10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

þ Quarterly report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the quarterly period ended March 31, 2007

or

o Transition report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934

for the transition period from                      to                     

Commission File Number 0-14120

Advanta Corp.

(Exact name of registrant as specified in its charter)

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ       Accelerated filer o       Non-accelerated filer o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

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 o No o

Applicable only to corporate issuers:

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

Class A	Outstanding at May 2, 2007
Common Stock, $.01 par value	9,606,862 shares
Class B	Outstanding at May 2, 2007
Common Stock, $.01 par value	19,431,791 shares

TABLE OF CONTENTS

	Page
PART I — FINANCIAL INFORMATION		3
Item 1. Financial Statements		3
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		18
Item 3. Quantitative and Qualitative Disclosures About Market Risk		35
Item 4. Controls and Procedures		35
PART II - OTHER INFORMATION		36
Item 1. Legal Proceedings		36
Item 1A. Risk Factors		36
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		36
Item 6. Exhibits		37
Exhibit Index		39
Preferred Pricing Agreement
Computation of Ratio of Earnings to Fixed Charges
Certification of CEO pursuant to Section 302
Certification of CFO pursuant to Section 302
Certification of CEO pursuant to Section 906
Certification of CFO pursuant to Section 906

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31,			December 31,
(In thousands, except share amounts)	2007			2006
ASSETS
Cash	$	39,949		$	35,055
Federal funds sold		504,079			547,631
Restricted interest-bearing deposits		903			1,211
Investments available for sale		253,245			197,477
Receivables, net:
Held for sale		517,200			568,456
Other		605,999			546,553
Total receivables, net		1,123,199			1,115,009
Accounts receivable from securitizations		335,624			334,486
Premises and equipment, net		17,425			16,715
Other assets		154,321			165,554
Total assets	$	2,428,745		$	2,413,138
LIABILITIES
Deposits	$	1,350,096		$	1,365,138
Debt		226,820			227,126
Subordinated debt payable to preferred securities trust		103,093			103,093
Other liabilities		162,865			150,620
Total liabilities		1,842,874			1,845,977
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Class A preferred stock, $1,000 par value:
Authorized, issued and outstanding – 1,010 shares in 2007 and 2006		1,010			1,010
Class A voting common stock, $.01 par value:
Authorized – 200,000,000 shares; issued – 10,041,017 shares in 2007 and 2006		100			100
Class B non-voting common stock, $.01 par value:
Authorized – 200,000,000 shares; issued – 23,615,867 shares in 2007 and 23,425,609 shares in 2006		236			234
Additional paid-in capital		315,004			308,219
Unearned ESOP shares		(9,099	)		(9,204	)
Accumulated other comprehensive loss		(263	)		(288	)
Retained earnings		372,198			359,813
Treasury stock at cost, 434,155 Class A common shares in 2007 and 2006; 4,303,945 Class B common shares in 2007 and 4,290,789 Class B common shares in 2006		(93,315	)		(92,723	)
Total stockholders’ equity		585,871			567,161
Total liabilities and stockholders’ equity	$	2,428,745		$	2,413,138

See notes to consolidated financial statements.

3

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS (Unaudited)

	Three Months Ended
(In thousands, except per share amounts)	March 31,
	2007		2006
Interest income:
Receivables	$	35,567	$	28,927
Investments		7,682		5,359
Other interest income		5,106		3,982
Total interest income		48,355		38,268
Interest expense:
Deposits		16,537		10,308
Debt		3,708		3,358
Subordinated debt payable to preferred securities trust		2,317		2,289
Total interest expense		22,562		15,955
Net interest income		25,793		22,313
Provision for credit losses		10,083		9,284
Net interest income after provision for credit losses		15,710		13,029
Noninterest revenues:
Securitization income		23,511		33,578
Servicing revenues		20,376		13,682
Other revenues, net		42,481		34,976
Total noninterest revenues		86,368		82,236
Operating expenses		66,802		59,639
Income before income taxes		35,276		35,626
Income tax expense		13,828		13,716
Net income	$	21,448	$	21,910
Basic net income per common share
Class A	$	0.74	$	0.79
Class B		0.80		0.82
Combined		0.78		0.81
Diluted net income per common share
Class A	$	0.70	$	0.73
Class B		0.73		0.74
Combined		0.72		0.73
Basic weighted average common shares outstanding
Class A		8,879		8,846
Class B		18,489		18,107
Combined		27,368		26,953
Diluted weighted average common shares outstanding
Class A		8,879		8,846
Class B		20,782		20,876
Combined		29,661		29,722

See notes to consolidated financial statements.

4

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

				Class A			Class A			Class B				Additional
	Comprehensive			Preferred			Common			Common				Paid-In
($ in thousands)	Income			Stock			Stock			Stock				Capital
Balance at December 31, 2005					$	1,010		$	100		$	219			$	276,231
Net income		$	84,986
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of ($210)			390
Comprehensive income		$	85,376
Preferred and common cash dividends declared
Exercise of stock options												9				10,499
Stock-based nonemployee compensation expense																238
Stock-based employee compensation expense																3,842
Excess tax benefits from stock-based compensation and ESOP																12,149
Issuance of nonvested shares												7				(7	)
Amortization of nonvested shares																5,953
Forfeitures of nonvested shares												(1	)			(359	)
Reclassification of nonvested shares																(1,148	)
Treasury stock acquired
ESOP shares committed to be released																821
Balance at December 31, 2006					$	1,010		$	100		$	234			$	308,219
Effect of applying the provisions of FIN No. 48 (See Note 2)
Net income		$	21,448
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of ($13)			25
Comprehensive income		$	21,473
Preferred and common cash dividends declared
Exercise of stock options												2				1,686
Stock-based employee compensation expense																1,151
Excess tax benefits from stock-based compensation and ESOP																2,387
Amortization of nonvested shares																1,291
Treasury stock acquired
ESOP shares committed to be released																270
Balance at March 31, 2007					$	1,010		$	100		$	236			$	315,004

See notes to consolidated financial statements.

5

ADVANTA CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited) – continued

	Unearned			Accumulated
	ESOP Shares			Other									Total
	& Nonvested			Comprehensive			Retained			Treasury			Stockholders’
($ in thousands)	Shares			Income (Loss)			Earnings			Stock			Equity
Balance at December 31, 2005	$	(10,770	)	$	(678	)	$	298,472		$	(49,147	)	$	515,437
Net income								84,986						84,986
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of ($210)					390									390
Comprehensive income
Preferred and common cash dividends declared								(23,645	)					(23,645	)
Exercise of stock options														10,508
Stock-based nonemployee compensation expense														238
Stock-based employee compensation expense														3,842
Excess tax benefits from stock-based compensation and ESOP														12,149
Issuance of nonvested shares														0
Amortization of nonvested shares														5,953
Forfeitures of nonvested shares														(360	)
Reclassification of nonvested shares		1,148												0
Treasury stock acquired											(43,576	)		(43,576	)
ESOP shares committed to be released		418												1,239
Balance at December 31, 2006	$	(9,204	)	$	(288	)	$	359,813		$	(92,723	)	$	567,161
Effect of applying the provisions of FIN No. 48 (See Note 2)								(2,099	)					(2,099	)
Net income								21,448						21,448
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of ($13)					25									25
Comprehensive income
Preferred and common cash dividends declared								(6,964	)					(6,964	)
Exercise of stock options														1,688
Stock-based employee compensation expense														1,151
Excess tax benefits from stock-based compensation and ESOP														2,387
Amortization of nonvested shares														1,291
Treasury stock acquired											(592	)		(592	)
ESOP shares committed to be released		105												375
Balance at March 31, 2007	$	(9,099	)	$	(263	)	$	372,198		$	(93,315	)	$	585,871

See notes to consolidated financial statements.

6

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
($ in thousands)	March 31,
	2007			2006
OPERATING ACTIVITIES — CONTINUING OPERATIONS
Net income	$	21,448		$	21,910
Adjustments to reconcile net income to net cash provided by operating activities:
Investment securities gains, net		(990	)		(708	)
Depreciation and amortization		1,416			1,641
Stock-based compensation expense		2,442			626
Provision for credit losses		10,083			9,284
Provision for interest and fee losses		2,446			2,038
Change in deferred origination costs, net of deferred fees		434			(839	)
Change in receivables held for sale		(306,402	)		(606,161	)
Proceeds from sale of receivables held for sale		357,658			535,890
Change in accounts receivable from securitizations		(1,138	)		176,557
Excess tax benefits from stock-based compensation and ESOP		(2,387	)		(787	)
Change in other assets and other liabilities		39,195			(65,148	)
Net cash provided by operating activities		124,205			74,303
INVESTING ACTIVITIES — CONTINUING OPERATIONS
Change in federal funds sold and restricted interest-bearing deposits		43,860			(14,766	)
Purchase of investments available for sale		(273,366	)		(211,887	)
Proceeds from sales of investments available for sale		202,521			204,140
Proceeds from maturing investments available for sale		16,105			19,730
Change in receivables not held for sale		(72,409	)		(42,325	)
Purchases of premises and equipment, net		(2,122	)		(891	)
Net cash used in investing activities		(85,411	)		(45,999	)
FINANCING ACTIVITIES — CONTINUING OPERATIONS
Change in demand and savings deposits		11,909			19,021
Proceeds from issuance of time deposits		116,025			129,915
Payments for maturing time deposits		(152,289	)		(168,002	)
Proceeds from issuance of debt		9,659			4,280
Payments on redemption of debt		(10,353	)		(16,472	)
Change in cash overdraft		(5,597	)		3,793
Proceeds from exercise of stock options		1,688			2,367
Cash dividends paid		(6,964	)		(3,716	)
Excess tax benefits from stock-based compensation and ESOP		2,387			787
Treasury stock acquired		(592	)		0
Net cash used in financing activities		(34,127	)		(28,027	)
DISCONTINUED OPERATIONS
Net cash provided by operating activities of discontinued operations		227			954
Net increase in cash		4,894			1,231
Cash at beginning of period		35,055			34,109
Cash at end of period	$	39,949		$	35,340

See notes to consolidated financial statements.

7

ADVANTA CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

March 31, 2007
(Unaudited)

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

Note 1) Basis of Presentation

We have 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 U.S. generally accepted accounting principles (“GAAP”) 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 GAAP 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 allowance for receivable losses, securitization income, rewards programs and income taxes.

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

Note 2) Recently Issued Accounting Standards

In August 2005, the Financial Accounting Standards Board (“FASB”) issued a revised exposure draft, Accounting for Transfers of Financial Assets – An Amendment of FASB Statement No. 140. The statement provides guidance for determining whether financial assets must first be transferred to a qualifying special-purpose entity (“QSPE”) to be derecognized, determining additional permitted activities for QSPEs, eliminating prohibitions on QSPEs’ ability to hold passive derivative financial instruments, and requires that interests related to transferred financial assets held by a transferor be initially recorded at fair value. In November 2006, the FASB reported that it expects to issue a revised exposure draft in the second quarter of 2007. Management will evaluate any potential impact of the final statement when it is available.

