Despite the Negative Earnings Impact of the Economy, Higher Liquidity and Strong Capital Ratios Continue in the Fourth Quarter

SPRING HOUSE, Pa.--(BUSINESS WIRE)--January 29, 2009--Advanta Corp. (NASDAQ: ADVNB; ADVNA) today reported a full year 2008 net loss of $43.8 million or $1.08 per diluted share for Class A and Class B shares combined. Reflecting the impact of an eroding economy, the Company’s 2008 results included $86.2 million pretax, or $1.37 per share after tax, of balance sheet charges and reserve build associated with worsening credit trends and wider market credit spreads. Through this year of challenging economic events, the Company has increased its cash and liquid investments to $2.6 billion dollars at year end and has strong capital levels.

Specific to the fourth quarter of 2008, the Company incurred a net loss of $46.9 million or $1.16 per combined diluted share. These results include $47.8 million pretax, or $0.77 per share after tax, of balance sheet charges and reserve build.

The Company also announced that it is taking actions in response to the continued economic downturn.

The Board of Directors has approved a reduction in the Company’s regular quarterly cash dividends. The new rates will apply to its next dividend declaration. As a result of this action, future quarterly dividends declared for its Class A Common Stock will decrease from 17.71 cents to 2 cents per share and future quarterly dividends declared for its Class B Common Stock will decrease from 21.25 cents to 2.5 cents per share.

In addition, the Company is taking steps to significantly reduce operating expenses to a level that is more commensurate with its anticipated portfolio size and scale of business activities in 2009. Cost reductions will result from actions such as slowing marketing activities, structuring the organization to be more efficient and reducing staffing levels beyond those previously announced related to its offshoring initiative. Flowing from this, the Company will have approximately 300 fewer employees and operating expenses for 2009 are expected to be between 20% and 25% lower than those reported for 2008.

Advanta management will hold a conference call with analysts and institutional investors today, January 29, at 9:00 a.m. Eastern Time, to review the fourth quarter and full year results for 2008. The call can be accessed by dialing 877-857-6173 and referring to confirmation code 4034997. At the same time, the call will be webcast via a Vcall link on Advanta’s website or at www.investorcalendar.com. Those interested in listening to the webcast should go to the website at least ten minutes before the call to register and download any necessary software. Beginning at about 11:00 this morning, a replay of the call will be available on the Internet at the same sites as the original webcast. The conference call may include a discussion of non-GAAP financial measures, which are reconciled to the most directly comparable GAAP financial measures in the Company’s press releases or the statistical supplements also available on the Company’s website.

Advanta is one of the nation’s largest credit card issuers (through Advanta Bank Corp.) in the small business market today. Advanta’s exclusive focus on this market as well as its size, experience, and commitment to developing meaningful product offerings and a high level of service tailored to the needs of small businesses differentiates the company from other issuers. Founded in 1951, Advanta has long been an innovator in developing and introducing many of the marketing techniques that are common in the financial services industry today. Learn more about Advanta at www.advanta.com.

This Press Release contains forward-looking statements that are subject to certain risks and uncertainties that could cause actual results to differ from those projected. The most significant of these risks and uncertainties are: (1) political conditions, social conditions, monetary and fiscal policies and general economic and other environmental conditions, including the impact of the ongoing disruption in the capital markets and deterioration of the U.S. economy, as well as the potential for further deterioration and disruption, and the impact of these factors on the level of new account originations, customer spending, delinquencies, charge-offs, the value of and ability to realize expected returns on its investments, and other results of operations; (2) 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; (3) interest rate and credit spread fluctuations; (4) factors affecting its level of costs and expenses; including difficulties achieving expected operating cost reductions due to, among other things, operational delays associated with new systems and processes, changes in personnel, changes in timing for our plans for implementation of our outsourcing initiatives and changes in the estimated timing for completion of a reduction in workforce; (5) factors affecting its level of liquidity, including funding decisions, the potential timing of the securitizations of its receivables and its ability to monetize its investments; (6) government regulation of banking and finance businesses, including the effects of and changes in the level of scrutiny, regulatory requirements and regulatory initiatives, certain mandatory and possibly discretionary action by state and federal regulators, restrictions and limitations imposed by banking laws, regulators, examinations and reviews, and the effects of, and changes in, regulatory policies, guidance, interpretations and initiatives and agreements between the Company and its regulators; (7) effect of legal and regulatory developments relating to the legality of certain business methods, practices and policies of credit card issuers and the ultimate resolution of industry-related judicial proceedings relating to the legality of certain interchange rates; (8) the amount and cost of financing available to it; (9) the ratings on the debt of Advanta Corp. and its subsidiaries; and (10) 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. Additional risks that may affect the Company’s future performance are detailed in the Company’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and its Quarterly Reports on Form 10-Q.

