Advanta 10Q 2007 Q2 Quarterly report

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, 2007


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. Yesþ Noo

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

Large accelerated filerþ Accelerated filero Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yeso Noþ

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.

Yeso Noo

Applicable only to corporate issuers:

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


Class A		Outstanding at August 2, 2007
Common Stock, $.01 par value		14,410,133 shares
Class B		Outstanding at August 2, 2007
Common Stock, $.01 par value		29,043,498 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		22

Item 3. Quantitative and Qualitative Disclosures About Market Risk		42

Item 4. Controls and Procedures		42

PART II-OTHER INFORMATION		42

Item 1. Legal Proceedings		42

Item 1A. Risk Factors		42

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		43

Item 4. Submission of Matters to a Vote of Security Holders		44

Item 6. Exhibits		45

Exhibit Index		47
COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES
CERTIFICATION OF CEO PURSUANT TO SECTION 302
CERTIFICATION OF CFO PURSUANT TO SECTION 302
CERTIFICATION OF CEO PURSUANT TO SECTION 906
CERTIFICATION OF CFO PURSUANT TO SECTION 906

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)	2007			2006

ASSETS
Cash	$	53,847		$	35,055
Federal funds sold		548,907			547,631
Restricted interest-bearing deposits		364			1,211
Investments available for sale		243,898			197,477
Receivables, net:
Held for sale		444,642			568,456
Other		668,908			546,553
Other
Total receivables, net		1,113,550			1,115,009
Accounts receivable from securitizations		344,166			334,486
Premises and equipment, net		18,060			16,715
Other assets		158,929			165,554

Total assets	$	2,481,721		$	2,413,138

LIABILITIES
Deposits	$	1,393,769		$	1,365,138
Debt		225,082			227,126
Subordinated debt payable to preferred securities trust		103,093			103,093
Other liabilities		160,567			150,620

Total liabilities		1,882,511			1,845,977


Commitments and contingencies

STOCKHOLDERS’ EQUITY
Class A preferred stock, $1,000 par value:
Authorized, issued and outstanding – 1,010 shares in 2007 and 2006		1,010			1,010
Class A voting common stock, $.01 par value:
Authorized – 200,000,000 shares; issued – 14,410,133 shares in 2007 and 15,061,525 in 2006		144			151
Class B non-voting common stock, $.01 par value:
Authorized – 200,000,000 shares; issued – 29,483,673 shares in 2007 and 35,138,413 shares in 2006		295			351
Additional paid-in capital		233,485			308,051
Unearned ESOP shares		(8,994	)		(9,204	)
Accumulated other comprehensive loss		(498	)		(288	)
Retained earnings		387,371			359,813
Treasury stock at cost, 651,232 Class A common shares in 2006; 470,022 Class B common shares in 2007 and 6,436,183 Class B common shares in 2006		(13,603	)		(92,723	)

Total stockholders’ equity		599,210			567,161

Total liabilities and stockholders’ equity	$	2,481,721		$	2,413,138

See accompanying notes to consolidated financial statements.

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED INCOME STATEMENTS (Unaudited)


	Three Months Ended				Six Months Ended
(In thousands, except per share amounts)	June 30,				June 30,
	2007		2006		2007		2006

Interest income:
Receivables	$	34,070	$	30,139	$	69,637	$	59,066
Investments		8,809		5,973		16,491		11,332
Other interest income		4,679		4,399		9,785		8,381

Total interest income		47,558		40,511		95,913		78,779
Interest expense:
Deposits		17,361		11,858		33,898		22,166
Debt and other borrowings		3,955		3,331		7,663		6,689
Subordinated debt payable to preferred securities trust		2,317		2,290		4,634		4,579

Total interest expense		23,633		17,479		46,195		33,434

Net interest income		23,925		23,032		49,718		45,345
Provision for credit losses		11,806		10,145		21,889		19,429

Net interest income after provision for credit losses		12,119		12,887		27,829		25,916
Noninterest revenues:
Securitization income		22,766		29,686		46,277		63,264
Servicing revenues		22,541		15,329		42,917		29,011
Other revenues, net		47,996		42,297		90,477		77,273

Total noninterest revenues		93,303		87,312		179,671		169,548
Operating expenses		68,777		62,736		135,579		122,375

Income before income taxes		36,645		37,463		71,921		73,089
Income tax expense		13,933		14,423		27,761		28,139

Income from continuing operations		22,712		23,040		44,160		44,950
Gain on discontinuance of mortgage and leasing businesses, net of tax		1,022		738		1,022		738

Net income	$	23,734	$	23,778	$	45,182	$	45,688

Basic income from continuing operations per common share
Class A	$	0.52	$	0.56	$	1.02	$	1.08
Class B		0.56		0.58		1.09		1.13
Combined		0.55		0.57		1.07		1.11

Diluted income from continuing operations per common share
Class A	$	0.50	$	0.52	$	0.96	$	1.01
Class B		0.51		0.52		1.00		1.01
Combined		0.51		0.52		0.99		1.01

Basic net income per common share
Class A	$	0.55	$	0.58	$	1.04	$	1.10
Class B		0.59		0.60		1.12		1.14
Combined		0.57		0.59		1.09		1.13

Diluted net income per common share
Class A	$	0.52	$	0.54	$	0.99	$	1.02
Class B		0.54		0.54		1.02		1.03
Combined		0.53		0.54		1.01		1.03

Basic weighted average common shares outstanding
Class A		13,331		13,281		13,324		13,274
Class B		28,039		26,918		27,887		27,039
Combined		41,370		40,199		41,211		40,313

Diluted weighted average common shares outstanding
Class A		13,331		13,281		13,324		13,274
Class B		31,343		30,689		31,258		31,000
Combined		44,674		43,970		44,582		44,274

See accompanying notes to consolidated financial statements.

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, 2005				$	1,010	$	151		$	329		$	276,070

Net income	$	84,986
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of ($210)		390

Comprehensive income	$	85,376

Preferred and common cash dividends declared
Exercise of stock options										13			10,495
Stock-based employee compensation expense													3,842
Stock-based nonemployee compensation expense													238
Excess tax benefits from stock- based compensation and ESOP													12,149
Issuance of nonvested shares										11			(11	)
Amortization of nonvested shares													5,953
Forfeitures of nonvested shares										(2	)		(358	)
Reclassification of nonvested shares													(1,148	)
Treasury stock acquired
ESOP shares committed to be released													821

Balance at December 31, 2006				$	1,010	$	151		$	351		$	308,051

Effect of applying the provisions of FIN No. 48 (See Note 2)
Net income	$	45,182
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $113		(210	)

Comprehensive income	$	44,972

Preferred and common cash dividends declared
Exercise of stock options										7			6,024
Stock-based employee compensation expense													2,581
Stock-based nonemployee compensation expense													95
Excess tax benefits from stock-based compensation and ESOP													6,432
Amortization of nonvested shares													2,833
Stock option exchange program stock distribution
Treasury stock acquired
Treasury stock retired							(7	)		(63	)		(93,101	)
ESOP shares committed to be released													570

Balance at June 30, 2007				$	1,010	$	144		$	295		$	233,485

See accompanying notes to consolidated financial statements.

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


	Unearned			Accumulated
	ESOP Shares			Other									Total
	& Nonvested			Comprehensive			Retained			Treasury			Stockholders’
($ in thousands)	Shares			Income (Loss)			Earnings			Stock			Equity

Balance at December 31, 2005	$	(10,770	)	$	(678	)	$	298,472		$	(49,147	)	$	515,437

Net income								84,986						84,986
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of ($210)					390									390
Comprehensive income
Preferred and common cash dividends declared								(23,645	)					(23,645	)
Exercise of stock options														10,508
Stock-based employee compensation expense														3,842
Stock-based nonemployee compensation expense														238
Excess tax benefits from stock- based compensation and ESOP														12,149
Issuance of nonvested shares														0
Amortization of nonvested shares														5,953
Forfeitures of nonvested shares														(360	)
Reclassification of nonvested shares		1,148												0
Treasury stock acquired											(43,576	)		(43,576	)
ESOP shares committed to be released		418												1,239

Balance at December 31, 2006	$	(9,204	)	$	(288	)	$	359,813		$	(92,723	)	$	567,161

Effect of applying the provisions of FIN No. 48 (See Note 2)								(2,099	)					(2,099	)
Net income								45,182						45,182
Other comprehensive income:
Unrealized appreciation (depreciation) of investments, net of tax benefit (expense) of $113					(210	)								(210	)
Comprehensive income
Preferred and common cash dividends declared								(15,525	)					(15,525	)
Exercise of stock options														6,031
Stock-based employee compensation expense														2,581
Stock-based nonemployee compensation expense														95
Excess tax benefits from stock-based compensation and ESOP														6,432
Amortization of nonvested shares														2,833
Stock option exchange program stock distribution											388			388
Treasury stock acquired											(14,439	)		(14,439	)
Treasury stock retired											93,171			0
ESOP shares committed to be released		210												780

Balance at June 30, 2007	$	(8,994	)	$	(498	)	$	387,371		$	(13,603	)	$	599,210

See accompanying notes to consolidated financial statements.