In February 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 155, Accounting for Certain Hybrid Financial Instruments. This statement amends SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities – a replacement of FASB Statement No. 125 (“SFAS No. 140”), and eliminates the guidance in SFAS No. 133 Implementation Issue No. D1, Application of Statement 133 to Beneficial Interests in Securitized

8

Financial Assets, which provided that beneficial interests in securitized financial assets are not subject to SFAS No. 133. Under the new statement, an entity may irrevocably elect to measure a hybrid financial instrument that would otherwise require bifurcation at fair value in its entirety on an instrument-by-instrument basis. The statement clarifies which interest-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, and amends SFAS No. 140 to eliminate the prohibition on a qualifying special purpose entity from holding certain derivative financial instruments. The statement is effective for all financial instruments that we acquire or issue after January 1, 2007. The adoption of this statement did not have a material impact on our financial position or results of operations.

In March 2006, the FASB issued SFAS No. 156, Accounting for Servicing of Financial Assets, that amends SFAS No. 140. The statement clarifies when an obligation to service financial assets should be separately recognized as a servicing asset or a servicing liability, requires that a separately recognized servicing asset or servicing liability be initially measured at fair value, if practicable, and permits an entity with a separately recognized servicing asset or servicing liability to choose either the amortization method or fair value method for subsequent measurement. The adoption of this statement effective January 1, 2007 did not have a material impact on our financial position or results of operations.

In July 2006, the FASB issued Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109, (“FIN No. 48”). The statement provides a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with the statement, before a tax benefit can be recognized, a tax position is evaluated using a threshold that it is more likely than not that the tax position will be sustained upon examination. When evaluating the more-likely-than-not recognition threshold, the interpretation provides that a company should presume the tax position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. If the tax position meets the more-likely-than-not recognition threshold, it is initially and subsequently measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We adopted this statement effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the opening balance of retained earnings. The adoption did not have a material impact on our effective tax rate for the three months ended March 31, 2007. See Note 10 for further discussion.

In September 2006, the FASB issued SFAS No. 157, Fair Value Measurements. The statement defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The statement also establishes a framework for measuring fair value by creating a three-level fair value hierarchy that ranks the quality and reliability of information used to determine fair value, and requires new disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. We do not expect the adoption of this statement effective January 1, 2008 to have a material impact on our financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. This statement provides entities with an irrevocable option to report most financial assets and liabilities at fair value, with subsequent changes in fair value reported in earnings. The election can be applied on an instrument-by-instrument basis. The statement establishes

9

presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The statement is effective for Advanta on January 1, 2008. Management is currently evaluating the impact that this statement may have on our financial position or results of operations.

Note 3) Investments Available for Sale

Investments available for sale consisted of the following:

	March 31, 2007				December 31, 2006
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
U.S. Treasury and government agency securities	$	31,105	$	31,009	$	21,098	$	20,940
State and municipal securities		13,429		13,443		13,247		13,242
Commercial paper		7,783		7,781		6,944		6,941
Corporate bonds		8,463		8,368		8,488		8,364
Asset-backed securities(1)		45,991		45,879		46,214		46,196
Equity securities(2)		9,374		9,260		10,118		9,983
Money market funds		133,162		133,162		91,771		91,771
Other		4,343		4,343		40		40
Total investments available for sale	$	253,650	$	253,245	$	197,920	$	197,477

(1)	Includes mortgage-backed securities.
(2)	Includes venture capital investments of $1.5 million at March 31, 2007 and $1.0 million at December 31, 2006. The amount shown as amortized cost represents fair value for these investments.

Note 4) Receivables

Owned receivables, including those held for sale, consisted of the following:

	March 31,			December 31,
	2007			2006
Business credit card receivables	$	1,142,006		$	1,133,132
Other receivables		7,703			7,673
Gross receivables		1,149,709			1,140,805
Add: Deferred origination costs, net of deferred fees		24,696			25,130
Less: Allowance for receivable losses
Business credit cards		(49,995	)		(49,715	)
Other receivables		(1,211	)		(1,211	)
Total allowance for receivable losses		(51,206	)		(50,926	)
Receivables, net	$	1,123,199		$	1,115,009

10

Note 5) Allowance for Receivable Losses

The following table presents activity in the allowance for receivable losses for the three months ended March 31:

	2007			2006
Balance at January 1	$	50,926		$	45,589
Provision for credit losses		10,083			9,284
Provision for interest and fee losses		2,446			2,038
Gross principal charge-offs:
Business credit cards		(10,996	)		(9,059	)
Principal recoveries:
Business credit cards		1,213			975
Net principal charge-offs		(9,783	)		(8,084	)
Interest and fee charge-offs:
Business credit cards		(2,466	)		(2,031	)
Balance at March 31	$	51,206		$	46,796

Note 6) Securitization Activities

Accounts receivable from securitizations consisted of the following:

	March 31,		December 31,
	2007		2006
Retained interests in securitizations	$	225,619	$	234,054
Accrued interest and fees on securitized receivables, net(1)		67,320		64,713
Amounts due from the securitization trust		42,685		35,719
Total accounts receivable from securitizations	$	335,624	$	334,486

(1) Reduced by an estimate for uncollectible interest and fees of $9.4 million at March 31, 2007 and $8.7 million at December 31, 2006.

The following represents 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
	March 31,
	2007			2006
Average securitized receivables	$	4,152,857		$	2,957,309
Securitization income		23,511			33,578
Discount accretion		5,106			3,982
Interchange income		42,414			33,714
Servicing revenues		20,376			13,682
Proceeds from new securitizations		357,658			535,890
Proceeds from collections reinvested in revolving-period securitizations		2,383,984			1,683,802
Cash flows received on retained interests		84,756			77,628
Key assumptions:
Discount rate		8.15% - 9.84	%		8.71% - 10.14	%
Monthly payment rate		20.04% - 23.10	%		22.75% - 25.00	%
Loss rate		3.70% - 4.24	%		4.25% - 4.90	%
Interest yield, net of interest earned by noteholders		7.29% - 7.30	%		8.86% - 9.95	%

There were no purchases of delinquent accounts from the securitization trust during the three months ended March 31, 2007 or 2006.

We used the following assumptions in measuring the fair value of retained interests in securitizations at March 31, 2007 and December 31, 2006. The assumptions listed

11

represent weighted averages of assumptions used for each securitization. The monthly payment rate assumptions used at both March 31, 2007 and December 31, 2006 result in cash flow projections over a three-month weighted average life of existing receivables for the retained interest-only strip valuation.

	March 31,			December 31,
	2007			2006
Discount rate		8.15% - 8.98	%		8.82% - 9.84	%
Monthly payment rate		20.04% - 23.10	%		21.29% - 23.10	%
Loss rate		3.85% - 4.24	%		3.70% - 4.07	%
Interest yield, net of interest earned by noteholders		7.29	%		7.30	%

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

We have prepared sensitivity analyses of the valuations of retained interests in securitizations that were estimated using the assumptions identified above. The sensitivity analyses show the hypothetical effect on the estimated 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. Set forth below are the results of those sensitivity analyses on the valuation at March 31, 2007.

Effect on estimated fair value of the following hypothetical changes in key assumptions:
Discount rate increased 200 basis points	$	(4,214	)
Discount rate increased 400 basis points		(8,239	)
Monthly payment rate at 115% of base assumption		(1,126	)
Monthly payment rate at 130% of base assumption		(2,611	)
Loss rate at 110% of base assumption		(4,131	)
Loss rate at 125% of base assumption		(10,328	)
Interest yield, net of interest earned by noteholders, decreased 100 basis points		(10,731	)
Interest yield, net of interest earned by noteholders, decreased 200 basis points		(21,461	)

The objective of these hypothetical analyses is to measure the sensitivity of the estimated fair value of the retained interests in securitizations to changes in assumptions. The methodology used to calculate the estimated fair value in the analyses is a discounted cash flow analysis, which is the same methodology used to calculate the estimated fair value of the retained interests if 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 business credit card 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 was as follows:

	March 31,		December 31,		March 31,
	2007		2006		2006
Owned business credit card receivables	$	1,142,006	$	1,133,132	$	982,251
Securitized business credit card receivables		4,444,055		4,073,128		3,045,600
Total managed receivables	$	5,586,061	$	5,206,260	$	4,027,851
Receivables 30 days or more delinquent:
Owned	$	28,544	$	26,053	$	26,335
Securitized		122,426		108,159		91,029
Total managed		150,970		134,212		117,364
Receivables 90 days or more delinquent:
Owned		12,878		12,632		11,637
Securitized		54,633		52,279		40,131
Total managed		67,511		64,911		51,768
Nonaccrual receivables:
Owned		10,711		10,524		11,710
Securitized		47,402		45,160		41,002
Total managed		58,113		55,684		52,712
Accruing receivables past due 90 days or more:
Owned		11,373		11,302		10,447
Securitized		47,974		46,785		36,003
Total managed		59,347		58,087		46,450
Net principal charge-offs for the three months ended March 31 and December 31:
Owned		9,783		9,169		8,084
Securitized		35,082		33,100		27,095
Total managed		44,865		42,269		35,179

Note 7) Commitments and 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. 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 financial position or results of operations based on our current expectations regarding the ultimate resolutions of these existing actions 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 actual results will differ from our estimates.

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Note 8) Capital Stock

Cash dividends per share of common stock declared were as follows:

	Three Months Ended
	March 31,
	2007		2006
Class A Common Stock	$	0.2125	$	0.1134
Class B Common Stock		0.2550		0.1361

In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split in the form of a 50% stock dividend, on both the Class A and Class B Common Stock, to stockholders of record as of May 25, 2007. The stock dividend will be payable after the close of business on June 15, 2007. In addition, the Board of Directors of Advanta Corp. approved a 25% increase in the regular quarterly cash dividends on Class A and Class B Common Stock beginning with the dividend paid in the second quarter of 2007. The Board of Directors of Advanta Corp. also authorized the repurchase of up to 1.0 million shares of Advanta Corp.’s Class B Common Stock, or 1.5 million shares stated on a split-adjusted basis.

In January 2007, in connection with the exercise of stock options by an officer, we withheld 13 thousand shares of Class B Common Stock with a market value of $592 thousand to meet our minimum statutory tax withholding requirements.

Note 9) Segment Information

The following table reconciles information about the Advanta Business Cards segment to the consolidated financial statements:

	Advanta
	Business
	Cards		Other(1)		Total
Three months ended March 31, 2007
Interest income	$	40,549	$	7,806	$	48,355
Interest expense		13,306		9,256		22,562
Noninterest revenues		84,326		2,042		86,368
Pretax income		34,811		465		35,276
Total assets at beginning of period		1,495,544		917,594		2,413,138
Total assets at end of period		1,509,317		919,428		2,428,745
Three months ended March 31, 2006
Interest income	$	32,810	$	5,458	$	38,268
Interest expense		10,024		5,931		15,955
Noninterest revenues		81,338		898		82,236
Pretax income		35,293		333		35,626
Total assets at beginning of period		1,362,133		765,270		2,127,403
Total assets at end of period		1,280,102		760,537		2,040,639

(1) Other includes venture capital operations as well as investment and other activities not attributable to the Advanta Business Cards segment.

