 434,934 |         |   | $      | 40,824 |  |  |       | 18.93 | %
|                                                                                                                              | Other receivables        |   |                           | 24,150  |          |   |        | 592    |         |  |          | 4.94  |      |   |           | 28,338  |         |   |        | 624    |  |  |       | 4.44  |  
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total owned receivables                                                                                                       |                          |   | 534,950                   |         |          |   | 36,388 |        |         |  | 13.72    |       |      |   | 463,272   |         |         |   | 41,448 |        |  |  | 18.04 |      
|Investments(2)                                                                                                                |                          |   | 618,286                   |         |          |   | 4,102  |        |         |  | 1.33     |       |      |   | 529,644   |         |         |   | 5,867  |        |  |  | 2.22  |      
|Retained interests in
securitizations                                                                                         |                          |   | 145,969                   |         |          |   | 7,965  |        |         |  | 10.91    |       |      |   | 88,525    |         |         |   | 5,312  |        |  |  | 12.00 |      
|Interest-earning assets of
discontinued operations                                                                            |                          |   | 40,407                    |         |          |   | 2,689  |        |         |  | 13.31    |       |      |   | 52,251    |         |         |   | 2,233  |        |  |  | 8.55  |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total interest-earning
assets(3)                                                                                              |                          |   | 1,339,612                 |         |          | $ | 51,144 |        |         |  | 7.68     | %     |      |   | 1,133,692 |         |         | $ | 54,860 |        |  |  | 9.74  | %    
|Noninterest-earning assets                                                                                                    |                          |   | 631,373                   |         |          |   |        |        |         |  |          |       |      |   | 461,113   |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Total assets                                                                                                                  |                          | $ | 1,970,985                 |         |          |   |        |        |         |  |          |       |      | $ | 1,594,805 |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Deposits                                                                                                                      |                          | $ | 942,634                   |         |          | $ | 14,444 |        |         |  | 3.09     | %     |      | $ | 632,724   |         |         | $ | 13,774 |        |  |  | 4.39  | %    
|Debt                                                                                                                          |                          |   | 318,322                   |         |          |   | 10,124 |        |         |  | 6.41     |       |      |   | 304,867   |         |         |   | 12,261 |        |  |  | 8.11  |      
|Other borrowings                                                                                                              |                          |   | 139                       |         |          |   | 1      |        |         |  | 1.67     |       |      |   | 7,113     |         |         |   | 66     |        |  |  | 1.86  |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |       |  
|Total interest-bearing
liabilities(4)                                                                                         |                          |   | 1,261,095                 |         |          | $ | 24,569 |        |         |  | 3.93     | %     |      |   | 944,704   |         |         | $ | 26,101 |        |  |  | 5.57  | %    
|Noninterest-bearing
liabilities                                                                                               |                          |   | 285,793                   |         |          |   |        |        |         |  |          |       |      |   | 182,871   |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Total liabilities                                                                                                             |                          |   | 1,546,888                 |         |          |   |        |        |         |  |          |       |      |   | 1,127,575 |         |         |   |        |        |  |  |       |      
|Company-obligated
mandatorily preferred
securities of subsidiary
trust holding solely
subordinate debentures of
Advanta Corp. |                          |   | 100,000                   |         |          |   |        |        |         |  |          |       |      |   | 100,000   |         |         |   |        |        |  |  |       |      
|Stockholders equity                                                                                                          |                          |   | 324,097                   |         |          |   |        |        |         |  |          |       |      |   | 367,230   |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Total liabilities and
stockholders equity                                                                                    |                          | $ | 1,970,985                 |         |          |   |        |        |         |  |          |       |      | $ | 1,594,805 |         |         |   |        |        |  |  |       |      
|                                                                                                                              |                          |   |                           |         |          |   |        |        |         |  |          |       |      |   |           |         |         |   |        |        |  |  |       |      
|Net interest spread                                                                                                           |                          |   |                           |         |          |   |        |        |         |  | 3.75     | %     |      |   |           |         |         |   |        |        |  |  | 4.17  | %    
|Net interest margin                                                                                                           |                          |   |                           |         |          |   |        |        |         |  | 4.00     | %     |      |   |           |         |         |   |        |        |  |  | 5.12  | %    



|(1) |  | Interest income includes late fees for owned business credit card
receivables of $3.0 million for the six months ended June 30, 2003
and $4.4 million for the six months ended June 30, 2002.
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Interest and average rate for tax-free securities are computed on a
tax equivalent basis using a statutory rate of 35%.                                                                      
|   
|(3) |  | Includes assets held and available for sale and non-accrual
receivables.                                                                                                                     
|   
|(4) |  | Includes funding of assets for both continuing and discontinued
operations.                                                                                                                  

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PROVISION AND ALLOWANCE FOR RECEIVABLE LOSSES

For the three months ended June 30, 2003, provision for credit losses
decreased by $2.1 million to $9.3 million as compared to the same period
in 2002. For the six months ended June 30, 2003, provision for credit
losses decreased by $3.3 million to $18.7 million as compared to the same
period in 2002. The decrease in provision for credit losses in both
periods reflects a reduction in our estimate of losses inherent in the
portfolio as of June 30, 2003, based on the improvement of delinquency
and principal charge-off trends and the current composition of the
portfolio as compared to our estimate as of June 30, 2002. This
favorable impact was partially offset by increases in average owned
business credit card receivables of $34 million for the three months
ended June 30, 2003 and $76 million for the six months ended June 30,
2003 as compared to the same periods of 2002.

For the three months ended June 30, 2003, provisions for interest and fee
losses, which are recorded as direct reductions to interest and fee
income, increased by $911 thousand to $2.4 million as compared to the
same period in 2002. For the six months ended June 30, 2003, provisions
for interest and fee losses increased by $2.1 million to $5.0 million as
compared to the same period in 2002. The increases in both periods were
due to a change in income billing practice effective October 1, 2002 and
the increases in average owned business credit card receivables in those
periods. Prior to October 1, 2002, the billing and recognition of
interest and fees was discontinued when the related receivable became 90
days past due or when the account was classified as fraudulent, bankrupt,
deceased, hardship or credit counseling. Effective October 1, 2002, we
continue to bill and recognize interest and fees on accounts when they
become 90 days past due, and an additional allowance for receivable
losses is established for the additional billings estimated to be
uncollectible through a provision for interest and fee losses. The
billing and recognition of interest and fees is still discontinued when
the account is classified as fraudulent, bankrupt, deceased, hardship or
credit counseling.

The allowance for receivable losses on business credit card receivables
was $45.9 million at June 30, 2003, or 10.4% of owned receivables, which
was relatively consistent with the allowance of $44.5 million, or 10.0%
of owned receivables at December 31, 2002.

The improvement in the net principal charge-off rate for the six months
ended June 30, 2003 as compared to the same period of 2002 is the result
of the composition of the portfolio during those periods and enhancements
in the collections area of operations. In June 2000, we ceased
origination of business credit card accounts with Fair, Isaac and Company
(FICO) credit scores of less than 661. We estimate that principal
charge-offs for accounts with FICO credit scores of less than 661 at
origination reached their peak in the first quarter of 2002, 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 beyond our control, and there may be
month-to-month or quarterly variations in losses or delinquencies, we
anticipate that owned and managed principal charge-off rates for the
period from July 1, 2003 to December 31, 2003 will be approximately the
same or slightly higher than those experienced in the six months ended
June 30, 2003, but lower than rates experienced in the period from July
1, 2002 to December 31, 2002. This expectation is based on the current
composition of the portfolio that reflects our strategic initiative to
selectively attract and retain more higher credit quality customers,
enhancements in the collections area of operations made in 2002, and the
current level of delinquencies.

