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 June 30, 2008
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
(State or other jurisdiction of
incorporation or organization) 23-1462070
(I.R.S. Employer
Identification No.)

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes þ      No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “small reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ	Accelerated filer o	Non-accelerated filer o	Smaller reporting company o
		(Do not check if a smaller reporting company)

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	Outstanding at August 4, 2008
Class A Common Stock, $.01 par value per share Class B Common Stock, $.01 par value per share	14,410,133 shares 31,313,384 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	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	48
Item 4.	Controls and Procedures	48
PART II — OTHER INFORMATION		49
Item 1.	Legal Proceedings	49
Item 1A.	Risk Factors	49
Item 4.	Submission of Matters to a Vote of Security Holders	52
Item 6.	Exhibits	53
Exhibit Index		55
MASTER SERVICES AGREEMENT
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
CERTIFICATION OF CEO, SECTION 302
CERTIFICATION OF CFO,SECTION 302
CERTIFICATION OF CEO, SECTION 906
CERTIFICATION OF CFO, SECTION 906

2

PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)

	June 30,			December 31,
(In thousands, except share amounts)	2008			2007
ASSETS
Cash	$	87,230		$	90,228
Federal funds sold		1,060,750			872,587
Investments available for sale		689,559			223,500
Receivables, net:
Held for sale		129,301			275,679
Other		656,542			714,989
Total receivables, net		785,843			990,668
Accounts receivable from securitizations		440,138			349,581
Premises and equipment, net		17,986			16,893
Other assets		213,528			220,915
Total assets	$	3,295,034		$	2,764,372
LIABILITIES
Deposits	$	2,098,689		$	1,651,737
Debt		226,427			220,848
Other borrowings		25,000			25,000
Subordinated debt payable to preferred securities trust		103,093			103,093
Other liabilities		246,021			177,913
Total liabilities		2,699,230			2,178,591
Commitments and contingencies
STOCKHOLDERS’ EQUITY
Class A preferred stock, $1,000 par value:
Authorized, issued and outstanding — 1,010 shares in 2008 and 2007		1,010			1,010
Class A voting common stock, $.01 par value:
Authorized — 200,000,000 shares; issued — 14,410,133 shares in 2008 and 2007		144			144
Class B non-voting common stock, $.01 par value:
Authorized — 200,000,000 shares; issued — 32,799,604 shares in 2008 and 29,618,641 shares in 2007		328			296
Additional paid-in capital		245,274			238,416
Unearned ESOP shares		(8,576	)		(8,785	)
Accumulated other comprehensive loss		(3,849	)		(1,674	)
Retained earnings		398,894			393,795
Treasury stock at cost, 1,563,736 Class B common shares in 2008 and 2007		(37,421	)		(37,421	)
Total stockholders’ equity		595,804			585,781
Total liabilities and stockholders’ equity	$	3,295,034		$	2,764,372

See accompanying notes to consolidated financial statements.

3

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS (Unaudited)

	Three Months Ended					Six Months Ended
(In thousands, except per share amounts)	June 30,					June 30,
	2008			2007		2008			2007
Interest income:
Receivables	$	37,750		$	34,070	$	66,880		$	69,637
Investments		7,954			8,809		17,886			16,491
Other interest income		9,565			4,679		16,550			9,785
Total interest income		55,269			47,558		101,316			95,913
Interest expense:
Deposits		23,600			17,361		45,519			33,898
Debt and other borrowings		4,120			3,955		8,028			7,663
Subordinated debt payable to preferred securities trust		2,317			2,317		4,634			4,634
Total interest expense		30,037			23,633		58,181			46,195
Net interest income		25,232			23,925		43,135			49,718
Provision for credit losses		30,327			11,806		58,709			21,889
Net interest income after provision for credit losses		(5,095	)		12,119		(15,574	)		27,829
Noninterest revenues:
Securitization income		4,608			22,766		21,605			46,277
Servicing revenues		24,365			22,541		50,457			42,917
Other revenues, net		65,350			47,996		131,918			90,477
Total noninterest revenues		94,323			93,303		203,980			179,671
Operating expenses		81,752			68,777		151,240			135,579
Income before income taxes		7,476			36,645		37,166			71,921
Income tax expense		3,461			13,933		14,789			27,761
Income from continuing operations		4,015			22,712		22,377			44,160
Gain on discontinuance of mortgage and leasing businesses, net of tax		0			1,022		0			1,022
Net income	$	4,015		$	23,734	$	22,377		$	45,182
Basic income from continuing operations per common share
Class A	$	0.06		$	0.52	$	0.48		$	1.02
Class B		0.12			0.56		0.58			1.09
Diluted income from continuing operations per common share
Class A	$	0.06		$	0.50	$	0.48		$	0.96
Class B		0.11			0.51		0.56			1.00
Basic net income per common share
Class A	$	0.06		$	0.55	$	0.48		$	1.04
Class B		0.12			0.59		0.58			1.12
Diluted net income per common share
Class A	$	0.06		$	0.52	$	0.48		$	0.99
Class B		0.11			0.54		0.56			1.02
Basic weighted average common shares outstanding
Class A		13,380			13,331		13,374			13,324
Class B		27,142			28,039		27,082			27,887
Diluted weighted average common shares outstanding
Class A		13,380			13,331		13,374			13,324
Class B		28,629			31,343		28,436			31,258

See accompanying notes to consolidated financial statements.

4

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

				Class A					Class B			Additional
	Comprehensive			Preferred		Class A			Common			Paid-In
($ in thousands)	Income (Loss)			Stock		Common Stock			Stock			Capital
Balance at December 31, 2006				$	1,010	$	151		$	351		$	308,051
Effect of applying the provisions of FIN No. 48 (See Note 13)
Net income	$	72,050
Other comprehensive income (loss):
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $830		(1,542	)
Actuarial gain (loss), net of tax benefit (expense) of ($84)		156
Comprehensive income	$	70,664
Preferred and common cash dividends declared
Exercise of stock options										7			6,630
Stock option exchange program stock distribution
Employee stock option expense													5,448
Nonemployee stock option expense													(21	)
Excess tax benefits from stock-based compensation													5,743
Issuance of nonvested shares										3			(3	)
Amortization of nonvested shares													4,834
Forfeitures of nonvested shares										(2	)		(116	)
Treasury stock acquired
Treasury stock retired							(7	)		(63	)		(93,101	)
ESOP shares committed to be released													951
Balance at December 31, 2007				$	1,010	$	144		$	296		$	238,416
Net income	$	22,377
Other comprehensive income (loss):
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $1,171		(2,175	)
Comprehensive income	$	20,202
Preferred and common cash dividends declared
Exercise of stock options													15
Employee stock option expense													2,922
Tax deficiency from stock-based compensation													(606	)
Issuance of nonvested shares										32			(32	)
Amortization of nonvested shares													4,480
ESOP shares committed to be released													79
Balance at June 30, 2008				$	1,010	$	144		$	328		$	245,274

See accompanying notes to consolidated financial statements.

5

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

				Accumulated
				Other									Total
	Unearned			Comprehensive			Retained			Treasury			Stockholders’
($ in thousands)	ESOP Shares			Income (Loss)			Earnings			Stock			Equity
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 13)								(6,103	)					(6,103	)
Net income								72,050						72,050
Other comprehensive income (loss):
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $830					(1,542	)								(1,542	)
Actuarial gain (loss), net of tax benefit (expense) of ($84)					156									156
Comprehensive income
Preferred and common cash dividends declared								(31,965	)					(31,965	)
Exercise of stock options														6,637
Stock option exchange program stock distribution											388			388
Employee stock option expense														5,448
Nonemployee stock option expense														(21	)
Excess tax benefits from stock-based compensation														5,743
Issuance of nonvested shares														0
Amortization of nonvested shares														4,834
Forfeitures of nonvested shares														(118	)
Treasury stock acquired											(38,257	)		(38,257	)
Treasury stock retired											93,171			0
ESOP shares committed to be released		419												1,370
Balance at December 31, 2007	$	(8,785	)	$	(1,674	)	$	393,795		$	(37,421	)	$	585,781
Net income								22,377						22,377
Other comprehensive income (loss):
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $1,171					(2,175	)								(2,175	)
Comprehensive income
Preferred and common cash dividends declared								(17,278	)					(17,278	)
Exercise of stock options														15
Employee stock option expense														2,922
Tax deficiency from stock-based compensation														(606	)
Issuance of nonvested shares														0
Amortization of nonvested shares														4,480
ESOP shares committed to be released		209												288
Balance at June 30, 2008	$	(8,576	)	$	(3,849	)	$	398,894		$	(37,421	)	$	595,804

See accompanying notes to consolidated financial statements.

6

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Six Months Ended
	June 30,
($ in thousands)	2008			2007
OPERATING ACTIVITIES — CONTINUING OPERATIONS
Net income	$	22,377		$	45,182
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Gain on discontinuance of mortgage and leasing businesses, net of tax		0			(1,022	)
Investment securities gains, net		(32,328	)		(2,345	)
Depreciation and amortization		3,284			2,936
Stock-based compensation expense		7,402			5,509
Provision for credit losses		58,709			21,889
Provision for interest and fee losses		10,418			5,027
Change in deferred origination costs, net of deferred fees		7,251			(1,299	)
Change in receivables held for sale		(421,647	)		(632,526	)
Proceeds from sale of receivables held for sale		318,025			756,340
Change in accounts receivable from securitizations		(90,557	)		(9,680	)
Tax deficiency (excess tax benefits) from stock-based compensation		606			(6,432	)
Change in other assets and other liabilities		112,888			44,885
Net cash (used in) provided by operating activities		(3,572	)		228,464
INVESTING ACTIVITIES — CONTINUING OPERATIONS
Change in federal funds sold and restricted interest-bearing deposits		(188,163	)		(429	)
Purchase of investments available for sale		(766,585	)		(555,902	)
Proceeds from sales of investments available for sale		392,017			467,433
Proceeds from sales of other investments		32,231			0
Proceeds from maturing investments available for sale		155,260			44,070
Change in receivables not held for sale		(17,931	)		(147,972	)
Purchases of premises and equipment, net		(4,368	)		(4,274	)
Net cash used in investing activities		(397,539	)		(197,074	)
FINANCING ACTIVITIES — CONTINUING OPERATIONS
Change in demand and savings deposits		(1,934	)		24,276
Proceeds from issuance of time deposits		738,926			275,725
Payments for maturing time deposits		(313,444	)		(289,496	)
Proceeds from issuance of debt		36,740			14,272
Payments on redemption of debt		(32,629	)		(17,010	)
Change in cash overdraft and other borrowings		(10,433	)		(3,026	)
Proceeds from exercise of stock options		15			6,031
Cash dividends paid		(17,278	)		(15,525	)
(Tax deficiency) excess tax benefits from stock-based compensation		(606	)		6,432
Treasury stock acquired		0			(14,439	)
Net cash provided by (used in) financing activities		399,357			(12,760	)
DISCONTINUED OPERATIONS
Net cash (used in) provided by operating activities of discontinued operations		(1,244	)		162
Net (decrease) increase in cash		(2,998	)		18,792
Cash at beginning of period		90,228			35,055
Cash at end of period	$	87,230		$	53,847
SUPPLEMENTAL DISCLOSURES
Income taxes paid, net	$	5,951		$	10,139
Interest paid		17,625			16,790

Non cash transactions: Interest credited directly to the accounts of deposit customers and retail note program investors was $24.9 million in the six months ended June 30, 2008 and $18.8 million in the same period of 2007. In the six months ended June 30, 2008, notes issued in our AdvantaSeries 2008-A1 and AdvantaSeries 2008-A3 securitizations were purchased by one of our bank subsidiaries, which had the impact of reducing receivables held for sale and increasing investments available for sale by $250 million.

See accompanying notes to consolidated financial statements.

7

ADVANTA CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2008
(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

Effective January 1, 2008, we adopted Statement of Financial Accounting Standards (“SFAS”) No. 157, Fair Value Measurements, for all financial assets and liabilities and for nonfinancial assets and liabilities measured at fair value on a recurring basis. Under Financial Accounting Standards Board (“FASB”) Staff Position (“FSP”) No. FAS 157-2, Effective Date of FASB Statement No. 157, we elected to defer the adoption of SFAS No. 157 for nonfinancial assets and nonfinancial liabilities measured on a nonrecurring basis. SFAS No. 157 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. The initial adoption of SFAS No. 157 did not have a material impact on our financial position or results of operations. There are no material assets or liabilities recognized or disclosed at fair value for which we have not applied the provisions of SFAS No. 157. See Note 16 for disclosures about assets and liabilities measured at fair value.