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Note 10) Income Taxes

Income tax expense consisted of the following components for the three months ended March 31:

	2007		2006
Current:
Federal	$	6,341	$	6,336
State		1,123		1,350
Total current		7,464		7,686
Deferred:
Federal		6,296		5,966
State		68		64
Total deferred		6,364		6,030
Income tax expense	$	13,828	$	13,716

The reconciliation of the statutory federal income tax to income tax expense was as follows for the three months ended March 31:

	2007		2006
Statutory federal income tax	$	12,346	$	12,469
State income taxes, net of federal income tax benefit		934		919
Compensation limitation		338		33
Nondeductible expenses		181		171
Other		29		124
Income tax expense	$	13,828	$	13,716

Our effective tax rate was 39.2% for the three months ended March 31, 2007 and 38.5% for the three months ended March 31, 2006.

We provide deferred taxes to reflect the estimated future tax effects of the differences between the financial statement and tax bases of assets and liabilities and currently enacted tax laws. The net deferred tax asset is comprised of the following:

	March 31,			December 31,
	2007			2006
Deferred tax assets	$	60,771		$	66,059
Deferred tax liabilities		(27,982	)		(26,893	)
Net deferred tax asset	$	32,789		$	39,166

The components of the net deferred tax asset were as follows:

	March 31,			December 31,
	2007			2006
Alternative minimum tax credit carryforwards	$	13,861		$	17,249
Deferred revenue		(12,501	)		(10,435	)
Business credit card rewards		12,184			11,492
Receivable losses		8,920			8,864
Deferred origination costs, net of deferred fees		(8,751	)		(8,910	)
Capital loss carryforwards		6,469			6,653
Incentive and deferred compensation		3,976			6,065
Securitization income		(2,624	)		(2,624	)
Unrealized venture capital investment losses		1,191			1,352
Other		10,064			9,460
Net deferred tax asset	$	32,789		$	39,166

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We adopted the provisions of FIN No. 48 effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the January 1, 2007 balance of retained earnings. The total amount of unrecognized tax benefits as of January 1, 2007 was $25.6 million. These unrecognized tax benefits, if recognized, would favorably affect our effective tax rate. The liability for unrecognized tax benefits is included in other liabilities on the consolidated balance sheet. At January 1, 2007, the liability for unrecognized tax benefits included $7.7 million accrued for the potential payment of interest and $7.2 million accrued for the potential payment of penalties. We classify interest and penalties related to unrecognized tax benefits as income tax expense. There were no material changes in unrecognized tax benefits in the three months ended March 31, 2007.

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As of January 1, 2007, we are subject to U.S. federal income tax examinations for the tax years 2005 and 2006, and, with few exceptions, subject to state income tax examinations for the tax years 1992 through 2006. The liability for unrecognized tax benefits at January 1, 2007 included $1.3 million related to tax positions for which it is reasonably possible that the total amounts could significantly change in the year ending December 31, 2007. This amount represents a potential decrease in unrecognized tax benefits related to the resolution of state income tax audits that may conclude in 2007.

We have an ownership interest in Fleet Credit Card Services, L.P. related to our exit from the consumer card business in 1998. The gain associated with the original transfer of assets to Fleet Credit Card Services, L.P. was not subject to income tax. As of March 31, 2007, the cumulative gain on transfer of consumer credit card business and our deficit capital account in Fleet Credit Card Services, L.P. on a tax basis for which no deferred taxes have been provided is approximately $650 million, as the transaction structure remains nontaxable under current tax law.

At March 31, 2007, we had $3.8 million of capital loss carryforwards that are scheduled to expire in 2009, $7.4 million that are scheduled to expire in 2010, and $7.3 million that are scheduled to expire in 2011. Alternative minimum tax credit carryforwards do not expire.

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Note 11) 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
	March 31,
	2007			2006
Net income	$	21,448		$	21,910
Less: Preferred A dividends		(141	)		(141	)
Net income available to common stockholders		21,307			21,769
Less: Class A dividends declared		(1,880	)		(999	)
Less: Class B dividends declared		(4,943	)		(2,576	)
Undistributed net income	$	14,484		$	18,194
Basic net income per common share
Class A	$	0.74		$	0.79
Class B		0.80			0.82
Combined(1)		0.78			0.81
Diluted net income per common share
Class A	$	0.70		$	0.73
Class B		0.73			0.74
Combined(1)		0.72			0.73
Basic weighted average common shares outstanding
Class A		8,879			8,846
Class B		18,489			18,107
Combined		27,368			26,953
Dilutive effect of
Options Class B		1,973			2,207
Nonvested shares Class B		320			562
Diluted weighted average common shares outstanding
Class A		8,879			8,846
Class B		20,782			20,876
Combined		29,661			29,722
Antidilutive shares
Options Class B		398			63

(1) Combined represents income available to common stockholders 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

“Advanta”, “we”, “us”, and “our” refer to Advanta Corp. and its subsidiaries, unless the context otherwise requires.

OVERVIEW

Net income included the following business segment results for the three months ended March 31:

($ in thousands, except per share data)
	2007		2006
Pretax income:
Advanta Business Cards	$	34,811	$	35,293
Other		465		333
Total pretax income		35,276		35,626
Income tax expense		13,828		13,716
Net income	$	21,448	$	21,910
Per combined common share, assuming dilution	$	0.72	$	0.73

Our Advanta Business Cards segment offers business credit cards that are competitively priced and typically include promotional pricing and rewards. We design our product offerings to selectively attract and retain high credit quality customers and to respond to the competitive environment. We experience the benefits of high credit quality customers through lower delinquency and credit loss rates and increases in transaction volume. Although promotional pricing reduces interest yield on new accounts during the initial promotional periods, we expect the yield to increase as the introductory periods expire. Advanta Business Cards pretax income of $34.8 million for the three months ended March 31, 2007 was essentially unchanged when compared to pretax income of $35.3 million for the same period of 2006, despite the impact of lower interest yields and higher amortization of deferred origination costs associated with the increase in new customers and receivables added in 2006 and the first quarter of 2007. The rate of new customer and receivables growth increased the percentage of customers in the receivable portfolio with competitive and promotional pricing and therefore reduced average interest yields in the three months ended March 31, 2007 as compared to the same period of 2006. The impact of lower yields on owned and securitized receivables was largely offset by higher transaction volume, improved asset quality resulting in decreases in credit loss rates on owned and securitized receivables, and a decrease in operating expenses as a percentage of owned and securitized receivables.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with GAAP 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. We have identified accounting for allowance for receivable losses, securitization income, rewards programs and income taxes as our most critical accounting policies and estimates because 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. Estimates are inherently subjective and are susceptible to significant revision as more information becomes available. Changes in estimates could have a material impact on our financial position or results of operations. These accounting policies and estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2006.

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ADVANTA BUSINESS CARDS

Advanta Business Cards originates new accounts directly and through the use of third parties. The following table provides key statistical information on our business credit card portfolio. Credit quality statistics for the business credit card portfolio are included in the “Provision and Allowance for Receivable Losses” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

	Three Months Ended
($ in thousands)	March 31,
	2007		2006
Average owned receivables	$	1,284,900	$	929,795
Average securitized receivables	$	4,152,857	$	2,957,309
Customer transaction volume	$	3,389,065	$	2,733,922
New account originations		96,781		82,617
Average number of active accounts(1)		848,375		649,384
Ending number of accounts at March 31		1,191,820		921,841

(1) Active accounts are defined as accounts with a balance at month-end. Active account statistics do not include charged-off accounts. The statistics reported above are the average number of active accounts for the three months ended March 31.

The increase in new account originations for the three months ended March 31, 2007 as compared to the same period of 2006 is due primarily to the efficiency and size of account acquisition campaigns. Based on our current marketing plans and strategies for the remainder of 2007 and on our results to date, we expect to originate over 300 thousand new accounts in the year ending December 31, 2007, and we expect owned and securitized business credit card receivables to grow between 20% and 25% for the year ending December 31, 2007.

The components of pretax income for Advanta Business Cards are as follows:

	Three Months Ended
($ in thousands)	March 31,
	2007			2006
Net interest income on owned interest-earning assets	$	27,243		$	22,786
Noninterest revenues		84,326			81,338
Provision for credit losses		(10,083	)		(9,334	)
Operating expenses		(66,675	)		(59,497	)
Pretax income	$	34,811		$	35,293

Net interest income on owned interest-earning assets increased $4.5 million for the three months ended March 31, 2007 as compared to the same period of 2006. The increase in net interest income on owned interest-earning assets was due primarily to an increase in average owned business credit card receivables, partially offset by a decrease in the average yield earned on our business credit card receivables as a result of an increase in the percentage of customers in the receivable portfolio with competitive and promotional pricing as compared to the same period of 2006. Average owned business credit card receivables increased $355 million for the three months ended March 31, 2007 as compared to the same period of 2006.

Noninterest revenues include securitization income, servicing revenues, interchange income and other revenues, and are reduced by rewards costs. Noninterest revenues increased $3.0 million for the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to higher merchandise sales transaction volume that resulted in higher interchange income and increased volume of securitized receivables that resulted in higher servicing fees, partially offset by higher rewards costs and lower securitization income. Securitization income decreased for

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the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to a decrease in yields on securitized receivables and an increase in the floating interest rates earned by noteholders, partially offset by growth in average securitized receivables and a decrease in the net principal charge-off rates on securitized receivables.

The increase in provision for credit losses for the three months ended March 31, 2007 as compared to the same period of 2006 was due primarily to the increase in average owned business credit card receivables, partially offset by the improved credit quality of the portfolio. See “Provision and Allowance for Receivable Losses” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for more detailed discussion and a table of credit quality data.

Operating expenses for the three months ended March 31, 2007 increased as compared to the same period of 2006 due primarily to higher salaries and employee benefits and other operating expenses resulting from the growth in new accounts and owned and securitized receivables, increases in executive compensation and higher employee stock option expense. In addition, operating expenses increased due to costs related to the pilot of new outsourcing initiatives in the three months ended March 31, 2007.

INTEREST INCOME AND EXPENSE

Total interest income increased $10.1 million to $48.4 million for the three months ended March 31, 2007 as compared to the same period of 2006. The increase in total interest income was due primarily to an increase in average balances of owned business credit card receivables and investments and an increase in average yields earned on our investments, partially offset by a decrease in the average yields earned on our business credit card receivables. Yields on business credit card receivables decreased for the three months ended March 31, 2007 as compared to the same period of 2006 as a result of an increase in the percentage of customers in the receivable portfolio with competitive and promotional pricing as compared to the same period of 2006. Based on expected levels of receivables growth in the year ending December 31, 2007 and planned marketing strategies, we expect the average yield earned on business credit card receivables for the year ending December 31, 2007 to continue to decrease as compared to the year ended December 31, 2006, but the amount of decrease in average yield is expected to be less than the amount of decrease experienced in 2006 as compared to 2005.

Total interest expense increased $6.6 million to $22.6 million for the three months ended March 31, 2007 as compared to the same period of 2006. The increase in total interest expense was due primarily to an increase in our average deposits outstanding and an increase in the average cost of funds on deposits resulting from the interest rate environment. Average deposits increased $271 million for the three months ended March 31, 2007 as compared to the same period of 2006.

The following table provides an analysis of interest income and expense data, average balance sheet data, net interest spread and net interest margin. 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 net interest earnings divided by total interest-earning assets. Interest income includes late fees on business credit card receivables.