In January 2003, the bank regulatory agencies issued guidance on account
management and loss allowance for credit card lending. The guidance
describes the agencies

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expectations for prudent risk management practices for credit card
activities, particularly with regard to credit line management,
over-limit accounts, and workouts. It also addresses income recognition
and loss allowance practices for credit card lending. Based on our
understanding of the guidance as currently implemented by the regulatory
agencies, we do not expect it to have a material adverse effect on our
financial condition or our results of operations. However, similar to
other examination guidance, this guidance provides wide discretion to the
bank regulatory agencies in how the guidance is applied generally or
with respect to any particular
institution. Accordingly, our account management or loss allowance practices could change in the future.

The following table provides credit quality data as of and for the
year-to-date periods indicated for our on-balance sheet, or owned,
receivable portfolio including a summary of allowances for receivable
losses, delinquencies, nonaccrual receivables, accruing receivables past
due 90 days or more, and net principal charge-offs. Consolidated data
includes business credit cards and other receivables.



|                                                           |                                               |   |          |      |              |   |          |      |   |   |        |     |  
|---------------------------------------------------------- | --------------------------------------------- | - | -------- | ---- | ------------ | - | -------- | ---- | - | - | ------ | --- | -
|                                                           |                                               |   | June 30, |      | December 31, |   | June 30,
|                                                           | ($ in thousands)                              |   | 2003(1)  |      | 2002(1)      |   | 2002    
|                                                           |                                               |   |          |      |              |  
|CONSOLIDATED  OWNED                                       |                                               |   |          |      |              |   |          |      |   |   |        |    
|Allowance for receivable losses                            |                                               | $ | 47,326   |      |              | $ | 46,159   |      |   | $ | 45,006 |    
|Receivables 30 days or more delinquent                     |                                               |   | 27,228   |      |              |   | 25,197   |      |   |   | 30,211 |    
|Receivables 90 days or more delinquent                     |                                               |   | 13,953   |      |              |   | 12,755   |      |   |   | 15,367 |    
|Nonaccrual receivables                                     |                                               |   | 7,860    |      |              |   | 5,525    |      |   |   | 21,775 |    
|Accruing receivables past due 90 days or more              |                                               |   | 11,741   |      |              |   | 10,535   |      |   |   | 0      |    
|As a percentage of gross receivables:                      |                                               |   |          |      |              |   |          |      |   |   |        |    
|                                                           | Allowance for receivable losses               |   |          | 10.2 | %            |   |          | 9.8  | % |   |        | 9.6 | %
|                                                           | Receivables 30 days or more delinquent        |   |          | 5.8  |              |   |          | 5.4  |   |   |        | 6.4 |  
|                                                           | Receivables 90 days or more delinquent        |   |          | 3.0  |              |   |          | 2.7  |   |   |        | 3.3 |  
|                                                           | Nonaccrual receivables                        |   |          | 1.7  |              |   |          | 1.2  |   |   |        | 4.6 |  
|                                                           | Accruing receivables past due 90 days or more |   |          | 2.5  |              |   |          | 2.2  |   |   |        | 0.0 |  
|Net principal charge-offs                                  |                                               | $ | 17,991   |      |              | $ | 37,416   |      |   | $ | 19,006 |    
|As a percentage of average gross receivables
(annualized): |                                               |   |          |      |              |   |          |      |   |   |        |    
|                                                           | Net principal charge-offs                     |   |          | 6.7  | %            |   |          | 7.5  | % |   |        | 8.2 | %
|BUSINESS CREDIT CARDS  OWNED                              |                                               |   |          |      |              |   |          |      |   |   |        |    
|Allowance for receivable losses                            |                                               | $ | 45,914   |      |              | $ | 44,466   |      |   | $ | 43,777 |    
|Receivables 30 days or more delinquent                     |                                               |   | 25,839   |      |              |   | 23,406   |      |   |   | 28,739 |    
|Receivables 90 days or more delinquent                     |                                               |   | 13,184   |      |              |   | 11,959   |      |   |   | 14,703 |    
|Nonaccrual receivables                                     |                                               |   | 7,091    |      |              |   | 4,729    |      |   |   | 21,111 |    
|Accruing receivables past due 90 days or more              |                                               |   | 11,741   |      |              |   | 10,535   |      |   |   | 0      |    
|As a percentage of gross receivables:                      |                                               |   |          |      |              |   |          |      |   |   |        |    
|                                                           | Allowance for receivable losses               |   |          | 10.4 | %            |   |          | 10.0 | % |   |        | 9.9 | %
|                                                           | Receivables 30 days or more delinquent        |   |          | 5.8  |              |   |          | 5.3  |   |   |        | 6.5 |  
|                                                           | Receivables 90 days or more delinquent        |   |          | 3.0  |              |   |          | 2.7  |   |   |        | 3.3 |  
|                                                           | Nonaccrual receivables                        |   |          | 1.6  |              |   |          | 1.1  |   |   |        | 4.8 |  
|                                                           | Accruing receivables past due 90 days or more |   |          | 2.7  |              |   |          | 2.4  |   |   |        | 0.0 |  
|Net principal charge-offs                                  |                                               | $ | 17,963   |      |              | $ | 37,400   |      |   | $ | 18,993 |    
|As a percentage of average gross receivables
(annualized): |                                               |   |          |      |              |   |          |      |   |   |        |    
|                                                           | Net principal charge-offs                     |   |          | 7.0  | %            |   |          | 7.9  | % |   |        | 8.7 | %



|(1) |  | See Note 4 to the consolidated financial statements for a
discussion of the change in income billing practice effective
October 1, 2002.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------

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##### Table of Contents



SECURITIZATION INCOME

Advanta Business Cards recognized securitization income as follows ($ in
thousands):

|                           |  |      |        |      |  |   |        | 
|-------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                           |  | 2003 |        | 2002
|                           |  |      |        |     
|Three months ended June 30 |  | $    | 31,752 |      |  | $ | 30,023 | 
|Six months ended June 30   |  |      | 61,362 |      |  |   | 59,670 | 

An increased volume of securitized receivables, a decrease in the
floating interest rates earned by note holders and a decreased net
principal charge-off rate on securitized receivables more than offset a
decrease in yield on securitized receivables, resulting in increases in
securitization income in both the three and six months ended June 30,
2003 as compared to the same periods of 2002. These fluctuations in
yields and rates are similar to those experienced in owned business
credit card receivables as discussed in the Interest Income and Expense
and Provision and Allowance for Receivable Losses sections of
Managements Discussion and Analysis of Financial Condition and Results
of Operations.