ADVANTA CORP. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Six Months Ended
($ in thousands)	June 30,
	2007			2006

OPERATING ACTIVITIES – CONTINUING OPERATIONS
Net income	$	45,182		$	45,688
Adjustments to reconcile net income to net cash provided by operating activities:
Gain on discontinuance of mortgage and leasing businesses, net of tax		(1,022	)		(738	)
Investment securities gains, net		(2,345	)		(3,532	)
Depreciation and amortization		2,936			3,092
Stock-based compensation expense		5,509			1,647
Provision for credit losses		21,889			19,429
Provision for interest and fee losses		5,027			4,201
Change in deferred origination costs, net of deferred fees		(1,299	)		(3,856	)
Change in receivables held for sale		(632,526	)		(1,173,053	)
Proceeds from sale of receivables held for sale		756,340			1,070,264
Change in accounts receivable from securitizations		(9,680	)		156,333
Excess tax benefits from stock-based compensation and ESOP		(6,432	)		(7,503	)
Change in other assets and other liabilities		44,885			(47,083	)

Net cash provided by operating activities		228,464			64,889

INVESTING ACTIVITIES – CONTINUING OPERATIONS
Change in federal funds sold and restricted interest-bearing deposits		(429	)		(62,745	)
Purchase of investments available for sale		(555,902	)		(356,529	)
Proceeds from sales of investments available for sale		467,433			385,941
Proceeds from maturing investments available for sale		44,070			38,106
Change in receivables not held for sale		(147,972	)		(98,923	)
Purchases of premises and equipment, net		(4,274	)		(2,052	)

Net cash used in investing activities		(197,074	)		(96,202	)

FINANCING ACTIVITIES – CONTINUING OPERATIONS
Change in demand and savings deposits		24,276			37,501
Proceeds from issuance of time deposits		275,725			297,735
Payments for maturing time deposits		(289,496	)		(255,398	)
Proceeds from issuance of debt		14,272			9,214
Payments on redemption of debt		(17,010	)		(26,096	)
Change in cash overdraft		(3,026	)		11,537
Proceeds from exercise of stock options		6,031			3,947
Cash dividends paid		(15,525	)		(10,236	)
Excess tax benefits from stock-based compensation and ESOP		6,432			7,503
Treasury stock acquired		(14,439	)		(43,513	)

Net cash (used in) provided by financing activities		(12,760	)		32,194

DISCONTINUED OPERATIONS
Net cash provided by operating activities of discontinued operations		162			2,903

Net increase in cash		18,792			3,784
Cash at beginning of period		35,055			34,109

Cash at end of period	$	53,847		$	37,893

See accompanying notes to consolidated financial statements.

ADVANTA CORP. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

June 30, 2007
(Unaudited)

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

Note 1) Basis of Presentation

We have prepared the consolidated financial statements included herein pursuant to the rules and regulations of the Securities and Exchange Commission. We have condensed or omitted certain information and footnote disclosures normally included in consolidated financial statements prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) pursuant to such rules and regulations. In the opinion of management, the statements include all adjustments (which include normal recurring adjustments) required for a fair statement of financial position, results of operations and cash flows for the interim periods presented. These financial statements should be read in conjunction with the financial statements and notes thereto included in our latest Annual Report on Form 10-K. The results of operations for the interim periods are not necessarily indicative of the results for the full year.

In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split, in the form of a 50% stock dividend payable June 15, 2007, on both Class A and Class B Common Stock. We have adjusted all share amounts, per share data and common stock equity balances in the consolidated financial statements and related notes to reflect the stock split for all periods presented.

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

Note 2) Recently Issued Accounting Standards

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

In February 2006, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 155,Accounting for Certain Hybrid Financial Instruments. This statement amends SFAS No. 133,Accounting for Derivative Instruments and Hedging Activities, and SFAS No. 140,Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities – a replacement of FASB Statement No. 125(“SFAS No. 140”),and eliminates the guidance in SFAS No. 133 Implementation Issue No. D1,Application of Statement 133 to Beneficial Interests in Securitized Financial Assets, which provided that beneficial interests in securitized financial assets are not subject to SFAS No. 133. Under the new statement, an entity may irrevocably elect to measure a hybrid financial instrument that would otherwise require bifurcation at fair value in its entirety on an instrument-by-instrument basis. The statement clarifies which interest-only strips are not subject to the requirements of SFAS No. 133, establishes a requirement to evaluate interests in securitized financial assets to identify interests that are freestanding derivatives or that are hybrid financial instruments that contain an embedded derivative requiring bifurcation, and amends SFAS No. 140 to eliminate the prohibition on a qualifying special purpose entity from holding certain derivative financial instruments. The statement is effective for all financial instruments that we acquire or issue after January 1, 2007. The adoption of this statement did not have a material impact on our financial position or results of operations.

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

In July 2006, the FASB issued Interpretation No. 48,Accounting for Uncertainty in Income Taxes – an Interpretation of FASB Statement No. 109,(“FIN No. 48”). The statement provides a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with the statement, before a tax benefit can be recognized, a tax position is evaluated using a threshold that it is more likely than not that the tax position will be sustained upon examination. When evaluating the more-likely-than-not recognition threshold, the interpretation provides that a company should presume the tax position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. If the tax position meets the more-likely-than-not recognition threshold, it is initially and subsequently measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We adopted this statement effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the opening balance of retained earnings. The adoption did not have a material impact on our effective tax rate for the three and six months ended June 30, 2007. See Note 11 for further discussion.

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

effective January 1, 2008 to have a material impact on our financial position or results of operations.

In February 2007, the FASB issued SFAS No. 159,The Fair Value Option for Financial Assets and Financial Liabilities. This statement provides entities with an irrevocable option to report most financial assets and liabilities at fair value, with subsequent changes in fair value reported in earnings. The election can be applied on an instrument-by-instrument basis. The statement establishes presentation and disclosure requirements designed to facilitate comparisons between entities that choose different measurement attributes for similar types of assets and liabilities. The statement is effective for Advanta on January 1, 2008. Management is currently evaluating the impact that this statement may have on our financial position or results of operations.

In March 2007, the FASB ratified 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 consensus is effective for Advanta on January 1, 2008. Management is currently evaluating the impact that this EITF consensus may have on our financial position or results of operations.

Note 3) Investments Available for Sale

Investments available for sale consisted of the following:


	June 30, 2007				December 31, 2006
	Amortized		Fair		Amortized		Fair
	Cost		Value		Cost		Value

U.S. Treasury and government agency securities	$	43,602	$	43,528	$	21,098	$	20,940
State and municipal securities		16,149		15,962		13,247		13,242
Commercial paper		8,298		8,298		6,944		6,941
Corporate bonds		18,438		18,355		8,488		8,364
Asset-backed securities⁽¹⁾		44,337		44,158		46,214		46,196
Equity securities⁽²⁾		10,081		9,838		10,118		9,983
Money market funds		99,416		99,416		91,771		91,771
Other		4,343		4,343		40		40

Total investments available for sale	$	244,664	$	243,898	$	197,920	$	197,477


(1)		Includes mortgage-backed securities.

(2)		Includes venture capital investments of $2.3 million at June 30, 2007 and $1.0 million at December 31, 2006. The amount shown as amortized cost represents fair value for these investments.

Note 4) Receivables

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


	June 30,			December 31,
	2007			2006

Business credit card receivables	$	1,133,198		$	1,133,132
Other receivables		7,658			7,673

Gross receivables		1,140,856			1,140,805

Add: Deferred origination costs, net of deferred fees		26,429			25,130
Less: Allowance for receivable losses
Business credit cards		(52,525	)		(49,715	)
Other receivables		(1,210	)		(1,211	)

Total allowance for receivable losses		(53,735	)		(50,926	)

Receivables, net	$	1,113,550		$	1,115,009

Note 5) Allowance for Receivable Losses

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


	2007			2006

Balance at January 1	$	50,926		$	45,589
Provision for credit losses		21,889			19,429
Provision for interest and fee losses		5,027			4,201
Gross principal charge-offs:
Business credit cards		(21,325	)		(17,272	)
Other receivables		(1	)		(4	)

Total gross principal charge-offs		(21,326	)		(17,276	)

Principal recoveries:
Business credit cards		1,986			1,668

Net principal charge-offs		(19,340	)		(15,608	)

Interest and fee charge-offs:
Business credit cards		(4,767	)		(3,949	)

Balance at June 30	$	53,735		$	49,662

Note 6) Securitization Activities

Accounts receivable from securitizations consisted of the following:


	June 30,		December 31,
	2007		2006

Retained interests in securitizations	$	225,394	$	234,054
Accrued interest and fees on securitized receivables, net⁽¹⁾		74,754		64,713
Amounts due from the securitization trust		44,018		35,719

Total accounts receivable from securitizations	$	344,166	$	334,486


(1)		Reduced by an estimate for uncollectible interest and fees of $11.3 million at June 30, 2007 and $8.7 million at December 31, 2006.


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


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006

Average securitized receivables	$	4,581,666		$	3,222,380		$	4,368,446		$	3,090,577
Securitization income		22,766			29,686			46,277			63,264
Discount accretion		4,679			4,399			9,785			8,381
Interchange income		49,207			39,127			91,621			72,841
Servicing revenues		22,541			15,329			42,917			29,011
Proceeds from new securitizations		398,682			534,374			756,340			1,070,264
Proceeds from collections reinvested in revolving- period securitizations		2,681,748			1,779,595			5,065,732			3,463,397
Cash flows received on retained interests		79,731			92,582			164,487			170,210
Key assumptions:
Discount rate		8.15% - 9.76	%		8.91% - 10.43	%		8.15% - 9.84	%		8.71% - 10.43	%
Monthly payment rate		19.36% - 23.10	%		22.07% - 25.00	%		19.36% - 23.10	%		22.07% - 25.00	%
Loss rate		3.85% - 4.35	%		4.00% - 4.90	%		3.70% - 4.35	%		4.00% - 4.90	%
Interest yield, net of interest earned by noteholders		7.29% - 7.33	%		8.03% - 8.86	%		7.29% - 7.33	%		8.03% - 9.95	%

There were no purchases of delinquent accounts from the securitization trust during the three or six months ended June 30, 2007 or 2006.

We used the following assumptions in measuring the fair value of retained interests in securitizations at June 30, 2007 and December 31, 2006. The assumptions listed represent weighted averages of assumptions used for each securitization. The monthly payment rate assumptions used at both June 30, 2007 and December 31, 2006 result in cash flow projections over a three-month weighted average life of existing receivables for the retained interest-only strip valuation.


	June 30,			December 31,
	2007			2006

Discount rate		8.53% - 9.76	%		8.82% - 9.84	%
Monthly payment rate		19.36% - 22.00	%		21.29% - 23.10	%
Loss rate		3.95% - 4.35	%		3.70% - 4.07	%
Interest yield, net of interest earned by noteholders		7.33	%		7.30	%

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

We have prepared sensitivity analyses of the valuations of retained interests in securitizations that were estimated using the assumptions identified above. The sensitivity analyses show the hypothetical effect on the estimated fair value of those assets of two unfavorable variations from the expected levels for each key assumption, independently from any change in another key assumption. Set forth below are the results of those sensitivity analyses on the valuation at June 30, 2007.


