Metris Reports Fourth Quarter 2004 Results

    Business Editors

    MINNETONKA, Minn.--(BUSINESS WIRE)--Jan. 26, 2005--Metris Companies Inc. (NYSE:MXT) today reported net income of $0.7 million for the quarter ended December 31, 2004. This compares to net income of $34.8 million for the quarter ended December 31, 2003. The Company also reported net income of $33.7 million for the year ended December 31, 2004, which compares to a net loss of $147.7 million for the full year 2003.
    In accordance with Emerging Issues Task Force Issue No. 03-6 "Participating Securities and the Two-Class Method under FASB Statement 128," diluted earnings per common share are calculated as net income after preferred dividends, less undistributed income allocated to preferred shareholders, divided by the sum of weighted average common shares outstanding and common share equivalents. For earnings per share purposes, common share equivalents do not include an assumed conversion of preferred securities.
    For the quarter ended December 31, 2004, the Company reported a loss of $0.18 per diluted common share. This compares to earnings of $0.24 per diluted common share for the quarter ended December 31, 2003. The Company also reported a loss of $0.17 per diluted common share for the year ended December 31, 2004, compared to a loss of $3.27 per diluted common share for the full year 2003.
    "We maintained positive earnings in the fourth quarter despite the impact of all the financing transactions executed during the period and our increased marketing efforts," said Metris Chairman and Chief Executive Officer David Wesselink. "Through a great deal of hard work and commitment from our employees to improve our operations and efficiencies, we posted net income of $33.7 million for full-year 2004, which represents a significant increase over the loss in 2003. One of the primary drivers of our success was the significant improvement we saw in the quality of our credit card portfolio in 2004. Delinquency rates are at their lowest point in over three years. Our new account marketing and improved funding profile should contribute to increased profitability in the future."

    Operating Data

    New account originations for the quarter and year ended December 31, 2004 were 208,000 and 480,000, respectively. New account originations for the comparable periods in 2003 were 76,000 and 316,000, respectively. Gross active accounts were 2.2 million as of December 31, 2004, compared to the same number as of September 30, 2004 and 2.5 million as of December 31, 2003. As of December 31, 2004, the Company's managed credit card loans were $6.6 billion, compared to $8.1 billion as of December 31, 2003. The Company's owned credit card loan portfolio as of December 31, 2004 was $68.2 million, compared to $128.6 million as of December 31, 2003.
    The managed delinquency rate was 9.1% as of December 31, 2004, compared to 9.7% as of September 30, 2004 and 11.1% as of December 31, 2003. The owned delinquency rate was 11.4% as of December 31, 2004, compared to 12.6% as of September 30, 2004 and 15.8% as of December 31, 2003.
    The managed net charge-off rate for the fourth quarter of 2004 was 15.5%, compared to 14.6% in the previous quarter, and 21.7% for the fourth quarter of 2003. The owned net charge-off rate was 13.2%, compared to 13.6% in the previous quarter and 56.6% in the fourth quarter of 2003.

    Metris Master Trust Data

    The three-month average excess spread in the Metris Master Trust was 4.86% as of December 31, 2004, compared to 5.58% as of September 30, 2004 and 3.62% as of December 31, 2003. The reported two-cycle plus delinquency rate in the Metris Master Trust was 9.2% as of December 31, 2004, compared to 9.7% as of September 30, 2004 and 11.1% as of December 31, 2003. The three-month average gross default rate of the Metris Master Trust as of December 31, 2004 was 17.5%, compared to 16.8% as of September 30, 2004 and 19.1% as of December 31, 2003.