Managed Receivable Data

In addition to evaluating the financial performance of the Advanta
Business Cards segment under generally accepted accounting principles
(GAAP), we evaluate Advanta Business Cards performance on a managed
basis. Our managed receivable portfolio is comprised of both owned and
securitized business credit card receivables. We sell business credit
card receivables through securitizations accounted for as sales under
GAAP. We continue to own and service the accounts that generate the
securitized receivables. Managed data presents performance as if the
securitized receivables had not been sold. We believe that performance
on a managed basis provides useful supplemental information because we
retain interests in the securitized receivables and, therefore, we have a
financial interest in and exposure to the performance of the securitized
receivables. Revenue and credit data on the managed portfolio provides
additional information useful in understanding the performance of the
retained interests in securitizations. The following tables provide
managed data for Advanta Business Cards and a reconciliation of the
managed data to the most directly comparable GAAP financial measures ($
in thousands):

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INCOME STATEMENT MEASURES AND STATISTICS

|                                                     |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|---------------------------------------------------- |  | ---------- | ------- | -------- |  | -------------- | ----- | ------- |  | -------- | --------- | -------- |  | ------- | --------- |  |  |  | ----- | -
|                                                     |  |            |         |          |  |                |       |         |  |          |           |          |  | Advanta |           |  |  | 
|                                                     |  | Advanta    |         |          |  |                |       |         |  |          |           | Business |  |         |           | 
|                                                     |  | Business   |         | GAAP     |  | Securitization |       | Cards   |  | Managed 
|                                                     |  | Cards GAAP |         | Ratio(3) |  | Adjustments    |       | Managed |  | Ratio(3)
|                                                     |  |            |         |          |  |                |       |         |  |         
|Three Months Ended June 30, 2003:                    |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|Interest income                                      |  | $          | 23,007  |          |  |                | 13.86 | %       |  | $        | 89,819    |          |  | $       | 112,826   |  |  |  | 16.14 | %
|Interest expense                                     |  |            | 11,269  |          |  |                | 6.79  |         |  |          | 9,684     |          |  |         | 20,953    |  |  |  | 3.00  |  
|Net interest income                                  |  |            | 11,738  |          |  |                | 7.07  |         |  |          | 80,135    |          |  |         | 91,873    |  |  |  | 13.14 |  
|Noninterest revenues                                 |  |            | 66,283  |          |  |                | 39.93 |         |  |          | (33,550   | )        |  |         | 32,733    |  |  |  | 4.68  |  
|Provision for credit losses                          |  |            | 9,555   |          |  |                | 5.76  |         |  |          | 46,585    | (2)      |  |         | 56,140    |  |  |  | 8.03  |  
|Risk-adjusted
revenues(1)                            |  |            | 68,466  |          |  |                | 41.24 |         |  |          | 0         |          |  |         | 68,466    |  |  |  | 9.79  |  
|Average business credit
card interest-earning
assets |  |            | 664,001 |          |  |                |       |         |  |          | 2,132,870 |          |  |         | 2,796,871 |  |  |  |       |  
|Net principal charge-offs                            |  |            | 9,555   |          |  |                | 5.76  |         |  |          | 46,585    |          |  |         | 56,140    |  |  |  | 8.03  |  
|                                                     |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|Three Months Ended June 30, 2002:                    |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|Interest income                                      |  | $          | 23,358  |          |  |                | 16.67 | %       |  | $        | 77,326    |          |  | $       | 100,684   |  |  |  | 19.08 | %
|Interest expense                                     |  |            | 8,775   |          |  |                | 6.26  |         |  |          | 9,376     |          |  |         | 18,151    |  |  |  | 3.44  |  
|Net interest income                                  |  |            | 14,583  |          |  |                | 10.41 |         |  |          | 67,950    |          |  |         | 82,533    |  |  |  | 15.64 |  
|Noninterest revenues                                 |  |            | 61,087  |          |  |                | 43.60 |         |  |          | (30,174   | )        |  |         | 30,913    |  |  |  | 5.86  |  
|Provision for credit losses                          |  |            | 11,100  |          |  |                | 7.92  |         |  |          | 37,776    | (2)      |  |         | 48,876    |  |  |  | 9.26  |  
|Risk-adjusted revenues(1)                            |  |            | 64,570  |          |  |                | 46.09 |         |  |          | 0         |          |  |         | 64,570    |  |  |  | 12.24 |  
|Average business credit
card interest-earning
assets |  |            | 560,413 |          |  |                |       |         |  |          | 1,550,007 |          |  |         | 2,110,420 |  |  |  |       |  
|Net principal charge-offs                            |  |            | 9,694   |          |  |                | 6.92  |         |  |          | 37,776    |          |  |         | 47,470    |  |  |  | 9.00  |  
|                                                     |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|Six Months Ended June 30, 2003:                     
|Interest income                                      |  | $          | 43,761  |          |  |                | 13.33 | %       |  | $        | 176,914   |          |  | $       | 220,675   |  |  |  | 16.09 | %
|Interest expense                                     |  |            | 22,003  |          |  |                | 6.70  |         |  |          | 19,205    |          |  |         | 41,208    |  |  |  | 3.01  |  
|Net interest income                                  |  |            | 21,758  |          |  |                | 6.63  |         |  |          | 157,709   |          |  |         | 179,467   |  |  |  | 13.09 |  
|Noninterest revenues                                 |  |            | 131,232 |          |  |                | 39.96 |         |  |          | (65,649   | )        |  |         | 65,583    |  |  |  | 4.78  |  
|Provision for credit losses                          |  |            | 18,963  |          |  |                | 5.77  |         |  |          | 92,060    | (2)      |  |         | 111,023   |  |  |  | 8.10  |  
|Risk-adjusted revenues(1)                            |  |            | 134,027 |          |  |                | 40.81 |         |  |          | 0         |          |  |         | 134,027   |  |  |  | 9.77  |  
|Average business credit
card interest-earning
assets |  |            | 656,769 |          |  |                |       |         |  |          | 2,085,603 |          |  |         | 2,742,372 |  |  |  |       |  
|Net principal charge-offs                            |  |            | 17,963  |          |  |                | 5.47  |         |  |          | 92,060    |          |  |         | 110,023   |  |  |  | 8.02  |  
|                                                     |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|Six Months Ended June 30, 2002:                      |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  
|Interest income                                      |  | $          | 46,136  |          |  |                | 17.63 | %       |  | $        | 156,969   |          |  | $       | 203,105   |  |  |  | 19.70 | %
|Interest expense                                     |  |            | 17,546  |          |  |                | 6.70  |         |  |          | 18,435    |          |  |         | 35,981    |  |  |  | 3.49  |  
|Net interest income                                  |  |            | 28,590  |          |  |                | 10.92 |         |  |          | 138,534   |          |  |         | 167,124   |  |  |  | 16.21 |  
|Noninterest revenues                                 |  |            | 119,226 |          |  |                | 45.55 |         |  |          | (61,772   | )        |  |         | 57,454    |  |  |  | 5.57  |  
|Provision for credit losses                          |  |            | 21,600  |          |  |                | 8.25  |         |  |          | 76,762    | (2)      |  |         | 98,362    |  |  |  | 9.54  |  
|Risk-adjusted revenues(1)                            |  |            | 126,216 |          |  |                | 48.22 |         |  |          | 0         |          |  |         | 126,216   |  |  |  | 12.24 |  
|Average business credit
card interest-earning
assets |  |            | 523,459 |          |  |                |       |         |  |          | 1,538,571 |          |  |         | 2,062,030 |  |  |  |       |  
|Net principal charge-offs                            |  |            | 18,993  |          |  |                | 7.26  |         |  |          | 76,762    |          |  |         | 95,755    |  |  |  | 9.29  |  
|                                                     |  |            |         |          |  |                |       |         |  |          |           |          |  |         |           |  |  |  |       |  



| | (1) |  | Risk-adjusted revenues represent net interest income and noninterest
revenues, less provision for credit losses.                                                                                                                 
| | --- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Includes the amount by which the credit
losses would have been higher had the securitized receivables remained as
owned and the provision for credit losses on securitized receivables been
equal to actual reported charge-offs.
|
| | (3) |  | Ratios are as a percentage of average business credit card
interest-earning assets.                                                                                                                                              