8

Effective January 1, 2008, we adopted SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilities. The 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 presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. We did not elect to measure any existing financial assets or liabilities at fair value that are not currently required to be measured at fair value upon adoption of this statement. The adoption of this statement did not have a material impact on our financial position or results of operations.

Effective January 1, 2008, we adopted the consensus reached by the Emerging Issues Task Force (“EITF”) on EITF Issue No. 06-10, Accounting for Collateral Assignment Split-Dollar Life Insurance Arrangements. The consensus provides guidance on whether an entity should recognize a liability for the postretirement benefit and how to recognize and measure the asset associated with a collateral assignment split-dollar life insurance arrangement. The adoption of this consensus did not have a material impact on our financial position or results of operations. Costs related to premiums on split-dollar life insurance policies that we expect to pay in postretirement periods, if applicable, are part of our supplemental executive insurance program liability.

Recently the FASB has been considering substantial revisions to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, that, if adopted, could result in certain off-balance sheet securitized receivables being consolidated on our balance sheets. It is not clear, however, whether amendments ultimately will be adopted by the FASB, what form they will take and how they will be implemented if adopted, how regulatory authorities will respond, or how our financial position or results of operations may be affected. The FASB plans to issue a proposed exposure draft in the third quarter of 2008. Management is monitoring this FASB project and will evaluate any potential impact of the final statement when it is available.

In June 2008, FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. The FSP concludes that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities under SFAS No. 128, Earnings Per Share, and should be included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that we currently use to determine earnings per share for our Class A and Class B Common Stock according to dividends declared and participation rights in undistributed earnings. The nonvested shares of Class B Common Stock issued under our stock-based incentive plan are participating securities with nonforfeitable rights to dividends. FSP No. EITF 03-6-1 is effective for Advanta on January 1, 2009 and management is currently evaluating the impact that the adoption will have on our reported earnings per share. The adoption is not expected to have an impact on our financial position or net income.

9

Note 3) Investments Available for Sale

Investments available for sale consisted of the following:

	June 30, 2008				December 31, 2007
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value
U.S. Treasury and government agency securities	$	219,862	$	219,935	$	18,416	$	18,469
State and municipal securities		19,468		19,331		18,554		18,651
Corporate bonds		0		0		7,525		7,499
Asset-backed securities:
Credit card asset-backed securities(1)		250,000		250,064		0		0
Mortgage and home equity line of credit-backed securities		34,709		28,703		40,234		37,340
Equity securities(2)		7,857		7,702		8,066		8,021
Money market funds		163,458		163,458		133,159		133,159
Other		366		366		361		361
Total investments available for sale	$	695,720	$	689,559	$	226,315	$	223,500

(1)	Amounts at June 30, 2008 represent AdvantaSeries Class A notes issued in our securitizations and purchased by one of our bank subsidiaries. Includes $100 million of AdvantaSeries 2008-A1 and $150 million of AdvantaSeries 2008-A3.
(2)	Includes venture capital investments of $265 thousand at June 30, 2008 and $413 thousand at December 31, 2007. The amount shown as amortized cost represents fair value for venture capital investments.

There were no declines in the fair value of investments available for sale below their cost that were deemed to be other than temporary at June 30, 2008 or December 31, 2007. The fair value of investments available for sale in an unrealized loss position and the related unrealized losses at June 30, 2008 were as follows:

	Less Than 12 Months in an					12 Months or Longer in an
	Unrealized Loss					Unrealized Loss
	Position					Position					Total
	Gross					Gross					Gross
	Unrealized			Fair		Unrealized			Fair		Unrealized			Fair
	Amount			Value		Amount			Value		Amount			Value
U.S. Treasury and government agency securities	$	(1	)	$	10,580	$	0		$	0	$	(1	)	$	10,580
State and municipal securities		(137	)		11,531		(57	)		1,603		(194	)		13,134
Mortgage and home equity line of credit-backed securities		(77	)		3,197		(5,940	)		25,152		(6,017	)		28,349
Equity securities		(155	)		7,145		0			0		(155	)		7,145
Total	$	(370	)	$	32,453	$	(5,997	)	$	26,755	$	(6,367	)	$	59,208

At June 30, 2008, securities in an unrealized loss position included three investments in U.S. Treasury and government agency securities, twenty-four investments in mortgage and home equity line of credit-backed securities, twenty-three investments in other debt securities and one equity investment. The range of unrealized losses per individual debt security at June 30, 2008, excluding mortgage and home equity line of credit-backed securities, was $1 thousand to $43 thousand. The range of unrealized losses per individual mortgage or home equity line of credit-backed security at June 30, 2008 was $1 thousand to $1.1 million. The mortgage and home equity line of credit-backed securities in our investment portfolio are floating rate and are primarily backed by subprime mortgage loans and home equity loans. At June 30, 2008, 79% of our investments in mortgage and home equity line of credit-backed securities at amortized cost were rated from AAA to AA by Standard & Poor’s and from Aaa to Aa3 by Moody’s Investor Service, or equivalent from other rating agencies, after taking into account the downgrade of five of the investments by at least one rating agency in 2008. Four investments, representing

10

the remaining 21% of our investments in mortgage and home equity line of credit-backed securities at amortized cost, were rated from A to BB by Standard & Poor’s and from A2 to Baa3 by Moody’s Investor Service, or equivalent from other rating agencies, at June 30, 2008. Our investments in mortgage and home equity line of credit-backed securities represent a small portion of our overall liquidity position. The fair values of our investments in mortgage and home equity line of credit-backed securities declined in the second half of 2007 and again in 2008 due to the difficulties in the subprime mortgage industry that created turmoil in the capital markets. Based on the issuing trusts’ payment histories, amounts of subordinate tranches and overcollateralization amounts, we expect to receive the scheduled interest and principal payments according to the contractual terms on these securities. The unrealized losses on all investments available for sale at June 30, 2008 were not deemed to be other than temporary impairments based upon the length of time and the extent to which the fair value has been less than cost, review of the current interest rate environment, the underlying credit rating of the securities, anticipated volatility in the market, and our intent and ability to retain the investments for a period of time sufficient to allow for recovery in fair value, which may be maturity.

Note 4) Receivables

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

	June 30,			December 31,
	2008			2007
Business credit card receivables	$	850,925		$	1,031,607
Other receivables		7,711			7,330
Gross receivables		858,636			1,038,937
Add: Deferred origination costs, net of deferred fees		13,020			20,271
Less: Allowance for receivable losses
Business credit cards		(84,611	)		(67,368	)
Other receivables		(1,202	)		(1,172	)
Total allowance for receivable losses		(85,813	)		(68,540	)
Receivables, net	$	785,843		$	990,668

At June 30, 2008 and December 31, 2007, we had a $25 million borrowing collateralized by business credit card receivables.

Note 5) Allowance for Receivable Losses

The following table presents activity in the allowance for receivable losses for the six months ended June 30:

	2008			2007
Balance at January 1	$	68,540		$	50,926
Provision for credit losses		58,709			21,889
Provision for interest and fee losses		10,418			5,027
Gross principal charge-offs:
Business credit cards		(43,272	)		(21,325	)
Other receivables		(2	)		(1	)
Total gross principal charge-offs		(43,274	)		(21,326	)
Principal recoveries:
Business credit cards		1,147			1,986
Net principal charge-offs		(42,127	)		(19,340	)
Interest and fee charge-offs:
Business credit cards		(9,727	)		(4,767	)
Balance at June 30	$	85,813		$	53,735

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Note 6) Securitization Activities

Accounts receivable from securitizations consisted of the following:

	June 30,		December 31,
	2008		2007
Retained interests in securitizations	$	228,450	$	213,077
Amounts due from the securitization trust		116,750		48,452
Accrued interest and fees on securitized receivables, net(1)		94,938		88,052
Total accounts receivable from securitizations	$	440,138	$	349,581

(1) Reduced by an estimate for uncollectible interest and fees of $22.5 million at June 30, 2008 and $17.3 million at December 31, 2007.

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						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Average securitized receivables	$	5,063,349		$	4,581,666		$	5,206,692		$	4,368,446
Securitization income		4,608			22,766			21,605			46,277
Discount accretion		9,565			4,679			16,550			9,785
Interchange income		57,799			49,207			113,244			91,621
Servicing revenues		24,365			22,541			50,457			42,917
Proceeds from new securitizations(1)		193,325			398,682			318,025			756,340
Proceeds from collections reinvested in revolving- period securitizations		2,581,177			2,681,748			5,133,254			5,065,732
Cash flows received on retained interests(2)		112,651			79,731			192,586			164,487
Key assumptions:
Discount rate		17.20% – 18.70	%		8.15% –   9.76	%		12.21% – 18.70	%		8.15% –   9.84	%
Monthly payment rate		18.79% – 20.46	%		19.36% – 23.10	%		18.79% – 20.46	%		19.36% – 23.10	%
Loss rate		7.85% – 10.12	%		3.85% –   4.35	%		6.20% – 10.12	%		3.70% –   4.35	%
Interest yield, net of interest earned by noteholders		11.36% – 12.29	%		7.29% –   7.33	%		8.79% – 12.29	%		7.29% –   7.33	%

(1)	Amounts reported for the three and six months ended June 30, 2008 exclude $250 million related to notes issued in our AdvantaSeries 2008-A1 and AdvantaSeries 2008-A3 securitizations that were purchased by one of our bank subsidiaries and are classified as investments available for sale on the consolidated balance sheet.
(2)	Amounts reported for the three and six months ended June 30, 2008 exclude $389 thousand of interest on AdvantaSeries 2008-A1 and AdvantaSeries 2008-A3 notes that is classified as interest income on the consolidated income statements.

There were no purchases of delinquent accounts from the securitization trust during the three or six months ended June 30, 2008 or 2007.

We used the following assumptions in measuring the fair value of retained interests in securitizations at June 30, 2008 and December 31, 2007. The assumptions listed represent weighted averages of assumptions used for each securitization. The

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monthly payment rate assumptions used at both June 30, 2008 and December 31, 2007 result in cash flow projections over an approximate three-month weighted average life of existing receivables for the retained interest-only strip valuation.

	June 30,			December 31,
	2008			2007
Discount rate		17.68% – 18.70	%		13.25% – 15.28	%
Monthly payment rate		18.99% – 20.46	%		19.34% – 20.46	%
Loss rate		8.80% – 10.12	%		6.20% –   7.13	%
Interest yield, net of interest earned by noteholders		12.29	%		8.79	%

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 June 30, 2008.

Effect on estimated fair value of the following hypothetical changes in key assumptions:
Discount rate increased 200 basis points	$	(3,249	)
Discount rate increased 400 basis points		(6,407	)
Monthly payment rate at 110% of base assumption		(1,851	)
Monthly payment rate at 125% of base assumption		(3,888	)
Loss rate at 110% of base assumption		(11,635	)
Loss rate at 125% of base assumption		(29,088	)
Interest yield, net of interest earned by noteholders, decreased 100 basis points		(13,217	)
Interest yield, net of interest earned by noteholders, decreased 200 basis points		(26,435	)

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:

	June 30,		December 31,		June 30,
	2008		2007		2007
Owned business credit card receivables	$	850,925	$	1,031,607	$	1,133,198
Securitized business credit card receivables		5,225,773		5,315,421		4,856,001
Total managed receivables	$	6,076,698	$	6,347,028	$	5,989,199
Receivables 30 days or more delinquent:
Owned	$	49,894	$	42,424	$	27,115
Securitized		294,432		229,808		136,468
Total managed		344,326		272,232		163,583
Receivables 90 days or more delinquent:
Owned		25,001		19,204		13,466
Securitized		145,715		105,577		68,424
Total managed		170,716		124,781		81,890
Nonaccrual receivables:
Owned		10,670		10,104		9,155
Securitized		68,719		59,131		47,416
Total managed		79,389		69,235		56,571
Accruing receivables past due 90 days or more:
Owned		22,684		17,213		12,249
Securitized		131,977		94,139		62,360
Total managed		154,661		111,352		74,609
Net principal charge-offs for the year-to-date period ended June 30 and December 31:
Owned		42,125		41,589		19,339
Securitized		190,391		178,173		76,197
Total managed		232,516		219,762		95,536
Net principal charge-offs for the three months ended June 30 and December 31:
Owned		25,819		11,542		9,556
Securitized		104,638		53,572		41,115
Total managed		130,457		65,114		50,671

Note 7) Other Assets and Liabilities

Other assets consisted of the following:

	June 30,		December 31,
	2008		2007
Net deferred tax asset	$	35,613	$	38,147
Investment in Fleet Credit Card Services, L.P.		32,095		32,095
Investment in preferred securities trust		3,093		3,093
Other		142,727		147,580
Total other assets	$	213,528	$	220,915

As of June 30, 2008, we own 27 thousand MasterCard Incorporated Class B common shares and 497 thousand Visa Inc. Class B common shares, all of which have zero cost basis and no book value. Other revenues include investment gains on sales of MasterCard Incorporated shares of $14.2 million for the three months ended June 30, 2008 and $18.8 million for the six months ended June 30, 2008. Other revenues for the six months ended June 30, 2008 also include a $13.4 million gain on the redemption of Visa Inc. shares.