In addition to the GAAP results provided throughout this document, the Company has provided managed receivable data and other non−GAAP financial measurements. Management believes that the non-GAAP financial measures used to manage the business may provide users additional useful information. The tables attached to this press release include a reconciliation of these non-GAAP financial measures to the most directly comparable GAAP financial measures and a description of why the non-GAAP financial measures are useful to investors.

ADVANTA
SEGMENT INCOME STATEMENT - QUARTER
(in thousands)

Three Months Ended
December 31, 2008

		Advanta
		Business
		Cards			Other (A)			Total
Interest income	$	36,870		$	9,315		$	46,185
Interest expense		21,920			10,631			32,551
Net interest income		14,950			(1,316	)		13,634
Provision for credit losses		35,476			9			35,485
Net interest loss after provision for credit losses		(20,526	)		(1,325	)		(21,851	)
Noninterest revenues:
Interchange income		60,304			0			60,304
Securitization income (loss)		(31,862	)		0			(31,862	)
Servicing revenues		22,458			0			22,458
Business credit card rewards		(21,195	)		0			(21,195	)
Other revenues, net		2,059			1,459			3,518
Total noninterest revenues		31,764			1,459			33,223
Operating expenses		81,157			(2,115	)		79,042
Income (loss) before income taxes	$	(69,919	)	$	2,249			(67,670	)
Income tax benefit								(20,728	)
Net loss							$	(46,942	)


Three Months Ended
December 31, 2007

		Advanta
		Business
		Cards			Other (A)			Total
Interest income	$	38,945		$	10,829		$	49,774
Interest expense		14,983			12,547			27,530
Net interest income		23,962			(1,718	)		22,244
Provision for credit losses		21,587			(35	)		21,552
Net interest income (loss) after provision for credit losses		2,375			(1,683	)		692
Noninterest revenues:
Interchange income		69,346			0			69,346
Securitization income		10,375			0			10,375
Servicing revenues		25,258			0			25,258
Business credit card rewards		(22,495	)		0			(22,495	)
Other revenues, net		8,149			1,768			9,917
Total noninterest revenues		90,633			1,768			92,401
Operating expenses		73,140			7,924			81,064
Income (loss) before income taxes	$	19,868		$	(7,839	)		12,029
Income tax expense								4,643
Net income							$	7,386

ADVANTA
SEGMENT INCOME STATEMENT - YEAR-TO-DATE
(in thousands)

Twelve Months Ended
December 31, 2008

		Advanta
		Business
		Cards			Other (A)			Total
Interest income	$	160,475		$	38,035		$	198,510
Interest expense		80,247			39,226			119,473
Net interest income		80,228			(1,191	)		79,037
Provision for credit losses		123,154			34			123,188
Net interest loss after provision for credit losses		(42,926	)		(1,225	)		(44,151	)
Noninterest revenues:
Interchange income		264,401			0			264,401
Securitization income (loss)		(18,930	)		0			(18,930	)
Servicing revenues		97,398			0			97,398
Business credit card rewards		(103,683	)		0			(103,683	)
Other revenues, net		35,834			15,219			51,053
Total noninterest revenues		275,020			15,219			290,239
Operating expenses		317,784			(5,565	)		312,219
Income (loss) before income taxes	$	(85,690	)	$	19,559			(66,131	)
Income tax benefit								(22,308	)
Net loss							$	(43,823	)