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BALANCE SHEET MEASURES AND STATISTICS

|                                              |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  
|--------------------------------------------- |  | ---------- | ------- | -------- |  | -------------- | ---- | ------------- |  | -------- | --------- | ------- |  | - | --------- |  |  |  | ---- | -
|                                              |  | Advanta    |         |          |  |                |      |               |  |          |           | Advanta |  |   |           | 
|                                              |  | Business   |         | GAAP     |  | Securitization |      | Business      |  | Managed  |          
|                                              |  | Cards GAAP |         | Ratio(2) |  | Adjustments    |      | Cards Managed |  | Ratio(2)
|                                              |  |            |         |          |  |                |      |               |  |         
|As of June 30, 2003(1)                        |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  
|Number of business credit
card accounts       |  |            | 788,470 |          |  |                |      |               |  |          | N/A       |         |  |   | 788,470   |  |  |  |      |  
|Ending business credit
card receivables       |  | $          | 442,769 |          |  |                |      |               |  | $        | 2,365,176 |         |  | $ | 2,807,945 |  |  |  |      |  
|Receivables 90 days or
more delinquent        |  |            | 13,184  |          |  |                | 2.98 | %             |  |          | 76,459    |         |  |   | 89,643    |  |  |  | 3.19 | %
|Receivables 30 days or
more delinquent        |  |            | 25,839  |          |  |                | 5.84 |               |  |          | 150,380   |         |  |   | 176,219   |  |  |  | 6.28 |  
|Nonaccrual receivables                        |  |            | 7,091   |          |  |                | 1.60 |               |  |          | 42,162    |         |  |   | 49,253    |  |  |  | 1.75 |  
|Accruing receivables past
due 90 days or more |  |            | 11,741  |          |  |                | 2.65 |               |  |          | 67,804    |         |  |   | 79,545    |  |  |  | 2.83 |  
|                                              |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  
|As of December 31, 2002(1)                    |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  
|Number of business credit
card accounts       |  |            | 780,326 |          |  |                |      |               |  |          | N/A       |         |  |   | 780,326   |  |  |  |      |  
|Ending business credit
card receivables       |  | $          | 445,083 |          |  |                |      |               |  | $        | 2,149,147 |         |  | $ | 2,594,230 |  |  |  |      |  
|Receivables 90 days or
more delinquent        |  |            | 11,959  |          |  |                | 2.69 | %             |  |          | 69,335    |         |  |   | 81,294    |  |  |  | 3.13 | %
|Receivables 30 days or
more delinquent        |  |            | 23,406  |          |  |                | 5.26 |               |  |          | 136,128   |         |  |   | 159,534   |  |  |  | 6.15 |  
|Nonaccrual receivables                        |  |            | 4,729   |          |  |                | 1.06 |               |  |          | 27,688    |         |  |   | 32,417    |  |  |  | 1.25 |  
|Accruing receivables past
due 90 days or more |  |            | 10,535  |          |  |                | 2.37 |               |  |          | 61,045    |         |  |   | 71,580    |  |  |  | 2.76 |  
|                                              |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  
|As of June 30, 2002                           |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  
|Number of business credit
card accounts       |  |            | 710,071 |          |  |                |      |               |  |          | N/A       |         |  |   | 710,071   |  |  |  |      |  
|Ending business credit
card receivables       |  | $          | 443,377 |          |  |                |      |               |  | $        | 1,744,669 |         |  | $ | 2,188,046 |  |  |  |      |  
|Receivables 90 days or
more delinquent        |  |            | 14,703  |          |  |                | 3.32 | %             |  |          | 58,836    |         |  |   | 73,539    |  |  |  | 3.36 | %
|Receivables 30 days or
more delinquent        |  |            | 28,739  |          |  |                | 6.48 |               |  |          | 115,500   |         |  |   | 144,239   |  |  |  | 6.59 |  
|Nonaccrual receivables                        |  |            | 21,111  |          |  |                | 4.76 |               |  |          | 83,313    |         |  |   | 104,424   |  |  |  | 4.77 |  
|Accruing receivables past
due 90 days or more |  |            | 0       |          |  |                | 0.00 |               |  |          | 0         |         |  |   | 0         |  |  |  | 0.00 |  
|                                              |  |            |         |          |  |                |      |               |  |          |           |         |  |   |           |  |  |  |      |  



| | (1) |  | See Note 4 to the consolidated financial statements for a discussion of
the change in income billing practice effective October 1, 2002.
| | --- |  | ----------------------------------------------------------------------------------------------------------------------------------------
|
| | (2) |  | Ratios are as a percentage of ending business credit card
receivables.                                                                  

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SERVICING REVENUES

Advanta Business Cards recognized servicing revenue as follows ($ in
thousands):

|                           |  |      |        |      |  |   |        | 
|-------------------------- |  | ---- | ------ | ---- |  | - | ------ | 
|                           |  | 2003 |        | 2002
|                           |  |      |        |     
|Three months ended June 30 |  | $    | 9,873  |      |  | $ | 8,143  | 
|Six months ended June 30   |  |      | 19,900 |      |  |   | 16,085 | 

The increase in servicing revenue in both the three and six months ended
June 30, 2003 as compared to the same periods of 2002 was due to
increased volume of securitized business credit card receivables.

OTHER REVENUES

|                                          |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |        |  
|----------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------ | -
|                                          |  | Three Months Ended |        | Six Months Ended
|                                          |  | June 30,           |        | June 30,        
|                                          |  |                    |        |                 
|($ in thousands)                          |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                          |  |                    |        |                  |  |      |        |     
|Interchange income                        |  | $                  | 29,289 |                  |  | $    | 22,737 |      |  | $ | 55,427  |   |  | $ | 42,930 |  
|Business credit card rewards              |  |                    | (7,534 | )                |  |      | (3,023 | )    |  |   | (11,666 | ) |  |   | (5,027 | )
|Investment securities gains
(losses), net |  |                    | (1,158 | )                |  |      | 534    |      |  |   | (1,766  | ) |  |   | (2,093 | )
|Balance transfer fees                     |  |                    | 865    |                  |  |      | 486    |      |  |   | 2,216   |   |  |   | 780    |  
|Cash advance fees                         |  |                    | 616    |                  |  |      | 883    |      |  |   | 1,371   |   |  |   | 1,691  |  
|Other fee revenues                        |  |                    | 1,644  |                  |  |      | 1,854  |      |  |   | 3,047   |   |  |   | 3,118  |  
|Other                                     |  |                    | 1,207  |                  |  |      | (472   | )    |  |   | 1,732   |   |  |   | (522   | )
|                                          |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |        |  
|Total other revenues, net                 |  | $                  | 24,929 |                  |  | $    | 22,999 |      |  | $ | 50,361  |   |  | $ | 40,877 |  
|                                          |  |                    |        |                  |  |      |        |      |  |   |         |   |  |   |        |  

Interchange income includes interchange fees on both owned and
securitized business credit cards. The increase in interchange income in
the three and six months ended June 30, 2003 as compared to the same
periods of 2002 was primarily due to higher transaction volume related to
the increase in average business credit card accounts and receivables.
The average interchange rate was 2.1% in each of the three and six months
ended June 30, 2003 and 2002.