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Other liabilities consisted of the following:

	June 30,		December 31,
	2008		2007
Amounts due to the securitization trust	$	70,673	$	9,258
Liability for unrecognized tax benefits		39,773		39,495
Business rewards liability		30,767		29,768
Cash back rewards liability		10,341		9,590
Accounts payable and accrued expenses		30,375		31,563
Cash overdraft		13,560		23,993
Current income taxes payable		7,548		2,464
Liabilities of discontinued operations		1,723		2,967
Other		41,261		28,815
Total other liabilities	$	246,021	$	177,913

Note 8) Deposits

Deposit accounts consisted of the following:

	June 30,		December 31,
	2008		2007
Demand deposits	$	8,263	$	8,874
Money market savings		83,481		84,804
Time deposits of $100,000 or less		1,031,792		867,263
Time deposits of more than $100,000		975,153		690,796
Total deposits	$	2,098,689	$	1,651,737

All deposits are interest bearing except demand deposits. Time deposit maturities were as follows at June 30, 2008:

Year Ending December 31,
2008	$	751,770
2009		924,506
2010		199,356
2011		50,567
2012 and thereafter		80,746

Note 9) Commitments and Contingencies

Advanta Corp. is a member of Visa U.S.A. Inc. (“Visa USA”) and owns shares of Visa Inc. Class B common stock. Our membership in Visa USA and our ownership interest in Visa Inc. (“Visa”) are related primarily to our former consumer credit card business, which we exited in 1998. Visa completed its initial public offering in March 2008 and set aside $3 billion of the proceeds in a litigation escrow account to fund litigation judgments or settlements that have occurred or may occur related to specified litigation matters between Visa and third parties. Advanta Corp. and its subsidiaries are not named as defendants in the specified litigation matters. However, to the extent Visa’s litigation escrow is not sufficient to satisfy the specified litigation matters, the members of Visa USA to varying extents may be required to fund certain losses incurred by Visa in connection with those matters due to member indemnification provisions within Visa USA’s bylaws. In 2007, we recorded a $12.0 million reserve associated with our contingent obligation to Visa USA related to the specified litigation matters between Visa and third parties. In March 2008, we increased the reserve by $577 thousand based on increases in litigation reserves disclosed by Visa. Also in March 2008, we reduced the liability by $6.1 million for our proportionate share of the amounts funded by Visa in the litigation escrow. The $5.5 million net reduction in indemnification reserves is classified as a benefit to operating expenses in the six months ended June 30, 2008.

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In addition to the matters discussed above, Advanta Corp. and its subsidiaries are now and in the future may become subject to class action lawsuits and other litigation as well as legal, regulatory, administrative and other claims, investigations or proceedings arising in the ordinary course of business or discontinued operations. Management believes that the aggregate loss, if any, resulting from existing litigation and legal, regulatory, administrative and other claims, investigations or 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 existing matters after consultation with our attorneys. However, due to the inherent uncertainty in litigation and other claims, investigations and proceedings, and since the ultimate resolutions of these matters are influenced by factors outside of our control, it is reasonably possible that actual results will differ from our estimates.

Note 10) Capital Stock

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Class A Common Stock	$	0.1771	$	0.1771	$	0.3542	$	0.3188
Class B Common Stock		0.2125		0.2125		0.4250		0.3825

Note 11) Stock-Based Compensation

All nonvested shares and stock options outstanding in the reported periods were for Class B Common Stock.

Nonvested shares activity was as follows for the six months ended June 30, 2008:

				Weighted
				Average Price
	Number of			at Date of
	Shares			Issuance
Outstanding at January 1		1,098		$	19.35
Granted		3,224			7.94
Vested		(189	)		23.72
Forfeited		(45	)		22.16
Outstanding at June 30		4,088		$	10.12

In connection with our management incentive program covering potential bonus awards for performance year 2010, we granted 565 thousand nonvested shares of Class B Common Stock to employees in February 2008 and 176 thousand nonvested shares of Class B Common Stock to officers in May 2008.

We adopted a special restricted stock bonus program for eligible employees and certain of our officers as an additional retention tool. In April and May 2008, we granted 2.1 million nonvested shares of Class B Common Stock in connection with this program. The nonvested shares granted under this special incentive program will vest ten years from the date of grant unless vesting is accelerated on a discretionary basis. In no event will any nonvested shares be eligible for accelerated vesting prior to January 1, 2009.

Nonvested shares that vested during the six months ended June 30, 2008 had a total fair value of $1.7 million on the vesting date. Nonvested shares that vested during the same period of 2007 had a total fair value of $7.5 million on the vesting date. As of June 30, 2008, there was $26.3 million of total unrecognized

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compensation expense related to nonvested shares and we expect to recognize the expense over a weighted average period of 2.5 years.

Compensation expense and related tax effects recognized in connection with nonvested shares were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Compensation expense	$	3,398	$	1,542	$	4,480	$	2,833
Income tax benefit		1,573		586		1,782		1,093

Stock option activity was as follows for the six months ended June 30, 2008:

								Weighted
				Weighted				Average
				Average		Aggregate		Remaining
	Number of			Exercise		Intrinsic		Contractual
	Options			Price		Value		Life
Outstanding at January 1		7,782		$	14.11
Granted		1,811			9.06
Exercised		(3	)		5.35
Forfeited		(96	)		27.06
Outstanding at June 30		9,494		$	13.02	$	2,776	5.5 years
Options exercisable at June 30		5,987		$	10.05	$	2,776	3.4 years

The aggregate intrinsic value of stock options exercised was $8 thousand in the six months ended June 30, 2008 and $15.8 million in the same period of 2007. As of June 30, 2008, there was $11.9 million of total unrecognized compensation expense related to outstanding stock options and we expect to recognize the expense over a weighted average period of 2.4 years.

Compensation expense and related tax effects recognized in connection with employee stock options and the weighted average fair value of options granted were as follows:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2008		2007		2008		2007
Compensation expense	$	1,501	$	1,430	$	2,922	$	2,581
Income tax benefit		695		543		1,162		996
Weighted average fair value of options granted	$	2.00	$	9.69	$	1.96	$	9.85

The assumptions listed in the table below represent weighted averages of the assumptions used to estimate the fair value for each employee option grant using the Black-Scholes-Merton option-pricing model. The expected dividend yield is based on current dividend rates. If applicable, expected dividend yield also includes the expected impact of announced and anticipated changes in dividend rates based upon management’s expectations of future performance. There were no anticipated changes in dividend rates over the expected life of the options for options granted in 2008. The expected life of the options is estimated by reviewing historical data and considering the contractual life of the options and the vesting periods. Expected volatility is based on the historical volatility of our Class B Common Stock. The risk-free interest rate is based on the discount rate on a U.S. Treasury note of a similar duration to the expected life of the options.

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	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Expected life (in years)		5.4			5.7			5.3			5.7
Expected volatility		52.80	%		33.11	%		52.46	%		33.57	%
Risk-free interest rate		3.04	%		4.55	%		2.99	%		4.57	%
Expected dividend yield		9.24	%		4.86	%		9.35	%		4.86	%

Note 12) 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 June 30, 2008
Interest income	$	47,227	$	8,042	$	55,269
Interest expense		21,828		8,209		30,037
Noninterest revenues		93,983		340		94,323
Pretax income from continuing operations		7,474		2		7,476
Three months ended June 30, 2007
Interest income	$	38,655	$	8,903	$	47,558
Interest expense		13,149		10,484		23,633
Noninterest revenues		90,737		2,566		93,303
Pretax income from continuing operations		35,824		821		36,645
Six months ended June 30, 2008
Interest income	$	83,243	$	18,073	$	101,316
Interest expense		40,026		18,155		58,181
Noninterest revenues		190,184		13,796		203,980
Pretax income from continuing operations		18,257		18,909		37,166
Total assets at beginning of period		1,518,810		1,245,562		2,764,372
Total assets at end of period		1,405,657		1,889,377		3,295,034
Six months ended June 30, 2007
Interest income	$	79,204	$	16,709	$	95,913
Interest expense		26,455		19,740		46,195
Noninterest revenues		175,063		4,608		179,671
Pretax income from continuing operations		70,635		1,286		71,921
Total assets at beginning of period		1,495,544		917,594		2,413,138
Total assets at end of period		1,526,802		954,919		2,481,721

(1) Other includes investment and other activities not attributable to the Advanta Business Cards segment. In addition, pretax income in the six months ended June 30, 2008 includes a $13.4 million gain on the redemption of Visa Inc. shares and the benefit of a $5.5 million decrease in Visa indemnification reserves.

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Note 13) Income Taxes

Income tax expense and our effective tax rate were as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Income tax expense attributable to:
Continuing operations	$	3,461		$	13,933		$	14,789		$	27,761
Discontinued operations		0			643			0			643
Total income tax expense	$	3,461		$	14,576		$	14,789		$	28,404
Effective tax rate		46.3	%		38.0	%		39.8	%		38.6	%

Income tax expense attributable to continuing operations consisted of the following components:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008		2007
Current:
Federal	$	7,678		$	9,673		$	10,274	$	16,014
State		381			1,224			810		2,347
Total current		8,059			10,897			11,084		18,361
Deferred:
Federal		(4,587	)		3,065			3,668		9,361
State		(11	)		(29	)		37		39
Total deferred		(4,598	)		3,036			3,705		9,400
Income tax expense attributable to continuing operations	$	3,461		$	13,933		$	14,789	$	27,761

The reconciliation of the statutory federal income tax to income tax expense attributable to continuing operations is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008		2007
Statutory federal income tax	$	2,616		$	12,826		$	13,008	$	25,172
State income taxes, net of federal income tax benefit		405			1,047			703		1,981
Compensation limitation		299			256			398		437
Nondeductible expenses		512			(139	)		652		199
Other		(371	)		(57	)		28		(28	)
Income tax expense	$	3,461		$	13,933		$	14,789	$	27,761

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:

	June 30,			December 31,
	2008			2007
Deferred tax assets	$	57,343		$	62,351
Deferred tax liabilities		(21,730	)		(24,204	)
Net deferred tax asset	$	35,613		$	38,147

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

	June 30,			December 31,
	2008			2007
Deferred revenue	$	(14,574	)	$	(15,138	)
Rewards programs		14,388			13,775
Federal tax benefit of state tax positions		11,146			11,028
Receivable losses		6,719			8,506
Incentive and deferred compensation		6,693			6,169
Deferred origination costs, net of deferred fees		(4,621	)		(7,167	)
Visa indemnification		2,269			4,194
Securitization income		1,993			3,393
Unrealized venture capital investment losses		246			148
Capital loss carryforwards		0			4,248
Other		11,354			8,991
Net deferred tax asset	$	35,613		$	38,147

We adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109, (“FIN No. 48”) effective January 1, 2007, and as a result, recorded a $6.1 million reduction to the January 1, 2007 balance of retained earnings. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the six months ended June 30, 2008, excluding accrued interest and penalties, is as follows:

Balance at December 31, 2007	$	17,732
Additions based on tax positions related to the current year		462
Additions for tax positions of prior years		104
Reductions for tax positions of prior years		(1,061	)
Settlements		(114	)
Balance at June 30, 2008	$	17,123

Unrecognized tax benefits as of June 30, 2008, excluding accrued interest and penalties, were $17.1 million, of which $11.1 million, if recognized, would favorably affect our effective tax rate. The remaining $6.0 million represents the federal tax benefits of unrecognized state tax benefits that were recognized as a deferred tax asset.

For the six months ended June 30, 2008, income tax expense included interest of $946 thousand and penalties of $79 thousand. At June 30, 2008, the liability for unrecognized tax benefits included $14.7 million accrued for potential payment of interest and $7.9 million accrued for potential payment of penalties. Of the $22.6 million total of accrued interest and penalties included in the liability for unrecognized tax benefits at June 30, 2008, $17.5 million would favorably affect our effective tax rate to the extent the interest and penalties were not assessed. The remaining $5.1 million represents the federal tax benefits on accrued interest that were recognized as a deferred tax asset.

The liability for unrecognized tax benefits at June 30, 2008 included approximately $1.5 million related to tax positions for which it is reasonably possible that the total amounts could significantly change in the twelve months ending June 30, 2009. This amount represents a potential decrease in unrecognized tax benefits related to state tax settlements that may occur in that period and expiring state statutes of limitations.