\|
Effect on estimated fair value of the following hypothetical changes in key assumptions:
Discount rate increased 200 basis points	$	(4,328	)
Discount rate increased 400 basis points		(8,474	)
Monthly payment rate at 110% of base assumption		(1,515	)
Monthly payment rate at 125% of base assumption		(2,693	)
Loss rate at 110% of base assumption		(5,040	)
Loss rate at 125% of base assumption		(12,599	)
Interest yield, net of interest earned by noteholders, decreased 100 basis points		(12,758	)
Interest yield, net of interest earned by noteholders, decreased 200 basis points		(25,517	)

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.

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,
	2007		2006		2006

Owned business credit card receivables	$	1,133,198	$	1,133,132	$	1,062,249
Securitized business credit card receivables		4,856,001		4,073,128		3,323,869

Total managed receivables	$	5,989,199	$	5,206,260	$	4,386,118

Receivables 30 days or more delinquent:
Owned	$	27,115	$	26,053	$	25,482
Securitized		136,468		108,159		90,987
Total managed		163,583		134,212		116,469
Receivables 90 days or more delinquent:
Owned		13,466		12,632		12,560
Securitized		68,424		52,279		45,008
Total managed		81,890		64,911		57,568
Nonaccrual receivables:
Owned		9,155		10,524		11,824
Securitized		47,416		45,160		42,938
Total managed		56,571		55,684		54,762
Accruing receivables past due 90 days or more:
Owned		12,249		11,302		11,266
Securitized		62,360		46,785		40,436
Total managed		74,609		58,087		51,702
Net principal charge-offs for the year-to-date period ended June 30 and December 31:
Owned		19,339		33,775		15,604
Securitized		76,197		116,227		53,728
Total managed		95,536		150,002		69,332
Net principal charge-offs for the three months ended June 30 and December 31:
Owned		9,556		9,169		7,520
Securitized		41,115		33,100		26,633
Total managed		50,671		42,269		34,153

Note 7) Commitments and Contingencies

Advanta Corp. and its subsidiaries are involved in class action lawsuits, other litigation, claims and legal proceedings arising in the ordinary course of business or discontinued operations. Management believes that the aggregate loss, if any, resulting from existing litigation, claims and other legal proceedings will not have a material adverse effect on our financial position or results of operations based on our current expectations regarding the ultimate resolutions of these existing actions after consultation with our attorneys. However, due to the inherent uncertainty in litigation and since the ultimate resolutions of our litigation, claims and other legal proceedings are influenced by factors outside of our control, it is reasonably possible that actual results will differ from our estimates.

Note 8) Capital Stock

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006

Class A Common Stock	$	0.1771	$	0.1417	$	0.3188	$	0.2173
Class B Common Stock		0.2125		0.1700		0.3825		0.2607

In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split, in the form of a 50% stock dividend payable June 15, 2007, on both Class A and Class B Common Stock. In addition, the Board of Directors of Advanta Corp. approved a 25% increase in the regular quarterly cash dividends on Class A and Class B Common Stock beginning with the dividend paid in the second quarter of 2007. The Board of Directors of Advanta Corp. also authorized the repurchase of up to 1.5 million shares of Advanta Corp.’s Class B Common Stock. As of June 30, 2007, we had repurchased 406 thousand shares for $13.0 million in connection with this authorization.

In January 2007, in connection with the exercise of stock options by an officer, we withheld 20 thousand shares of Class B Common Stock with a market value of $592 thousand to meet our minimum statutory tax withholding requirements. In April 2007, in connection with the vesting of shares related to the 2006 performance year for our management incentive program, we withheld 24 thousand vested shares with a market value of $757 thousand from certain employees (including officers) to meet our minimum statutory tax withholding requirements.

In the three months ended June 30, 2007, we retired 651 thousand treasury shares of Class A Common Stock and 6.3 million treasury shares of Class B Common Stock.

Note 9) 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, 2007:


				Weighted
				Average Price
	Number of			at Date of
	Shares			Issuance

Outstanding at January 1		1,238		$	20.88
Granted		72			30.35
Vested		(239	)		24.22
Forfeited		(57	)		21.98

Outstanding at June 30		1,014		$	20.72

Nonvested shares that vested during the six months ended June 30, 2007 had a total fair value of $7.5 million on the vesting date. Nonvested shares that vested during the same period of 2006 had a total fair value of $22.7 million on the vesting date.

Stock option activity was as follows for the six months ended June 30, 2007:


								Weighted
				Weighted				Average
				Average		Aggregate		Remaining
	Number of			Exercise		Intrinsic		Contractual
	Options			Price		Value		Life

Outstanding at January 1		7,419		$	10.88
Granted		1,507			30.53
Exercised		(759	)		10.10
Forfeited		(171	)		22.56

Outstanding at June 30		7,996		$	14.41	$	133,783	5.5 years

Options exercisable at June 30		5,098		$	7.81	$	118,951	3.5 years

The aggregate intrinsic value of stock options exercised was $15.8 million in the six months ended June 30, 2007 and $5.8 million in the same period of 2006. As of June 30, 2007, there was $14.5 million of total unrecognized compensation expense related to outstanding stock options and we expect to recognize the expense over a weighted average period of 2.5 years.

Compensation expense, net of forfeitures, 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,

	2007		2006		2007		2006

Compensation expense	$	1,430	$	1,078	$	2,581	$	1,702
Income tax benefit		543		415		996		655
Weighted average fair value of options granted	$	9.69	$	10.19	$	9.85	$	10.10

The assumptions listed in the table below represent weighted averages of the assumptions used to estimate the fair value for each option grant using the Black-Scholes-Merton option-pricing model. The expected dividend yield is based on current dividend rates as well as announced and anticipated changes in dividend rates based upon management’s expectations of future performance. The expected life of the option 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 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 option.


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006

Expected life (in years)		5.7			5.4			5.7			5.4
Expected volatility		33.11	%		38.82	%		33.57	%		38.93	%
Risk-free interest rate		4.55	%		5.02	%		4.57	%		4.98	%
Expected dividend yield		4.86	%		4.22	%		4.86	%		4.26	%
Range of expected dividend yield over expected life		2.78%-6.73	%		2.71%-5.85	%		2.78%-6.74	%		2.73%-5.90	%

Note 10) Segment Information

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


	Advanta
	Business
	Cards		Other^(A)			Total

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

Three months ended June 30, 2006
Interest income	$	34,450	$	6,061		$	40,511
Interest expense		10,400		7,079			17,479
Noninterest revenues		86,104		1,208			87,312
Pretax income (loss) from continuing operations		37,464		(1	)		37,463

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

Six months ended June 30, 2006
Interest income	$	67,260	$	11,519		$	78,779
Interest expense		20,424		13,010			33,434
Noninterest revenues		167,442		2,106			169,548
Pretax income from continuing operations		72,757		332			73,089


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

Note 11) Income Taxes

Income tax expense was as follows:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2007		2006		2007		2006

Income tax expense attributable to:
Continuing operations	$	13,933	$	14,423	$	27,761	$	28,139
Discontinued operations		643		462		643		462

Total income tax expense	$	14,576	$	14,885	$	28,404	$	28,601

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


	Three Months Ended						Six Months Ended
	June 30,						June 30
	2007			2006			2007		2006

Current:
Federal	$	9,673		$	11,194		$	16,014	$	17,530
State		1,224			1,591			2,347		2,941

Total current		10,897			12,785			18,361		20,471

Deferred:
Federal		3,065			1,790			9,361		7,756
State		(29	)		(152	)		39		(88	)

Total deferred		3,036			1,638			9,400		7,668

Income tax expense attributable to continuing operations	$	13,933		$	14,423		$	27,761	$	28,139

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,
	2007			2006		2007			2006

Statutory federal income tax	$	12,826		$	13,112	$	25,172		$	25,581
State income taxes, net of federal income tax benefit		1,047			936		1,981			1,855
Nondeductible expenses		256			151		437			322
Compensation limitation		(139	)		33		199			66
Other		(57	)		191		(28	)		315

Income tax expense	$	13,933		$	14,423	$	27,761		$	28,139

Our effective tax rate was 38.0% for the three months ended June 30, 2007 and 38.6% for the six months ended June 30, 2007 as compared to 38.5% for the three and six months ended June 30, 2006.

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


	June 30,			December 31,
	2007			2006

Deferred tax assets	$	57,488		$	66,059
Deferred tax liabilities		(28,252	)		(26,893	)

Net deferred tax asset	$	29,236		$	39,166

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


	June 30,			December 31,
	2007			2006

Deferred revenue	$	(12,731	)	$	(10,435	)
Rewards programs		12,613			11,492
Alternative minimum tax credit carryforwards		9,496			17,249
Deferred origination costs, net of deferred fees		(9,353	)		(8,910	)
Receivable losses		8,924			8,864
Capital loss carryforwards		6,281			6,653
Incentive and deferred compensation		5,017			6,065
Securitization income		(2,624	)		(2,624	)
Unrealized venture capital investment losses		992			1,352
Other		10,621			9,460

Net deferred tax asset	$	29,236		$	39,166

We adopted the provisions of FIN No. 48 effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the January 1, 2007 balance of retained earnings. The total amount of unrecognized tax benefits as of January 1, 2007 was $25.6 million. These unrecognized tax benefits, if recognized, would favorably affect our effective tax rate. The liability for unrecognized tax benefits is included in other liabilities on the consolidated balance sheet. At January 1, 2007, the liability for unrecognized tax benefits included $7.7 million accrued for the potential payment of interest and $7.2 million accrued for the potential payment of penalties. We classify interest and penalties related to unrecognized tax benefits as income tax expense. There were no material changes in unrecognized tax benefits in the six months ended June 30, 2007.