The increases in business credit card rewards in the three and six months
ended June 30, 2003 as compared to the same periods of 2002 were due
primarily to the increase in average owned and securitized business
credit card accounts in the cash-back rewards programs and the
corresponding transaction activity in those accounts, partially offset by
a change in redemption terms of certain bonus mile reward programs in the
first quarter of 2003 that decreased the anticipated costs of future
reward redemptions in those bonus mile reward programs by approximately
$867 thousand.

Investment securities gains (losses), net, primarily represent decreases
in valuations of venture capital investments reflecting the market
conditions for the investments. Investment securities gains for the
three and six months ended June 30, 2002 also include $0.5 million of
realized gains on other investments.

An increase in the volume of balance transfer promotional offers included
in our marketing campaigns has resulted in a higher volume of balance
transfers and therefore, balance transfer fees have increased in the
three and six months ended June 30, 2003 as compared to the same periods
of 2002.

Other revenues for the three months ended June 30, 2002 included charges
of $600 thousand related to valuation adjustments on other receivables
held for sale. The

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same period of 2003 included the benefit of a
reversal of a lower of cost or market valuation adjustment on other
receivables held for sale of $550 thousand, based on the valuation in an
agreement of sale dated July 2003. Other revenues also included an
estimate of the earnings allocable to our partnership interest in Fleet
Credit Card Services, L.P. of $500 thousand for the three months ended
June 30, 2003 and $1.0 million for the six months ended June 30, 2003.

OPERATING EXPENSES

|                                                |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |        | 
|----------------------------------------------- |  | ------------------ | ------ | ---------------- |  | ---- | ------ | ---- |  | - | ------- |  |  | - | ------ | 
|                                                |  | Three Months Ended |        | Six Months Ended
|                                                |  | June 30,           |        | June 30,        
|                                                |  |                    |        |                 
|($ in thousands)                                |  | 2003               |        | 2002             |  | 2003 |        | 2002
|                                                |  |                    |        |                  |  |      |        |     
|Salaries and employee benefits                  |  | $                  | 18,891 |                  |  | $    | 16,533 |      |  | $ | 36,882  |  |  | $ | 33,664 | 
|Amortization of deferred
origination costs, net |  |                    | 12,973 |                  |  |      | 12,410 |      |  |   | 27,157  |  |  |   | 24,432 | 
|External processing                             |  |                    | 5,005  |                  |  |      | 4,082  |      |  |   | 9,625   |  |  |   | 8,259  | 
|Marketing                                       |  |                    | 4,444  |                  |  |      | 3,653  |      |  |   | 7,371   |  |  |   | 5,564  | 
|Professional fees                               |  |                    | 3,284  |                  |  |      | 3,412  |      |  |   | 6,718   |  |  |   | 7,247  | 
|Equipment                                       |  |                    | 2,533  |                  |  |      | 2,466  |      |  |   | 5,927   |  |  |   | 5,067  | 
|Occupancy                                       |  |                    | 2,473  |                  |  |      | 1,687  |      |  |   | 4,262   |  |  |   | 3,298  | 
|Fraud                                           |  |                    | 1,036  |                  |  |      | 694    |      |  |   | 1,951   |  |  |   | 1,435  | 
|Credit                                          |  |                    | 997    |                  |  |      | 1,622  |      |  |   | 2,182   |  |  |   | 3,295  | 
|Insurance                                       |  |                    | 976    |                  |  |      | 297    |      |  |   | 1,727   |  |  |   | 1,114  | 
|Postage                                         |  |                    | 902    |                  |  |      | 831    |      |  |   | 1,804   |  |  |   | 1,622  | 
|Telephone                                       |  |                    | 772    |                  |  |      | 1,111  |      |  |   | 1,846   |  |  |   | 1,738  | 
|Other                                           |  |                    | 2,909  |                  |  |      | 1,089  |      |  |   | 5,265   |  |  |   | 2,110  | 
|                                                |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |        | 
|Total operating expenses                        |  | $                  | 57,195 |                  |  | $    | 49,887 |      |  | $ | 112,717 |  |  | $ | 98,845 | 
|                                                |  |                    |        |                  |  |      |        |      |  |   |         |  |  |   |        | 

Salaries and employee benefits, external processing, fraud, postage and
other expenses have increased in the three and six months ended June 30,
2003 as compared to the same periods of 2002 due primarily to growth in
owned and securitized business credit card receivables. We expect
salaries and employee benefits to continue to increase in the remainder
of 2003 as we make investments in initiatives to acquire and retain
relationships with high credit quality customers.

Amortization of deferred origination costs, net, increased in the three
and six months ended June 30, 2003 as compared to the same periods of
2002 due to an increase in the number and timing of new account
originations, partially offset by a decrease in the average acquisition
cost per account. We originated a significant volume of new accounts in
the fourth quarter of 2002, and expect to have increased amortization
expense through the third quarter of 2003 as those costs amortize over
the privilege period of one year.

Professional fees decreased in the three and six months ended June 30,
2003 as compared to the same periods of 2002 primarily due to a
decrease in the use of external consultants. We expect professional
fees to increase in the remaining quarters of 2003 as compared to the
three months ended June 30, 2003, due to the expected use of
consultants in certain initiatives to acquire and retain relationships
with high credit quality customers.

Equipment expense increased in the six months ended June 30, 2003 as
compared to the same period of 2002 due to an increase in technology
costs, including a licensing fee, and the growth in owned and
securitized business credit card receivables.

Occupancy expense increased in both the three and six months ended June
30, 2003 as compared to the same periods of 2002 due to additional office
space that we began

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leasing in March 2003. Rental expense on the new
office space was $413 thousand in the three months ended June 30, 2003
and $550 thousand in the six months ended June 20, 2003. In addition,
occupancy expense in 2003 included approximately $410 thousand of lease
termination costs paid in June 2003 relating to office space formerly
used in our venture capital operations.

Marketing expense increased in the three and six months ended June 30,
2003 as compared to the same periods of 2002 due to Advantas sponsorship
and advertising costs associated with tennis events in 2003 and increased
origination activities in new markets for our retail note program.
Marketing expense has also increased in the six months ended June 30,
2003 as compared to the same period of 2002 due to our initiatives to
enhance and maintain our relationships with existing high credit quality
business credit card customers, including marketing programs to stimulate
usage, enhance customer loyalty and retain existing accounts, and the
development of programs to acquire new customers.

Credit expense decreased in the three and six months ended June 30,
2003 as compared to the same periods of 2002 due to a shift in the
types of recoveries. There was an increase in the proportion of total
recoveries collected through sales of pools of charged-off accounts and
a decrease in the proportion collected through outsourced individual
account recovery efforts.

Insurance expense increased in the three and six months ended June 30,
2003 as compared to the same periods of 2002 due to an increase in
directors and officers professional liability insurance costs. In
addition, insurance expense in the three and six months ended June 30,
2002 included a $382 thousand reduction of our estimated liability
related to workers compensation insurance.