Twelve Months Ended
December 31, 2007

		Advanta
		Business
		Cards			Other (A)			Total
Interest income	$	157,255		$	38,392		$	195,647
Interest expense		54,922			44,409			99,331
Net interest income		102,333			(6,017	)		96,316
Provision for credit losses		58,200			(35	)		58,165
Net interest income (loss) after provision for credit losses		44,133			(5,982	)		38,151
Noninterest revenues:
Interchange income		249,481			0			249,481
Securitization income		79,040			0			79,040
Servicing revenues		92,393			0			92,393
Business credit card rewards		(86,705	)		0			(86,705	)
Other revenues, net		24,582			7,706			32,288
Total noninterest revenues		358,791			7,706			366,497
Operating expenses		276,439			12,529			288,968
Income (loss) before income taxes	$	126,485		$	(10,805	)		115,680
Income tax expense								44,652
Income from continuing operations								71,028
Gain on discontinuance of mortgage and leasing businesses, net of tax								1,022
Net income							$	72,050

ADVANTA
EARNINGS AND COMMON STOCK DATA
(in thousands, except per share data)

		Three Months Ended										Percent Change From							Twelve Months Ended
	Dec. 31,				Sept. 30,				Dec. 31,			Prior			Prior			Dec. 31,			Dec. 31,			Percent
		2008				2008				2007		Quarter			Year				2008			2007		Change
Basic income (loss) from continuing operations per common share:
Class A	$	(1.19	)		$	(0.51	)		$	0.15		133.3		%	N/M			$	(1.23	)	$	1.61		N/M
Class B		(1.14	)			(0.45	)			0.20		153.3			N/M				(1.01	)		1.78		N/M
Combined (A)		(1.16	)			(0.47	)			0.18		146.8			N/M				(1.08	)		1.73		N/M
Diluted income (loss) from continuing operations per common share:
Class A	$	(1.19	)		$	(0.51	)		$	0.15		133.3		%	N/M			$	(1.23	)	$	1.55		N/M
Class B		(1.14	)			(0.45	)			0.18		153.3			N/M				(1.01	)		1.64		N/M
Combined (A)		(1.16	)			(0.47	)			0.17		146.8			N/M				(1.08	)		1.61		N/M
Basic net income (loss) per common share:
Class A	$	(1.19	)		$	(0.51	)		$	0.15		133.3		%	N/M			$	(1.23	)	$	1.64		N/M
Class B		(1.14	)			(0.45	)			0.20		153.3			N/M				(1.01	)		1.81		N/M
Combined (A)		(1.16	)			(0.47	)			0.18		146.8			N/M				(1.08	)		1.75		N/M
Diluted net income (loss) per common share:
Class A	$	(1.19	)		$	(0.51	)		$	0.15		133.3		%	N/M			$	(1.23	)	$	1.57		N/M
Class B		(1.14	)			(0.45	)			0.18		153.3			N/M				(1.01	)		1.66		N/M
Combined (A)		(1.16	)			(0.47	)			0.17		146.8			N/M				(1.08	)		1.63		N/M

Return on average common equity (annualized)		(34.70	)	%		(13.15	)	%		4.98	%	163.9		%	N/M				(7.61	)	%	12.24	%	N/M

Weighted average common shares used to compute:
Basic earnings (loss) per common share
Class A		13,405				13,393				13,356		0.1		%	0.4		%		13,387			13,337		0.4		%
Class B		27,225				27,217				27,149		0.0			0.3				27,151			27,679		(1.9	)
Total		40,630				40,610				40,505		0.0			0.3				40,538			41,016		(1.2	)
Diluted earnings (loss) per common share
Class A		13,405				13,393				13,356		0.1		%	0.4		%		13,387			13,337		0.4		%
Class B		27,225				27,217				29,396		0.0			(7.4	)			27,151			30,664		(11.5	)
Total		40,630				40,610				42,752		0.0			(5.0	)			40,538			44,001		(7.9	)