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. As of January 1, 2007, we are subject to U.S. federal income tax examinations for the tax years 2005 and 2006, and, with few exceptions, subject to state income tax examinations for the tax years 1992 through 2006. The liability for unrecognized tax benefits at January 1, 2007 included $1.3 million related to tax positions for which it is reasonably possible that the total amounts could significantly change in the twelve months ending June 30, 2008. This amount represents a potential decrease in unrecognized tax benefits related to the resolution of state income tax audits that may conclude in that period.

We have an ownership interest in Fleet Credit Card Services, L.P. related to our exit from the consumer card business in 1998. The gain associated with the original transfer of assets to Fleet Credit Card Services, L.P. was not subject to income tax. As of June 30, 2007, the cumulative gain on transfer of consumer credit card business and our deficit capital account in Fleet Credit Card Services, L.P. on a tax basis for which no deferred taxes have been provided is approximately $650 million, as the transaction structure remains nontaxable under current tax law.

At June 30, 2007, we had $3.2 million of capital loss carryforwards that are scheduled to expire in 2009, $7.4 million that are scheduled to expire in 2010, and $7.3 million that are scheduled to expire in 2011. Alternative minimum tax credit carryforwards do not expire.

Note 12) Discontinued Operations

The components of the gain on discontinuance of our mortgage and leasing businesses for the three and six months ended June 30, 2007 and 2006 were as follows:


	Three and Six Months Ended
	June 30, 2007						June 30, 2006
				Advanta						Advanta
	Advanta			Leasing			Advanta			Leasing
	Mortgage			Services			Mortgage			Services

Pretax gain on discontinuance of mortgage and leasing businesses	$	800		$	865		$	500		$	700
Income tax expense		(309	)		(334	)		(193	)		(269	)

Gain on discontinuance of mortgage and leasing businesses, net of tax	$	491		$	531		$	307		$	431

The gain on discontinuance of the mortgage business in each of the reported periods 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 in each of the reported periods represents changes in estimated operating results of the leasing segment over the wind down period, including credit and residual realization performance, sales tax assessments or refunds, insurance reimbursements and operating expenses. We had no lease receivables outstanding in the six months ended June 30, 2007.

Per share data was as follows:


	Three Months Ended June 30,								Six Months Ended June 30,
	Advanta				Advanta Leasing				Advanta				Advanta Leasing
	Mortgage				Services				Mortgage				Services
	2007		2006		2007		2006		2007		2006		2007		2006

Basic gain on discontinuance of mortgage and leasing businesses, net of tax, per common share
Class A	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01
Class B		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Combined		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Diluted gain on discontinuance of mortgage and leasing businesses, net of tax, per common share
Class A	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01	$	0.01
Class B		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01
Combined		0.01		0.01		0.01		0.01		0.01		0.01		0.01		0.01

Note 13) Calculation of Earnings Per Share

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


	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2007			2006			2007			2006

Income from continuing operations	$	22,712		$	23,040		$	44,160		$	44,950
Less: Preferred A dividends		0			0			(141	)		(141	)

Income from continuing operations available to common stockholders		22,712			23,040			44,019			44,809
Gain on discontinuance of mortgage and leasing businesses, net of tax		1,022			738			1,022			738

Net income available to common stockholders		23,734			23,778			45,041			45,547
Less: Class A dividends declared		(2,396	)		(1,955	)		(4,276	)		(2,954	)
Less: Class B dividends declared		(6,165	)		(4,565	)		(11,108	)		(7,141	)

Undistributed net income	$	15,173		$	17,258		$	29,657		$	35,452

Basic income from continuing operations per common share
Class A	$	0.52		$	0.56		$	1.02		$	1.08
Class B		0.56			0.58			1.09			1.13
Combined⁽¹⁾		0.55			0.57			1.07			1.11

Diluted income from continuing operations per common share
Class A	$	0.50		$	0.52		$	0.96		$	1.01
Class B		0.51			0.52			1.00			1.01
Combined⁽¹⁾		0.51			0.52			0.99			1.01

Basic net income per common share
Class A	$	0.55		$	0.58		$	1.04		$	1.10
Class B		0.59			0.60			1.12			1.14
Combined⁽¹⁾		0.57			0.59			1.09			1.13

Diluted net income per common share
Class A	$	0.52		$	0.54		$	0.99		$	1.02
Class B		0.54			0.54			1.02			1.03
Combined⁽¹⁾		0.53			0.54			1.01			1.03

Basic weighted average common shares outstanding
Class A		13,331			13,281			13,324			13,274
Class B		28,039			26,918			27,887			27,039
Combined		41,370			40,199			41,211			40,313

Dilutive effect of
Options Class B		2,910			3,380			2,935			3,345
Nonvested shares Class B		394			391			436			616

Diluted weighted average common shares outstanding
Class A		13,331			13,281			13,324			13,274
Class B		31,343			30,689			31,258			31,000
Combined		44,674			43,970			44,582			44,274

Antidilutive shares
Options Class B		1,542			1,369			1,072			732


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


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.

In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split, in the form of a 50% stock dividend payable June 15, 2007, on both Class A and Class B Common Stock. We have adjusted all share amounts and per share data in Management’s Discussion and Analysis of Financial Condition and Results of Operations to reflect the stock split for all periods presented.

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,
	2007		2006			2007		2006

Pretax income (loss):
Advanta Business Cards	$	35,824	$	37,464		$	70,635	$	72,757
Other		821		(1	)		1,286		332

Total pretax income		36,645		37,463			71,921		73,089
Income tax expense		13,933		14,423			27,761		28,139

Income from continuing operations	$	22,712	$	23,040		$	44,160	$	44,950
Per combined common share, assuming dilution	$	0.51	$	0.52		$	0.99	$	1.01

Our Advanta Business Cards segment offers business credit cards that are competitively priced and typically include promotional pricing and rewards. We design our product offerings to selectively attract and retain high credit quality customers and to respond to the competitive environment. Promotional pricing reduces interest yield on new accounts during the initial promotional periods. We have experienced the benefits of high credit quality customers through favorable delinquency and credit loss rates and increases in transaction volume. The rate of new customer and receivables growth has increased the percentage of customers in the receivable portfolio with competitive and promotional pricing and therefore reduced average interest yields in the three and six months ended June 30, 2007 as compared to the same periods of 2006. As a result, Advanta Business Cards pretax income decreased 4% for the three months ended June 30, 2007 as compared to the same period of 2006 and decreased 3% for the six months ended June 30, 2007 as compared to the same period of 2006. The impact of lower interest yields was partially offset by growth in average owned and securitized receivables, higher transaction volume and decreases in operating expenses as a percentage of owned and securitized receivables in both the three and six months ended June 30, 2007 as compared to the same periods of 2006. We expect the average yield earned on business credit card receivables to increase during the second half of 2007 as compared to the first half of 2007 as introductory pricing periods expire on many of the accounts originated in prior periods and based on our expected levels of receivables growth and planned marketing strategies.

For the three 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. For the three months ended June 30, 2006, we recorded an after-tax gain on the discontinuance of our mortgage and leasing businesses of $738 thousand, or $0.02 per combined diluted common share. See “Discontinued Operations” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. We have identified accounting for allowance for receivable losses, securitization income, rewards programs and income taxes as our most critical accounting policies and estimates because they require management’s most difficult, subjective or complex judgments as a result of the need to make estimates about the effect of matters that are inherently uncertain. Estimates are inherently subjective and are susceptible to significant revision as more information becomes available. Changes in estimates could have a material impact on our financial position or results of operations. These accounting policies and estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2006.

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,
	2007		2006		2007		2006

Average owned receivables	$	1,248,235	$	997,754	$	1,266,466	$	963,962
Average securitized receivables	$	4,581,666	$	3,222,380	$	4,368,446	$	3,090,577
Customer transaction volume	$	3,692,780	$	3,031,493	$	7,081,845	$	5,765,415
New account originations		102,937		86,398		199,718		169,015
Average number of active accounts⁽¹⁾		894,610		687,912		871,781		668,814
Ending number of accounts at June 30		1,255,557		978,517		1,255,557		978,517


(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.

The increases in new account originations for the three and six months ended June 30, 2007 as compared to the same periods of 2006 are due primarily to the efficiency and size of account acquisition campaigns. Based on our current marketing plans and strategies for the remainder of 2007 and on our results to date, we expect to originate over 300 thousand new accounts in the year ending December 31, 2007. We expect managed business credit card receivables to grow between 20% and 25% and owned business credit card receivables to grow between 10% and 15% for the year ending December 31, 2007. See “Securitization Income” in Management’s Discussion and Analysis of Financial Condition and Results of Operations for further discussion of why management believes managed data is useful to investors. The following is a reconciliation of projected estimated owned business credit card receivable growth to managed business credit card receivable growth:


			Projected Estimate at December 31, 2007
	Actual at
	December 31,		Low End		Percentage			High End		Percentage
($ in thousands)	2006		of Range		Increase			of Range		Increase

Owned receivables	$	1,133,132	$	1,250,000		10.0	%	$	1,302,000		15.0	%
Securitized receivables		4,073,128		4,998,000		23.0	%		5,206,000		28.0	%

Managed receivables	$	5,206,260	$	6,248,000		20.0	%	$	6,508,000		25.0	%

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


	Three Months Ended						Six Months Ended
($ in thousands)	June 30,						June 30,
	2007			2006			2007			2006

Net interest income on owned interest-earning assets	$	25,506		$	24,050		$	52,749		$	46,836
Noninterest revenues		90,737			86,104			175,063			167,442
Provision for credit losses		(11,806	)		(10,145	)		(21,889	)		(19,479	)
Operating expenses		(68,613	)		(62,545	)		(135,288	)		(122,042	)

Pretax income	$	35,824		$	37,464		$	70,635		$	72,757

Net interest income on owned interest-earning assets increased $1.5 million for the three months ended June 30, 2007 as compared to the same period of 2006 and increased $5.9 million for the six months ended June 30, 2007 as compared to the same period of 2006. Net interest income in the three and six months ended June 30, 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. The increases in net interest income on owned interest-earning assets were also due to increases in average owned business credit card receivables, partially offset by decreases in the average yield earned on our business credit card receivables as a result of increases in the percentage of customers in the receivable portfolio with competitive and promotional pricing as compared to the same periods of 2006. Average owned business credit card receivables increased $250 million for the three months ended June 30, 2007 and increased $303 million for the six months ended June 30, 2007, both as compared to the same periods of 2006.