The decrease in telephone expense in the three months ended June 30,
2003 as compared to the same period of 2002 was caused by a reduction
in contract rate charged by one of our service providers that was
effective February 2003.

Other operating expenses in the three and six months ended June 30,
2002 included a $1.1 million decrease in litigation reserves resulting
from a reduction of damages in a jury verdict.

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
our exit from that business in the first quarter of 2001. See
discussion in Note 8 to the consolidated financial statements.
Management believes that the aggregate loss, if any, resulting from
these actions will not have a material adverse effect on our financial
position or results of our operations based on the level of litigation
reserves we have established and our current expectations regarding the
ultimate resolutions of these existing actions. Our litigation
reserves are estimated based on the status of litigation and our
assessment of the ultimate resolution of each action after consultation
with our attorneys. 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.

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INCOME TAXES

Income tax expense on income from continuing operations was as follows
($ in thousands):

|                           |  |      |       |      |  |   |       | 
|-------------------------- |  | ---- | ----- | ---- |  | - | ----- | 
|                           |  | 2003 |       | 2002
|                           |  |      |       |     
|Three months ended June 30 |  | $    | 3,932 |      |  | $ | 4,459 | 
|Six months ended June 30   |  |      | 7,628 |      |  |   | 7,110 | 

Our effective tax rate was 38.5% for both the three and six months ended
June 30, 2003 and 2002. See Note 8 to the consolidated financial
statements for a discussion of tax matters currently before the Internal
Revenue Service Regional Office of Appeals.

DISCONTINUED OPERATIONS

In the three months ended June 30, 2003, we recorded an after-tax loss
on the discontinuance of our mortgage and leasing businesses of $2.0
million. The components of this loss include a $2.6 million pretax loss
on mortgage discontinuance, a $600 thousand pretax loss on leasing
discontinuance, and a tax benefit of $1.2 million. The $2.6 million
pretax loss on mortgage discontinuance was the result of an increase in
our estimated future costs of mortgage business-related contingent
liabilities, primarily due to a lengthening of the anticipated timeframe
of the resolution for those contingent liabilities, including an extension of the
discovery process and a delay in the scheduled trial date in the
litigation with Chase Manhattan Mortgage Corporation. The $600 thousand
pretax loss on leasing discontinuance was principally associated with an
unfavorable sales tax assessment and represents a decrease in our
estimate of operating results of the leasing segment over the remaining
life of the lease portfolio. The impact of the unfavorable sales tax
assessment was partially offset by favorable credit performance on the
leasing 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 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 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 charge related primarily to an increase in
our estimated 2002 and future costs of mortgage business-related
contingent liabilities in connection with (1) 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 (2) costs related to Advantas litigation with Chase Manhattan
Mortgage Corporation in connection with the Mortgage Transaction. The
change in estimate reflected the legal and consulting fees and other
costs that we expected to incur based on the levels of contingent
liabilities and expense rates, and considered the status of the
discovery process associated with the Mortgage Transaction litigation.
The $11.3 million pretax gain on leasing discontinuance represented 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

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had filed for bankruptcy protection, and operational improvements in the
leasing collections area.

MARKET RISK SENSITIVITY

We are exposed to equity price risk on the equity securities in our
investments available for sale portfolio. A significant portion of our
equity securities at June 30, 2003 represented venture capital
investments. We typically do not attempt to reduce or eliminate the
market exposure on equity investments. A 20% adverse change in equity
prices would result in an approximate $3.6 million decrease in the fair
value of our equity investments as of June 30, 2003. A 20% adverse
change would have resulted in an approximate $4.1 million decrease in
fair value as of December 31, 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. The measurement of managed
net interest income in addition to net interest income on owned assets is
meaningful because our securitization income fluctuates with yields on
securitized receivables and interest rates earned by note holders. 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. As of June 30, 2003 and
December 31, 2002, we estimated that our owned net interest income and
managed net interest income would change as follows over a twelve-month
period:

|                                                                         |                                                     |  |          |    |          |  |  |    |   
|------------------------------------------------------------------------ | --------------------------------------------------- |  | -------- | -- | -------- |  |  | -- | --
|                                                                         |                                                     |  | June 30, |    | Dec. 31,
|                                                                         |                                                     |  | 2003     |    | 2002    
|                                                                         |                                                     |  |          |    |         
|Estimated percentage increase (decrease) in owned net
interest income:   |                                                     |  |          |    |          |  |  |   
|                                                                         | Assuming 200 basis point increase in interest rates |  |          | 16 | %        |  |  | 16 | % 
|                                                                         | Assuming 200 basis point decrease in interest rates |  |          | (4 | )%       |  |  | 3  | % 
|Estimated percentage increase (decrease) in managed
net interest income: |                                                     |  |          |    |          |  |  |   
|                                                                         | Assuming 200 basis point increase in interest rates |  |          | (2 | )%       |  |  | (4 | )%
|                                                                         | Assuming 200 basis point decrease in interest rates |  |          | 5  | %        |  |  | 9  | % 

Our business credit card receivables include interest rate floors that
cause our managed net interest income to rise in the declining rate
scenario. Our managed net interest income decreases in a rising rate
scenario due to the portion of the business credit card portfolio that is
effectively at a fixed rate because of the nature of the pricing of the
accounts. Changes in the composition of our balance sheet, the current
interest rate environment and the lower average interest rate on our
deposit portfolio have also impacted the results of the owned and managed
net interest income sensitivity analyses at June 30, 2003 as compared to
December 31, 2002.

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

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managements expectation regarding the future direction of interest
rates, and they depict only two possibilities out of a large set of
possible scenarios.

LIQUIDITY, CAPITAL RESOURCES AND ANALYSIS OF FINANCIAL CONDITION

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, 2003. At June 30, 2003, we
had $281 million of federal funds sold, $159 million of receivables held
for sale, and $157 million of investments, which could be sold to
generate additional liquidity. Components of funding were as follows ($
in thousands):

|                                             |  |               |           |                   |  |        |     |   |  |   |           |  |  |  |     |  
|-------------------------------------------- |  | ------------- | --------- | ----------------- |  | ------ | --- | - |  | - | --------- |  |  |  | --- | -
|                                             |  | June 30, 2003 |           | December 31, 2002
|                                             |  |               |           |                  
|                                             |  | Amount        |           | %                 |  | Amount |     | %
|                                             |  |               |           |                   |  |        |     |  
|Off-balance sheet
securitized
receivables(1) |  | $             | 2,291,372 |                   |  |        | 54  | % |  | $ | 2,172,266 |  |  |  | 60  | %
|Deposits                                     |  |               | 1,205,001 |                   |  |        | 28  |   |  |   | 714,028   |  |  |  | 19  |  
|Debt and other borrowings                    |  |               | 319,428   |                   |  |        | 8   |   |  |   | 315,886   |  |  |  | 9   |  
|Capital securities                           |  |               | 100,000   |                   |  |        | 2   |   |  |   | 100,000   |  |  |  | 3   |  
|Equity                                       |  |               | 326,859   |                   |  |        | 8   |   |  |   | 321,313   |  |  |  | 9   |  
|                                             |  |               |           |                   |  |        |     |   |  |   |           |  |  |  |     |  
|Total                                        |  | $             | 4,242,660 |                   |  |        | 100 | % |  | $ | 3,623,493 |  |  |  | 100 | %
|                                             |  |               |           |                   |  |        |     |   |  |   |           |  |  |  |     |  



|(1) |  | Includes both off-balance sheet business credit card receivables
and off-balance sheet lease receivables related to discontinued
operations. Excludes our ownership interest in the investor
principal balance of securitizations (subordinated trust assets)
that are held on-balance sheet and classified as retained
interests in securitizations or assets of discontinued operations.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

At June 30, 2003, we had a $280 million committed commercial paper
conduit facility that provides off-balance sheet funding, all of which
was unused at June 30, 2003. At December 31, 2002, $330 million of
business credit card receivables were securitized through this facility.
In June 2003, this facility was renewed through June 14, 2004.