    Funding and Liquidity

    As of December 31, 2004, consolidated cash and cash equivalents were $397.1 million, representing a $218.6 million increase from $178.5 million as of December 31, 2003. As of December 31, 2004 and December 31, 2003, the portion of cash and cash equivalents held by our wholly owned subsidiary, Direct Merchants Credit Card Bank, N.A., was $167.5 million and $126.5 million, respectively. The liquidity reserve deposit, which is not included in cash and cash equivalents, was $79.7 million as of December 31, 2004, compared to $80.2 million as of December 31, 2003. Outstanding corporate debt was $373.6 million and $350.4 million as of December 31, 2004 and December 31, 2003, respectively. Off-balance-sheet funding was $5.3 billion, with $840 million in unused conduit capacity as of December 31, 2004, compared to $6.7 billion of off-balance-sheet funding as of December 31, 2003.
    During the quarter ended December 31, 2004, the Company completed several funding transactions, including issuance of the $600 million Series 2004-2 asset-backed securities from the Metris Master Trust, the defeasance of the $600 million Series 2000-1 asset-backed securities from the Metris Master Trust that were scheduled to mature in February 2005 and the prepayment of $75 million on the Company's senior-secured credit agreement due May 2007.

    Results of Operations - Revenues

    Revenues for the quarter ended December 31, 2004 were $130.3 million, a 21.6% decrease from $166.1 million for the quarter ended December 31, 2003. Revenues for the period include securitization income of $86.7 million, compared to securitization income of $99.9 million for the same period in 2003. The $13.2 million decrease in securitization income is primarily due to an increase in losses on new securitizations and replenishment of receivables to the Metris Master Trust of $34.4 million, partially offset by an improvement in the change in fair value of retained interests in loans securitized of $21.7 million and higher interest-only revenues of $5.4 million. Servicing income on securitized receivables decreased $8.5 million from the fourth quarter of 2003 due to a $1.8 billion reduction in average principal receivables in the Metris Master Trust. Credit card loan and other interest income increased $3.2 million from the fourth quarter of 2003, due primarily to the $198.9 million increase in average short-term investments between the two periods, partially offset by a $57.2 million decrease in average owned credit card loans. Credit card loan fees, interchange and other income decreased $9.6 million from the fourth quarter of 2003 due primarily to the reduction in average owned credit card loans. Enhancement services income decreased $3.2 million from the fourth quarter of 2003 due primarily to the declining number of memberships retained by the Company following the sale of the membership club and warranty business in the third quarter of 2003.
    Revenues for the year ended December 31, 2004 were $530.1 million, an 11.0% decrease from $595.6 million for the year ended December 31, 2003. The decrease from 2003 was primarily due to a $70.4 million decrease in credit card loan and other interest income, and a $57.5 million decrease in credit card loan fees, interchange and other income, both due to the reduction in average owned credit card loans. In addition, enhancement services income decreased $82.8 million from 2003 primarily as a result of the sale of the membership club and warranty business in the third quarter of 2003. These decreases were partially offset by a $155.9 million increase in securitization income over 2003 primarily due to favorable changes in the valuation of the Company's retained interests, which totaled $116.9 million for the year ended December 31, 2004, and higher interest-only revenues of $71.4 million for the year ended December 31, 2004, offset by an increase in transaction and other costs of $32.3 million for full-year 2004.