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INTEREST RATE ANALYSIS AND AVERAGE BALANCES

	Three Months Ended March 31,
	2007							2006
	Average				Average			Average				Average
($ in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Owned receivables:
Business credit cards(1)	$	1,284,900	$	35,443		11.19	%	$	929,795	$	28,828		12.57	%
Other receivables		7,671		124		6.54			7,743		99		5.18
Total receivables		1,292,571		35,567		11.16			937,538		28,927		12.51
Investments(2)		595,568		7,682		5.16			499,619		5,363		4.30
Retained interests in securitizations		230,817		5,106		8.85			180,836		3,982		8.81
Total interest-earning assets(3)		2,118,956	$	48,355		9.22	%		1,617,993	$	38,272		9.56	%
Noninterest-earning assets		302,626							482,908
Total assets	$	2,421,582						$	2,100,901
Interest-bearing liabilities:
Deposits	$	1,344,066	$	16,537		4.99	%	$	1,072,928	$	10,308		3.90	%
Debt		227,501		3,707		6.61			221,448		3,357		6.15
Subordinated debt payable to preferred securities trust		103,093		2,317		8.99			103,093		2,289		8.88
Other borrowings		111		1		5.27			97		1		4.77
Total interest-bearing liabilities		1,674,771	$	22,562		5.46	%		1,397,566	$	15,955		4.62	%
Noninterest-bearing liabilities		169,317							176,131
Total liabilities		1,844,088							1,573,697
Stockholders’ equity		577,494							527,204
Total liabilities and stockholders’ equity	$	2,421,582						$	2,100,901
Net interest spread						3.76	%						4.94	%
Net interest margin						4.94	%						5.59	%

(1)	Interest income includes late fees for owned business credit card receivables of $2.5 million for the three months ended March 31, 2007 and $1.9 million for the same period of 2006.
(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 nonaccrual receivables.

PROVISION AND ALLOWANCE FOR RECEIVABLE LOSSES

For the three months ended March 31, 2007, provision for credit losses on a consolidated basis increased $799 thousand to $10.1 million as compared to the same period of 2006. The provision for interest and fee losses increased $408 thousand to $2.4 million for the three months ended March 31, 2007 as compared to the same period of 2006. The increase in provisions for credit losses and interest and fee losses for the three months ended March 31, 2007 as compared to the same period of 2006 was due primarily to an increase in average owned business credit card receivables of $355 million, partially offset by improved credit quality of the portfolio, which is evident in lower delinquency and charge-off rates. The improvement in delinquency and charge-off rates reflects the composition of the portfolio that includes more high credit quality customers. To a much lesser extent, charge-off rates for the three months ended March 31, 2007 were benefited by a higher level of recoveries from sales of charged-off receivables as compared

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to the same period of 2006. The comparison of charge-off rates for the three months ended March 31, 2007 as compared to the same period of 2006 is also impacted by the change in bankruptcy law on October 17, 2005 that benefited charge-off rates in the first half of 2006 because it resulted in a surge in bankruptcy petition filings and charge-offs in 2005 that we otherwise would have expected to occur in later periods, including the first half of 2006.

There was no significant change in the level of allowance for receivable losses at March 31, 2007 as compared to December 31, 2006. The allowance for receivable losses on business credit card receivables was $50.0 million as of March 31, 2007, or 4.38% of owned receivables, as compared to an allowance of $49.7 million, or 4.39% of owned receivables, as of December 31, 2006. Owned business credit card receivables were $1.1 billion at March 31, 2007 and December 31, 2006.

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 expect the charge-off rates on owned business credit card receivables for the year ending December 31, 2007 to be in a range of 3.00% to 3.30% as compared to 3.19% for the year ended December 31, 2006. We base this expectation on the level of delinquent receivables at March 31, 2007, the composition of the portfolio and the expected level of growth in receivables.

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The following table provides credit quality data as of and for the periods indicated for our 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 card and other receivables.

	March 31,			December 31,			March 31,
($ in thousands)	2007			2006			2006
Consolidated – Owned
Allowance for receivable losses	$	51,206		$	50,926		$	46,796
Receivables 30 days or more delinquent		28,544			26,053			26,335
Receivables 90 days or more delinquent		12,878			12,632			11,637
Nonaccrual receivables		10,711			10,524			11,710
Accruing receivables past due 90 days or more		11,373			11,302			10,447
As a percentage of gross receivables:
Allowance for receivable losses		4.45	%		4.46	%		4.73	%
Receivables 30 days or more delinquent		2.48			2.28			2.66
Receivables 90 days or more delinquent		1.12			1.11			1.18
Nonaccrual receivables		0.93			0.92			1.18
Accruing receivables past due 90 days or more		0.99			0.99			1.06
Net principal charge-offs for the year-to-date period ended March 31 and December 31	$	9,783		$	33,780		$	8,084
As a percentage of average gross receivables (annualized):
Net principal charge-offs for the year-to-date period ended March 31 and December 31		3.03	%		3.17	%		3.45	%
Business Credit Cards – Owned
Allowance for receivable losses	$	49,995		$	49,715		$	45,580
Receivables 30 days or more delinquent		28,544			26,053			26,335
Receivables 90 days or more delinquent		12,878			12,632			11,637
Nonaccrual receivables		10,711			10,524			11,710
Accruing receivables past due 90 days or more		11,373			11,302			10,447
As a percentage of gross receivables:
Allowance for receivable losses		4.38	%		4.39	%		4.64	%
Receivables 30 days or more delinquent		2.50			2.30			2.68
Receivables 90 days or more delinquent		1.13			1.11			1.18
Nonaccrual receivables		0.94			0.93			1.19
Accruing receivables past due 90 days or more		1.00			1.00			1.06
Net principal charge-offs for the year-to-date period ended March 31 and December 31	$	9,783		$	33,775		$	8,084
As a percentage of average gross receivables (annualized):
Net principal charge-offs for the year-to-date period ended March 31 and December 31		3.05	%		3.19	%		3.48	%

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SECURITIZATION INCOME

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. Securitizations impacted the following line items on the consolidated income statements:

	Three Months Ended
	March 31,
($ in thousands)	2007		2006
Securitization income	$	23,511	$	33,578
Interest income (discount accretion)		5,106		3,982
Interchange income		42,414		33,714
Servicing revenues		20,376		13,682
Total	$	91,407	$	84,956

Our retained interests in securitizations entitle us to the excess spread on the securitized receivables. Excess spread represents income-related cash flows on securitized receivables net of noteholders’ interest, servicing fees, and credit losses. Fair value estimates used in the recognition of securitization income include cash flow estimates of interest income on securitized receivables in excess of interest expense (interest earned by noteholders), servicing fees and credit losses on securitized receivables.

Securitization income decreased $10.1 million for the three months ended March 31, 2007 as compared to the same period of 2006. The decrease in securitization income was due primarily to a decrease in yields on securitized receivables and an increase in the floating interest rates earned by noteholders, partially offset by growth in average securitized receivables and a decrease in the net principal charge-off rates on securitized receivables. The trends in yields and net principal charge-offs are similar to those described 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. The increase in the floating interest rates earned by noteholders for the three months ended March 31, 2007 as compared to the same period of 2006 resulted from the interest rate environment. Securitization income in the three months ended March 31, 2006 included a $1.3 million unfavorable valuation adjustment to the retained interest-only strip related primarily to the timing of bankruptcy charge-offs subsequent to the change in bankruptcy law in late 2005 and its impact on estimated future cash flows over the three-month weighted average life of the existing securitized receivables at March 31, 2006 as compared to December 31, 2005. Our future expectations for yields on securitized receivables are similar to those in owned business credit card receivables as discussed in the “Interest Income and Expense” section 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 GAAP, we evaluate Advanta Business Cards’ performance on a managed basis. Our managed business credit card receivable portfolio is comprised of both owned and securitized business credit card receivables. We believe that performance on a managed basis provides useful supplemental information to investors 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

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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:

Managed Financial Measures and Statistics

	Advanta								Advanta
	Business		GAAP			Securitization			Business Cards		Managed
($ in thousands)	Cards GAAP		Ratio(1)			Adjustments			Managed		Ratio(1)
Three Months Ended March 31, 2007
Net interest income	$	27,243		7.19	%	$	68,205		$	95,448		7.02	%
Provision for credit losses		10,083		2.66			35,082	(2)		45,165		3.32
Noninterest revenues		84,326		22.25			(33,123	)		51,203		3.77
Average business credit card interest-earning assets		1,515,717					3,922,040			5,437,757
Three Months Ended March 31, 2006
Net interest income	$	22,786		8.21	%	$	66,385		$	89,171		9.18	%
Provision for credit losses		9,334		3.36			28,395	(2)		37,729		3.88
Noninterest revenues		81,338		29.29			(37,990	)		43,348		4.46
Average business credit card interest-earning assets		1,110,631					2,776,473			3,887,104
As of March 31, 2007
Ending business credit card receivables	$	1,142,006				$	4,444,055		$	5,586,061
Receivables 30 days or more delinquent		28,544		2.50	%		122,426			150,970		2.70	%
Receivables 90 days or more delinquent		12,878		1.13			54,633			67,511		1.21
As of December 31, 2006
Ending business credit card receivables	$	1,133,132				$	4,073,128		$	5,206,260
Receivables 30 days or more delinquent		26,053		2.30	%		108,159			134,212		2.58	%
Receivables 90 days or more delinquent		12,632		1.11			52,279			64,911		1.25
As of March 31, 2006
Ending business credit card receivables	$	982,251				$	3,045,600		$	4,027,851
Receivables 30 days or more delinquent		26,335		2.68	%		91,029			117,364		2.91	%
Receivables 90 days or more delinquent		11,637		1.18			40,131			51,768		1.29

(1)

Ratios are as a percentage of average business credit card interest-earning assets except delinquency ratios which are as a percentage of ending business credit card receivables.

(2)

Includes the amount by which the credit losses would have been higher had the securitized receivables remained as owned and the provision for credit losses on securitized receivables been equal to actual reported charge-offs. In addition, the three months ended March 31, 2006 includes a $1.3 million unfavorable valuation adjustment to retained interests in securitizations as an increase to provision for credit losses.

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SERVICING REVENUES

Servicing revenues were $20.4 million for the three months ended March 31, 2007 and $13.7 million for the same period of 2006. The increase in servicing revenues was due to increased volume of securitized business credit card receivables.

OTHER REVENUES

	Three Months Ended
($ in thousands)	March 31,
	2007			2006
Interchange income	$	55,234		$	44,393
Cash back rewards		(13,400	)		(9,513	)
Business rewards		(5,932	)		(4,604	)
Balance transfer fees		1,829			1,644
Cash usage fees		1,133			823
Other business credit card fees		1,225			852
Investment securities gains, net		990			708
Other, net		1,402			673
Total other revenues, net	$	42,481		$	34,976

Interchange income includes interchange fees on both owned and securitized business credit cards. The increase in interchange income for the three months ended March 31, 2007 as compared to the same period of 2006 was due primarily to higher merchandise sales transaction volume. The average interchange rate was 2.2% in both of the three-month periods ended March 31, 2007 and 2006.