Noninterest revenues include securitization income, servicing revenues, interchange income and other revenues, and are reduced by rewards costs. Noninterest revenues increased $4.6 million for the three months ended June 30, 2007 as compared to the same period of 2006 and increased $7.6 million for the six months ended June 30, 2007 as compared to the same period of 2006 due primarily to higher merchandise sales transaction volume that resulted in higher interchange income and increased volume of securitized receivables that resulted in higher servicing fees, partially offset by higher rewards costs and lower securitization income. Securitization income decreased for the three and six months ended June 30, 2007 as compared to

the same periods of 2006, due primarily to decreases in yields on securitized receivables and increases in the floating interest rates earned by noteholders, partially offset by growth in average securitized receivables. Noninterest revenues for the three and six months ended June 30, 2006 also included a $2.4 million investment gain.

The increase in provision for credit losses for the three and six months ended June 30, 2007 as compared to the same periods of 2006 was due primarily to the increase in average owned business credit card receivables. 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, 2007 increased as compared to the same periods of 2006 due primarily to growth in new accounts and owned and securitized receivables, increases in executive compensation and costs related to the pilot of new outsourcing initiatives in 2007.

INTEREST INCOME AND EXPENSE

Total interest income increased $7.0 million to $47.6 million for the three months ended June 30, 2007 as compared to the same period of 2006 and $17.1 million for the six months ended June 30, 2007 to $95.9 million as compared to the same period of 2006. The increases in total interest income were due primarily to increases in average balances of owned business credit card receivables and investments and an increase in average yields earned on our investments, partially offset by decreases in the average yields earned on our business credit card receivables. Yields on business credit card receivables decreased for the three and six months ended June 30, 2007 as compared to the same periods of 2006 as a result of an increase in the percentage of customers in the receivable portfolio with competitive and promotional pricing as compared to the same periods of 2006. We expect the average yield earned on business credit card receivables to increase during the second half of 2007 as compared to the first half of 2007 as introductory pricing periods expire on many of the accounts originated in prior periods and based on our expected levels of receivables growth and planned marketing strategies.

Total interest expense increased $6.2 million to $23.6 million for the three months ended June 30, 2007 as compared to the same period of 2006 and increased $12.8 million to $46.2 million for the six months ended June 30, 2007 as compared to the same period of 2006. The increases in total interest expense were due primarily to increases in our average deposits outstanding and increases in the average cost of funds on deposits resulting from the interest rate environment. Average deposits increased $244 million for the three months ended June 30, 2007 as compared to the same period of 2006 and $257 million for the six months ended June 30, 2007 as compared to the same period of 2006.

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

INTEREST RATE ANALYSIS AND AVERAGE BALANCES


	Three Months Ended June 30,
	2007							2006
	Average				Average			Average				Average
($ in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Owned receivables:
Business credit cards⁽¹⁾	$	1,248,235	$	33,976		10.92	%	$	997,754	$	30,051		12.08	%
Other receivables		7,567		94		5.02			7,440		88		4.75

Total receivables		1,255,802		34,070		10.88			1,005,194		30,139		12.03
Investments⁽²⁾		665,063		8,812		5.25			500,829		5,975		4.73
Retained interests in securitizations		228,231		4,679		8.20			195,118		4,399		9.02

Total interest-earning assets⁽³⁾		2,149,096	$	47,561		8.85	%		1,701,141	$	40,513		9.53	%
Noninterest-earning assets		306,068							450,066

Total assets	$	2,455,164						$	2,151,207


Interest-bearing liabilities:
Deposits	$	1,365,927	$	17,361		5.10	%	$	1,122,365	$	11,858		4.24	%
Debt		225,831		3,953		7.02			211,736		3,320		6.29
Subordinated debt payable to preferred securities trust		103,093		2,317		8.99			103,093		2,290		8.88
Other borrowings		110		2		5.27			824		11		5.04

Total interest-bearing liabilities		1,694,961	$	23,633		5.59	%		1,438,018	$	17,479		4.87	%
Noninterest-bearing liabilities		166,296							183,379

Total liabilities		1,861,257							1,621,397

Stockholders’ equity		593,907							529,810


Total liabilities and stockholders’ equity	$	2,455,164						$	2,151,207


Net interest spread						3.26	%						4.66	%
Net interest margin						4.47	%						5.43	%


(1)		Interest income includes late fees for owned business credit card receivables of $2.3 million for the three months ended June 30, 2007 and $2.0 million for the same period of 2006.

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

(3)		Includes assets held and available for sale and nonaccrual receivables.


	Six Months Ended June 30,
	2007							2006
	Average				Average			Average				Average
($ in thousands)	Balance		Interest		Rate			Balance		Interest		Rate
Interest-earning assets:
Owned receivables:
Business credit cards⁽¹⁾	$	1,266,466	$	69,419		11.05	%	$	963,962	$	58,879		12.32	%
Other receivables		7,619		218		5.78			7,591		187		4.97

Total receivables		1,274,085		69,637		11.02			971,553		59,066		12.26
Investments⁽²⁾		630,508		16,494		5.21			500,228		11,338		4.51
Retained interests in securitizations		229,517		9,785		8.53			188,017		8,381		8.92

Total interest-earning assets⁽³⁾		2,134,110	$	95,916		9.04	%		1,659,798	$	78,785		9.55	%
Noninterest-earning assets		305,638							478,458

Total assets	$	2,439,748						$	2,138,256


Interest-bearing liabilities:
Deposits	$	1,355,056	$	33,898		5.04	%	$	1,097,783	$	22,166		4.07	%
Debt		226,661		7,660		6.81			216,565		6,677		6.22
Subordinated debt payable to preferred securities trust		103,093		4,634		8.99			103,093		4,579		8.88
Other borrowings		111		3		5.27			463		12		5.02

Total interest-bearing liabilities		1,684,921	$	46,195		5.52	%		1,417,904	$	33,434		4.75	%
Noninterest-bearing liabilities		169,151							193,147

Total liabilities		1,854,072							1,611,051

Stockholders’ equity		585,676							527,205


Total liabilities and stockholders’ equity	$	2,439,748						$	2,138,256


Net interest spread						3.52	%						4.80	%
Net interest margin						4.70	%						5.51	%


(1)		Interest income includes late fees for owned business credit card receivables of $4.8 million for the six months ended June 30, 2007 and $3.8 million for the same period of 2006.

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

(3)		Includes assets held and available for sale and nonaccrual receivables.

PROVISION AND ALLOWANCE FOR RECEIVABLE LOSSES


	Three Months Ended				Six Months Ended
	June 30,				June 30,
($ in thousands)	2007		2006		2007		2006

Provision for credit losses	$	11,806	$	10,145	$	21,889	$	19,429
Provision for interest and fee losses		2,581		2,163		5,027		4,201

Provision for credit losses on a consolidated basis increased $1.7 million for the three months ended June 30, 2007 as compared to the same period of 2006, and increased $2.5 million for the six months ended June 30, 2007 as compared to the same period of 2006. The provision for interest and fee losses increased $418 thousand for the three months ended June 30, 2007 as compared to the same period of 2006, and increased $826 thousand for the six months ended June 30, 2007 as compared to the same period of 2006. The increases in provisions for credit losses and interest and fee losses for the three and six months ended June 30, 2007 as compared to the same periods of 2006 were due primarily to increases in average owned business credit card receivables of $250 million for the three months ended June 30, 2007 and $303 million for the six months ended June 30, 2007. The comparison of charge-off rates for the three and six months ended June 30, 2007 as compared to the same periods of 2006 is impacted by the change in bankruptcy law on October 17, 2005 that benefited charge-off rates in the first half of 2006 because it resulted in a surge in bankruptcy petition filings and charge-offs in 2005 that we otherwise would have expected to occur in later periods, including the first half of 2006.

The allowance for receivable losses on business credit card receivables was $52.5 million as of June 30, 2007, or 4.64% of owned receivables, which was higher as a percentage of owned receivables than the allowance of $49.7 million, or 4.39% of owned receivables, as of December 31, 2006. Owned business credit card receivables were $1.1 billion at June 30, 2007 and December 31, 2006. The increase in the allowance for receivable losses as a percentage of owned receivables reflects an increase in the estimate of losses inherent in the portfolio based on trends in delinquency rates as compared to December 31, 2006 and the current composition of the portfolio.

In December 2006, the federal financial institutions regulatory agencies issued theInteragency Policy Statement on the Allowance for Loan and Lease Lossesthat replaced the banking agencies’ previous policy statement on allowance for loan and lease losses. The policy statement was revised to ensure consistency with GAAP and describes the responsibilities of the board of directors, management and bank examiners regarding the allowance for loan and lease losses. In accordance with the guidance in the policy statement, management implemented enhancements to the allowance process and documentation in 2006 and 2007 that had no material impact on our financial position or results of operations.

Although charge-off levels are not always predictable since they are impacted by the economic environment and other factors beyond our control and there may be month-to-month or quarterly variations in losses or delinquencies, we expect the charge-off rate on owned business credit card receivables for the year ending December 31, 2007 to be within approximately 10 basis points of the rate of 3.19% that was experienced for the year ended December 31, 2006. We base this expectation on the level of delinquent receivables at June 30, 2007 and the expected level of growth in receivables.