    Results of Operations - Expenses

    Total expenses were $127.4 million for the quarter ended December 31, 2004, a $1.2 million increase from $126.2 million for the quarter ended December 31, 2003. Provision for loan losses decreased to $0.4 million in the fourth quarter of 2004 from $18.8 million for the fourth quarter of 2003. This decrease was due primarily to the reduction in owned credit card loans. Data processing services and communications expenses, and occupancy and equipment expenses, decreased $7.8 million during the quarter ended December 31, 2004 compared to the same period in 2003. This resulted primarily from the significant reduction in the Company's credit card operations during the year. These expense decreases were largely offset by a $21.5 million increase in credit card account and other product solicitation and marketing expenses during the fourth quarter of 2004. In addition, there was an $11.9 million increase in other expenses primarily due to costs and charges associated with the prepayment of $75.0 million in debt during the fourth quarter.
    Total expenses for the year ended December 31, 2004 were $474.2 million, a $338.6 million decrease from $812.8 million for the year ended December 31, 2003. The reduction in the provision for loan losses of $131.4 million resulted from the $431.4 million reduction in average owned credit card loans between the two periods, as well as slightly improved credit quality in the owned loan portfolio. The $34.2 million decrease in employee compensation for full-year 2004 compared to full-year 2003 resulted from a reduction in the number of employees required to service fewer gross active accounts. Interest expense also decreased $14.0 million as a result of the sale of the Company's portfolio of certificates of deposits held by its bank subsidiary in the third quarter of 2003, partially offset by increased interest costs on term debt. Credit card account and other product solicitation and marketing expenses, data processing services and communications, credit protection claims, occupancy and equipment, purchased portfolio premium amortization and other expenses also decreased $75.1 million primarily as a result of the sale of the membership club and warranty business and the significant reduction in the Company's credit card operations. Expenses in 2003 also included $8.3 million related to workforce reductions, $20.8 million in write-downs of excess property, equipment and operating leases, a $22.0 million write-off of purchased portfolio premium, a $5.1 million write-off of capitalized commitment fees and a $33.0 million loss recognized during 2003 related to the sale of the Company's portfolio of deposits.
    Income tax expense was $2.2 million for the quarter ended December 31, 2004 compared to $5.1 million for the quarter ended December 31, 2003. This resulted in effective tax rates of 76.0% and 12.9% for the two periods, respectively. Income tax expense was $22.2 million for full-year 2004 compared to a benefit of $69.5 million for full-year 2003. This resulted in effective tax rates of 39.7% and 32.0% for the two periods, respectively.
    Metris Companies Inc. (NYSE:MXT), based in Minnetonka, Minn, is one of the largest bankcard issuers in the United States. The Company issues credit cards through Direct Merchants Credit Card Bank, N.A., a wholly owned subsidiary headquartered in Phoenix, Ariz. For more information, visit www.metriscompanies.com or www.directmerchantsbank.com.

    Certain information discussed in this press release may constitute forward-looking statements within the meaning of the federal securities law. Forward-looking statements are based on certain assumptions by management and are subject to risks, trends and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. These risks and uncertainties include, but are not limited to: our high liquidity requirement and our need to enter into financing transactions on a regular basis; the risk of reduced funding availability and increased funding costs; the higher delinquency and charge-off rates of our targeted middle-market consumers as compared to higher income consumers; the risk that certain events could result in early amortization (required repayment) of the securities issued by the Metris Master Trust; the risk that the recent improvement in our delinquency and charge-off rates may not continue; the risk that Direct Merchants Credit Card Bank's regulators could impose additional restrictions that could negatively impact our operations or financial condition, including further restrictions or limitations relating to Direct Merchants Bank's minimum capital and credit loss reserve requirements and its ability to pay distributions to us; risks associated with Direct Merchants Bank's ability to operate in accordance with its regulatory restrictions, including those in its Modified Operating Agreement with the OCC; the risk that we could be required to provide support to Direct Merchants Bank; risks associated with fluctuations in the value of and income earned from our retained interests in securitizations; interest rate risk, including the risk of adverse changes in the interest rates on the funds we borrow and the amounts we loan to our credit card customers; risks associated with the intense competition we face; the effect of laws and regulations that apply to us, or adverse changes in those laws or regulations, including among others, laws and regulations that limit the fees and charges that we are allowed to impose, regulate our practices for collection and sharing of non-public customer information, govern the sale and terms of products and services we offer and require that we obtain and maintain licenses and qualifications; the risk that we may be adversely affected by litigation involving us, by our ongoing SEC and OCC investigations, or by the IRS's examination of our treatment of certain credit card fees as original issue discount; the effects of our previous restatements of our financial results; the impact of recent decisions in the antitrust litigation involving MasterCard(R) and Visa(R), and other industry-wide risks including, among others, the risk of fraud by cardholders and third parties and the risk of decreased consumer acceptance of credit card products; and general economic conditions that can have a negative impact on the performance of credit card loans and the marketing of our credit protection, insurance and other products.
    For further information on risks that could impact us and the statements contained in this press release, please refer to our filings with the Securities and Exchange Commission, including our current reports on Form 8-K, quarterly reports on Form 10-Q, and annual reports on Form 10-K, as amended.
    Metris Companies Inc. will host a live conference call on Thursday, January 27, 2005, at 11:00 a.m. Eastern Time. The press and public are invited to listen to a live webcast of the call by registering at http://www.metriscompanies.com. Click on the Investor Relations icon to participate. A replay of the webcast will be available from January 27, 2005, at 2:00 p.m. Eastern Time through February 3, 2005, at midnight. A recorded version of the conference call will be available for investors by calling 1-800-405-2236, reservation 11021183#. The recording will also be available from 2:00 p.m. Eastern Time on January 27, 2005 until midnight on Thursday, February 3, 2005.