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

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original transfer of assets to Fleet Credit Card Services, L.P. was not subject to income tax. As of June 30, 2008, 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.

Note 14) Discontinued Operations

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

	Three and Six Months Ended
	June 30, 2008				June 30, 2007
			Advanta					Advanta
	Advanta		Leasing		Advanta			Leasing
	Mortgage		Services		Mortgage			Services
Pretax gain on discontinuance of mortgage and leasing businesses	$	0	$	0	$	800		$	865
Income tax expense		0		0		(309	)		(334	)
Gain on discontinuance of mortgage, and leasing businesses, net of tax	$	0	$	0	$	491		$	531

The gain on discontinuance of the mortgage business for the three and six months ended June 30, 2007 represents a change in our estimates of the future costs of mortgage business-related contingent liabilities based on developments in litigation or disputes related to our former mortgage programs, insurance reimbursements related to past or future costs, or cash flows related to a former mortgage insurance product. The gain on discontinuance of the leasing business for the three and six months ended June 30, 2007 represents changes in estimated operating results of the leasing segment over the wind down period, including sales tax assessments or refunds, insurance reimbursements and operating expenses. We had no lease receivables outstanding in 2007 or 2008.

The gain on discontinuance of the mortgage business for the three and six months ended June 30, 2007, net of tax, per basic and diluted common share, was $0.01 for both Class A and Class B shares. The gain on discontinuance of the leasing business for the three and six months ended June 30, 2007, net of tax, per basic and diluted common share, was $0.01 for Class A and Class B shares.

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Note 15) Calculation of Earnings Per Share

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

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2008			2007			2008			2007
Income from continuing operations	$	4,015		$	22,712		$	22,377		$	44,160
Less: Preferred A dividends		0			0			(141	)		(141	)
Income from continuing operations available to common stockholders		4,015			22,712			22,236			44,019
Gain on discontinuance of mortgage and leasing businesses, net of tax		0			1,022			0			1,022
Net income available to common stockholders		4,015			23,734			22,236			45,041
Less: Class A dividends declared		(2,369	)		(2,396	)		(4,737	)		(4,276	)
Less: Class B dividends declared		(6,408	)		(6,165	)		(12,400	)		(11,108	)
Undistributed net income (loss)	$	(4,762	)	$	15,173		$	5,099		$	29,657
Basic income from continuing operations per common share
Class A	$	0.06		$	0.52		$	0.48		$	1.02
Class B		0.12			0.56			0.58			1.09
Combined(1)		0.10			0.55			0.55			1.07
Diluted income from continuing operations per common share
Class A	$	0.06		$	0.50		$	0.48		$	0.96
Class B		0.11			0.51			0.56			1.00
Combined(1)		0.10			0.51			0.53			0.99
Basic net income per common share
Class A	$	0.06		$	0.55		$	0.48		$	1.04
Class B		0.12			0.59			0.58			1.12
Combined(1)		0.10			0.57			0.55			1.09
Diluted net income per common share
Class A	$	0.06		$	0.52		$	0.48		$	0.99
Class B		0.11			0.54			0.56			1.02
Combined(1)		0.10			0.53			0.53			1.01
Basic weighted average common shares outstanding
Class A		13,380			13,331			13,374			13,324
Class B		27,142			28,039			27,082			27,887
Combined		40,522			41,370			40,456			41,211
Dilutive effect of
Options Class B		1,125			2,910			1,114			2,935
Nonvested shares Class B		362			394			240			436
Diluted weighted average common shares outstanding
Class A		13,380			13,331			13,374			13,324
Class B		28,629			31,343			28,436			31,258
Combined		42,009			44,674			41,810			44,582
Antidilutive shares
Options Class B		4,955			1,542			4,437			1,072
Nonvested shares Class B		1,566			0			1,401			0

(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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Note 16) Fair Value of Financial Instruments

Fair Value Hierarchy

SFAS No. 157 specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect our market assumptions. The level within the fair value hierarchy to measure the financial instrument shall be determined based on the lowest level input that is significant to the fair value measurement. The three levels of the fair-value hierarchy are as follows:

• Level 1 — Quoted prices for identical instruments in active markets accessible at the measurement date.

• Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and valuations in which all significant inputs are observable in active markets. Inputs are observable for substantially the full term of the financial instrument.

• Level 3 — Valuations derived from one or more significant inputs that are unobservable.

Determination of Fair Value

When available, we generally use quoted market prices to determine fair value and classify the financial instrument in Level 1. In cases where quoted market prices for similar financial instruments are available, we utilize these inputs for valuation techniques and classify the financial instrument in Level 2. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flows, present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument and we classify the financial instrument in Level 3.

Investments Available for Sale

Investments available for sale are valued using quoted market prices in active markets, when available, and classified as Level 1 of the fair value hierarchy. Level 1 investments available for sale include U.S. Treasury securities, certain equity securities and money market funds. Investments available for sale are classified as Level 2 of the fair value hierarchy if quoted market prices are not available and fair values are estimated using quoted prices of similar securities or recently executed transactions for the securities. Level 2 investments available for sale include government agency securities, state and municipal securities, credit card asset-backed securities and mortgage-backed securities issued by Federal National Mortgage Association and Federal Home Loan Mortgage Corp. The remaining mortgage and home equity line of credit-backed securities are valued based on external prices or spread data and are classified as Level 3 of the fair value hierarchy because of lack of observable data due to market inactivity. Venture capital equity investments are classified as Level 3 of the fair value hierarchy.

Retained Interests in Securitizations

We estimate the fair value of our retained interests in securitizations based on a discounted cash flow analysis if quoted market prices are not available. Quoted market prices were not available at June 30, 2008 or December 31, 2007. We

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estimate the cash flows of the retained interest-only strip as the excess of the interest yield on the pool of the receivables sold over the sum of the interest rate earned by noteholders, the servicing fee and future credit losses over the life of the existing receivables. We discount cash flows from the date the cash is expected to become available to us using an interest rate that management believes a third party purchaser would demand. See Note 6 for the assumptions used in the estimation of fair values of the retained interests in securitizations. Since the majority of the inputs for determining the fair value of the retained interests are unobservable, we classify this financial instrument as Level 3.

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Assets measured at fair value on a recurring basis at June 30, 2008 are categorized in the table below based upon the lowest level of significant input to the valuations. We had no liabilities measured at fair value at June 30, 2008.

	Quoted
	Prices in
	Active		Significant
	Markets for		Other		Significant
	Identical		Observable		Unobservable
	Instruments		Inputs		Inputs
	(Level 1)		(Level 2)		(Level 3)		Total
Investments available for sale:
U.S. Treasury and government agency securities	$	206,223	$	13,712	$	0	$	219,935
State and municipal securities		0		19,331		0		19,331
Asset-backed securities:
Credit card asset-backed securities		0		250,064		0		250,064
Mortgage and home equity line of credit-backed securities		0		4,056		24,647		28,703
Equity securities		7,437		0		265		7,702
Money market funds		163,458		0		0		163,458
Other		0		366		0		366
Retained interests in securitizations		0		0		228,450		228,450
Total assets measured at fair value	$	377,118	$	287,529	$	253,362	$	918,009

Changes in Level 3 Assets Measured at Fair Value on a Recurring Basis

	Asset-
	Backed			Retained Interests		Equity
	Securities			in Securitizations		Securities			Total
Fair value at January 1, 2008	$	33,989		$	213,077	$	413		$	247,479
Unrealized gain (loss)(1)		0			4,000		(2	)		3,998
Unrealized loss in other comprehensive income		(3,077	)		0		0			(3,077	)
Purchases, sales, issuances, settlement, net		(6,265	)		11,373		(146	)		4,962
Transfers in and/or out of Level 3		0			0		0			0
Fair value at June 30, 2008	$	24,647		$	228,450	$	265		$	253,362

(1) Unrealized gains or losses on retained interests in securitizations are included in securitization income on the consolidated income statements. Unrealized gains or losses on venture capital investments are included in other revenues on the consolidated income statements.

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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

Income from continuing operations includes the following business segment results:

	Three Months Ended				Six Months Ended
($ in thousands, except per share data)	June 30,				June 30,
	2008		2007		2008		2007
Pretax income:
Advanta Business Cards	$	7,474	$	35,824	$	18,257	$	70,635
Other(1)		2		821		18,909		1,286
Total pretax income		7,476		36,645		37,166		71,921
Income tax expense		3,461		13,933		14,789		27,761
Income from continuing operations	$	4,015	$	22,712	$	22,377	$	44,160
Per combined common share, assuming dilution	$	0.10	$	0.51	$	0.53	$	0.99

(1) The six months ended June 30, 2008 include a $13.4 million gain on the redemption of Visa Inc. shares and the benefit of a $5.5 million decrease in Visa indemnification reserves.

Our Advanta Business Cards segment issues (through Advanta Bank Corp.) business purpose credit cards to small businesses and business professionals in the United States. Our business credit card accounts provide approved customers with unsecured revolving business credit lines. The decreases in Advanta Business Cards pretax income for the three and six months ended June 30, 2008 as compared to the same periods of 2007 reflect the challenging economic environment and are due primarily to increases in net principal charge-off and delinquency rates on owned and securitized receivables and increases in operating expenses, partially offset by higher interest yields on owned and securitized receivables, lower off-balance sheet cost of funds rates, higher average securitized receivables and gains on sales of MasterCard Incorporated shares. Despite our focus on high credit quality customers, we had higher delinquency and net principal charge-off rates in the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to deterioration in the U.S. economy and, to a lesser extent, continued seasoning of the portfolio, and as a result, we had higher provisions for credit losses and lower securitization income. Based on the current economic environment, we expect these negative trends to continue to affect our provision for credit losses, securitization income and results of operations in future periods. Additionally, further deterioration in the U.S. economy could worsen these trends. The average yields earned on business credit card receivables increased due to our pricing and marketing strategies, the expiration of introductory pricing periods on many accounts originated in prior periods, and the lower level of new account originations. The average floating interest rates earned by securitization noteholders have decreased due to decreases in short-term market interest rates. Operating expenses have increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 as we have implemented initiatives to manage risk exposures in the current economic environment and to enhance our competitive position in the small business market when the economy improves.

Pretax income for the six months ended June 30, 2008 includes a $13.4 million gain on the redemption of Visa Inc. shares and the benefit of a $5.5 million decrease in Visa indemnification reserves. See “Contingencies” section of Management’s

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Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

There was no gain or loss on discontinuance of our mortgage or leasing businesses for the three or six months ended June 30, 2008. For the three and six months ended June 30, 2007, we recorded an after-tax gain on the discontinuance of our mortgage and leasing businesses of $1.0 million, or $0.02 per combined diluted common share. See “Discontinued Operations” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

In June 2008, FASB issued FSP No. EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities. The FSP concludes that unvested share-based payment awards that contain nonforfeitable rights to dividends are participating securities under SFAS No. 128, Earnings Per Share, and should be included in the computation of earnings per share under the two-class method. The two-class method is an earnings allocation formula that we currently use to determine earnings per share for our Class A and Class B Common Stock according to dividends declared and participation rights in undistributed earnings. The nonvested shares of Class B Common Stock issued under our stock-based incentive plan are participating securities with nonforfeitable rights to dividends. FSP No. EITF 03-6-1 is effective for Advanta on January 1, 2009 and management is currently evaluating the impact that the adoption will have on our reported earnings per share. The adoption is not expected to have an impact on our financial position or net income.

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, 2007.

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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				Six Months Ended
($ in thousands)	June 30,				June 30,
	2008		2007		2008		2007
Average owned receivables	$	1,164,748	$	1,248,235	$	1,081,939	$	1,266,466
Average securitized receivables	$	5,063,349	$	4,581,666	$	5,206,692	$	4,368,446
Customer transaction volume	$	3,471,711	$	3,692,780	$	6,909,824	$	7,081,845
New account originations		26,269		102,937		93,363		199,718
Average number of active accounts(1)		939,700		894,610		947,042		871,781
Ending number of accounts at June 30		1,305,288		1,255,557		1,305,288		1,255,557

(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 and six months ended June 30.

In response to the current economic conditions, we reduced mail volume in direct mail account acquisition campaigns in 2008 and as a result had fewer new account originations for the three and six months ended June 30, 2008 as compared to the same periods of 2007. Based on our currently planned marketing strategies and in continued response to current economic conditions, we expect to originate substantially fewer new accounts in 2008 as compared to 2007.

