Fitch Ratings Lowers Metris Cos. To 'B+' From 'BB'.

Business Editors

NEW YORK--(BUSINESS WIRE)--April 17, 2002

Fitch Ratings lowers Metris Companies Inc. (Metris) secured bank credit facility to 'B+' from 'BB+' and senior debt to 'B+' from 'BB'. In addition, the long-term deposit rating for Metris' wholly owned banking subsidiary,

This rating action reflects the heightened regulatory scrutiny the company is now operating under following the company's written agreement with the Office of the Comptroller of the Currency (OCC), which includes prior OCC approval for dividends between DMCCB and Metris, as well as the development of more rigorous reporting requirements and implementing certain functional enhancements. This agreement requires Metris, among other things, to institute or enhance certain processes and procedures, mainly at the bank level. These include more routine reporting to the OCC, while improving processes at the bank or transferring functions to the bank from the holding company. The equalization of the bank credit facility with the senior debt reflects the parri-passu nature of the credit facility with the senior debt.

The agreement does not place formal limitations on deposit or asset growth, although credit line increases will be more tightly managed. Importantly, there is now a dividend restriction between DMCCB and Metris, which is a driving factor in differentiating the bank and holding company ratings at this time. While the initial financial implications of this regulatory action are expected to be nominal, Fitch believes that this reflects regulators increased uneasiness with the company's lending activities to low and moderate income consumers. In Fitch's view, the longer-term prospects for Metris' business continue to be challenged. The agreement follows recent regulatory actions to alter the company's charge-off policy for accounts in consumer credit counseling and to maintain higher capital levels at DMCCB in accordance with the expanded guidance on subprime lending.

Fitch's Negative Outlook continues to reflect the view that Metris will be challenged to manage credit quality and profitability throughout 2002. Metris expects receivable growth to be weaker than expected, which will negatively impact earnings and profitability throughout 2002. Moreover, the regulatory agreement tightens Metris' ability to offer credit line increases to existing card holders, further reducing receivable growth. Fitch remains concerned with the company's reliance on, and ability to execute securitization transactions to fund its business, particularly under more stressful conditions. Moreover, Fitch generally believes deposit growth may be constrained by what appears to be regulatory discomfort with federally insured deposits funding subprime assets.

Metris Companies Inc. is a Minnesota-based marketer of consumer credit cards and related enhancement products. At March 31, 2002, the company reported $11.77 billion of managed loans, and $1.17 billion of common and preferred equity.