Ending shares outstanding:
Class A		14,410				14,410				14,410		0.0		%	0.0		%
Class B		31,213				31,144				28,055		0.2			11.3
Total		45,623				45,554				42,465		0.2			7.4

Stock price:
Class A
High	$	5.09			$	7.80			$	26.45		(34.7	)	%	(80.8	)	%	$	9.36		$	31.47		(70.3	)	%
Low		1.10				4.00				6.93		(72.5	)		(84.1	)			1.10			6.93		(84.1	)
Closing		1.16				4.93				7.30		(76.5	)		(84.1	)			1.16			7.30		(84.1	)
Class B
High	$	8.65			$	10.24			$	29.95		(15.5	)	%	(71.1	)	%	$	10.63		$	34.51		(69.2	)	%
Low		1.58				6.01				7.84		(73.7	)		(79.8	)			1.58			7.84		(79.8	)
Closing		2.09				8.23				8.07		(74.6	)		(74.1	)			2.09			8.07		(74.1	)

Cash dividends declared:
Class A	$	0.1771			$	0.1771			$	0.1771		0.0		%	0.0		%	$	0.7084		$	0.6730		5.3		%
Class B		0.2125				0.2125				0.2125		0.0			0.0				0.8500			0.8075		5.3

Book value per common share	$	12.26			$	13.75			$	14.40		(10.8	)	%	(14.9	)	%

ADVANTA
BALANCE SHEET
(in thousands)

			As of
			Dec. 31,			Dec. 31,
			2008			2007
	ASSETS

	Cash	$	31,716		$	90,228
	Federal funds sold		32,277			872,587
	Interest-bearing deposits		1,595,138			0
	Investments available for sale		977,245			223,500
	Receivables, net		414,844			990,668
	Accounts receivable from securitizations		301,118			349,581
	Premises and equipment, net		16,762			16,893
	Other assets		215,945			220,915
	Total assets	$	3,585,045		$	2,764,372

	LIABILITIES AND STOCKHOLDERS' EQUITY

	Deposits	$	2,541,406		$	1,651,737
	Debt		206,598			220,848
	Other borrowings		50,000			25,000
	Subordinated debt payable to preferred securities trust		103,093			103,093
	Other liabilities		176,587			177,913
	Total liabilities		3,077,684			2,178,591

	Stockholders' equity		507,361			585,781

	Total liabilities and stockholders' equity	$	3,585,045		$	2,764,372

	Ratio of equity to owned assets		14.15	%		21.19	%
	Ratio of equity and subordinated debt payable to preferred securities trust to owned assets		17.03	%		24.92	%
	Ratio of equity to managed assets (A)		6.57	%		7.38	%
	Ratio of equity and subordinated debt payable to preferred securities trust to managed assets (A)		7.90	%		8.68	%

	Ratio of equity to owned business credit card receivables		100.35	%		56.78	%
	Ratio of equity and subordinated debt payable to preferred securities trust to owned business credit card receivables		120.74	%		66.78	%
	Ratio of equity to managed business credit card receivables (A)		10.11	%		9.23	%
	Ratio of equity and subordinated debt payable to preferred securities trust to managed business credit card receivables (A)		12.17	%		10.85	%

	MANAGED ASSETS (A)
	Total on-balance sheet assets (GAAP)	$	3,585,045		$	2,764,372
	Off-balance sheet securitized receivables (B)		4,140,595			5,173,404
	Managed assets	$	7,725,640		$	7,937,776

____________________
(A)		Managed asset and managed receivable statistics are non-GAAP financial measures. Management believes that managed assets and managed receivables and the related ratios provide useful supplemental information because our on-balance sheet assets include retained interests in securitizations that serve as credit enhancement to the noteholders' interests in the securitized receivables.
(B)		Includes off-balance sheet business credit card receivables. Excludes our ownership interest in the noteholder principal balance of securitizations that are held on-balance sheet.