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


	June 30,			December 31,			June 30,
($ in thousands)	2007			2006			2006

Consolidated – Owned
Allowance for receivable losses	$	53,735		$	50,926		$	49,662
Receivables 30 days or more delinquent		27,115			26,053			25,482
Receivables 90 days or more delinquent		13,446			12,632			12,560
Nonaccrual receivables		9,155			10,524			11,824
Accruing receivables past due 90 days or more		12,249			11,302			11,266
As a percentage of gross receivables:
Allowance for receivable losses		4.71	%		4.46	%		4.64	%
Receivables 30 days or more delinquent		2.38			2.28			2.38
Receivables 90 days or more delinquent		1.18			1.11			1.17
Nonaccrual receivables		0.80			0.92			1.11
Accruing receivables past due 90 days or more		1.07			0.99			1.05
Net principal charge-offs for the year-to-date period ended June 30 and December 31	$	19,340		$	33,780		$	15,608
Net principal charge-offs for the three months ended June 30 and December 31		9,557			9,170			7,524
As a percentage of average gross receivables (annualized):
Net principal charge-offs for the year-to-date period ended June 30 and December 31		3.04	%		3.17	%		3.21	%
Net principal charge-offs for the three months ended June 30 and December 31		3.04			3.05			2.99

Business Credit Cards – Owned
Allowance for receivable losses	$	52,525		$	49,715		$	48,450
Receivables 30 days or more delinquent		27,115			26,053			25,482
Receivables 90 days or more delinquent		13,466			12,632			12,560
Nonaccrual receivables		9,155			10,524			11,824
Accruing receivables past due 90 days or more		12,249			11,302			11,266
As a percentage of gross receivables:
Allowance for receivable losses		4.64	%		4.39	%		4.56	%
Receivables 30 days or more delinquent		2.39			2.30			2.40
Receivables 90 days or more delinquent		1.19			1.11			1.18
Nonaccrual receivables		0.81			0.93			1.11
Accruing receivables past due 90 days or more		1.08			1.00			1.06
Net principal charge-offs for the year-to-date period ended June 30 and December 31	$	19,339		$	33,775		$	15,604
Net principal charge-offs for the three months ended June 30 and December 31		9,556			9,169			7,520
As a percentage of average gross receivables (annualized):
Net principal charge-offs for the year-to-date period ended June 30 and December 31		3.05	%		3.19	%		3.24	%
Net principal charge-offs for the three months ended June 30 and December 31		3.06			3.07			3.01

SECURITIZATION INCOME

We sell business credit card receivables through securitizations accounted for as sales under GAAP. We continue to own and service the accounts that generate the securitized receivables. Securitizations impacted the following line items on the consolidated income statements:


	Three Months Ended				Six Months Ended
	June 30,				June 30,
($ in thousands)	2007		2006		2007		2006

Securitization income	$	22,766	$	29,686	$	46,277	$	63,264
Interest income (discount accretion)		4,679		4,399		9,785		8,381
Interchange income		49,207		39,127		91,621		72,841
Servicing revenues		22,541		15,329		42,917		29,011

Total	$	99,193	$	88,541	$	190,600	$	173,497

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

Securitization income decreased $6.9 million for the three months ended June 30, 2007 as compared to the same period of 2006, and decreased $17.0 million for the six months ended June 30, 2007 as compared to the same period of 2006. The decreases in securitization income for the three and six months ended June 30, 2007 as compared to the same periods of 2006 were due primarily to decreases in yields on securitized receivables and increases in the floating interest rates earned by noteholders, partially offset by growth in average securitized receivables. The trends and future expectations for yields 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. The increase in the floating interest rates earned by noteholders for the three and six months ended June 30, 2007 as compared to the same periods of 2006 resulted from the interest rate environment. Securitization income includes unfavorable valuation adjustments to the retained interest-only strip of $2.2 million for the three months ended June 30, 2006 and $3.5 million for the six months ended June 30, 2006. The change in bankruptcy law on October 17, 2005 benefited charge-off rates in the first half of 2006 because it resulted in a surge in bankruptcy petition filings and charge-offs in 2005 that we otherwise would have expected to occur in later periods, including the first half of 2006. Our estimate of future cash flows over the three-month weighted average life of the existing securitized receivables was lower at June 30, 2006 compared to the estimates at March 31, 2006 and December 31, 2005 as a result of lower yields, higher floating interest rates earned by noteholders, the impact of the timing of bankruptcy charge-offs and our expectations regarding future charge-off rates, which resulted in the unfavorable valuation adjustments in 2006.

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.

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, 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
Three months ended June 30, 2006
Net interest income	$	24,050		8.06	%	$	64,511		$	88,561		8.39	%
Provision for credit losses		10,145		3.40			28,833	⁽²⁾		38,978		3.69
Noninterest revenues		86,104		28.87			(35,678	)		50,426		4.78
Average business credit card interest-earning assets		1,192,872					3,027,262			4,220,134
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
Six months ended June 30, 2006
Net interest income	$	46,836		8.13	%	$	130,896		$	177,732		8.77	%
Provision for credit losses		19,479		3.38			57,228	⁽²⁾		76,707		3.78
Noninterest revenues		167,442		29.07			(73,668	)		93,774		4.63
Average business credit card interest-earning assets		1,151,979					2,902,560			4,054,539

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
As of December 31, 2006
Ending business credit card receivables	$	1,133,132				$	4,073,128		$	5,206,260
Receivables 30 days or more delinquent		26,053		2.30	%		108,159			134,212		2.58	%
Receivables 90 days or more delinquent		12,632		1.11			52,279			64,911		1.25
As of June 30, 2006
Ending business credit card receivables	$	1,062,249				$	3,323,869		$	4,386,118
Receivables 30 days or more delinquent		25,482		2.40	%		90,987			116,469		2.66	%
Receivables 90 days or more delinquent		12,560		1.18			45,008			57,568		1.31


(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, unfavorable valuation adjustments to retained interests in securitizations of $2.2 million in the three months ended June 30, 2006 and $3.5 million in the six months ended June 30, 2006 are included as increases to provision for credit losses.

SERVICING REVENUES

Advanta Business Cards recognized servicing revenue as follows:


($ in thousands)	2007		2006

Three months ended June 30	$	22,541	$	15,329
Six months ended June 30		42,917		29,011

The increases in servicing revenues for the three and six months ended June 30, 2007 as compared to the same periods of 2006 were due to increased volume of securitized business credit receivables.

OTHER REVENUES


	Three Months Ended						Six Months Ended
($ in thousands)	June 30,						June 30,
	2007			2006			2007			2006

Interchange income	$	62,130		$	51,217		$	117,364		$	95,610
Cash back rewards		(15,346	)		(10,852	)		(28,746	)		(20,365	)
Business rewards		(6,007	)		(5,444	)		(11,939	)		(10,048	)
Balance transfer fees		2,162			1,689			3,991			3,333
Investment securities gains, net		1,355			2,824			2,345			3,532
Cash usage fees		1,020			854			2,153			1,677
Earnings on investment in Fleet Credit Card Services, L.P.		376			819			376			819
Other business credit card fees		1,127			753			2,352			1,605
Other, net		1,179			437			2,581			1,110

Total other revenues, net	$	47,996		$	42,297		$	90,477		$	77,273

Interchange income includes interchange fees on both owned and securitized business credit cards. The increases in interchange income for the three and six months ended June 30, 2007 as compared to the same periods of 2006 were due primarily to higher merchandise sales transaction volume. The average interchange rate was 2.2% in each of the three-month and six-month periods ended June 30, 2007 and 2006.

The increases in cash back rewards and business rewards for the three and six months ended June 30, 2007 as compared to the same periods of 2006 were due primarily to higher merchandise sales transaction volume and higher average number of business credit card accounts in the rewards programs. Both periods include changes in estimates of costs of future 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 $1.1 million for the three months ended June 30, 2007 as compared to an increase of $200 thousand for the three months ended June 30, 2006. Changes in estimates increased other revenues $1.5 million for the six months ended June 30, 2007 as compared to an increase of $700 thousand for the six months ended June 30, 2006.

Investment securities gains, net, include realized and unrealized gains and losses on venture capital investments reflecting the market conditions for those investments in each respective period, as well as realized gains and losses on the sale of other investments. We had a net gain of $818 thousand on venture capital investments for the three months ended June 30, 2007. There were no gains or losses on venture capital investments for the same period of 2006. We had a net gain on venture capital investments of $1.3 million for the six months ended June 30, 2007 as compared to a net gain of $330 thousand for the six months ended June 30, 2006. For the three and six months ended June 30, 2006, net realized gains on other investments included a $2.4 million gain on MasterCard Incorporated’s redemption of a portion of our shares related to their initial public offering. Our MasterCard Class B common shares have zero cost

basis and no book value. Beginning in August 2007, we will have the opportunity to convert a portion of our remaining MasterCard Class B shares into MasterCard Class A shares and to sell them. If the eligible MasterCard shares had been converted to MasterCard Class A shares as of June 30, 2007, the eligible shares would have had a fair value of $3.4 million as of that date.

In 2007, our bank subsidiaries sold Federal Deposit Insurance Corporation deposit insurance assessment credits to third-party banks. Other revenues include 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,
	2007		2006		2007		2006

Salaries and employee benefits	$	26,246	$	24,014	$	52,344	$	47,303
Amortization of deferred origination costs, net		12,852		11,711		25,719		23,659
External processing		7,007		6,182		13,707		12,123
Marketing		4,075		4,150		7,310		7,757
Professional fees		2,978		2,918		6,883		5,495
Equipment		2,730		2,371		5,325		4,988
Occupancy		2,343		2,332		4,645		4,471
Fraud		2,217		813		3,685		1,583
Postage		1,531		1,178		2,925		2,333
Credit		1,157		1,380		2,447		2,473
Other		5,641		5,687		10,589		10,190

Total operating expenses	$	68,777	$	62,736	$	135,579	$	122,375

Salaries and employee benefits increased for the three and six months ended June 30, 2007 as compared to the same periods of 2006 due primarily to increases in executive compensation, personnel hired to support growth in owned and securitized receivables and the number of new accounts, and higher employee stock option expense.

Amounts paid to third parties to acquire business credit card accounts and certain other origination costs are deferred and netted against any related business credit card origination fee, and the net amount is amortized on a straight-line basis over a privilege period of one year. Amortization of deferred origination costs, net, increased for the three and six months ended June 30, 2007 as compared to the same periods of 2006 due primarily to an increase in new account originations, partially offset by a decrease in our average acquisition cost per account.

External processing expense increased for the three and six months ended June 30, 2007 as compared to the same periods of 2006 due primarily to an increase in the number of accounts and higher transaction volume, and higher processing costs associated with the pilot of new outsourcing initiatives.