The increase in cash back rewards for the three months ended March 31, 2007 as compared to the same period of 2006 was due primarily to higher merchandise sales transaction volume and higher average number of business credit card accounts in the cash back rewards programs. The increase in business rewards for the three months ended March 31, 2007 as compared to the same period of 2006 was due primarily to higher merchandise sales transaction volume. Both periods include changes in estimates of costs of future reward redemptions based on changes in experiences in redemption rates and the costs of business rewards redeemed, and/or changes in the rewards programs. Changes in estimates increased other revenues $400 thousand for the three months ended March 31, 2007 as compared to an increase of $500 thousand for the three months ended March 31, 2006.

Investment securities gains, net, include realized and unrealized gains and losses on venture capital investments reflecting the market conditions for those investments in each respective period, as well as realized gains and losses on the sale of other investments. We had a net gain of $461 thousand on venture capital investments for the three months ended March 31, 2007 as compared to a net gain of $330 thousand for the same period of 2006.

In the three months ended March 31, 2007, one of our bank subsidiaries sold Federal Deposit Insurance Corporation deposit insurance assessment credits to a third-party bank at a gain of $920 thousand, which is included in other revenues.

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OPERATING EXPENSES

	Three Months Ended
($ in thousands)	March 31,
	2007		2006
Salaries and employee benefits	$	26,098	$	23,289
Amortization of deferred origination costs, net		12,867		11,948
External processing		6,700		5,941
Professional fees		3,905		2,577
Marketing		3,235		3,607
Equipment		2,595		2,617
Occupancy		2,302		2,139
Fraud		1,468		770
Postage		1,394		1,155
Credit		1,290		1,093
Other		4,948		4,503
Total operating expenses	$	66,802	$	59,639

Salaries and employee benefits increased for the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to personnel hired to support growth in owned and securitized receivables and the number of new accounts, increases in executive compensation, and higher employee stock option expense due to the value of stock options granted in the second quarter of 2006.

Amounts paid to third parties to acquire business credit card accounts and certain other origination costs are deferred and netted against any related business credit card origination fee, and the net amount is amortized on a straight-line basis over a privilege period of one year. Amortization of deferred origination costs, net, increased for the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to an increase in new account originations, partially offset by a decrease in our average acquisition cost per account.

External processing expense increased for the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to an increase in the number of accounts and higher transaction volume.

Professional fees increased for the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to costs related to the pilot of new outsourcing initiatives.

Fraud expense increased for the three months ended March 31, 2007 as compared to the same period of 2006 due primarily to growth in owned and securitized receivables and lower fraud recoveries associated with certain types of fraud in the credit card market.

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. 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 financial position or results of operations based on our current expectations regarding the ultimate resolutions of these existing actions 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 actual results will differ from our estimates.

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INCOME TAXES

Income tax expense was as follows for the three months ended March 31:

($ in thousands)

	2007			2006
Income tax expense	$	13,828		$	13,716
Effective tax rate		39.2	%		38.5	%

Our effective tax rate for the three months ended March 31, 2007 increased as compared to the same period of 2006 due to an increase in anticipated levels of certain nondeductible expenses.

In July 2006, the FASB issued FIN No. 48 that provides a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with the statement, before a tax benefit can be recognized, a tax position is evaluated using a threshold that it is more likely than not that the tax position will be sustained upon examination. When evaluating the more-likely-than-not recognition threshold, a company should presume the tax position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. If the tax position meets the more-likely-than-not recognition threshold, it is initially and subsequently measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We adopted the provisions of FIN No. 48 effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the January 1, 2007 balance of retained earnings. The adoption did not have a material impact on our effective tax rate for the three months ending March 31, 2007.

We have an ownership interest in Fleet Credit Card Services, L.P. related to our exit from the consumer credit card business in 1998. The gain associated with the original transfer of assets to Fleet Credit Card Services, L.P. was not subject to income tax. As of March 31, 2007, the cumulative gain on transfer of consumer credit card business and our deficit capital account in Fleet Credit Card Services, L.P. on a tax basis for which no deferred taxes have been provided is approximately $650 million, as the transaction structure remains nontaxable under current tax law.

OFF-BALANCE SHEET ARRANGEMENTS

Off-balance sheet business credit card securitizations provide a significant portion of our funding and they are one of our primary sources of liquidity. At March 31, 2007, off-balance sheet securitized receivables represented 65% of our funding. Our credit risk in the securitized receivables is limited to the amount of our retained interests in securitizations. We had securitized business credit card receivables of $4.4 billion at March 31, 2007 and $4.1 billion at December 31, 2006.

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The following table summarizes securitization data including income and cash flows:

	Three Months Ended
	March 31,
($ in thousands)	2007		2006
Average securitized receivables	$	4,152,857	$	2,957,309
Securitization income		23,511		33,578
Discount accretion		5,106		3,982
Interchange income		42,414		33,714
Servicing revenues		20,376		13,682
Proceeds from new securitizations		357,658		535,890
Proceeds from collections reinvested in revolving-period securitizations		2,383,984		1,683,802
Cash flows received on retained interests		84,756		77,628

See “Securitization Income” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for discussion of income related to securitizations. See Note 6 to the consolidated financial statements for the key assumptions used in estimating the fair value of retained interests in securitizations as of March 31, 2007 and December 31, 2006 and for the three months ended March 31, 2007 and 2006.

In the three months ended March 31, 2007, we completed additional business credit card securitizations. The revolving periods for those securitizations extend to the following dates:

	Noteholder
	Principal			Coupon	Scheduled End of
($ in thousands)	Balance			Type	Revolving Period
Series 2007-A	$	153,453	(1)	Floating	January 15, 2008
AdvantaSeries:
2007-A1		200,000		Floating	May 31, 2011
2007-B1		100,000		Floating	April 30, 2011
2007-D1		25,000		Floating	May 31, 2009

(1) A portion of the noteholder principal balance of securitized receivables as of March 31, 2007 was owned by Advanta and included in accounts receivable from securitizations on the consolidated balance sheet. The principal balances owned by Advanta are subordinated to the other noteholders’ interests.

The level of investment-grade notes outstanding at March 31, 2007 issued as part of the AdvantaSeries de-linked securitization structure, and our ability to issue and hold additional AdvantaSeries non-investment grade notes, provides additional capacity for future securitization issuances in excess of our expected securitization funding needs through December 31, 2007. The de-linked structure provides flexibility to issue different classes of asset-backed securities with varying maturities, sizes, and terms based on our funding needs and prevailing market conditions.

We have a $200 million committed commercial paper conduit facility through June 2007 that provides off-balance sheet funding, of which $90 million was used at March 31, 2007. We have a second $150 million committed commercial paper conduit facility through January 2008 that provides off-balance sheet funding, all of which was used at March 31, 2007. Upon the expiration of these facilities, management expects to obtain the appropriate level of replacement funding under similar terms and conditions.

In August 2005, the FASB issued a revised exposure draft, Accounting for Transfers of Financial Assets – An Amendment of FASB Statement No. 140. The statement provides guidance for determining whether financial assets must first be transferred to a QSPE to be derecognized, determining additional permitted activities for QSPEs, eliminating prohibitions on QSPEs’ ability to hold passive derivative financial instruments, and requires that interests related to transferred financial assets held by a transferor be initially recorded at fair value. In November 2006, the FASB reported that it expects to issue a revised

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exposure draft in the second quarter of 2007. Management will evaluate any potential impact of the final statement when it is available.

MARKET RISK SENSITIVITY

We measure our interest rate risk using a rising rate scenario and a declining rate scenario. We estimate net interest income using a third party software model that uses standard income modeling techniques. We 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 securitization noteholders. Both increasing and decreasing rate scenarios assume an instantaneous shift in interest rates and measure the corresponding change in expected net interest income as compared to a base case scenario that includes management’s current expectations of future interest rate movements. We estimated that our net interest income would change as follows over a twelve-month period:

	March 31,			December 31,
	2007			2006
Estimated percentage increase (decrease) in net interest income on owned assets:
Assuming 200 basis point increase		11	%		12	%
Assuming 200 basis point decrease		(2	)%		(6	)%
Estimated percentage increase (decrease) in net interest income on securitized receivables:
Assuming 200 basis point increase		(9	)%		(8	)%
Assuming 200 basis point decrease		19	%		15	%
Estimated percentage increase (decrease) in net interest income on managed assets:
Assuming 200 basis point increase		(4	)%		(3	)%
Assuming 200 basis point decrease		14	%		10	%

Our managed net interest income decreases in a rising rate scenario due to the variable rate funding of the majority of our off-balance sheet securitized receivables and 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 or because the customer pays their balance in full each month. Our business credit card receivables include interest rate floors that cause our managed net interest income to increase in the declining rate scenario. Changes in the composition of our balance sheet, the interest rate environment, business credit card pricing terms and securitization funding strategies have also impacted the results of the net interest income sensitivity analyses as of March 31, 2007 as compared to the results as of December 31, 2006.

The above estimates of net interest income sensitivity alone do not provide a comprehensive view of our exposure to interest rate risk and are not necessarily indicative of potential changes in our owned, securitized and managed net interest income. Additional factors such as changes in the portfolio, customer behavior, marketing strategies and funding strategies also affect owned, securitized and managed net interest income and accordingly, actual results may differ from these estimates. 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 do not reflect management’s expectation regarding the future direction of interest rates, and they depict only two possibilities out of a large set of possible scenarios.

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LIQUIDITY, CAPITAL RESOURCES AND ANALYSIS OF FINANCIAL CONDITION

At March 31, 2007, we had a high level of liquidity including $39.9 million of cash and $504.1 million of federal funds sold. At March 31, 2007, we also had receivables held for sale and investments available for sale that could be sold to generate additional liquidity. At March 31, 2007, we had $133.7 million of subordinated trust assets held at non-bank subsidiaries that were rated BB by Standard & Poor’s and Ba2 by Moody’s Investor Service that could be sold or borrowed against to generate additional liquidity.

As shown on the statements of cash flows, our operating activities generated $124.2 million of cash in the three months ended March 31, 2007 due primarily to the proceeds from receivables sold in excess of the increase in receivables held for sale, excess spread and servicing revenues related to securitized receivables, interchange income, and interest and fee income on owned receivables, partially offset by operating expenses, interest expense and costs of rewards programs. For the three months ended March 31, 2006, our operating activities generated $74.3 million of cash and were impacted by the timing of securitization transactions. We expect to fund future growth and continuing operations with off-balance sheet securitizations, deposits, other borrowings, and sources of operating cash flow, including excess spread and servicing revenues related to securitized receivables, interchange income, and interest and fee income on owned receivables.

Our access to unsecured, institutional debt is limited since Advanta Corp.’s debt rating is not investment grade. However, we do have access to a diversity of funding sources. Our components of funding were as follows:

	March 31, 2007					December 31, 2006
($ in thousands)	Amount		%			Amount		%
Off-balance sheet securitized receivables(1)	$	4,300,206		65	%	$	3,932,732		63	%
Deposits		1,350,096		21			1,365,138		22
Debt		226,820		3			227,126		4
Subordinated debt payable to preferred securities trust		103,093		2			103,093		2
Equity		585,871		9			567,161		9
Total	$	6,566,086		100	%	$	6,195,250		100	%

(1) Excludes our ownership interest in the noteholder principal balance of securitizations (subordinated trust assets) that are held on-balance sheet and classified as retained interests in securitizations.