ADVANTA
ADVANTA BUSINESS CARDS STATISTICS
($ in thousands)

	Three Months Ended									Percent Change From
		Dec. 31,			Sept. 30,			Dec. 31,		Prior		Prior
		2008			2008			2007		Quarter		Year
New account originations		15,312			18,581			61,234		(17.6)	%	(75.0)	%
Average number of active accounts (A)		839,105			897,138			952,557		(6.5)		(11.9)
Ending number of accounts		1,048,363			1,206,580			1,316,523		(13.1)		(20.4)
Customer transaction volume:
Merchandise sales	$	2,599,639		$	2,940,685		$	3,019,122		(11.6)		(13.9)
Balance transfers		90,347			97,304			346,484		(7.1)		(73.9)
Cash usage		194,986			249,489			389,714		(21.8)		(50.0)
Total customer transaction volume		2,884,972			3,287,478			3,755,320		(12.2)		(23.2)
Securitization volume increase (decrease)
excluding replenishment sales	$	(364,390)		$	(369,902)		$	330,000		(1.5)		N/M
Average receivables:
Owned	$	684,034		$	858,331		$	1,164,704		(20.3)		(41.3)
Securitized		4,630,859			5,030,299			5,148,195		(7.9)		(10.0)
Managed (B)		5,314,893			5,888,630			6,312,899		(9.7)		(15.8)
Ending receivables:
Owned	$	505,578		$	726,652		$	1,031,607		(30.4)		(51.0)
Securitized		4,511,650			4,863,634			5,315,421		(7.2)		(15.1)
Managed (B)		5,017,228			5,590,286			6,347,028		(10.3)		(21.0)
Operating expense ratio (C)		6.11	%		5.45	%		4.63	%	12.1		32.0

CREDIT QUALITY - OWNED
Receivables 30 days or more delinquent	$	52,997		$	51,661		$	42,424
Receivables 90 days or more delinquent		24,132			24,531			19,204
As a percentage of receivables:
Receivables 30 days or more delinquent		10.48	%		7.11	%		4.11	%	47.4	%	155.0	%
Receivables 90 days or more delinquent		4.77			3.38			1.86		41.1		156.5
Net principal charge-offs:
Amount	$	24,092		$	22,839		$	11,542
As a percentage of average
receivables (annualized)		14.09	%		10.64	%		3.96	%	32.4		255.8

CREDIT QUALITY - SECURITIZED
Receivables 30 days or more delinquent	$	425,271		$	314,740		$	229,808
Receivables 90 days or more delinquent		188,424			148,182			105,577
As a percentage of receivables:
Receivables 30 days or more delinquent		9.43	%		6.47	%		4.32	%	45.7	%	118.3	%
Receivables 90 days or more delinquent		4.18			3.05			1.99		37.0		110.1
Net principal charge-offs:
Amount	$	135,270		$	124,303		$	53,572
As a percentage of average
receivables (annualized)		11.68	%		9.88	%		4.16	%	18.2		180.8

CREDIT QUALITY - MANAGED (B)
Receivables 30 days or more delinquent	$	478,268		$	366,401		$	272,232
Receivables 90 days or more delinquent		212,556			172,713			124,781
As a percentage of receivables:
Receivables 30 days or more delinquent		9.53	%		6.55	%		4.29	%	45.5	%	122.1	%
Receivables 90 days or more delinquent		4.24			3.09			1.97		37.2		115.2
Net principal charge-offs:
Amount	$	159,362		$	147,142		$	65,114
As a percentage of average receivables (annualized)		11.99	%		10.00	%		4.13	%	19.9		190.3

____________________
(A)		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 periods presented.
(B)		Managed statistics are non-GAAP financial measures and represent the sum of owned (GAAP) business credit card statistics and securitized business credit card statistics. 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.
(C)		Operating expense ratio is annualized and calculated as a percentage of average owned and securitized receivables.
N/M - Not Meaningful

ADVANTA
RECONCILIATION OF MANAGED FINANCIAL MEASURES AND RATIOS
(in thousands)

In addition to evaluating the financial performance of the Advanta Business Cards segment under U.S. generally accepted accounting principles (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. Risk-adjusted revenues represent net interest income and noninterest revenues, less provision for credit losses. Management uses risk-adjusted revenues as a basis for monitoring the risk-based return on the portfolio and components of our portfolio. Generally, based on risk-based pricing strategies, customers with higher credit losses should have higher revenues. We believe the measure is useful to investors as a measure of our ability to appropriately price for the risk of the portfolio by demonstrating the relationship between revenues and credit losses in one concise measure.