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

	Three Months Ended						Six Months Ended
($ in thousands)	June 30,						June 30,
	2008			2007			2008			2007
Net interest income on owned interest-earning assets	$	25,399		$	25,506		$	43,217		$	52,749
Noninterest revenues		93,983			90,737			190,184			175,063
Provision for credit losses		(30,295	)		(11,806	)		(58,677	)		(21,889	)
Operating expenses		(81,613	)		(68,613	)		(156,467	)		(135,288	)
Pretax income	$	7,474		$	35,824		$	18,257		$	70,635

Net interest income on owned interest-earning assets decreased $107 thousand for the three months ended June 30, 2008 as compared to the same period of 2007 and decreased $9.5 million for the six months ended June 30, 2008 as compared to the same period of 2007. The decreases were due primarily to decreases in average owned receivables and increases in interest expense, partially offset by increases in the average yields earned on receivables. Average owned business credit card receivables decreased $83 million for the three months ended June 30, 2008 and decreased $185 million for the six months ended June 30, 2008, both as compared to the same periods of 2007. The average yields earned on business credit card receivables increased due to our pricing and marketing strategies, the expiration of introductory pricing periods on many accounts originated in prior periods, and the lower level of new account originations. We have increased our liquidity in response to continued turmoil in the capital markets. Interest expense allocated to the Advanta Business Card segment increased for the three and six months ended

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June 30, 2008 as compared to the same periods of 2007 due to the costs of additional liquidity. In addition, net interest income in 2007 includes the benefit of deposit insurance credit sale gains of $940 thousand in the three months ended June 30, 2007 and $1.9 million in the six months ended June 30, 2007. For segment reporting purposes, these gains are included in the allocation of interest expense to Advanta Business Cards.

Noninterest revenues include securitization income, servicing revenues, interchange income and other revenues, and are reduced by rewards costs. Noninterest revenues increased $3.2 million for the three months ended June 30, 2008 as compared to the same period of 2007 and increased $15.1 million for the six months ended June 30, 2008 as compared to the same period of 2007. These increases were due primarily to investment gains on sales of MasterCard Incorporated shares of $14.2 million for the three months ended June 30, 2008 and $18.8 million for the six months ended June 30, 2008, higher merchandise sales transaction volume that resulted in higher interchange income, and increased volume of securitized receivables that resulted in higher servicing fees. These increases were partially offset by lower securitization income and higher rewards costs. Securitization income decreased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to increases in net principal charge-off and delinquency rates on securitized receivables and increases in discount rates resulting from the credit market environment, partially offset by increases in the average yields on securitized receivables, decreases in the average floating interest rates earned by noteholders due to decreases in short-term market interest rates, and growth in average securitized receivables.

The increases in provision for credit losses for the three months and six months ended June 30, 2008 as compared to the same periods of 2007 were due primarily to increases in delinquency and net principal charge-off rate trends, partially offset by a decrease in average owned business credit card receivables. The increases in delinquency and net principal charge-off rates are the result of deterioration in the U.S. economy and, to a lesser extent, continued seasoning 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 and six months ended June 30, 2008 increased as compared to the same periods of 2007 due primarily to expenses associated with our initiatives to manage risk exposures in the current economic environment and to enhance our competitive position in the small business market when the economy improves. These activities included marketing, profitability and receivable collection initiatives. In the first quarter of 2008, we decided to move forward with offshoring certain business processes, which we expect will result in significant operating expense savings related to those business processes by the latter part of 2009. We expect costs from current and planned marketing, profitability and collection initiatives, in combination with costs associated with the implementation of offshoring and other outsourcing activities, including severance and related costs associated with a reduction in workforce, to result in higher operating expenses in the third and fourth quarters of 2008 as compared to the second quarter of 2008 and the comparable periods of 2007.

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INTEREST INCOME AND EXPENSE

	Three Months Ended				Six Months Ended
($ in thousands)	June 30,				June 30,
	2008		2007		2008		2007
Interest income	$	55,269	$	47,558	$	101,316	$	95,913
Interest expense		30,037		23,633		58,181		46,195

Total interest income increased $7.7 million for the three months ended June 30, 2008 as compared to the same period of 2007 and $5.4 million for the six months ended June 30, 2008 as compared to the same period of 2007. The increases in total interest income were due primarily to increases in the average yield earned on our business credit card receivables, higher average balances of investments and increases in yields earned on retained interests in securitizations due to the credit market environment, partially offset by decreases in average business credit card receivables and average yields earned on our investments. The average yields earned on business credit card receivables increased due to our pricing and marketing strategies, the expiration of introductory pricing periods on many accounts originated in prior periods, and the lower level of new account originations. We expect the average yield earned on business credit card receivables to continue to increase in 2008 based on these same factors. The decreases in the average yields earned on our investments were due to the interest rate environment.

Total interest expense increased $6.4 million for the three months ended June 30, 2008 as compared to the same period of 2007 and increased $12.0 million for the six months ended June 30, 2008 as compared to the same period of 2007. The increases in total interest expense were due primarily to increases in our average deposits outstanding, partially offset by decreases in the average cost of funds on deposits resulting from the interest rate environment. Average deposits increased $692 million for the three months ended June 30, 2008 and $560 million for the six months ended June 30, 2008 as compared to the same periods of 2007.

The following tables provide 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 June 30,
	2008							2007
	Average				Average			Average				Average
($ in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Owned receivables:
Business credit cards(1)	$	1,164,748	$	37,662		13.01	%	$	1,248,235	$	33,976		10.92	%
Other receivables		7,739		88		4.55			7,567		94		5.02
Total receivables		1,172,487		37,750		12.95			1,255,802		34,070		10.88
Investments(2)		1,361,904		7,956		2.31			665,063		8,812		5.25
Retained interests in securitizations		217,629		9,565		17.58			228,231		4,679		8.20
Total interest-earning assets(3)		2,752,020	$	55,271		8.05	%		2,149,096	$	47,561		8.85	%
Noninterest-earning assets		463,773							302,064
Total assets	$	3,215,793						$	2,451,160
Interest-bearing liabilities:
Deposits	$	2,058,064	$	23,600		4.61	%	$	1,365,927	$	17,361		5.10	%
Debt		220,235		3,482		6.36			225,831		3,953		7.02
Subordinated debt payable to preferred securities trust		103,093		2,317		8.99			103,093		2,317		8.99
Other borrowings		26,543		638		9.51			110		2		5.27
Total interest-bearing liabilities		2,407,935	$	30,037		5.01	%		1,694,961	$	23,633		5.59	%
Noninterest-bearing liabilities		208,683							166,296
Total liabilities		2,616,618							1,861,257
Stockholders’ equity		599,175							589,903
Total liabilities and stockholders’ equity	$	3,215,793						$	2,451,160
Net interest spread						3.04	%						3.26	%
Net interest margin						3.69	%						4.47	%

(1)	Interest income includes late fees for owned business credit card receivables of $2.1 million for the three months ended June 30, 2008 and $2.3 million for the same period of 2007.
(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.

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	Six Months Ended June 30,
	2008							2007
	Average				Average			Average				Average
($ in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Owned receivables:
Business credit cards(1)	$	1,081,939	$	66,693		12.40	%	$	1,266,466	$	69,419		11.05	%
Other receivables		7,535		187		4.98			7,619		218		5.78
Total receivables		1,089,474		66,880		12.34			1,274,085		69,637		11.02
Investments(2)		1,283,034		17,890		2.76			630,508		16,494		5.21
Retained interests in securitizations		219,315		16,550		15.09			229,517		9,785		8.53
Total interest-earning assets(3)		2,591,823	$	101,320		7.83	%		2,134,110	$	95,916		9.04	%
Noninterest-earning assets		483,092							301,634
Total assets	$	3,074,915						$	2,435,744
Interest-bearing liabilities:
Deposits	$	1,914,739	$	45,519		4.78	%	$	1,355,056	$	33,898		5.04	%
Debt		217,955		6,923		6.39			226,661		7,660		6.81
Subordinated debt payable to preferred securities trust		103,093		4,634		8.99			103,093		4,634		8.99
Other borrowings		25,881		1,105		8.45			111		3		5.27
Total interest-bearing liabilities		2,261,668	$	58,181		5.17	%		1,684,921	$	46,195		5.52	%
Noninterest-bearing liabilities		218,033							169,151
Total liabilities		2,479,701							1,854,072
Stockholders’ equity		595,214							581,672
Total liabilities and stockholders’ equity	$	3,074,915						$	2,435,744
Net interest spread						2.66	%						3.52	%
Net interest margin						3.35	%						4.70	%

(1)	Interest income includes late fees for owned business credit card receivables of $3.9 million for the six months ended June 30, 2008 and $4.8 million for the same period of 2007.
(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.

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PROVISION AND ALLOWANCE FOR RECEIVABLE LOSSES

	Three Months Ended				Six Months Ended
($ in thousands)	June 30,				June 30,
	2008		2007		2008		2007
Provision for credit losses	$	30,327	$	11,806	$	58,709	$	21,889
Provision for interest and fee losses		6,057		2,581		10,418		5,027

Provision for credit losses on a consolidated basis increased $18.5 million for the three months ended June 30, 2008 as compared to the same period of 2007, and increased $36.8 million for the six months ended June 30, 2008 as compared to the same period of 2007. The provision for interest and fee losses increased $3.5 million for the three months ended June 30, 2008 as compared to the same period of 2007, and increased $5.4 million for the six months ended June 30, 2008 as compared to the same period of 2007. The increases in the provisions for both periods were due primarily to increases in delinquency and net principal charge-off rate trends, partially offset by a decrease in average owned business credit card receivables of $83 million for the three months ended June 30, 2008 and $185 million for the six months ended June 30, 2008 as compared to the same periods of 2007. The deterioration in credit performance is broad-based across industries, geographic regions and origination vintages in our receivable portfolio. The increasing delinquency and charge-off rates reflect deterioration in the U.S. economy and, to a lesser extent, continued seasoning of the portfolio. While we remain focused on initiatives to reduce credit losses to the extent possible in the current economic environment, additional deterioration in the U.S. economy could cause these trends to worsen.

The allowance for receivable losses on business credit card receivables was $84.6 million as of June 30, 2008, or 9.94% of owned receivables, which was higher as a percentage of owned receivables than the allowance of $67.4 million, or 6.53% of owned receivables, as of December 31, 2007. The increase in the allowance for receivable losses reflects an increase in the estimate of losses inherent in the portfolio based on increases in delinquent receivables as of June 30, 2008, recent trends in net principal charge-off rates, the economic environment and the current composition of the portfolio.

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

	June 30,			December 31,			June 30,
($ in thousands)	2008			2007			2007
Business Credit Cards — Owned
Allowance for receivable losses	$	84,611		$	67,368		$	52,525
Receivables 30 days or more delinquent		49,894			42,424			27,115
Receivables 90 days or more delinquent		25,001			19,204			13,466
Nonaccrual receivables		10,670			10,104			9,155
Accruing receivables past due 90 days or more		22,684			17,213			12,249
As a percentage of receivables:
Allowance for receivable losses		9.94	%		6.53	%		4.64	%
Receivables 30 days or more delinquent		5.86			4.11			2.39
Receivables 90 days or more delinquent		2.94			1.86			1.19
Nonaccrual receivables		1.25			0.98			0.81
Accruing receivables past due 90 days or more		2.67			1.67			1.08
Net principal charge-offs for the year-to-date period ended June 30 and December 31	$	42,125		$	41,589		$	19,339
Net principal charge-offs for the three months ended June 30 and December 31		25,819			11,542			9,556
As a percentage of average receivables (annualized):
Net principal charge-offs for the year-to-date period ended June 30 and December 31		7.79	%		3.39	%		3.05	%
Net principal charge-offs for the three months ended June 30 and December 31		8.87			3.96			3.06

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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. 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 estimates of future cash flows of interest income on securitized receivables in excess of interest expense (interest earned by noteholders), servicing fees and credit losses over the life of the existing securitized receivables.

Securitization income decreased $18.2 million to $4.6 million for the three months ended June 30, 2008 as compared to the same period of 2007 and decreased $24.7 million to $21.6 million for the six months ended June 30, 2008 as compared to the same period of 2007. The decreases in securitization income for both periods were due primarily to increases in net principal charge-off and delinquency rates on securitized receivables and increases in discount rates resulting from the credit market environment, partially offset by increases in the average yields on securitized receivables, decreases in the average floating interest rates earned by noteholders due to decreases in short-term market interest rates, and growth in average securitized receivables. The trends in net principal charge-off and delinquency rates on securitized receivables are similar to those on owned receivables described in the “Provision and Allowance for Receivable Losses” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. The trends and future expectations for yields on securitized receivables are similar to those described in the “Interest Income and Expense” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations. Securitization income includes a favorable valuation adjustment to retained interests in securitizations of $4.0 million for the six months ended June 30, 2008. The favorable valuation adjustment was due primarily to an increase in estimated cash flows from higher yields and lower interest rates earned by noteholders, partially offset by an increase in estimated future credit losses on securitized receivables and an increase in discount rates resulting from the credit market environment, each as compared to estimates as of December 31, 2007.