METRIS COMPANIES INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands, except per-share data) (unaudited)

December 31, December 31, 2004 2003 ------------ ------------

Assets Cash and due from banks $25,198 $32,076 Federal funds sold 22,450 25,300 Short-term investments 349,479 121,109 ------------ ------------ Cash and cash equivalents 397,127 178,485 ------------ ------------

Liquidity reserve deposit 79,746 80,158

Credit card loans 68,230 128,615 Less: Allowance for loan losses 12,409 45,492 ------------ ------------ Net credit card loans 55,821 83,123 ------------ ------------ Retained interests in loans securitized 784,135 836,901 Property and equipment, net 24,135 33,680 Purchased portfolio premium 9,261 17,561 Other receivables due from credit card securitizations, net 68,021 80,714 Other assets 63,233 81,774 ------------ ------------ Total assets $1,481,479 $1,392,396 ============ ============

Liabilities Deposits $3,407 $6,262 Debt 373,624 350,448 Accounts payable 37,619 32,397 Deferred income 10,530 18,060 Accrued expenses and other liabilities 108,997 76,036 ------------ ------------ Total liabilities 534,177 483,203 ------------ ------------

Stockholders' Equity Convertible preferred stock, par value $.01 per share; 10,000,000 shares authorized, 1,381,327 and 1,263,699 shares issued and outstanding, respectively 514,545 470,728 Common stock, par value $.01 per share; 300,000,000 shares authorized, 65,182,416 and 64,862,314 issued, respectively 652 649 Paid-in capital 233,989 229,655 Unearned compensation -- (27) Treasury stock - 7,055,300 shares (58,308) (58,308) Retained earnings 256,424 266,496 ------------ ------------ Total stockholders' equity 947,302 909,193 ------------ ------------ Total liabilities and stockholders' equity $1,481,479 $1,392,396 ============ ============

METRIS COMPANIES INC. AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per-share data) (unaudited)

Three Months Ended Twelve Months Ended December 31, December 31, ------------------ --------------------- 2004 2003 2004 2003 --------- -------- ---------- ---------- Revenues: Loss on new securitization of receivables to the Metris Master Trust $(51,735) $-- $(143,621) $(55,214) Loss on replenishment of receivables to the Metris Master Trust (16,840) (34,168) (88,193) (161,743) Discount accretion 69,168 68,877 254,455 308,912 Interest-only revenue 75,325 69,957 292,710 221,331 Change in fair value of retained interests in loans securitized 20,314 (1,336) 114,515 (71,669) Transaction and other costs (9,539) (3,479) (100,556) (68,250) --------- -------- ---------- ---------- Securitization income 86,693 99,851 329,310 173,367 Servicing income on securitized receivables 31,085 39,630 133,665 176,627 Credit card loan and other interest income 5,435 2,281 20,100 90,530 Credit card loan fees, interchange and other income 2,150 11,779 21,966 79,492 Enhancement services income 4,939 8,182 25,087 107,930 Loss on sale of credit card loans -- -- -- (117,183) Gain on sale of membership and warranty business -- 4,396 -- 84,787 --------- -------- ---------- ---------- Total revenues 130,302 166,119 530,128 595,550 --------- -------- ---------- ---------- Expenses: Interest expense 13,740 14,068 60,441 74,421 Provision for loan losses 413 18,810 (4,762) 126,648 Credit card account and other product solicitation and marketing expenses 29,810 8,304 78,658 93,349 Employee compensation 35,131 34,440 141,353 175,539 Data processing services and communications 12,489 15,733 54,941 68,715 Credit protection claims expense 3,086 4,345 17,891 30,882 Occupancy and equipment 4,764 9,311 22,591 36,564 Purchased portfolio premium amortization 1,557 3,898 8,300 25,000 Asset impairments, lease write-offs and severance 682 3,458 5,197 56,222 Loss on sale of deposits -- -- -- 32,963 Other 25,725 13,801 89,562 92,512 --------- -------- ---------- ---------- Total expenses 127,397 126,168 474,172 812,815 --------- -------- ---------- ---------- Income (Loss) Before Income Taxes 2,905 39,951 55,956 (217,265) Income tax expense (benefit) 2,208 5,134 22,211 (69,526) --------- -------- ---------- ---------- Net Income (Loss) 697 34,817 33,745 (147,739) Convertible preferred stock dividends 11,323 10,358 43,817 40,086 --------- -------- ---------- ---------- Net (Loss) Income after preferred dividends $(10,626) $24,459 $(10,072) $(187,825) ========= ======== ========== ==========