As shown above in the components of funding table, off-balance sheet securitizations provide a significant portion of our funding and are one of our primary sources of liquidity. See “Off-Balance Sheet Arrangements” section in Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion of off-balance sheet securitizations and their impact on our liquidity, capital resources and financial condition.

The parent company, Advanta Corp., had $63.8 million of owned business credit card receivables at March 31, 2007. In April 2007, we entered into a secured borrowing agreement using the business credit card receivables as collateral up to a maximum of $100 million. We intend to use borrowings from this agreement to fund receivables growth at nonbank entities.

In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split in the form of a 50% stock dividend, on both the Class A and Class B Common Stock, to stockholders of record as of May 25, 2007. The stock dividend will be payable after the close of business on June 15, 2007. In addition, the

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Board of Directors of Advanta Corp. approved a 25% increase in the regular quarterly cash dividends on Class A and Class B Common Stock beginning with the dividend paid in the second quarter of 2007. We expect to fund the increase in dividends with sources of operating cash flows. The Board of Directors of Advanta Corp. also authorized the repurchase of up to 1.0 million shares of Advanta Corp.’s Class B Common Stock, or 1.5 million shares stated on a split-adjusted basis. We expect to fund the repurchase of shares with existing liquidity.

Advanta Corp. and its subsidiaries are involved in litigation, class action lawsuits, claims and legal proceedings arising in the ordinary course of business or discontinued operations. 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. 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.

We adopted the provisions of FIN No. 48 effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the January 1, 2007 balance of retained earnings. The liability for unrecognized tax benefits as of January 1, 2007 was $25.6 million. We estimate that approximately $1.3 million of this liability may be payable in 2007. We are unable to reasonably estimate the amount or timing of payments for the remainder of the liability. Other than the liability for unrecognized tax benefits, there have been no significant changes to the amounts that were disclosed in the contractual obligations table included in the “Liquidity, Capital Resources and Analysis of Financial Condition” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2006.

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 primarily funds our business purpose credit cards. Advanta Bank Corp. paid dividends to Advanta Corp. of $25 million in the three months ended March 31, 2007. Advanta National Bank paid a dividend of $39.1 million and return of capital of $28 million to Advanta Corp. in the three months ended March 31, 2007, after having received prior approval from the Office of the Comptroller of the Currency. At March 31, 2007, Advanta Bank Corp.’s combined total capital ratio (combined Tier I and Tier II capital to risk-weighted assets) was 22.35% as compared to 21.37% at December 31, 2006. At both dates, 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. 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. In April 2007, we received approval for the conversion of Advanta National Bank’s national bank charter to a Delaware state chartered bank, Advanta Bank. The conversion of the charter was effective May 3, 2007. This bank subsidiary’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.

CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

This Quarterly Report on Form 10-Q contains statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of

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the Private Securities Litigation Reform Act of 1995 (the “Act”). In addition, other written or oral communications provided by Advanta from time to time may contain “forward-looking statements.” Forward-looking statements are not historical facts but instead are based on certain assumptions by management and represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Forward-looking statements may include, among others: statements about anticipated growth in credit card accounts and receivables; interest yields; expected cost of funds; net principal charge-off rates; estimated values of and anticipated cash flows from our retained interests in securitizations; our ability to replace existing credit facilities and securitization financing when they expire or terminate; income tax uncertainties; realizability of net deferred tax asset; expected levels of liquidity and capital; anticipated outcome and effects of litigation and other future expectations of Advanta.

Forward-looking statements are subject to various assumptions, risks and uncertainties which change over time, and speak only as of the date they are made. Forward-looking statements are often identified by words or phrases such as “is anticipated,” “are expected to,” “are estimated to be,” “intend to,” “believe,” “will likely result,” “projected,” “may,” or other similar words or phrases. We undertake no obligation to update any forward-looking information except as required by law. However, any further disclosures made on related subjects in our subsequent reports filed with the SEC, including our Reports on Forms 10-K, 10-Q and 8-K, should be consulted. We caution readers that actual results may be materially different from those in the forward-looking information. Factors that may cause actual results to differ materially from current expectations include, but are not limited to:

(1)	factors affecting our net interest income on owned and securitized receivables, including fluctuations in the volume of receivables and the range and timing of pricing offers to customers;
(2)	competitive pressures, including product development and pricing, among financial institutions;
(3)	political conditions, social conditions, monetary and fiscal policies and general economic and other environmental conditions 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 customers 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)	the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, and examinations;
(9)	effect of, and changes in, tax laws, rates, regulations and policies;
(10)	effect of legal and regulatory developments, including changes in bankruptcy laws and regulations and the ultimate resolution

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of industry-related judicial proceedings relating to the legality of certain interchange rates;

(11)	relationships with customers, significant vendors and business partners;
(12)	difficulties or delays in the development, acquisition, production, testing and marketing of products or services, including the ability and cost to obtain intellectual property rights or a failure to implement new products or services when anticipated;
(13)	the amount and cost of financing available to us;
(14)	the ratings on the debt of Advanta Corp. and its subsidiaries;
(15)	the effects of changes in accounting policies or practices as may be required by changes in U.S. generally accepted accounting principles;
(16)	the impact of litigation, including judgments, settlements and actual or anticipated insurance recoveries for costs or judgments;
(17)	the proper design and operation of our disclosure controls and procedures; and
(18)	the ability to attract and retain key personnel.

The cautionary statements provided above are being made pursuant to the provisions of the Act and with the intention of obtaining the benefits of the “safe harbor” provisions of the Act for any such forward-looking information. Also see, “Item 1A. Risk Factors” in Part II of this report for further discussion of important factors that could cause actual results to differ from those in the forward-looking statements.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by this item is incorporated herein by reference to “Item 2-Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this Report on Form 10-Q under the heading “Market Risk Sensitivity.”

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted pursuant to the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) 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 March 31, 2007, 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 control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in class action lawsuits, other litigation, claims and legal proceedings arising in the ordinary course of business or discontinued operations. See Note 7 of the Notes to Consolidated Financial Statements set forth in Part I, Item 1 of this Quarterly Report which is incorporated herein by reference. For a discussion of previously reported legal proceedings, see Part I, Item 3, Legal Proceedings of our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

ITEM 1A. RISK FACTORS

Information regarding risks that may affect our future performance are discussed in “Management’s Discussion and Analysis of Financial Condition and Results of Operation – CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995” and in our other filings with the Securities and Exchange Commission. There have been no material changes in our risk factors from those disclosed in Item 1A of Part I in our Annual Report on Form 10-K for the fiscal year ended December 31, 2006.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

(a)	None.
(b)	None.
(c)	The table below provides information with respect to all purchases of equity securities by us during the period from January 1, 2007 through March 31, 2007. All shares reported in the table below are shares of Class B Common Stock.

ISSUER PURCHASES OF EQUITY SECURITIES
									(d) Maximum Number
							(c) Total Number		(or Approximate
	(a) Total						of Shares		Dollar Value of
	Number of						Purchased as		Shares) That May
	Shares			(b) Average			Part of Publicly		Yet Be Purchased
	Purchased			Price Paid			Announced Plans		Under the Plans
Period	(In Thousands)			per Share			or Programs (B)		or Programs (B)
1/1/07 – 1/31/07		13.2	(A)	$	44.98			0		0
2/1/07 – 2/28/07		0.0			N/A	*		0		0
3/1/07 – 3/31/07		0.0			N/A	*		0		0
Total		13.2		$	44.98			0		0

(A)	In January 2007, in connection with the exercise of an officer’s stock options, 13,156 shares were withheld to meet Advanta Corp.’s minimum statutory tax withholding requirements.
(B)	In April 2007, the Board of Directors of Advanta Corp. authorized a three-for-two stock split and the repurchase of up to 1.0 million shares of Advanta Corp.’s Class B Common Stock, or 1.5 million shares stated on split-adjusted basis.
*	N/A – Not Applicable

36

ITEM 6. EXHIBITS

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

Exhibit
Number	Description of Document
10.1	Preferred Pricing Agreement, effective March 19, 2007, between Dun & Bradstreet, Inc. and Advanta Bank Corp.
12	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

37

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)
By	/s/ Philip M. Browne
Senior Vice President and Chief Financial Officer
May 9, 2007
By	/s/ David B. Weinstock
Vice President and Chief Accounting Officer
May 9, 2007

38

               EXHIBIT INDEX

		Manner of
Exhibit	Description	Filing
10.1	Preferred Pricing Agreement, effective March 19, 2007, between Dun & Bradstreet, Inc. and Advanta Bank Corp.	*
12	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.

39

EX-10.1

Exhibit 10.1

Preferred Pricing Agreement for D&B Risk Management Solutions (11-06c)

This Preferred Pricing Agreement for D&B Risk Management Solutions (“PPA”) is subject to the PPA Terms and Conditions set forth below in addition to the existing D&B Master Agreement between Customer and D&B effective June 17, 2002. Upon acceptance of this PPA by both parties, this PPA shall constitute an “Order” under the existing Master Agreement. If the “New” box is checked, this Order is not valid until a D&B Master Agreement has been executed between the parties. If the “Existing” box is checked, such D&B Master Agreement means the existing D&B Master Agreement between the parties. Notwithstanding anything to the contrary contained in the D&B Master Agreement, this Order constitutes Customer’s binding commitment for the term of this Order.

Effective Date: 03/19/2007	Initial Term: 1 Year	Schedule of Affiliates:	Customer:
		Yes - See Attached	o New     þ Existing
Governing MA DUNS # : 122683253	Subscriber # : 004012511		o MDP Conversion

PPA Terms and Conditions

Customer shall have access to all products and services listed on attached Appendix A (“Included Services”) subject to the following:

1. The term of this Order is 1 year from the Effective Date (“Initial Term”). Each 12 month period beginning on the Effective Date is referred to herein as a “Contract Year”.

2. In consideration of Customer’s payment of the fee for each Contract Year as set forth below (“PPA Fee”), Customer shall be entitled to receive an unlimited amount of Included Services, subject to usage limits on selected products and services included within the Included Services (which limits are referred to as “Product Usage Limits”), determined by reference to the applicable pricing set forth below (subject to Customer’s band discount set forth below);

3. Any use of Included Services in excess of the applicable Product Usage Limits during a particular Contract Year shall be billed to Customer at the below referenced pricing, including applicable band discount;

4. The use of Included Services under this Agreement applies to Customer as it exists today, and may be used only to support Customer’s U.S. business, and may be used by Customer’s U.S. divisions and wholly owned subsidiaries that are identified on a “Schedule of Affiliates “ attached hereto and executed by the parties and that are not currently eligible to receive Included Services under an existing agreement with D&B (“Included Entities”) to support their respective U.S. businesses, provided Customer is liable for such Included Entities’ compliance with this Order and Master Agreement. Any change to Customer via merger or acquisition (including the acquisition of a portfolio), shall require a written addendum between D&B and Customer to reflect such change, which addendum shall include the applicable revised PPA Fee schedule. Future acquisitions by Customer of, or future acquisitions of Customer by, companies with a D&B credit information contract (“Acquired/Acquiring Companies”) shall not be included in this Order. Acquired/Acquiring Companies shall continue to receive D&B services pursuant to the terms and conditions of the respective D&B credit information contract (“Credit Contract”) and shall not be included as an Included Entity under this Order, until the expiration of such Credit Contract and the execution of an addendum to this Order as referenced above.