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 additional information useful in understanding the performance of the retained interests in securitizations.

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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 June 30, 2008
Net interest income	$	25,399		7.35	%	$	120,008		$	145,407		9.34	%
Provision for credit losses		30,295		8.77			104,638	(2)		134,933		8.67
Noninterest revenues		93,983		27.19			(15,370	)		78,613		5.05
Average business credit card interest-earning assets		1,382,377					4,845,720			6,228,097
Three months ended June 30, 2007
Net interest income	$	25,506		6.91	%	$	74,990		$	100,496		6.90	%
Provision for credit losses		11,806		3.20			41,115	(2)		52,921		3.63
Noninterest revenues		90,737		24.58			(33,875	)		56,862		3.90
Average business credit card interest-earning assets		1,476,466					4,353,435			5,829,901
Six months ended June 30, 2008
Net interest income	$	43,217		6.64	%	$	229,856		$	273,073		8.68	%
Provision for credit losses		58,677		9.02			186,391	(2)		245,068		7.79
Noninterest revenues		190,184		29.23			(43,465	)		146,719		4.67
Average business credit card interest-earning assets		1,301,254					4,987,377			6,288,631
Six months ended June 30, 2007
Net interest income	$	52,749		7.05	%	$	143,195		$	195,944		6.95	%
Provision for credit losses		21,889		2.93			76,197	(2)		98,086		3.48
Noninterest revenues		175,063		23.40			(66,998	)		108,065		3.84
Average business credit card interest-earning assets		1,495,983					4,138,929			5,634,912
As of June 30, 2008
Ending business credit card receivables	$	850,925				$	5,225,773		$	6,076,698
Receivables 30 days or more delinquent		49,894		5.86	%		294,432			344,326		5.67	%
Receivables 90 days or more delinquent		25,001		2.94			145,715			170,716		2.81
As of December 31, 2007
Ending business credit card receivables	$	1,031,607				$	5,315,421		$	6,347,028
Receivables 30 days or more delinquent		42,424		4.11	%		229,808			272,232		4.29	%
Receivables 90 days or more delinquent		19,204		1.86			105,577			124,781		1.97
As of June 30, 2007
Ending business credit card receivables	$	1,133,198				$	4,856,001		$	5,989,199
Receivables 30 days or more delinquent		27,115		2.39	%		136,468			163,583		2.73	%
Receivables 90 days or more delinquent		13,466		1.19			68,424			81,890		1.37

(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, a favorable valuation adjustment to retained interests in securitizations of $4.0 million in the six months ended June 30, 2008 is included as a decrease to provision for credit losses.

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SERVICING REVENUES

Servicing revenues were as follows:

($ in thousands)	2008		2007
Three months ended June 30	$	24,365	$	22,541
Six months ended June 30		50,457		42,917

The increases in servicing revenues for the three and six months ended June 30, 2008 as compared to the same periods of 2007 were due to increased volume of securitized business credit card receivables.

OTHER REVENUES

	Three Months Ended						Six Months Ended
($ in thousands)	June 30,						June 30,
	2008			2007			2008			2007
Interchange income	$	70,627		$	62,130		$	136,275		$	117,364
Cash back rewards		(16,082	)		(15,346	)		(30,665	)		(28,746	)
Business rewards		(6,944	)		(6,007	)		(13,526	)		(11,939	)
Investment securities gains, net		14,315			1,355			32,328			2,345
Balance transfer and cash usage fees		1,858			3,182			4,864			6,144
Other business credit card fees		1,196			1,127			2,105			2,352
Other, net		380			1,555			537			2,957
Total other revenues, net	$	65,350		$	47,996		$	131,918		$	90,477

Interchange income includes interchange fees on both owned and securitized business credit cards. The increase in interchange income for the three and six months ended June 30, 2008 as compared to the same periods of 2007 was due to higher merchandise sales transaction volume and an increase in the average interchange rate resulting from an increase in certain interchange rates established by MasterCard Incorporated in October 2007. The average interchange rate was 2.3% for the three and six months ended June 30, 2008 as compared to 2.2% for the same periods of 2007.

The increases in cash back rewards and business rewards for the three and six months ended June 30, 2008 as compared to the same periods of 2007 were due primarily to higher merchandise sales transaction volume, partially offset by lower average program costs. Business rewards costs in both periods were also impacted by changes in estimates of costs of future business reward redemptions based on changes in experience 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 June 30, 2008 as compared to $1.1 million for the three months ended June 30, 2007. Changes in estimates increased other revenues $700 thousand for the six months ended June 30, 2008 as compared to $1.5 million for the six months ended June 30, 2007.

Investment securities gains for the three months ended June 30, 2008 include a $14.2 million realized gain on the sale of MasterCard Incorporated shares. Investment securities gains for the six months ended June 30, 2008 include $18.8 million of realized gains on sales of MasterCard Incorporated shares and a $13.4 million realized gain on the redemption of Visa Inc. shares. As of June 30, 2008, we own 27 thousand MasterCard Incorporated Class B common shares and 497 thousand Visa Inc. Class B common shares, all of which have zero cost basis and no book value. Investment securities gains, net, also include realized and unrealized gains and losses on venture capital investments, when applicable, reflecting the market conditions for those investments in each respective period. There were no gains or losses on venture capital investments for the three or six

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months ended June 30, 2008. We had a net gain of $818 thousand on venture capital investments for the three months ended June 30, 2007 and a net gain of $1.3 million on venture capital investments for the six months ended June 30, 2007.

The decreases in balance transfer and cash usage fees for the three and six months ended June 30, 2008 as compared to the same periods of 2007 were due primarily to decreases in balance transfer volume and a lower number of cash transactions, as well as lower averages of owned receivables. The decreases in balance transfer and cash transaction volume resulted from our initiatives to manage risk exposure including fewer new account originations, lower credit lines assigned at origination and lower promotional activities. These impacts were partially offset by an increase in the fees charged for balance transfers and cash usage in the three and six months ended June 30, 2008 as compared to the same periods of 2007.

In 2007, our bank subsidiaries sold Federal Deposit Insurance Corporation deposit insurance assessment credits to third-party banks. Other revenues included gains of $940 thousand in the three months ended June 30, 2007 and $1.9 million in the six months ended June 30, 2007 related to these sales.

OPERATING EXPENSES

	Three Months Ended				Six Months Ended
($ in thousands)	June 30,				June 30,
	2008		2007		2008			2007
Salaries and employee benefits	$	31,118	$	26,246	$	59,646		$	52,344
Amortization of deferred origination costs, net		9,247		12,852		20,191			25,719
External processing		9,220		7,007		17,465			13,707
Marketing		8,165		4,075		13,401			7,310
Professional fees		6,058		2,978		11,649			6,883
Equipment		3,729		2,730		6,961			5,325
Credit		3,425		1,157		5,452			2,447
Occupancy		2,578		2,343		5,049			4,645
Fraud		1,525		2,217		3,557			3,685
Postage		1,522		1,531		3,129			2,925
Visa indemnification		0		0		(5,501	)		0
Other		5,165		5,641		10,241			10,589
Total operating expenses	$	81,752	$	68,777	$	151,240		$	135,579

Salaries and employee benefits increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to higher stock-based compensation expense and personnel hires related to marketing, profitability and receivable collection initiatives. Stock-based compensation expense increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to nonvested shares granted in the second quarter of 2008 in connection with a new special restricted stock bonus program that was created as an additional retention tool to promote stability in our senior management team given the challenging economic climate, the changing credit dynamics and the decline in our stock price.

In July 2008, we commenced a reduction of workforce in connection with initiatives to outsource business processes within the areas of information technology, customer service, collections, and accounting and finance. We expect to incur expenses of approximately $6.0 million to $6.5 million related to severance and related costs as the affected employees are notified. The reduction of workforce will be phased in over time and is expected to be substantially complete by April 2009. In connection with the outsourcing initiatives, we expect to significantly reduce the operating costs related to these business processes by the latter part of 2009.

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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, decreased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to decreases in the number of new account originations. In contrast, marketing expenses not paid to third parties to acquire business credit card accounts increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to costs incurred related to initiatives to enhance our competitive position and to test new product offerings in the small business market.

External processing expense increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to lower incentives earned related to lower receivable and account growth rates. The increase in external processing expense also reflects additional offshore processing costs.

Professional fees increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to the use of external consultants in connection with profitability, marketing and receivable collection initiatives.

Equipment expense increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due primarily to license fees, maintenance costs and amortization of software used in connection with marketing and profitability initiatives.

Credit expense increased for the three and six months ended June 30, 2008 as compared to the same periods of 2007 due to the increased use of third parties as part of our receivable collection initiatives.

In the six months ended June 30, 2008, we released a net amount of $5.5 million from our Visa indemnification reserve as a result of litigation escrow amounts funded by Visa in connection with their initial public offering.

CONTINGENCIES

Advanta Corp. is a member of Visa USA and owns shares of Visa Inc. Class B common stock. Our membership in Visa USA and our ownership interest in Visa are related primarily to our former consumer credit card business, which we exited in 1998. Visa completed its initial public offering in March 2008 and set aside $3 billion of the proceeds in a litigation escrow account to fund litigation judgments or settlements that have occurred or may occur related to specified litigation matters between Visa and third parties. Advanta Corp. and its subsidiaries are not named as defendants in the specified litigation matters. However, to the extent Visa’s litigation escrow is not sufficient to satisfy the specified litigation matters, the members of Visa USA to varying extents may be required to fund certain losses incurred by Visa in connection with those matters due to member indemnification provisions within Visa USA’s bylaws. In 2007, we recorded a $12.0 million reserve associated with our contingent obligation to Visa USA related to the specified litigation matters between Visa and third parties. In March 2008, we increased the reserve by $577 thousand based on increases in litigation reserves disclosed by Visa. Also in March 2008, we reduced the liability by $6.1 million for our proportionate share of the amounts funded by Visa in the litigation escrow. The $5.5 million net reduction in indemnification reserves is classified as a benefit to operating expenses in the six months ended June 30, 2008.

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In addition to the matters discussed above, Advanta Corp. and its subsidiaries are now and in the future may become subject to class action lawsuits and other litigation as well as legal, regulatory, administrative and other claims, investigations or proceedings arising in the ordinary course of business or discontinued operations. Management believes that the aggregate loss, if any, resulting from existing litigation and legal, regulatory, administrative and other claims, investigations or 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 existing matters after consultation with our attorneys. However, due to the inherent uncertainty in litigation and other claims, investigations and proceedings, and since the ultimate resolutions of these matters are influenced by factors outside of our control, it is reasonably possible that actual results will differ from our estimates.

INCOME TAXES

Income tax expense attributable to continuing operations was as follows:

	Three Months Ended						Six Months Ended
($ in thousands)	June 30,						June 30,
	2008			2007			2008			2007
Income tax expense	$	3,461		$	13,933		$	14,789		$	27,761
Effective tax rate		46.3	%		38.0	%		39.8	%		38.6	%

Our effective tax rate for the six months ended June 30, 2008 was higher than the rate for the same period of 2007 due to lower estimated full year pretax income without a corresponding decrease in levels of nondeductible expenses, partially offset by favorable settlements and changes in judgment associated with prior period uncertain tax positions. The full year 2008 effective tax rate excluding the impact of those changes is 43.3%. Income tax expense for the three months ended June 30, 2008 was impacted by an increase in our estimated effective tax rate for the full year 2008 as compared to our estimate at March 31, 2008.

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 June 30, 2008, 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.

DISCONTINUED OPERATIONS

There was no gain or loss on discontinuance of our mortgage or leasing businesses for the three or six months ended June 30, 2008. For the three and six months ended June 30, 2007, we recorded an $800 thousand pretax gain on discontinuance of our mortgage business representing a favorable change in estimate in an experience refund related to a former mortgage insurance product, partially offset by an increase in estimates of legal expenses on mortgage business-related contingent liabilities. We recorded a pretax gain on discontinuance of our leasing business of $865 thousand for the three and six months ended June 30, 2007 representing changes in estimated leasing operating results of the leasing segment over the wind down period. The largest components of the change in estimate in 2007 were favorable results relating to insurance reimbursements, sales tax assessments, credit recoveries and operating expenses.