Professional fees increased for the six months ended June 30, 2007 as compared to the same period of 2006 due primarily to costs related to the pilot of new outsourcing initiatives and the use of external consultants for marketing and profitability initiatives.

Fraud expense increased for the three and six months ended June 30, 2007 as compared to the same periods of 2006 due to lower fraud recoveries associated with certain types of credit card fraud and growth in owned and securitized receivables.

LITIGATION CONTINGENCIES

INCOME TAXES

Income tax expense attributable to continuing operations was as follows:


	Three Months Ended						Six Months Ended
($ in thousands)	June 30,						June 30,
	2007			2006			2007			2006

Income tax expense	$	13,933		$	14,423		$	27,761		$	28,139
Effective tax rate		38.0	%		38.5	%		38.6	%		38.5	%

In the three months ended June 30, 2007, we adjusted our estimated effective tax rate for the full year 2007 from 39.2% to 38.6% based on a decrease in anticipated levels of certain nondeductible expenses as compared to our estimates as of March 31, 2007.

In July 2006, the FASB issued FIN No. 48 that provides a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. In accordance with the statement, before a tax benefit can be recognized, a tax position is evaluated using a threshold that it is more likely than not that the tax position will be sustained upon examination. When evaluating the more-likely-than-not recognition threshold, a company should presume the tax position will be examined by the appropriate taxing authority that has full knowledge of all relevant information. If the tax position meets the more-likely-than-not recognition threshold, it is initially and subsequently measured as the largest amount of benefit that is greater than 50% likely of being realized upon ultimate settlement. The interpretation also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. We adopted the provisions of FIN No. 48 effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the January 1, 2007 balance of retained earnings. The adoption did not have a material impact on our effective tax rate for the three and six months ended June 30, 2007.

We have an ownership interest in Fleet Credit Card Services, L.P. related to our exit from the consumer credit card business in 1998. The gain associated with the original transfer of assets to Fleet Credit Card Services, L.P. was not subject to income tax. As of June 30, 2007, the cumulative gain on transfer of consumer credit card business and our deficit capital account in Fleet Credit Card Services, L.P. on a tax basis for which no deferred taxes have been provided is approximately $650 million, as the transaction structure remains nontaxable under current tax law.

DISCONTINUED OPERATIONS

For the three 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. For the same period of 2006, we recorded a $500 thousand pretax gain on discontinuance of our mortgage business representing changes in estimates of legal expenses and related insurance reimbursements and other favorable changes in estimate related to a former mortgage insurance product.

We recorded a pretax gain on discontinuance of our leasing business of $865 thousand for the three months ended June 30, 2007 and $700 thousand for the same period of 2006, both 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. The largest components of the change in estimate in 2006 were favorable credit recoveries and equipment realization rates based on performance trends.

OFF-BALANCE SHEET ARRANGEMENTS

Off-balance sheet business credit card securitizations provide a significant portion of our funding and they are one of our primary sources of liquidity. At June 30, 2007, off-balance sheet securitized receivables represented 67% of our funding. Our credit risk in the securitized receivables is limited to the amount of our retained interests in securitizations. We had securitized business credit card receivables of $4.9 billion at June 30, 2007 and $4.1 billion at December 31, 2006.

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


	Three Months Ended				Six Months Ended
	June 30,				June 30,
($ in thousands)	2007		2006		2007		2006

Average securitized receivables	$	4,581,666	$	3,222,380	$	4,368,446	$	3,090,577
Securitization income		22,766		29,686		46,277		63,264
Discount accretion		4,679		4,399		9,785		8,381
Interchange income		49,207		39,127		91,621		72,841
Servicing revenues		22,541		15,329		42,917		29,011
Proceeds from new securitizations		398,682		534,374		756,340		1,070,264
Proceeds from collections reinvested in revolving-period securitizations		2,681,748		1,779,595		5,065,732		3,463,397
Cash flows received on retained interests		79,731		92,582		164,487		170,210

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, 2007 and December 31, 2006 and for the three and six months ended June 30, 2007 and 2006.

In the six months ended June 30, 2007, we completed additional business credit card securitizations. The revolving periods for those AdvantaSeries securitizations extend to the following dates:

Noteholder

Principal

Coupon

Scheduled End of

($ in thousands)

Balance

Type

Revolving Period

AdvantaSeries:

2007-D1

25,000

Floating

May 31, 2009

2007-A2

225,000

Fixed

July 31, 2009

2007-A4

200,000

Floating

August 31, 2009

2007-B1

100,000

Floating

April 30, 2011

2007-A1

200,000

Floating

May 31, 2011

2007-A3

200,000

Floating

August 31, 2011

The level of investment-grade notes outstanding at June 30, 2007 issued as part of the AdvantaSeries de-linked securitization structure, and our ability to issue and hold additional AdvantaSeries non-investment grade notes, provides additional capacity for future securitization issuances in excess of our expected securitization funding needs through December 31, 2007. The de-linked structure provides flexibility to issue different classes of asset-backed securities with varying maturities, sizes, and terms based on our funding needs and prevailing market conditions.

Our Series 1997-A securitization represents a $200 million committed commercial paper conduit facility available through June 2008 that provides off-balance sheet funding, of which $20 million was used at June 30, 2007. Our Series 2007-A securitization represents a $150 million committed commercial paper conduit facility available through January 2008 that provides off-balance sheet funding, none of which was used at June 30, 2007. Upon the expiration of these facilities, management expects to obtain the appropriate level of replacement funding under similar terms and conditions.

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

MARKET RISK SENSITIVITY

We measure our interest rate risk using a rising rate scenario and a declining rate scenario. We estimate net interest income using a third party software model that uses standard income modeling techniques. We measure the effect of interest rate risk on our managed net interest income, which includes net interest income on owned assets and net interest income on securitized receivables. The measurement of managed net interest income in addition to net interest income on owned assets is meaningful because our securitization income fluctuates with yields on securitized receivables and interest rates earned by securitization noteholders. Both increasing and decreasing rate scenarios assume an instantaneous shift in interest rates and measure the corresponding change in expected net interest income as compared to a base case scenario that includes management’s current expectations of future interest rate movements. We estimated that our net interest income would change as follows over a twelve-month period:


	June 30,			December 31,
	2007			2006

Estimated percentage increase (decrease) in net interest income on owned assets:
Assuming 200 basis point increase		13	%		12	%
Assuming 200 basis point decrease		(4	)%		(6	)%

Estimated percentage increase (decrease) in net interest income on securitized receivables:
Assuming 200 basis point increase		(8	)%		(8	)%
Assuming 200 basis point decrease		19	%		15	%

Estimated percentage increase (decrease) in net interest income on managed assets:
Assuming 200 basis point increase		(3	)%		(3	)%
Assuming 200 basis point decrease		13	%		10	%

Our managed net interest income decreases in a rising rate scenario due to the variable rate funding of the majority of our off-balance sheet securitized receivables and the portion of the business credit card portfolio that is effectively at a fixed rate because of the nature of the pricing of the accounts or because the customer pays their balance in full each month. Our business credit card receivables include interest rate floors that cause our managed net interest income to increase in the declining rate scenario. Changes in the composition of our balance sheet, the interest rate environment, business credit card pricing terms and securitization funding strategies have also impacted the results of the net interest income sensitivity analyses as of June 30, 2007 as compared to the results as of December 31, 2006.

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

LIQUIDITY, CAPITAL RESOURCES AND ANALYSIS OF FINANCIAL CONDITION

At June 30, 2007, we had a high level of liquidity including $53.8 million of cash and $548.9 million of federal funds sold. At June 30, 2007, we also had receivables held for sale and investments available for sale that could be sold to generate additional liquidity. At June 30, 2007, we had $133.7 million of subordinated trust assets held at non-bank subsidiaries that were rated BB by Standard & Poor’s and Ba2 by Moody’s Investor Service that could be sold or borrowed against to generate additional liquidity.

As shown on the statements of cash flows, our operating activities generated $228.5 million of cash in the six months ended June 30, 2007 due primarily to the proceeds from receivables sold in excess of the increase in receivables held for sale, excess spread and servicing revenues related to securitized receivables, interchange income, and interest and fee income on owned receivables, partially offset by operating expenses, interest expense and costs of rewards programs. For the six months ended June 30, 2006, our operating activities generated $64.9 million of cash and were impacted by the timing of securitization transactions. We expect to fund future growth and continuing operations with off-balance sheet securitizations, deposits, other borrowings, and sources of operating cash flow, including excess spread and servicing revenues related to securitized receivables, interchange income, and interest and fee income on owned receivables.

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


	June 30, 2007					December 31, 2006
($ in thousands)	Amount		%			Amount		%

Off-balance sheet securitized receivables⁽¹⁾	$	4,712,152		67	%	$	3,932,732		63	%
Deposits		1,393,769		20			1,365,138		22
Debt		225,082		3			227,126		4
Subordinated debt payable to preferred securities trust		103,093		1			103,093		2
Equity		599,210		9			567,161		9

Total	$	7,033,306		100	%	$	6,195,250		100	%


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

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

We had $91.3 million of owned business credit card receivables at a nonbank subsidiary at June 30, 2007. In April 2007, we entered into a secured borrowing agreement using these business credit card receivables as collateral up to a maximum of $100 million. We intend to use borrowings from this agreement to fund receivables growth at nonbank subsidiaries. There were no borrowings on this facility as of June 30, 2007.

In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split, in the form of a 50% stock dividend payable June 15, 2007, on both Class A and Class B Common Stock. In addition, the Board of Directors of Advanta Corp. approved a 25% increase in the regular quarterly cash dividends on Class A and Class B Common Stock beginning with the dividend paid in the second quarter of 2007. We expect to fund the increase in cash dividends with sources of operating cash flows. The Board of Directors of Advanta Corp. also authorized the repurchase

of up to 1.5 million shares of Advanta Corp.’s Class B Common Stock. As of June 30, 2007, we have repurchased 406 thousand shares for $13.0 million in connection with this authorization. We expect to fund the remaining repurchase of additional shares with existing liquidity.