5. Any use of Included Services by Customer’s affiliates other than Included Entities shall be the subject of a separate, mutually agreed amendment to this Order; and Customer’s use of D&B products and services other than Included Services, if any, shall be the subject of separate Orders executed by the parties, each of which shall be subject to, and incorporate by reference therein, the terms of the Master Agreement.

PPA Fee	Band Discount: Band 7	Product Usage Limits (per Contract Year)
Contract Year 1: 1,034,522
Contract Year 2:	Applicable Pricing: D&B’s published pricing for 2007	þ International Reports 15 % of PPA Fee
Contract Year 3:
Annual Service Fee: 599

1. In the event the parties agree to renew this Order under this PPA, the PPA Fee for any Contract Year following Contract Year 1 shall include 50% of the amount, if any, by which Customer’s usage in the previous Contract Year exceeded three (3) times the PPA Fee for the previous Contract Year.

2. Customer’s actual usage for a particular Contract Year and the PPA Fee for the subsequent Contract Year shall be determined by D&B by reference to the above referenced pricing, including applicable band discount and communicated to Customer within thirty (30) days after the end of the applicable Contract Year.

3. PPA Fees include the Annual Service Fee, and are non-refundable, and unused amounts may not be carried over to subsequent Contract Years.

4. In the event Customer does not renew this Order prior to or on the expiration date, Customer may continue to receive Services, provided that Customer will pay D&B’s then current published pricing (subject to Customer’s discount associated with the prior Contract Year PPA Fee set forth herein) for such Included Services for the sixty day period following the expiration date.

Payment Terms: Due upon Receipt of Invoice
Invoice Options: þ Annual Eff. Date      o Annual Eff. Date 30/60       o Other Blank

AGREED TO BY:
DUN & BRADSTREET, INC.	CUSTOMER
Approved:	Company Name: Advanta Bank Corp.
Authorized Signature: /s/ Thomas M. Wickersham	Authorized Signature: David W. Griffith
Name (Please Print): Thomas M. Wickersham	Name (Please Print): David W. Griffith
Title: RVP Strategic Acct	Title: SVP Credit and Marketing Analysis
Date: 3/22/07	Date: March 22, 2007

CUSTOMER BILL TO ADDRESS:

Company Name: Advanta Bank Corp.
Address: Welsh & McKean Roads
City: Spring House	State: PA	Zip: 19477
Attention: Dave Griffith
Telephone #: (215) 444-5153		Fax #:
D&B D-U-N-S #: 122683253	E-Mail: dgriffith@advanta.com	Purchase Order#:

SUBSCRIBER #: 004-012511

CUSTOMER SHIPPING INFORMATION:

Company Name: same as above
Address*:
City:	State:	Zip:
Attention:
RM Name: Ron Needham	RM #: 101818	Center #: 3126
RM Telephone #: (717) 413-4332	Ext:	E-Mail: needhamr@dnb.com
RM Fax:

* Attach usage address, if different (Attach Schedule of Affiliates for participating points.)

Dun & Bradstreet, Inc. (“D&B”) and the customer named on the attached Order (“Customer”) agree that D&B shall make available to Customer business information services (“Services”), which may include information (“Information”); computer programs or applications (including those accessed remotely), documentation and media (collectively, “Software”); and other services, subject to this Master Agreement (“Agreement”). The Services subject to this Agreement are identified in Orders entered into from time to time by D&B and Customer. No obligation to furnish or to pay for a particular Service arises under this Agreement until D&B accepts an order and any attachments thereto placed by Customer. All accepted orders and their attachments (collectively, the “Order(s)”) for Services are subject to this Agreement, and the terms of such Orders are incorporated by reference in this Agreement. Subject to paragraph 10.2, this Agreement continues in force even though no Order may then be outstanding. The Services will also be made available to Customer’s U.S. parent and to U.S. companies that are subsidiaries, divisions or affiliates, wholly-owned or controlled by Customer and that are identified on a “Schedule of Locations of Service & Customer-Related Companies” schedule attached to such Order and signed by the parties.

1. Licenses

1.1 D&B grants to Customer a non-exclusive, non-transferable license (“License”) to use and display the Information and Software (in object code format only) constituting each D&B product specified in an Order, subject to the limitations contained in this Agreement and such Order. D&B retains all ownership rights (including copyrights and other intellectual property rights) in the Services, in any form, and Customer obtains only such rights as are explicitly granted in this Agreement and such Order. The Services will include a custom model developed by D&B through the use of D&B and Customer information. To the extent such model is customized for Customer, the customized model shall be owned by Customer; provided that (i) Customer grants D&B a license to use such model in connection with its provision of Services to Customer hereunder, (ii) Customer’s ownership of the customized model does not (x) include ownership of any D&B information, techniques, processes, methods, expertise, or other intellectual property included therein (which collectively remain D&B intellectual property) or (y) affect D&B’s ability or rights with respect to the use of such D&B information, techniques, processes, methods, expertise, or other intellectual property for the purpose of developing custom models for other customers for any purpose, and (iii) Customer shall not license, sell, distribute or otherwise make available such custom model to any third party, other than those third parties to which Customer may make Information or Software available pursuant to the first sentence of paragraph 2.2.

1.2 Each License and Order is for a term, beginning on the date of the Order, of 12 months, unless another term is specified in the Order. D&B may extend the term for an additional period, in its discretion, while the parties are engaged in renewal discussions. Any such extension shall be subject to this Agreement. Each License or Order may be renewed as set forth in the Order and by mutual written agreement and payment of renewal fees and applicable product and service fees (the initial term and any renewal period for an Order or License constitute “the Term” for such Order or License).

1.3 Software “Updates” (i.e., minor enhancements, additions, and substitutions to Software, including corrections and bug fixes) are provided at no additional fee, if available. “Upgrades” (i.e., modifications, additions or substitutions that result in a substantial change, improvement or addition to Software), if available, are provided for an additional fee, if applicable. The determination of whether a matter involves an Update or an Upgrade is within the sole discretion of D&B. All Updates and Upgrades obtained by Customer are subject to this Agreement.

1.4 Telephone and email based software support is available during the Term of an Order for the currently licensed Software versions, and only if Customer has installed all Updates received.

2. Restrictions on Use

2.1 Information and Software are licensed for Customer’s internal use only and (i) only at the points of service specified in the Order; (ii) only for the frequency of use or total number of users set forth in the Order; and (iii) subject to any other restrictions set forth in the Order.

2.2 Customer will not provide Information or Software to others, whether directly in any media or indirectly through incorporation in a database, marketing list, report or otherwise, or use or permit the use of Information to generate any statistical or other information that is or will be provided to third parties (including as the basis for providing recommendations to others); use or permit the use of Information to prepare any comparison to other information databases that is or will be provided to third parties; or voluntarily produce Information in legal proceedings; except that Customer may provide Information or Software to Representatives as defined below, in response to regulatory requests, or as otherwise required by law. Customer shall: (i) maintain the Information in strict confidence, including by restricting disclosure of the Information solely to those of its employees, consultants, agents and advisors (collectively, “Representatives”) with a need to know and not allowing it to be disclosed, through negligence or otherwise, to third parties, (ii) advise Representatives who receive the Confidential Information of their obligations hereunder and assume full responsibility for any breach by them of such obligations, (iii) use the Confidential Information only in furtherance of the business relationship described in Paragraph 1 above, and (iv) take all steps to ensure that no unauthorized persons have access to Confidential Information and that all persons having access to Confidential Information refrain from any unauthorized disclosure.

2.3 Customer will not attempt to access, use, modify, copy, reverse engineer, or otherwise derive the source code of Software.

2.4 Upon reasonable notice and during regular business hours, Customer will permit D&B to inspect the locations at, or computer systems on which, Information and Software are used, stored or transmitted so that D&B can verify Customer’s compliance with this Agreement.

2.5 Customer will be responsible for any direct damages or lost profits incurred by D&B as a result of Customer’s breach of this paragraph 2.

3. Copying

3.1 Customer will not copy, download, upload or in any other way reproduce Information or Software except for (i) creating a reasonable number of copies of Information in any format for internal use only in accordance with this Agreement and not for general internal distribution; and (ii) making one copy of Information and of Software for internal archival purposes.

4. D-U-N-S Numbers

4.1 D-U-N-S Numbers are proprietary to and controlled by D&B. D&B grants Customer a non-exclusive, perpetual, limited license to use D-U-N-S Numbers solely for identification purposes and only for Customer’s internal business use. Where practicable, Customer will refer to the number as a “D-U-N-S Number” and state that D-U-N-S is a registered trademark of D&B.

5. Third Party Services

5.1 Customer may engage a third party to process or host Information (the “Processor”) provided that the Processor and D&B enter into a D&B Processor’s Agreement before any Information or Software is provided to the Processor.

5.2 Third parties that provide Information to D&B for use in providing the Services are intended third party beneficiaries of paragraphs 8 and 11.

6. Payment

6.1 Customer will pay D&B in accordance with the Order. Prices and product descriptions are those set forth in the Order, or, if not included in the Order, in the applicable pricing and product policies made available to Customer in hard copy or on any D&B Internet site, which policies are incorporated herein. A late payment charge of the lesser of 1¹/2% per month or the highest lawful rate may be applied to any outstanding balances until paid.

6.2 Customer will pay any applicable taxes relating to this Agreement, other than taxes based on D&B income and franchise — related taxes.

6.3 For certain Orders for a committed volume or usage represented by an upfront payment by Customer, Customer may be entitled to “carry over” portions of unused volume or usage upon renewal. In addition, if Customer’s usage exceeds the committed amount, such excess usage shall be billed at a specified “overrun” rate. Such carryover and/or overrun rate, if applicable, will be determined in accordance with the Order, or, if not included in the Order, in the applicable pricing and product policies made available to Customer in hard copy or on any D&B Internet site.

6.4 If Customer’s pricing with respect to a particular Order is based on Customer’s expected volume or usage as indicated on such Order and Customer does not meet such volume or usage levels, Customer will pay D&B a “true-up amount” based on the pricing applicable to the volume or usage actually utilized by Customer.

7. Compliance with Law

7.1 Customer will not use Information as a factor in establishing an individual’s eligibility for (i) credit or insurance to be used primarily for personal, family, or household purposes, or (ii) employment. In addition, Customer will not use any Service to engage in any unfair or deceptive practices and will use the Services only in compliance with applicable state, local, federal or foreign laws or regulations, including laws and regulations regarding telemarketing, customer solicitation (including fax and/or e-mail solicitation), data protection and privacy.

8. Disclaimers

8.1 Though D&B uses extensive procedures to keep its database current and to maintain accurate data, Customer acknowledges that the Information will contain a degree of error and that Customer is responsible for determining that the Information is sufficiently accurate for Customer’s purposes. If the Information is not sufficiently accurate for Customer’s purposes, then Customer must so notify D&B, in writing, within 15 days after receipt of such Information. D&B will, at its option, either correct the inaccuracy at D&B’s expense or refund any amounts paid relating to the unusable Information.