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OFF-BALANCE SHEET ARRANGEMENTS

We have traditionally used off-balance sheet business credit card securitizations for a significant portion of our funding and as one of our primary sources of liquidity. Our credit risk in the off-balance sheet securitized receivables is limited to the amount of our retained interests in securitizations. We had off-balance sheet securitized receivables of $4.8 billion at June 30, 2008 and $5.2 billion at December 31, 2007. We hold certain securitized receivables on-balance sheet in the form of subordinated trust assets and Class A notes. Subordinated trust assets represent our ownership interest in the securitized receivables that is subordinated to the other noteholders’ interests. Subordinated trust assets are a component of retained interests in securitizations and are classified as accounts receivable from securitizations on the consolidated balance sheets. Class A notes issued in our 2008 securitizations were purchased by one of our bank subsidiaries and are classified as investments available for sale on the consolidated balance sheet.

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

	Three Months Ended				Six Months Ended
($ in thousands)	June 30,				June 30,
	2008		2007		2008		2007
Average securitized receivables	$	5,063,349	$	4,581,666	$	5,206,692	$	4,368,446
Securitization income		4,608		22,766		21,605		46,277
Discount accretion		9,565		4,679		16,550		9,785
Interchange income		57,799		49,207		113,244		91,621
Servicing revenues		24,365		22,541		50,457		42,917
Proceeds from new securitizations(1)		193,325		398,682		318,025		756,340
Proceeds from collections reinvested in revolving-period securitizations		2,581,177		2,681,748		5,133,254		5,065,732
Cash flows received on retained interests(2)		112,651		79,731		192,586		164,487

(1)	Amounts reported for the three and six months ended June 30, 2008 exclude $250 million related to notes issued in our AdvantaSeries 2008-A1 and AdvantaSeries 2008-A3 securitizations that were purchased by one of our bank subsidiaries and are classified as investments available for sale on the consolidated balance sheet.
(2)	Amounts reported for the three and six months ended June 30, 2008 exclude $389 thousand of interest on AdvantaSeries 2008-A1 and AdvantaSeries 2008-A3 notes that is classified as interest income on the consolidated income statement.

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 June 30, 2008 and December 31, 2007 and for the three and six months ended June 30, 2008 and 2007.

In the six months ended June 30, 2008, we completed the following business credit card securitizations.

	Noteholder
	Principal		Coupon	Scheduled End of
($ in thousands)	Balance		Type	Revolving Period
AdvantaSeries:
2008-A1	$	125,000	Floating	January 31, 2009
2008-A2		122,000	Fixed	January 31, 2009
2008-A3		150,000	Floating	May 31, 2009

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At June 30, 2008, off-balance sheet securitized receivables represented 61% of our funding as compared to 67% at December 31, 2007. Based on market conditions for asset-backed securities and as part of our liquidity management and funding diversification strategies, we chose to have one of our bank subsidiaries purchase Class A notes issued in our securitizations in the three months ended June 30, 2008 including $100 million of the AdvantaSeries 2008-A1 notes and $150 million of the AdvantaSeries 2008-A3 notes. Since these notes are held on-balance sheet, they did not provide funding and they are not a component of off-balance sheet securitized receivables. We also chose to use deposit funding instead of securitizations for certain funding needs in the six months ended June 30, 2008. The combination of these strategies resulted in a decrease in the percentage of our funding from off-balance sheet securitized receivables as of June 30, 2008 as compared to December 31, 2007. The $250 million of AdvantaSeries Class A notes could be used as collateral for potential future borrowings from the Federal Reserve Discount Window. These notes are classified as investments available for sale on the consolidated balance sheet.

The following securitizations had noteholder principal payment dates in the six months ended June 30, 2008:

	Noteholder		End of Revolving	Noteholder
($ in thousands)	Principal Balance		Period	Payment Date
Series 2001-A	$	300,000	January 2008	April 2008
AdvantaSeries:
2005-A4		150,000	December 2007	February 2008
2005-A1		250,000	March 2008	May 2008
2005-D1		20,000	April 2008	June 2008

When a securitization is in its revolving period, principal collections on securitized receivables allocated to that securitization are used to purchase new receivables to replenish the noteholders’ interest in receivables that have been repaid. In contrast, when a securitization starts its accumulation period, principal collections are held in the trust until the payment date of the notes. As principal is collected on securitized receivables during an accumulation period of a securitization, we need to replace that amount of funding.

The following securitizations are expected to end their revolving periods in 2008:

	Noteholder		Expected End of	Expected Noteholder
($ in thousands)	Principal Balance		Revolving Period	Payment Date
AdvantaSeries:
2005-C1	$	100,000	July 2008	September 2008
2005-A3		250,000	September 2008	November 2008
2006-A2		250,000	December 2008	February 2009

We expect to assess our funding needs and replace the funding of the accumulating securitizations, if necessary, with our choice of existing liquidity, additional deposit funding or additional securitizations. If we choose not to securitize, we may have a decline in our level of cash and liquid investments; however, we would expect to continue to have a strong liquidity position. If we choose to securitize, the AdvantaSeries de-linked securitization structure provides us with the flexibility to issue different classes of asset-backed securities with varying maturities, sizes, and terms based on our funding needs and prevailing market conditions. Based on current unfavorable market conditions, we expect that any notes issued in connection with new securitizations would have interest rate spreads to index rates less favorable to us than our existing securitizations.

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Our Series 1997-A securitization represents a $200 million committed commercial paper conduit facility available through June 2009 that provides off-balance sheet funding and was fully utilized at June 30, 2008. Our Series 2007-A securitization represents a $150 million committed commercial paper conduit facility available through January 2009 that provides off-balance sheet funding, of which $142.7 million was used at June 30, 2008. Upon expiration of these facilities, management expects to obtain the appropriate level of replacement funding under similar terms and conditions.

Recently the FASB has been considering substantial revisions to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, that, if adopted, could result in certain off-balance sheet securitized receivables being consolidated on our balance sheets. It is not clear, however, whether amendments ultimately will be adopted by the FASB, what form they will take and how they will be implemented if adopted, how regulatory authorities will respond, or how our financial position or results of operations may be affected. The FASB plans to issue a proposed exposure draft in the third quarter of 2008. Management is monitoring this FASB project and will evaluate any potential impact of the final statement when it is available.

See “Contingencies” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for a discussion of our contingent indemnification obligation related to Advanta Corp.’s membership in Visa USA.

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:

	June 30,			December 31,
	2008			2007
Estimated percentage increase (decrease) in net interest income on owned assets:
Assuming 200 basis point increase		24	%		20	%
Assuming 200 basis point decrease		(20	)%		(16	)%
Estimated percentage increase (decrease) in net interest income on securitized receivables:
Assuming 200 basis point increase		(8	)%		(11	)%
Assuming 200 basis point decrease		12	%		15	%
Estimated percentage increase (decrease) in net interest income on managed assets:
Assuming 200 basis point increase		(3	)%		(7	)%
Assuming 200 basis point decrease		7	%		11	%

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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 June 30, 2008 as compared to the results as of December 31, 2007. Based on receivable pricing strategies we plan to implement in the third and fourth quarters of 2008, we expect the results of similar sensitivity analyses in those quarters will indicate increases in net interest income for both managed and owned assets in scenarios that assume a 200 basis point increase in interest rates.

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 economic environment, the composition of the receivables 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.

LIQUIDITY, CAPITAL RESOURCES AND ANALYSIS OF FINANCIAL CONDITION

At June 30, 2008, we had a high level of liquidity including $87.2 million of cash and $1.1 billion of federal funds sold. At June 30, 2008, we also had receivables held for sale and investments available for sale that could be sold to generate additional liquidity.

At June 30, 2008, we had $100 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. In July 2007, we established a master repurchase agreement using these subordinated trust assets as collateral to facilitate future borrowings. There were no borrowings in connection with this agreement as of June 30, 2008.

Investments available for sale at fair value totaled $689.6 million at June 30, 2008 and $223.5 million at December 31, 2007. The investment portfolio includes mortgage and home equity line of credit-backed securities with an amortized cost of $34.7 million and gross unrealized losses of $6.0 million at June 30, 2008 as compared to amortized cost of $40.2 million and gross unrealized losses of $2.9 million at December 31, 2007. Our investments in mortgage and home equity line of credit-backed securities represent a small portion of our overall liquidity position described above. The fair values of our investments in mortgage and home equity line of credit-backed securities declined in the second half of 2007 and again in 2008 due to the difficulties in the subprime mortgage industry that created turmoil in the capital markets. The declines in the fair values were not deemed to be other than temporary impairments at June 30, 2008 based upon the length of time and the extent to which the fair value has been less than cost, the underlying credit rating of the securities, anticipated volatility in the market, and our intent and ability to retain the investments for a period of time sufficient to allow for recovery in fair value, which may be maturity.

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As shown on the consolidated statements of cash flows, our operating activities used $3.6 million of cash in the six months ended June 30, 2008 due primarily to the increase in receivables held for sale in excess of proceeds from receivables sold in the period, cash used to fund growth in accounts receivable in securitizations related to securitizations in accumulation periods, operating expenses, interest expense and costs of rewards programs. These cash outflows were partially offset by excess spread and servicing revenues related to securitized receivables, interchange income, and interest and fee income on owned receivables. For the six months ended June 30, 2007, our operating activities generated $228.5 million of cash 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. We expect to fund continuing operations with some combination of existing liquidity, deposits, other borrowings or off-balance sheet securitized receivables, 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 and investments.

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:

	June 30, 2008					December 31, 2007
($ in thousands)	Amount		%			Amount		%
Off-balance sheet securitized receivables(1)	$	4,820,022		61	%	$	5,173,404		67	%
Deposits		2,098,689		27			1,651,737		21
Debt		226,427		3			220,848		3
Other borrowings		25,000		0			25,000		0
Subordinated debt payable to preferred securities trust		103,093		1			103,093		1
Equity		595,804		8			585,781		8
Total	$	7,869,035		100	%	$	7,759,863		100	%

(1) Excludes our ownership interest in the noteholder principal balance of securitizations that are held on-balance sheet.

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

In the six months ended June 30, 2008, we chose to use deposit funding instead of off-balance sheet securitized receivables for certain funding needs due to unfavorable market conditions for asset-backed securities. In addition, we increased our level of deposit funding to generate additional liquidity in response to continued turmoil in the capital markets and to fund higher levels of on-balance sheet assets resulting from securitizations in their accumulation periods in the first and second quarters of 2008. This additional liquidity was held in federal funds sold and investments available for sale at June 30, 2008.

There were $119.4 million of owned business credit card receivables at a nonbank subsidiary at June 30, 2008. We have a $75 million secured borrowing agreement committed through April 2009 that uses these business credit card receivables as

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collateral. At June 30, 2008, $25 million was borrowed in connection with this agreement.

Our bank subsidiaries are eligible to borrow from the Federal Reserve’s Discount Window. Such borrowings would have a term of up to 90 days and would be secured by receivables or investments. We may choose to use Discount Window borrowings at Advanta Bank Corp. as an alternative short-term funding source in future periods.

Advanta Corp. and its subsidiaries are now and in the future may become subject to class action lawsuits and other litigation as well as legal, regulatory, administrative and other claims, investigations or proceedings arising in the ordinary course of business or discontinued operations. Management believes that the aggregate loss, if any, resulting from existing litigation and legal, regulatory, administrative and other claims, investigations or proceedings, will not have a material adverse effect on our liquidity or capital resources based on our current expectations regarding the ultimate resolutions of existing matters after consultation with our attorneys. However, due to the inherent uncertainty in litigation and other proceedings, and since the ultimate resolutions of our litigation and other claims, investigations and proceedings are influenced by factors outside of our control, it is reasonably possible that the estimated cash flow related to these matters may change or that actual results will differ from our estimates.

Our bank subsidiaries are subject to regulatory capital requirements and other regulatory provisions that restrict their ability to lend and/or pay dividends to Advanta Corp. and its affiliates. Advanta Bank Corp. issues and funds the majority of our business purpose credit cards. Advanta Bank Corp. paid $10 million of dividends to Advanta Corp. in the six months ended June 30, 2008. At June 30, 2008, Advanta Bank Corp.’s combined total capital ratio (combined Tier I and Tier II capital to risk-weighted assets) was 23.00% as compared to 22.66% at December 31, 2007. 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. The operations of our other bank subsidiary, Advanta Bank, 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.

VALUATION OF FINANCIAL INSTRUMENTS

Effective January 1, 2008, we adopted SFAS No. 157, Fair Value Measurements, for all financial assets and liabilities and for nonfinancial assets and liabilities measured at fair value on a recurring basis. 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 based on whether the inputs to those valuation techniques are observable or unobservable, and requires new disclosures of assets and liabilities measured at fair value based on their level in the hierarchy. The initial adoption of SFAS No. 157 did not have a material impact on our financial position or results of operations. There are no material assets or liabilities recognized or disclosed at fair value for which we have not applied the provisions of SFAS No. 157.

