Fitch Affirms Advanta At 'B+' & Revises Outlook to Positive

Business Wire, July 21, 2004

NEW YORK -- Fitch Ratings has revised the Rating Outlook on Advanta Corp. (Advanta) to Positive from Stable and affirmed the long-term rating of 'B '. In conjunction with this action, Fitch has assigned new ratings to Advanta Bank Corp. (ABC) and has affirmed and withdrawn ratings on Advanta National Bank (ANB). A detailed list of affected ratings is available at the end of this release.

Today's affirmation and Outlook revision recognize the improvement in Advanta's core operating performance, which if sustained, could result in a future upgrade of the company's ratings. Since refocusing the company on small business credit card lending, Advanta has been able to achieve stable and improving core operating results (excluding one-time charges). This improvement can be attributed to Advanta's conscious effort to target more creditworthy customers, which has resulted in lower credit losses on both a coincident and lagged basis. Fitch also views Advanta's capital levels as solid at the current rating level with an expectation that the company will maintain sound risk-adjusted capitalization. While Advanta has established a solid niche in small business credit card lending, Fitch does expect the competitive environment will become more intense in this business segment. Advanta's ability to maintain its business focus and further improve its financial profile will be partly determined by its ability to appropriately adjust to the changes in the competitive environment.

Fitch remains concerned with Advanta's outstanding litigation with J.P. Morgan Chase surrounding the sale Advanta's mortgage business in February 2001. While the outcome of this lawsuit remains uncertain, Fitch believes that even an adverse outcome would be manageable from both a capital and liquidity perspective within the current ratings.

Fitch is encouraged that Advanta has taken steps to improve the structure of its corporate governance framework. Changes such as adopting new charters for board level committees and comprising audit, compensation and nominating committees solely of independent directors move Advanta toward establishing standards that are more consistent with industry norms. While corporate governance is not currently viewed as a restraint on Advanta's ratings or preventing consideration of an upgrade, Fitch would expect to see additional enhancements in corporate governance structure and evidence that the framework produces functionality that provides benefits to its stakeholders before more meaningful changes in ratings would be considered.

Ratings affirmed with Positive Outlook

Advanta Corp.

-- Senior debt 'B ';

-- Short-term 'B'.

Advanta Capital Trust I

-- Trust preferred stock 'B-'.

Ratings assigned with Positive Outlook

Advanta Bank Corp.

-- Long-term deposits 'BB-';

-- Senior debt 'B ';

-- Short-term 'B'.

Ratings affirmed and withdrawn

Advanta National Bank

-- Long-term deposits 'BB-';

-- Senior debt 'B ';

-- Subordinated debt 'B';

-- Short-term 'B'.