8.2 ALL SERVICES ARE PROVIDED ON AN “AS IS,” “AS AVAILABLE” BASIS. OTHER THAN AS EXPLICITLY STATED IN THIS AGREEMENT, D&B DISCLAIMS ALL WARRANTIES, EXPRESS OR IMPLIED, INCLUDING ANY WARRANTIES OF ACCURACY, COMPLETENESS, CURRENTNESS, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. D&B DOES NOT WARRANT THAT THE SERVICES WILL BE UNINTERRUPTED OR ERROR-FREE AND DISCLAIMS ANY WARRANTY OR REPRESENTATION REGARDING AVAILABILITY OF A SERVICE, SERVICE LEVELS OR PERFORMANCE. D&B WILL NOT BE LIABLE FOR ANY LOSS OR INJURY ARISING OUT OF, IN WHOLE OR IN PART, D&B’S CONDUCT IN PROCURING, COMPILING, COLLECTING, INTERPRETING, REPORTING OR DELIVERING SERVICES.

9. Copyrights and Other Proprietary Rights

9.1 Customer acknowledges that Information and Software are proprietary works of D&B and comprise: (i) works of original authorship, including compiled Information containing D&B’s selection, arrangement and coordination and expression of such Information or pre-existing material it has created, gathered or assembled; (ii) trade secret and other confidential information, including information that derives value or potential value from not being readily known or available; and (iii) information that has been created, developed and maintained by D&B at great expense, such that misappropriation or unauthorized use by others for commercial gain would unfairly and/or irreparably harm D&B or reduce D&B’s incentive to create, develop and maintain such information. Customer will not knowingly commit or permit any act or omission that would contest or impair D&B’s proprietary and intellectual property rights in Information and Software or that would cause the Information or Software to infringe the proprietary or intellectual property rights of a third party. Customer will reproduce D&B’s copyright and proprietary rights legend on all copies of Information and Software which are so marked when received. Customer will be responsible for any direct damages or lost profits incurred by D&B as a result of Customer’s breach of this paragraph 9.1.

9.2 Customer and D&B will not (i) use any trademark, service mark or trade name of each other or any of their affiliated companies, except that D&B and its affiliates may include Customer’s trade names in the data base of business information included within the Services it offers to Customer and others or otherwise as permitted by law, or (ii) publish any press releases regarding this Agreement or any Order.

9.3 D&B will treat all information that Customer designates in writing to be proprietary in the same manner as D&B treats its own proprietary information. D&B agrees not to use such identified proprietary information except for the purposes of performing its obligations to Customer and for internal analytical purposes (i.e., analyzing such data to improve D&B’s products and services). Such proprietary information shall not include information that (i) is or becomes a part of the public domain through no act or omission of D&B; (ii) was in D&B’s lawful possession prior to Customer’s disclosure to D&B; (iii) is lawfully disclosed to D&B by a third-party with the right to disclose such information and without restriction on such disclosure; or (iv) is independently developed by D&B without use of or reference to the proprietary information.

9.4 D&B represents and warrants to Customer that, to D&B’s knowledge, the Software and Information, when used in accordance with this Agreement, do not violate any existing U.S. copyrights, patents, trademarks, or other intellectual property rights of any third party. The foregoing warranty does not apply to the extent Customer modifies the Software or Information in any way or combines the Software or Information with material from third parties.

10. Termination

10.1 In the event of material breach (including, without limitation, an assignment in violation of paragraph 13.2 hereof) by Customer or D&B, the non-breaching party may immediately terminate this Agreement or particular Orders without prior notice. In addition, D&B may terminate this Agreement or particular Orders upon 30 days’ prior written notice; provided that if D&B terminates this Agreement or particular Orders other than for cause, D&B will refund to Customer the unused balance of any amounts paid under the relevant Orders. If Customer terminates this Agreement or particular Orders due to a material breach by D&B pursuant to this section, D&B will refund to Customer the unused balance of any amounts paid under the relevant Orders so long as such material breach is proved in any judicial proceeding.

10.2 If Customer has no Orders in effect during a period of six consecutive months, then D&B may terminate this Agreement at the end of such six-month period by sending written notice to Customer.

10.3 The provisions set forth in paragraphs 2, 3, 4, 6, 7, 8, 9, 10.3, 10.4, 10.5, 11 and 12 will survive the termination of this Agreement.

10.4 If, without D&B’s written permission, Customer continues after termination to obtain Services covered by a terminated Order or Agreement, Customer will be liable to D&B for the undiscounted fees for such Services in effect on the date of such termination.

10.5 Upon termination of a Term with respect to particular Information or Software, or upon receipt of Software or Information that is intended to supersede previously obtained Software or Information, unless D&B instructs Customer otherwise, Customer will immediately delete or destroy all originals and copies (other than archival copies permitted by paragraph 3) of the Information or Software, and upon request, provide D&B with certification thereof.

10.6 Termination of this Agreement will result in a termination of all outstanding Orders.

11. Limitation of Liability

11.1 NEITHER D&B NOR CUSTOMER WILL BE LIABLE FOR SPECIAL, PUNITIVE, EXEMPLARY, INCIDENTAL OR CONSEQUENTIAL DAMAGES (INCLUDING LOST PROFITS), EVEN IF ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, ARISING OUT OF THIS AGREEMENT OR THE DELIVERY, USE, SUPPORT OR OPERATION OF THE SERVICES, EXCEPT AS OTHERWISE PROVIDED HEREIN.

11.2 D&B’s LIABILITY FOR A PARTICULAR CLAIM WILL NOT EXCEED THE AMOUNT PAID BY CUSTOMER TO D&B FOR THE PARTICULAR INFORMATION OR SOFTWARE UPON WHICH THE CLAIM IS BASED OR $20,000, WHICHEVER IS GREATER. ANY CLAIMS AGAINST D&B WILL BE BROUGHT, IN ACCORDANCE WITH THIS AGREEMENT, WITHIN 12 MONTHS OF DISCOVERY OF THE FIRST OCCURRENCE GIVING RISE TO SUCH CLAIMS, BUT IN NO CASE MORE THAN TWENTY-FOUR (24) MONTHS FROM THE FIRST OCCURRENCE, OR SUCH CLAIMS WILL BE FOREVER BARRED.

12. Choice of Law; Disputes

12.1 This Agreement is governed by and construed in accordance with the laws of the State of New Jersey, without regard to choice of law provisions. Any disputes arising out of this Agreement that cannot be resolved by the parties will be brought in state or federal court located in Newark, New Jersey.

12.2 Each party shall bear its own costs and expenses, including reasonable attorneys’ fees incurred in any action to enforce the obligations of the other party under this Agreement, however, Customer will reimburse D&B

for all costs and expenses (including all reasonable attorneys’ fees and costs as well as all damages incurred) in D&B’s enforcement of the Customer-Related Companies compliance with this Agreement.

13. Miscellaneous

13.1 This Agreement, all Orders, addenda and schedules, and D&B’s published policies and procedures referred to herein and in effect from time to time, including those published on D&B’s web site, constitute the entire agreement between D&B and Customer regarding the Services. Unless an Order states otherwise, where there is a conflict between the terms of any addenda or schedules and this Agreement, the terms of the Agreement shall control with respect to the Services. Where there is a conflict between the terms of any Order and this Agreement, the terms of the Order shall control with respect to the Services set forth in such Order and solely to the extent of the conflict. Any amendments of or waivers relating to this Agreement or any Order must be in writing signed by both parties.

13.2 This Agreement binds and inures to the benefit of the parties and their successors and assigns, except that neither party will assign this Agreement without the prior written consent of the other party; however, either party may assign the Agreement (i) to an affiliate controlled by, controlling or under common control with that party; provided such affiliate is not a direct competitor of D&B, or (ii) in connection with a merger or consolidation (so long as the assignment is to the newly merged or consolidated entity) or the sale of substantially all of its assets (so long as the assignment is to the newly merged or consolidated entity). Notwithstanding the foregoing, with respect to an assignment pursuant to (ii) above, the non-assigning party may terminate this agreement upon thirty (30) days written notice if such party objects to the assignment.

14 Indemnification

     D&B shall defend or settle at its expense any claim, suit or proceeding arising from or alleging: (a) infringement of any existing U.S. copyrights, patents, trademarks, or other intellectual property rights of any third party (“Intellectual Property Right”) by Service or part thereof furnished under this Agreement; (b) property damage or personal injury, including death, directly caused by or personal injury, including death, directly caused by or sustained in connection with the performance of the Services or any activities of D&B in connection therewith; and (c) a breach of the warranties and representations made by D&B in this Agreement. D&B shall indemnify and hold Customer harmless from and pay any and all losses, costs and damages, including royalties and license fees, reasonable counsel fees attributable to such claim, suit or proceeding. Customer shall give D&B prompt notice of, and the parties shall cooperate in, the defense of any such claim, suit or proceeding, including appeals, negotiations and any settlement or compromise thereof, provided that the Customer shall approve the terms of any settlement or compromise.

If any Service or part thereof furnished under this Agreement, including without limitation Software, system design, equipment or Documentation, becomes or in the Customer’s or D&B’s reasonable opinion is likely to become, the subject of any claim, suit, or proceeding arising from or alleging infringement of, or in the event of any adjudication that such Service or part thereof infringes on, any Intellectual Property Right, D&B, at its own expense shall take the following actions in the listed order of preference: (i) secure for the Customer the right to continue using the Service or part thereof; or (ii) if efforts are unavailing, replace or modify the Service or part thereof to make it non-infringing; provided, however, that such modification or replacement shall not degrade the operation or performance of the Service

EX-12

Exhibit 12

ADVANTA CORP. AND SUBSIDIARIES
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

	Three Months Ended
($ in thousands)	March 31,
	2007			2006
Net income	$	21,448		$	21,910
Income tax expense		13,828			13,716
Earnings before income taxes		35,276			35,626
Fixed charges:
Interest on debt, deposits and other borrowings		20,245			13,666
Interest on subordinated debt payable to preferred securities trust		2,317			2,289
One-third of all rentals		474			447
Total fixed charges		23,036			16,402
Earnings before income taxes and fixed charges	$	58,312		$	52,028
Ratio of earnings to fixed charges(1)		2.53	x		3.17	x

(1) For purposes of computing these ratios, “earnings” represent income before income taxes plus fixed charges. “Fixed charges” consist of interest expense and one-third (the portion deemed representative of the interest factor) of rental expense on operating leases.

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Dennis Alter, certify that:

1.	I have reviewed this quarterly report on Form 10-Q of Advanta Corp.;
2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.	The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Dennis Alter

Dennis Alter

Chief Executive Officer

May 9, 2007

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EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Philip M. Browne, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Advanta Corp.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

/s/ Philip M. Browne

Philip M. Browne

Chief Financial Officer

May 9, 2007

- 2 -

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q of Advanta Corp. (the “Company”) for the quarterly period ended March 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dennis Alter, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Dennis Alter

Dennis Alter

Chief Executive Officer

May 9, 2007

EX-32.2

Exhibit 32.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

     In connection with the Quarterly Report on Form 10-Q of Advanta Corp. (the “Company”) for the quarterly period ended March 31, 2007 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Philip M. Browne, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

/s/ Philip M. Browne

Philip M. Browne

Chief Financial Officer

May 9, 2007