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When available, we generally use quoted market prices to determine fair value and classify the financial instrument in Level 1. In cases where quoted market prices for similar financial instruments are available, we utilize these inputs for valuation techniques and classify the financial instrument in Level 2. In cases where quoted market prices are not available, fair values are based on estimates using discounted cash flows, present value or other valuation techniques for those assets. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows. Financial instruments for which unobservable inputs are significant to their fair value measurement are classified as Level 3 in the fair value hierarchy. Level 3 assets include certain investments in asset-backed securities and retained interests in securitizations.

At June 30, 2008, we had $24.6 million of asset-backed securities, $228.5 million of retained interests in securitizations and $265 thousand of equity securities classified as Level 3 assets. Level 3 asset-backed securities represented 4% of investments available for sale and 3% of total assets measured at fair value as of June 30, 2008. See “Liquidity, Capital Resources and Analysis of Financial Condition” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations for discussion of the nature of our investments in asset-backed securities and changes in their fair values. Retained interests in securitizations represented 25% of total assets measured at fair value as of June 30, 2008. Changes in the fair value of retained interests in securitization are classified as securitization income on the consolidated income statements. Due to the materiality of securitizations to our operating results, management considers securitization income to be one of our most critical accounting policies and estimates. See further discussion of securitization income accounting policies and estimates in our Annual Report on Form 10-K for the year ended December 31, 2007. Also see “Securitization Income” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Form 10-Q for discussion of valuation adjustments to retained interests in securitizations for the three and six months ended June 30, 2008.

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

We have included or incorporated by reference in this Quarterly Report on Form 10-Q statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of 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 earnings per share, anticipated growth in receivables outstanding and credit card accounts; interest yields; expected cost of funds; anticipated employment growth; the expected level of new account acquisitions, customer spending and account attrition; anticipated payment rates of outstanding receivables; anticipated marketing and other operating expenses; estimated values of and anticipated cash flows from our retained interests in securitizations; industry trends; our need and ability to replace existing credit facilities and securitization financing when they expire or terminate with appropriate levels of funding; the value of investments that we hold; anticipated delinquencies and charge-offs; income tax uncertainties; realizability of net deferred tax asset; expected levels of liquidity and capital; the expected results of our offshoring, pricing, marketing and other initiatives; anticipated outcomes and effects of litigation and other claims, investigations and proceedings; and other future expectations of Advanta.

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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 any forward looking statement provided by us is not a guarantee of future performance and actual results may be materially different from those in the forward-looking information. In addition, future results could be materially different from historical performance. 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, including the impact of the disruption in the capital markets, the deterioration of the U.S. economy and potential for further deterioration and disruption, that affect the level of new account originations, customer spending, delinquencies, charge-offs, and other results of operations;
(4)	factors affecting fluctuations in the number of accounts or receivable balances, including the retention of customers after promotional pricing periods have expired, changes in terms on their accounts, or changes in programs or product offerings;
(5)	interest rate and credit spread fluctuations;
(6)	factors affecting our level of costs and expenses, including those associated with the implementation of our offshoring initiatives such as the effects of changes in severance and related costs, changes in the timing for completion of our planned workforce reduction and other difficulties associated with the implementation of our offshoring initiatives due to, among other things, disruption in our business and operational delays associated with new systems, processes and changes in personnel;
(7)	funding decisions and the potential timing of the securitizations of our receivables;
(8)	government regulation, including the effects of restrictions and limitations imposed by banking laws, regulators, and examinations and the effects of, and changes in, statutes, the level of regulatory scrutiny, regulatory requirements or regulatory policies, guidance, interpretations and initiatives, including mandatory and possible discretionary actions by federal and state regulators;

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(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 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 and 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 and legal, regulatory, administrative or other claims, investigations or proceedings 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.

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 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

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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 concluded that, as of June 30, 2008, 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.

PART II — OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are now and in the future may become subject to class action lawsuits and other litigation as well as legal, regulatory, administrative and other claims, investigations or proceedings arising in the ordinary course of business or discontinued operations. See Note 9 of the Notes to Consolidated Financial Statements set forth in “Item 1. Financial Statements” in Part I of this 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, 2007.

ITEM 1A. RISK FACTORS

Information regarding risks that may affect our future performance are discussed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation — CAUTIONARY STATEMENT PURSUANT TO THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995” in Part I of this report and in our other filings with the Securities and Exchange Commission. Except for the risk factors set forth below, 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, 2007.

Legislative, regulatory and other legal developments may affect our business operations and ability to generate new accounts. Banking, finance and insurance businesses, in general, and banks, including industrial loan banks such as Advanta Bank Corp., are the subject of extensive regulation at the state and federal levels. Numerous legislative and regulatory proposals are advanced each year which, if adopted, could affect our profitability or the manner in which we conduct our activities.

The credit card industry is also highly regulated by federal and state laws. These laws affect how loans are made, enforced and collected. The federal and state legislatures may pass new laws, or may amend existing laws, to regulate further the credit card industry or to reduce finance charges or other fees applicable to credit card accounts. Changes in laws or regulations, as well as changes in the marketplace, economic and political environments and prudent business practices, could make it more difficult for us to enforce or change the terms of our existing business credit card accounts or to collect business credit card receivables. Any of the foregoing could decrease our income and profitability.

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In recent years certain industry groups and consumers have expressed concerns about interchange rates related to Visa^® and MasterCard^® credit and debit transactions and about increases in the interchange rates. In some countries, regulators have taken actions to challenge or reduce interchange rates and certain other fees that banks charge on transactions. While there is no specific imminent regulatory action pending to restrict interchange rates in the United States, interchange rates have also been the topic of increased Congressional and regulatory interest. Also in the United States, several suits have been filed by various merchants alleging that the establishment of interchange rates violates the antitrust laws. Any restriction on or reduction in interchange rates would reduce the amount of interchange paid to us and could have an adverse effect upon our results of operations and financial position.

Federal and state legislatures as well as government regulatory agencies are considering increased regulation of credit cards through legislative and regulatory initiatives that could impact our business, such as proposals related to enhanced credit scoring disclosure, interchange rates, defaults, billing practices, account repricing, penalty pricing, payment hierarchy, minimum monthly payments and other aspects of credit card lending, marketing and operations. There are other legislative and regulatory initiatives and proposals under discussion or consideration that could impact our business, including the manner in which we conduct and fund our business, such as changes in regulations governing unfair and deceptive acts and practices and proposals dealing with data security, notification of customers in the event of data breach, identity theft and the securitization of credit card receivables and other loans. It is possible that if any versions of these proposals were to become effective they could impact our business and, accordingly, could make compliance more difficult and expensive and could negatively affect our operating results and the manner in which we conduct our business.

Changes to statutes, regulations or regulatory policies, guidance or interpretations could adversely affect us, including by limiting the types of products and services we may offer and the amounts of finance charge rates or other fees we may charge. It is impossible to determine the extent of the impact of any new laws, regulations or initiatives that may be proposed, or whether any of the federal or state proposals will become law. For further discussion, see “Item 1. Business— Government Regulation” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Changes in accounting may affect our reported earnings and results of operations. U.S. generally accepted accounting principles and accompanying accounting pronouncements, implementation guidelines, interpretations and practices for many aspects of our business are complex and involve subjective judgments, such as accounting for the allowance for receivable losses, securitization income, rewards programs and income taxes. Changes in these estimates or changes in other accounting rules and principles, or their interpretation, could significantly change our reported earnings and operating results, and could add significant volatility to those measures. For further discussion see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations —Critical Accounting Policies and Estimates” and Note 2 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

Recently the FASB has been considering substantial revisions to SFAS No. 140, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities, and FASB Interpretation No. 46(R), Consolidation of Variable Interest Entities, (“FIN No. 46R”). We sell business credit card receivables in securitization transactions using a securitization trust that is a

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qualifying special purpose entity (“QSPE”) under SFAS No. 140, and therefore, the assets and liabilities of the trust are not consolidated as part of our consolidated financial statements under GAAP.

Potential changes include the elimination of the QSPE concept from GAAP, but the FASB has not formally issued proposed amendments to SFAS No. 140 or FIN No. 46R. If the QSPE concept is eliminated, our securitization structure will have to be evaluated under FIN No. 46R for potential consolidation. The FASB will issue its proposed amendments for public comment and, based upon public comments received and other considerations, may revise the amendments before issuing final guidance. Although we cannot at this time predict the content of the proposed or final amendments, we may lose sale accounting treatment for previous and future securitization transactions and we may be required to consolidate the assets and liabilities of the trust, which would materially affect our consolidated balance sheets.

It is not clear, however, whether amendments ultimately will be adopted by the FASB, what form they will take and how they will be implemented if adopted, how regulatory authorities will respond, or how our financial position or results of operations may be affected. There can be no assurance that amendments could not result in additional capital requirements for Advanta Bank Corp. For the reasons discussed above, if future guidance from FASB impacts the accounting treatment of our securitizations, it could materially adversely affect our financial condition, reserve requirements, capital requirements, liquidity, cost of funds and operations.

Our strategic, contractual and other relationships with third parties expose us to risks that may disrupt our business operations and adversely affect our results of operations and financial condition. We rely on third parties to provide services that are critically important to our business credit card business. For example, we rely on third parties to perform certain administrative functions associated with servicing our business credit card accounts, and to supply credit scores and other credit-related data and information about our potential and existing customers. In addition, from time to time we partner or contract with, invest in or enter into other relationships with third parties to establish relationships that are necessary for us to conduct our business or are intended to benefit our business operations and financial condition, including outsourcing and other initiatives to enhance our productivity and operational efficiency.

These arrangements with third parties expose us to a number of risks, such as the following:

• If any third party providing services critical to our business were to fail or become insolvent, or if we were unable to renew expiring agreements with such parties on mutually acceptable terms, our business operations, results of operations and financial condition could be adversely impacted.

• To the extent these third party relationships involve or depend on the transfer of knowledge related to our business for their success, we may be exposed to risks associated with misappropriation or misuse of intellectual property or confidential information, including information that is proprietary to us or to our customers.

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• If the third parties do not perform as anticipated or if they default on their obligations, we may not realize the intended benefits of these relationships, including the expected productivity, cost or expense improvements.

• In the event of a default or termination, our agreements with third parties may take an extended period of time to unwind or resolve and, under certain circumstances such as early termination, may require us to pay substantial termination fees, which could adversely affect our business operations, results of operations and financial condition.

• If our relationships with third parties include indemnification provisions or obligations, we may be required, under specified circumstances, to indemnify the other parties for certain losses they incur in connection with the products or services they provide to us. In the event we are obligated to make payments to third parties under indemnification or other obligations for losses of third parties, it could adversely affect our results of operation and financial condition. For further discussion see Note 11 to the consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 2007.

• If our relationship is with a third party located outside of the United States, we may be exposed to international economic, political and other risks that could adversely affect our business, including, instability in international political and economic conditions, different intellectual property laws and protections and difficulty in administering and enforcing our policies and procedures in a foreign country, any of which could adversely affect our results of operations and financial condition.

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

(a) Advanta Corp. held its Annual Meeting of Stockholders on June 11, 2008.

(b) The directors whose terms continued after the meeting who were not elected at the meeting are: Dennis Alter, Dana Becker Dunn, Olaf Olafsson, William A. Rosoff and Michael Stolper.

(c)	The following proposals were submitted to a vote of stockholders.
	The election of three directors to hold office until the 2011 Annual Meeting of Stockholders.

NOMINEES	VOTES FOR		VOTES WITHHELD
Max Botel		8,115,388		3,907,141
Thomas P. Costello		10,941,247		1,081,282
Ronald Lubner		8,383,238		3,639,291

The proposal to ratify the appointment by the Board of Directors of KPMG LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2008:

FOR	AGAINST		ABSTAIN		BROKER NON-VOTES
11,751,458		30,356		240,715		0

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ITEM 6. EXHIBITS

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

Exhibit
Number	Description of Document
10.1	Master Services Agreement by and between Advanta Bank Corp. and Genpact International LLC, Hungarian Branch, dated March 15, 2007, and amendments (Portions of this exhibit have been omitted pursuant to a confidential treatment request and this information has been filed separately with the SEC).
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

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Advanta Corp.
	(Registrant)
By	/s/ Philip M. Browne
Senior Vice President and
Chief Financial Officer
August 8, 2008
By	/s/ David B. Weinstock
Vice President and
Chief Accounting Officer
August 8, 2008

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     EXHIBIT INDEX

		Manner of
Exhibit	Description	Filing
10.1	Master Services Agreement by and between Advanta Bank Corp. and Genpact International LLC, Hungarian Branch, dated March 15, 2007, and amendments (Portions of this exhibit have been omitted pursuant to a confidential treatment request and this information has been filed separately with the SEC).	*
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.

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