		Three Months Ended
		December 31, 2008
		Advanta								Advanta
		Business Cards				Securitization				Business Cards
		GAAP				Adjustments				Managed
Net interest income	$	14,950			$	150,454			$	165,404
Average business credit card interest-earning assets		849,454				4,465,439				5,314,893
Ratio (A)		7.04		%						12.45		%

Provision for credit losses	$	35,476			$	171,707		(B)	$	207,183
Average business credit card interest-earning assets		849,454				4,465,439				5,314,893
Ratio (A)		16.71		%						15.59		%

Noninterest revenues	$	31,764			$	21,253			$	53,017
Average business credit card interest-earning assets		849,454				4,465,439				5,314,893
Ratio (A)		14.96		%						3.99		%

Risk-adjusted revenues (C)	$	11,238			$	0			$	11,238
Average business credit card interest-earning assets		849,454				4,465,439				5,314,893
Ratio (A)		5.29		%						0.85		%

Pretax loss	$	(69,919	)		$	0			$	(69,919	)
Average business credit card interest-earning assets		849,454				4,465,439				5,314,893
Ratio (A)		(32.92	)	%						(5.26	)	%

		Three Months Ended
		December 31, 2007
		Advanta								Advanta
		Business Cards				Securitization				Business Cards
		GAAP				Adjustments				Managed
Net interest income	$	23,962			$	90,823			$	114,785
Average business credit card interest-earning assets		1,392,748				4,920,151				6,312,899
Ratio (A)		6.88		%						7.27		%

Provision for credit losses	$	21,587			$	70,764		(B)	$	92,351
Average business credit card interest-earning assets		1,392,748				4,920,151				6,312,899
Ratio (A)		6.20		%						5.85		%

Noninterest revenues	$	90,633			$	(20,059	)		$	70,574
Average business credit card interest-earning assets		1,392,748				4,920,151				6,312,899
Ratio (A)		26.03		%						4.47		%

Risk-adjusted revenues (C)	$	93,008			$	0			$	93,008
Average business credit card interest-earning assets		1,392,748				4,920,151				6,312,899
Ratio (A)		26.71		%						5.89		%

Pretax income	$	19,868			$	0			$	19,868
Average business credit card interest-earning assets		1,392,748				4,920,151				6,312,899
Ratio (A)		5.71		%						1.26		%

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(A)		Ratios are annualized and calculated as a percentage of average business credit card interest-earning assets.
(B)		Includes the amount by which 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, provision for credit losses includes unfavorable valuation adjustments to retained interests in securitizations of $36.4 million for the three months ended December 31, 2008 and $17.2 million for the three months ended December 31, 2007.
(C)		Risk-adjusted revenues represent net interest income and noninterest revenues, less provision for credit losses.

CONTACT:
Advanta Corp.
Amy B. Holderer
Vice President, Investor Relations
(215) 444-5335
aholderer@advanta.com
or
David M. Goodman
Vice President, Communications
(215) 444-5073
dgoodman@advanta.com

____________________
(A)		Other includes investment and other activities not attributable to the Advanta Business Cards segment. In addition, operating expenses in the three months ended December 31, 2008 include the benefit of a $2.2 million decrease in Visa indemnification reserves. Operating expenses in the three months ended December 31, 2007 include $7.8 million of charges associated with a contingent obligation to indemnify Visa Inc. for certain litigation matters.

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(A)		Combined represents income (loss) allocable to common stockholders divided by the combined total of Class A and Class B weighted average common shares outstanding.
N/M - Not Meaningful