(Loss) Earnings per common share: Basic Distributed $-- $-- $-- $-- Undistributed (0.18) 0.24 (0.17) (3.27) --------- -------- ---------- ---------- Total Basic $(0.18) $0.24 $(0.17) $(3.27) ========= ======== ========== ==========

Total Diluted $(0.18) $0.24 $(0.17) $(3.27)

Shares used to compute (loss) earnings per common share: Basic 58,083 57,607 57,946 57,471 Diluted 58,083 58,120 57,946 57,471

METRIS COMPANIES INC. AND SUBSIDIARIES Consolidated Quarterly Financial Information and Earnings per Share Data (In thousands, except per-share data) (unaudited)

Three Months Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2004 2004 2004 2004 2003 --------- --------- --------- --------- -------- Revenues: Loss on new securitization of receivables to the Metris Master Trust $(51,735) $-- $(90,640) $(1,246) $-- Loss on replenishment of receivables to the Metris Master Trust (16,840) (21,972) (25,454) (23,927) (34,168) Discount accretion 69,168 63,747 61,570 59,970 68,877 Interest-only revenue 75,325 87,316 55,137 74,932 69,957 Change in fair value of retained interests in loans securitized 20,314 25,518 20,718 47,965 (1,336) Transaction and other costs (9,539) (6,634) (45,674) (38,709) (3,479) --------- --------- --------- --------- -------- Securitization income 86,693 147,975 (24,343) 118,985 99,851 Servicing income on securitized receivables 31,085 32,496 33,847 36,237 39,630 Credit card loan and other interest income 5,435 4,549 5,010 5,106 2,281 Credit card loan fees, interchange and other income 2,150 3,736 5,264 10,816 11,779 Enhancement services income 4,939 5,692 6,976 7,480 8,182 Gain on sale of membership and warranty business -- -- -- -- 4,396 --------- --------- --------- --------- -------- Total revenues 130,302 194,448 26,754 178,624 166,119 --------- --------- --------- --------- -------- Expenses: Interest expense 13,740 14,056 18,714 13,931 14,068 Provision for loan losses 413 1,408 (491) (6,092) 18,810 Credit card account and other product solicitation and marketing expenses 29,810 17,190 15,726 15,932 8,304 Employee compensation 35,131 31,554 35,723 38,945 34,440 Data processing services and communications 12,489 12,203 13,777 16,472 15,733 Credit protection claims expense 3,086 3,421 5,036 6,348 4,345 Occupancy and equipment 4,764 5,442 5,984 6,401 9,311 Purchased portfolio premium amortization 1,557 2,241 2,105 2,397 3,898 Asset impairments, lease write-offs and severance 682 1,242 1,812 1,461 3,458 Other 25,725 20,502 24,818 18,517 13,801 --------- --------- --------- --------- -------- Total expenses 127,397 109,259 123,204 114,312 126,168 --------- --------- --------- --------- -------- Income (Loss) Before Income Taxes 2,905 85,189 (96,450) 64,312 39,951 Income tax expense (benefit) 2,208 23,425 (26,124) 22,702 5,134 --------- --------- --------- --------- -------- Net Income (Loss) 697 61,764 (70,326) 41,610 34,817 Convertible preferred stock dividends 11,323 11,073 10,830 10,591 10,358 --------- --------- --------- --------- -------- Net (Loss) Income after preferred dividends $(10,626) $50,691 $(81,156) $31,019 $24,459 ========= ========= ========= ========= ======== Earnings (loss) per common share: Distributed earnings - Preferred $11,323 $11,073 $10,830 $10,591 $10,358 Weighted average preferred shares 1,351 1,321 1,292 1,264 1,236 --------- --------- --------- --------- -------- Distributed earnings per share - Preferred $8.38 $8.38 $8.38 $8.38 $8.38 ========= ========= ========= ========= ========