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

We adopted the provisions of FIN No. 48 effective January 1, 2007, and as a result, recorded a $2.1 million reduction to the January 1, 2007 balance of retained earnings. The liability for unrecognized tax benefits as of January 1, 2007 was $25.6 million. We estimate that approximately $1.3 million of this liability may be payable in the twelve months ending June 30, 2008. We are unable to reasonably estimate the amount or timing of payments for the remainder of the liability. Other than the liability for unrecognized tax benefits, there have been no significant changes to the amounts that were disclosed in the contractual obligations table included in the “Liquidity, Capital Resources and Analysis of Financial Condition” section of Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2006.

Our bank subsidiaries are subject to regulatory capital requirements and other regulatory provisions that restrict their ability to lend and/or pay dividends to Advanta Corp. and its affiliates. Advanta Bank Corp. issues and primarily funds our business purpose credit cards. Advanta Bank Corp. paid dividends to Advanta Corp. of $40 million in the six months ended June 30, 2007. At June 30, 2007, Advanta Bank Corp.’s combined total capital ratio (combined Tier I and Tier II capital to risk-weighted assets) was 23.05% as compared to 21.37% at December 31, 2006. At both dates, Advanta Bank Corp. had capital in excess of levels a bank is required to maintain to be classified as well capitalized under the regulatory framework for prompt corrective action. Prior to our exit from the mortgage business in the first quarter of 2001, Advanta National Bank issued and funded a large portion of our mortgage business. Advanta National Bank paid a dividend of $39.1 million and return of capital of $28 million to Advanta Corp. in the three months ended March 31, 2007, after having received prior approval from the Office of the Comptroller of the Currency. In April 2007, we received approval for the conversion of Advanta National Bank from a national bank to a Delaware state chartered bank that is named Advanta Bank. The conversion to a Delaware state bank was effective May 3, 2007. This bank subsidiary’s operations are currently not material to our consolidated operating results. Our insurance subsidiaries are also subject to certain capital and dividend rules and regulations as prescribed by state jurisdictions in which they are authorized to operate. Management believes that these restrictions, for both bank and insurance subsidiaries, will not have an adverse effect on Advanta Corp.’s ability to meet its cash obligations due to the current levels of liquidity and diversity of funding sources.

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

This Quarterly Report on Form 10-Q contains statements that may constitute “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”). In addition, other written or oral communications provided by Advanta from time to time may contain “forward-looking statements.” Forward-looking statements are not historical facts but instead are based on certain assumptions by management and represent only our belief regarding future events, many of which, by their nature, are inherently uncertain and outside our control. Forward-looking statements may include, among others: statements about anticipated growth in credit card accounts and receivables; interest yields; expected cost of funds; net principal charge-off rates; estimated values of and anticipated cash flows from our retained interests in securitizations; our ability to replace existing credit facilities and securitization financing when they expire or terminate; income tax uncertainties; realizability of net deferred tax asset; expected levels of liquidity and capital; anticipated outcome and effects of litigation and other future expectations of Advanta.

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

	(1)		factors affecting our net interest income on owned and securitized receivables, including fluctuations in the volume of receivables and the range and timing of pricing offers to customers;

	(2)		competitive pressures, including product development and pricing, among financial institutions;

	(3)		political conditions, social conditions, monetary and fiscal policies and general economic and other environmental conditions that affect the level of new account originations, customer spending, delinquencies and charge-offs;

	(4)		factors affecting fluctuations in the number of accounts or receivable balances, including the retention of customers after promotional pricing periods have expired;

	(5)		interest rate fluctuations;

	(6)		the level of expenses;

	(7)		the timing of the securitizations of our receivables;

	(8)		the effects of government regulation, including restrictions and limitations imposed by banking laws, regulators, and examinations;

	(9)		effect of, and changes in, tax laws, rates, regulations and policies;

	(10)		effect of legal and regulatory developments, including changes in bankruptcy laws and regulations and the ultimate resolution of industry-related judicial proceedings relating to the legality of certain interchange rates;

	(11)		relationships with customers, significant vendors and business partners;

	(12)		difficulties or delays in the development, acquisition, production, testing and marketing of products or services, including the ability and cost to obtain intellectual property rights or a failure to implement new products or services when anticipated;

	(13)		the amount and cost of financing available to us;

	(14)		the ratings on the debt of Advanta Corp. and its subsidiaries;

	(15)		the effects of changes in accounting policies or practices as may be required by changes in U.S. generally accepted accounting principles;

	(16)		the impact of litigation, including judgments, settlements and actual or anticipated insurance recoveries for costs or judgments;

	(17)		the proper design and operation of our disclosure controls and procedures; and

	(18)		the ability to attract and retain key personnel.

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted pursuant to the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, rather than absolute, assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

An evaluation was performed by management, with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of June 30, 2007, our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms. There have been no changes in our internal control over financial reporting that occurred during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II – OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

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

ITEM 1A. RISK FACTORS

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

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

(a)		None.

(b)		None.

(c)		The table below provides information with respect to all purchases of equity securities by us during the period from April 1, 2007 through June 30, 2007. In April 2007, the Board of Directors of Advanta Corp. approved a three-for-two stock split, in the form of a 50% stock dividend payable June 15, 2007, on both Class A and Class B Common Stock. We have adjusted all share amounts and per share data in the table below to reflect the three-for-two stock split for all months presented. Shares are in thousands.

ISSUER PURCHASES OF EQUITY SECURITIES


									(d) Maximum
							(c) Total		Number (or
							Number of		Approximate
							Shares		Dollar Value
							Purchased as		of Shares)
							Part of		That May Yet
	(a) Total						Publicly		Be Purchased
	Number of			(b) Average			Announced		Under the
	Shares			Price Paid			Plans or		Plans or
Period	Purchased			per Share			Programs (C)		Programs (C)

Class A:
4/1/07 – 4/30/07		0.0			N/A	*		0.0		0.0
5/1/07 – 5/31/07		0.0			N/A	*		0.0		0.0
6/1/07 – 6/30/07		0.2	(B)	$	30.90			0.0		0.0

Subtotal Class A		0.2		$	30.90			0.0		0.0
Class B:
4/1/07 – 4/30/07		24.1	(A)	$	31.34			0.0		1,500.0
5/1/07 – 5/31/07		242.6		$	30.99			242.6		1,257.4
6/1/07 – 6/30/07		165.3	(B)	$	33.70			163.8		1,093.6

Subtotal Class B		432.0		$	32.05			406.4		1,093.6

Total		432.2		$	32.05			406.4		1,093.6


(A)		In April 2007, in connection with the vesting of shares related to the 2006 performance year for our management incentive program, we withheld 24.1 thousand vested shares from certain employees (including officers) to meet our minimum statutory tax withholding requirements.

(B)		Includes cash paid in lieu of fractional shares related to the stock dividend payable June 15, 2007.

(C)		In April 2007, the Board of Directors of Advanta Corp. authorized the repurchase of up to 1.5 million shares of Advanta Corp.’s Class B Common Stock.

*		N/A – Not Applicable

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

(a)		Advanta Corp. held its Annual Meeting of Stockholders on June 4, 2007 (the “Annual Meeting”). The Annual Meeting occurred prior to June 15, 2007, the effective date of the three-for-two stock split approved by the Board of Directors of Advanta Corp. in April 2007. The information provided in (c) below has not been adjusted to reflect the stock split.

(b)		Not required.

(c)		The following proposals were submitted to a vote of stockholders. As described in (a) above, the information below has not been adjusted to reflect the stock split.

The election of two directors to hold office until the 2010 Annual Meeting of Stockholders.


NOMINEES	VOTES FOR		VOTES WITHHELD
Dennis Alter		6,852,662		1,097,800
Dana Becker Dunn		6,504,875		1,445,587

The proposal to approve the Advanta Corp. Office of the Chairman Cash Bonus Plan.


FOR	AGAINST		ABSTAIN		BROKER NON-VOTES
7,591,537		184,395		174,530		0

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, 2007:


FOR	AGAINST		ABSTAIN		BROKER NON-VOTES
7,641,995		106,392		202,115		0

(d)

Not required.

ITEM 6. EXHIBITS

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


Exhibit
Number		Description of Document

3.2		Amended and Restated Bylaws

3.3		Rights Agreement, dated April 11, 2007, by and between us and Mellon Investor Services LLC, as Rights Agent

10.1		Advanta Employees Severance Pay Plan, as amended and restated effective April 2, 2007

10.2		Advanta Corp. Employee Change of Control Severance Plan, as amended and restated effective April 2, 2007

10.3		Advanta Senior Management Change of Control Severance Plan, as amended and restated effective April 2, 2007

10.4		Advanta Corp. Office of the Chairman Cash Bonus Plan

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

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, 2007

By		/s/ David B. Weinstock

Vice President and Chief Accounting Officer August 8, 2007

EXHIBIT INDEX


		Manner of
Exhibit	Description	Filing

3.2	Amended and Restated Bylaws	*

3.3	Rights Agreement, dated April 11, 2007, by and between us and Mellon Investor Services LLC, as Rights Agent	**

10.1	Advanta Employees Severance Pay Plan, as amended and restated effective April 2, 2007	***

10.2	Advanta Corp. Employee Change of Control Severance Plan, as amended and restated effective April 2, 2007	****

10.3	Advanta Senior Management Change of Control Severance Plan, as amended and restated effective April 2, 2007	*****

10.4	Advanta Corp. Office of the Chairman Cash Bonus Plan	******

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	*******


*		Incorporated by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed April 5, 2007.

**		Incorporated by reference to Exhibit 1 to the Registrant’s Registration Statement on Form 8-A filed with the United States Securities and Exchange Commission on April 11, 2007, including: The Form of Rights Certificate, attached as Exhibit A; and The Summary of Rights to Purchase Series A Junior Participating Preferred Stock, attached as Exhibit B.

***		Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed April 5, 2007.

****		Incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed April 5, 2007.

*****		Incorporated by reference to Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed April 5, 2007.

******		Incorporated by reference to Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A filed April 30, 2007.

*******		Filed electronically herewith.

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Advanta (ADVNQ) Inactive 10-Q2007 Q2 Quarterly report

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