In the six months ended June 30, 2003, we completed two public business
credit card securitizations. The revolving period for those
securitizations extend to the following dates:

|                 |  |                    |         |                  |  |                |  | 
|---------------- |  | ------------------ | ------- | ---------------- |  | -------------- |  | 
|                 |  | Investor Principal |         |                  |  |               
|                 |  | Balance at         |         | Scheduled End of
|($ in thousands) |  | June 30, 2003      |         | Revolving Period
|                 |  |                    |         |                 
|Series 2003-A    |  | $                  | 400,000 |                  |  | May 2005      
|Series 2003-B    |  |                    | 300,000 |                  |  | September 2005

When a business credit card securitization series is in its revolving
period, principal collections on securitized receivables allocated to
that series are used to purchase additional receivables to replenish
receivables that have been repaid. In contrast, when a series of our
securitization trust starts its amortization period, principal
collections are held in the trust until the payment date of the notes.
As principal is collected on securitized receivables in a series during
its amortization period, we need to replace that amount of funding. Our
$157 million Series 2000-A business credit card securitization started
its scheduled
amortization period in February 2003 and the note holders were paid in
full in

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April 2003. Our $600 million Series 2000-B business credit card
securitization started its scheduled amortization period in April 2003
and completed amortization in June 2003. Note holders in the Series
2000-B securitization were paid in full in July 2003. Balances of
accounts receivable from securitizations and amounts due to the
securitization trust at June 30, 2003 have increased as compared to
December 31, 2002, primarily as a result of principal collections of
receivables allocated to Series 2000-B during its amortization period.
The increases in these assets were primarily funded through an increase
in deposits. We anticipate completing one or more public business credit
card securitizations in the remainder of 2003 under similar terms and
conditions as the public securitizations completed in the six months
ended June 30, 2003.

We continue to offer unsecured debt securities of Advanta Corp., in the
form of RediReserve Certificates and Investment Notes, to retail
investors through our retail note program. We change the interest rates
we offer frequently, depending on market conditions and our funding
needs. The rates also vary depending on the size of each investment. At
June 30, 2003, $319 million of RediReserve Certificates and Investment
Notes were outstanding with interest rates ranging from 1.49% to 11.56%.
In 2002, we began to lengthen the maturities of our unsecured debt
securities to enhance our liquidity management and to take advantage of
the lower interest rate environment. Debt maturing in one year or less
totaled $176 million at June 30, 2003, as compared to $207 million at
December 31, 2002 and $228 million at June 30, 2002.

The Board of Directors of Advanta Corp. has authorized management to
purchase up to 3.0 million shares of Advanta Corp. common stock. As of
December 31, 2002, we had repurchased 2,248,059 shares of our Class B
Common Stock. In the six months ended June 30, 2003, we repurchased
154,632 shares of our Class A Common Stock and 315,250 shares of our
Class B Common Stock. We intend to continue to make purchases under the
remaining unused authorization when we believe it is prudent to do so
while we analyze evolving capital requirements.

Our bank subsidiaries are subject to regulatory capital requirements and
other regulatory provisions that restrict their ability to lend and/or
pay dividends to Advanta Corp. and its affiliates. Advanta Bank Corp
issues and funds our business credit cards and is the servicer of our
discontinued leasing business. Prior to our exit from the mortgage
business in the first quarter of 2001, Advanta National Bank issued and
funded a large portion of our mortgage business. Advanta National Banks
operations are currently not material to our consolidated operating
results. Our insurance subsidiaries are also subject to certain capital
and dividend rules and regulations as prescribed by state jurisdictions
in which they are authorized to operate. Management believes that these
restrictions, for both bank and insurance subsidiaries, will not have an
adverse effect on Advanta Corp.s ability to meet its cash obligations
due to the current levels of liquidity and diversity of funding sources.

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. In connection with removing the
agreements, Advanta Bank Corp. reached an understanding with its
regulators, reflecting continued progress in our ongoing efforts to
enhance Advanta Bank Corp.s practices and procedures. Effective October
2002, the understanding was revised. The revised understanding replaces
the provisions of the prior understanding and provides for the bank to
enhance

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certain of its internal planning and monitoring processes. The
revised 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.

At June 30, 2003, Advanta Bank Corp.s combined total capital ratio
(combined Tier I and Tier II capital to risk-weighted assets) was 12.68%
as compared to 18.46% at December 31, 2002. In each case, Advanta Bank
Corp. had capital in excess of levels a bank is required to maintain to
be classified as well-capitalized under the regulatory framework for
prompt corrective action. Advanta Bank Corp.s combined total capital
ratio at June 30, 2003 was lower than the ratio at December 31, 2002 due
to the amortization of the 2000-B securitization discussed above and the
corresponding increase in on-balance sheet assets. Based on the planned
level of securitizations, we expect on-balance sheet assets and deposits
to be lower at September 30, 2003 and December 31, 2003 than on-balance
sheet assets at June 30, 2003. We expect Advanta Bank Corps capital
ratios at September 30, 2003 and December 31, 2003 to be higher than the
ratio at June 30, 2003, due to the expected decrease in on-balance sheet
assets.

In February 2003, we entered into an operating lease agreement for
additional office space to be used for certain business card operations
and general business purposes. The minimum lease payments on the lease
are $566 thousand in 2003, $1.4 million in 2004, $1.7 million in 2005,
$1.8 million in each of the years 2006 through 2008 and $3.6 million
thereafter.

In May 2003, we sold two buildings formerly used in our mortgage business
that were classified as assets from discontinued operations on the
consolidated balance sheet. The proceeds of approximately $27 million
from the sale of the buildings increased our liquidity position. In
addition, we sold two lots of real estate for book value of $4.6 million.

In June 2003, we exercised a clean-up call option on a leasing securitization
transaction with $46 million of securitized leases outstanding, resulting in an
increase in on-balance sheet lease receivables and a decrease in retained
interests in leasing securitizations. Both on-balance sheet lease receivables
and retained interests in leasing securitizations are classified as assets of
discontinued operations in the consolidated balance sheets. The net impact on
liquidity and assets of discontinued operations from the exercise of the
clean-up call option was not material.

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 our exit
from that business in the first quarter of 2001. Management believes
that the aggregate loss, if any, resulting from existing litigation,
claims and other legal proceedings will not have a material adverse
effect on our liquidity or capital resources based on our current
expectations regarding the ultimate resolutions of these actions and
amounts held in escrow in connection with certain litigation. 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 the estimated cash flow related
to these proceedings may change or that actual results will differ from
our estimates.