Undistributed (loss) earnings $(10,626) $50,691 $(81,156) $31,019 $24,459 Preferred ownership on a converted basis 44% 44% 44% 44% 43% --------- --------- --------- --------- -------- Preferred shareholders interest in undistributed (loss) earnings(1) $-- $22,304 $-- $13,648 $10,517 --------- --------- --------- --------- -------- Weighted average preferred shares 1,351 1,321 1,292 1,264 1,236 --------- --------- --------- --------- -------- Undistributed earnings per share - Preferred $-- $16.88 $-- $10.80 $8.51 ========= ========= ========= ========= ========

Undistributed (loss) earnings $(10,626) $50,691 $(81,156) $31,019 $24,459 Common ownership 56% 56% 56% 56% 57% --------- --------- --------- --------- -------- Common shareholders interest in undistributed (loss) earnings(1) $(10,626) $28,387 $(81,156) $17,371 $13,942 --------- --------- --------- --------- -------- Weighted average common shares and common share equivalents 58,083 58,710 57,924 58,318 58,120 --------- --------- --------- --------- -------- Undistributed common (loss) earnings per share - Diluted $(0.18) $0.48 $(1.40) $0.30 $0.24 ========= ========= ========= ========= ========

(1)Preferred shareholders do not participate in any undistributed losses with common shareholders

METRIS COMPANIES INC. AND SUBSIDIARIES Financial & Statistical Summary (In thousands, except per-share data) (unaudited)

Three Months Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2004 2004 2004 2004 2003 ----------- ----------- ----------- ----------- ----------- Selected Operating Data (Owned Basis): Cash and cash equivalents: Direct Merchants Bank $167,527 $173,130 $166,529 $182,680 $126,528 Other 229,600 230,400 234,700 137,365 51,957 ----------- ----------- ----------- ----------- ----------- $397,127 $403,530 $401,229 $320,045 $178,485 =========== =========== =========== =========== ===========

Retained interests in loans securitized: Contractual retained interests $537,945 $493,574 $525,085 $574,275 $542,014 Excess transferor's interests 105,237 158,307 52,255 32,031 48,775 Interest- only strip receivable 82,672 73,075 47,290 26,652 16,039 Spread accounts receivable 58,281 114,452 136,983 161,457 230,073 ----------- ----------- ----------- ----------- ----------- $784,135 $839,408 $761,613 $794,415 $836,901 =========== =========== =========== =========== ===========

Valuation assumptions: Monthly payment rate 7.6% 7.5% 7.3% 7.0% 6.7% Gross yield 25.9% 25.5% 25.7% 25.2% 25.4% Annual interest expense and servicing fee 5.0% 4.7% 4.8% 4.0% 4.2% Annual gross principal default rate 18.4% 18.6% 19.5% 20.4% 20.7% Average enhancement levels 12.08% 11.10% 11.66% 10.77% 9.92% Weighted average months to maturity 20.1 20.8 24.4 19.6 24.5

Average Metris Master Trust actual excess spread 4.86% 5.58% 3.83% 4.61% 3.62% Average principal receivables in the Metris Master Trust $6,180,757 $6,460,243 $6,801,726 $7,281,487 $7,857,480 Principal delinquency rate in the Metris Master Trust 7.7% 8.2% 7.9% 8.7% 9.3% Average principal default rate in the Metris Master Trust 17.5% 16.8% 19.2% 19.3% 19.1%

