Advanta Corp.'s Ratings Lowered By Fitch.

Business Editors

NEW YORK--(BUSINESS WIRE)--July 31, 2000

Fitch, the international rating agency, lowers the ratings of Advanta Corp. as follows: senior debt from `BB' to `B+' and preferred stock from `B+' to `B-'. Advanta National Bank's certificates of deposit rating was lowered from `BB+/B' to `BB-/B' and the unsecured debt of Advanta National Bank was lowered from `BB' to `B+'. The ratings remain on Rating Watch Negative, where they were first placed on June 5, 2000.

This action reflects some of the negative ramifications that have impacted Advanta as a result of its announcement on June 2, 2000, that Advanta's banking units have reached agreements with their respective bank regulatory agencies, primarily relating to the bank's subprime lending operations. The regulatory agreements establish temporary asset and deposit growth limits, restrictions on taking brokered deposits, and requiring that Advanta National Bank maintain capital ratios, which are well above the current minimum regulatory requirements established for `well capitalized' financial institutions. Fitch anticipates that these limitations will negatively affect the company's loan and deposit growth expectations for the foreseeable future.

Additional regulatory requirements announced by the firm on July 31, 2000 will require Advanta to take a charge to earnings in the second quarter of 2000. These charges are related to writedowns of its securitization-related residual assets, as well as adding to its on-balance sheet reserve. Under the agreement signed with regulators on May 31, 2000, Advanta National Bank was required to change its charge-off policy for delinquent mortgages to 180 days and modify its accounting processes and methodology for its allowance for loan losses and valuation of residual assets.

Fitch is less concerned with the economic impact of the second quarter 2000 charges, as it already factored that into its internal capital model. However, Fitch is concerned about the financial impact that regulatory agreements will have on the company's strategy going forward. Advanta had intended to fund a significant portion of future originations on balance sheet with deposits. As a result of the regulatory restrictions, the company will likely need to fund more of its loan originations with securitizations, which are less cost-effective and market sensitive than deposits. Fitch expects that this change will likely put further pressure on core operating profitability for Advanta over the intermediate term.

The ratings for Advanta remain on Rating Watch Negative as a result of the uncertain impact that recent bank regulatory scrutiny will have on the company's operations. The Rating Watch also reflects potential ramifications that may occur as a result of a strategic review currently being undertaken by management. Advanta has hired Salomon Smith Barney to assist it in studying possible strategic alternatives for the mortgage and leasing businesses, which could result in a partnership, alliance, joint venture, or outright sale of these operations. Given current market conditions, Fitch believes that such an execution may be difficult to achieve.

Fitch is an international rating agency that provides global capital market investors with the highest quality ratings and research. Dual headquartered in New York and London with a major office in Chicago, Fitch rates entities in 75 countries and has some 1,100 employees in more than 40 local offices worldwide. The agency, which is a combination of Fitch IBCA and Duff & Phelps Credit Rating Co., provides ratings for Financial Institutions, Insurance, Corporates, Structured Finance, Sovereigns and Public Finance Markets worldwide.