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FORWARD-LOOKING STATEMENTS

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 may 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 income;                                                                                                                                                                  
| | ---- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (2)  |  | competitive pressures;                                                                                                                                                                            
|
| | (3)  |  | political, social and/or general economic conditions that
affect the level of new account originations, customer
spending, delinquencies and charge-offs;                                         
|
| | (4)  |  | factors affecting fluctuations in the number of accounts
or receivable balances including the retention of cardholders
after promotional pricing periods have expired;                            
|
| | (5)  |  | interest rate fluctuations;                                                                                                                                                                       
|
| | (6)  |  | the level of expenses;                                                                                                                                                                            
|
| | (7)  |  | the timing of the securitizations of our receivables;                                                                                                                                             
|
| | (8)  |  | factors affecting the value of investments that we hold;                                                                                                                                          
|
| | (9)  |  | the effects of government regulation, including
restrictions and limitations imposed by banking laws,
regulators, examinations, and agreements between our bank
subsidiaries and their regulators;
|
| | (10) |  | effect of, and changes in, tax
laws, rates, regulations and policies;                                                                                                                             
|
| | (11) |  | relationships with customers, significant vendors and
business partners;                                                                                                                          
|
| | (12) |  | difficulties or delays in the development, production,
testing and marketing of products or services;                                                                                             
|
| | (13) |  | the amount and cost of financing available to us;                                                                                                                                                 
|
| | (14) |  | the ratings on our debt and the debt of our subsidiaries;                                                                                                                                         
|
| | (15) |  | revisions to estimates associated with the discontinuance
of our mortgage and leasing businesses;                                                                                                 
|
| | (16) |  | the impact of litigation;                                                                                                                                                                         
|
| | (17) |  | the proper design and operation of our disclosure
controls and procedures; and                                                                                                                    
|
| | (18) |  | the ability to attract and retain key personnel.                                                                                                                                                  

Additional risks that may affect our future performance are set forth
elsewhere in this Quarterly Report on Form 10-Q, in our Annual Report on
Form 10-K for the year ended December 31, 2002 and in our other filings
with the Securities and Exchange Commission.




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 Market Risk
Sensitivity.

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ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act
reports is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commissions rules and
forms, and that such information is accumulated and communicated to
management, including our Chief Executive Officer and Chief Financial
Officer as appropriate, to allow timely decisions regarding required
disclosure. In designing and evaluating the disclosure controls and
procedures, management recognized that any disclosure controls and
procedures, no matter how well designed and operated, can provide only
reasonable, rather than absolute, assurance of achieving the desired
control objectives, and management necessarily was required to apply its
judgment in evaluating the cost-benefit relationship of possible controls
and procedures.

An evaluation was performed by management with the participation of our
Chief Executive Officer and Chief Financial Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures.
Based on this evaluation, the Chief Executive Officer and Chief Financial
Officer have concluded that, as of June 30, 2003, our disclosure controls
and procedures are effective to ensure that information required to be
disclosed in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported, within the time periods
specified in the Securities and Exchange Commissions rules and forms.
There have been no changes in our internal controls over financial
reporting that occurred during the period covered by this report that
have materially affected, or are reasonably likely to materially affect,
these internal controls over financial reporting.




PART II  OTHER INFORMATION




ITEM 1. LEGAL PROCEEDINGS

The legal proceedings and claims described under the heading captioned
Commitments and Contingencies in Note 8 of the Notes to Consolidated
Financial Statements set forth in Part I, Item 1 of this Quarterly Report
are hereby incorporated by reference.




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



|(a) |  | Advanta Corp. held its Annual Meeting of Stockholders on June 5,
2003.
|--- |  | ----------------------------------------------------------------------
|   
|(b) |  | Not required.                                                         
|   
|(c) |  | The following proposal was submitted to a vote of stockholders.       



| |                                                                                             
| | --------------------------------------------------------------------------------------------
| | The election of four directors to hold office until the 2006 Annual
Meeting of Stockholders.

|                 |  |           |           |                |  |  |         | 
|---------------- |  | --------- | --------- | -------------- |  |  | ------- | 
|NOMINEES         |  | VOTES FOR |           | VOTES WITHHELD
|                 |  |           |           |               
|Robert H. Rock   |  |           | 8,046,267 |                |  |  | 622,769 | 
|Olaf Olafsson    |  |           | 8,368,630 |                |  |  | 300,406 | 
|William A
Rosoff |  |           | 8,365,143 |                |  |  | 303,893 | 
|Michael Stolper  |  |           | 8,087,093 |                |  |  | 581,943 | 



|(d) |  | Not required.
|--- |  | -------------

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ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K



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

|        |  |                                                                                                                                                                             
|------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |  |                                                                                                                                                                             
|Number  |  | Description of Document                                                                                                                                                     
|        |  |                                                                                                                                                                             
|10      |  | Agreement of Lease, dated February 27, 2003, between Advanta
Shared Services Corp. and Liberty Property Limited Partnership
(without exhibits) and Guaranty of Advanta Corp.
|        |  |                                                                                                                                                                             
|12      |  | Consolidated Computation of Ratio of Earnings to Fixed Charges                                                                                                              
|        |  |                                                                                                                                                                             
|31.1    |  | Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002                                                                          
|        |  |                                                                                                                                                                             
|31.2    |  | Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002                                                                          
|        |  |                                                                                                                                                                             
|32.1    |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002                           
|        |  |                                                                                                                                                                             
|32.2    |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002                           



|(b) |  | Reports on Form 8-K
|--- |  | -------------------



| | (b) (1) |  | A Current Report on Form 8-K, dated April 24, 2003, was filed by
Advanta setting forth the financial highlights of Advantas results of
operations for the three months ended March 31, 2003.
| | ------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) (2) |  | A Current Report on Form 8-K, dated June 5, 2003, was filed
by Advanta announcing the results of its Annual Stockholders
Meeting including the re-election of four incumbent directors.     

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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, 2003            |  | By                        |  | /s/ Philip M. Browne  
|                           |  | Senior Vice President and
|                           |  | Chief Financial Officer  
|                           |  |                           |  |                       
|August 13, 2003            |  | By                        |  | /s/ David B. Weinstock
|                           |  | Vice President and       
|                           |  | Chief Accounting Officer 

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|        |  |                                                                                                                                                                              |  |          
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------
|        |  | EXHIBIT INDEX                                                                                                                                                                |  |          
|        |  |                                                                                                                                                                              |  | Manner of
|Exhibit |  | Description                                                                                                                                                                  |  | Filing   
|        |  |                                                                                                                                                                              |  |          
|10      |  | Agreement of Lease, dated February 27, 2003, between Advanta
Shared Services Corp. and Liberty Property Limited Partnership
(without exhibits) and Guaranty of Advanta Corp. |  | *        
|        |  |                                                                                                                                                                              |  |          
|12      |  | Consolidated Computation of Ratio of Earnings to Fixed Charges                                                                                                               |  | *        
|        |  |                                                                                                                                                                              |  |          
|31.1    |  | Certification of Chief Executive Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002                                                                           |  | *        
|        |  |                                                                                                                                                                              |  |          
|31.2    |  | Certification of Chief Financial Officer Pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002                                                                           |  | *        
|        |  |                                                                                                                                                                              |  |          
|32.1    |  | Certification of Chief Executive Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002                            |  | *        
|        |  |                                                                                                                                                                              |  |          
|32.2    |  | Certification of Chief Financial Officer Pursuant to 18 U.S.C.
Section 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002                            |  | *        



| |  |  | * Filed electronically herewith.
| |  |  | --------------------------------

46