Average total stockholders' equity $953,794 $914,917 $912,051 $969,540 $951,539 Total shareholders equity $947,302 $945,657 $882,746 $952,812 $909,193 Common shareholder equity $432,757 $442,435 $390,597 $471,493 $438,465 Common shares outstanding 58,127 58,044 57,957 57,908 57,807 Preferred securities on a converted basis 45,054 45,054 45,054 45,054 42,616 Total book value $9.18 $9.17 $8.57 $9.25 $9.05 Common shareholder book value $7.45 $7.62 $6.74 $8.14 $7.58

METRIS COMPANIES INC. AND SUBSIDIARIES Financial & Statistical Summary (In thousands) (unaudited)

The following information is not in conformity with accounting principles generally accepted in the United States of America, however, we believe the information is relevant to understanding the overall financial condition and results of operations of the Company.

Three Months Ended Dec. 31, Sept. 30, June 30, March 31, Dec. 31, 2004 2004 2004 2004 2003 ----------- ----------- ----------- ----------- ----------- Selected Operating Data (Managed Basis): Account Originations 208 118 96 58 76 Period-end gross active accounts: Credit card loans 55 60 65 88 93 Receivables held by the Metris Master Trust 2,123 2,117 2,174 2,263 2,389 ----------- ----------- ----------- ----------- ----------- Managed 2,178 2,177 2,239 2,351 2,482 =========== =========== =========== =========== =========== Period-end loans(1): Credit card loans $68,230 $70,389 $72,491 $74,085 $128,615 Receivables held by the Metris Master Trust 6,511,990 6,711,075 7,010,664 7,461,916 8,003,216 ----------- ----------- ----------- ----------- ----------- Managed $6,580,220 $6,781,464 $7,083,155 $7,536,001 $8,131,831 =========== =========== =========== =========== =========== Average loans(1): Credit card loans $69,310 $72,581 $80,779 $126,957 $126,469 Receivables held by the Metris Master Trust 6,589,913 6,892,481 7,258,288 7,787,351 8,416,684 ----------- ----------- ----------- ----------- ----------- Managed $6,659,223 $6,965,062 $7,339,067 $7,914,308 $8,543,153 =========== =========== =========== =========== =========== Delinquencies: Credit card loans $7,781 $8,886 $9,321 $11,079 $20,309 Receivables held by the Metris Master Trust 593,819 648,321 658,650 773,592 881,766 ----------- ----------- ----------- ----------- ----------- Managed $601,600 $657,207 $667,971 $784,671 $902,075 =========== =========== =========== =========== =========== Delinquency ratio (over 30 days): Credit card loans 11.4% 12.6% 12.9% 15.0% 15.8% Receivables held by the Metris Master Trust 9.1% 9.7% 9.4% 10.4% 11.0% Managed 9.1% 9.7% 9.4% 10.4% 11.1% Net charge-offs Credit card loans $2,298 $2,490 $3,080 $22,400 $18,029 Receivables held by the Metris Master Trust 257,106 253,782 307,563 327,607 449,581 ----------- ----------- ----------- ----------- ----------- Managed $259,404 $256,272 $310,643 $350,007 $467,610 =========== =========== =========== =========== =========== Net charge-off ratio annualized(2): Credit card loans 13.2% 13.6% 15.3% 71.0% 56.6% Receivables held by the Metris Master Trust 15.5% 14.6% 17.0% 16.9% 21.2% Managed 15.5% 14.6% 17.0% 17.8% 21.7%

(1)Included in period-end loans and average loans are principal receivables, accrued finance charges and net deferred acquisition costs.

(2)The net charge-off ratios were impacted by a portfolio of approximately $38 million transferred to held for sale at March 31, 2004 and the portfolio sale of $494.3 million in November 2003.

--30--CLR/ms*

CONTACT: Metris Companies Inc., Minnetonka Jeff Grosklags, 952-525-5074

KEYWORD: MINNESOTA INDUSTRY KEYWORD: BANKING CONSUMER/HOUSEHOLD RETAIL EARNINGS CONFERENCE CALLS SOURCE: Metris Companies Inc.

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