Metris Reports Net Income of $27.6 Million

    Business Editors

    MINNETONKA, Minn.--(BUSINESS WIRE)--April 20, 2005--Metris Companies Inc. (NYSE:MXT) today reported net income of $27.6 million for the quarter ended March 31, 2005, or earnings of $0.15 per diluted common share. This compares to net income of $41.6 million for the quarter ended March 31, 2004, or earnings of $0.30 per diluted common share.
    "We are very pleased with the operating results posted in the first quarter," said Metris Chairman and Chief Executive Officer David Wesselink. "We saw substantial improvement in the performance of our credit card portfolio. The three-month average excess spread in the Metris Master Trust was 6.47%, which was considerably higher than the fourth quarter 2004 three-month average of 4.86%. As of March 31, 2005, the two-cycle plus delinquency rate in the Metris Master Trust was 8.3%, the lowest in almost four years, while the first-cycle delinquency rate of 4.1% in the Metris Master Trust is the lowest in our history. The decline in delinquencies is an encouraging sign for loss rates in the months ahead."

    Operating Data

    New account originations for the quarter ended March 31, 2005 were 163,000. Gross active accounts were 2.2 million as of March 31, 2005, compared to 2.2 million as of December 31, 2004 and 2.4 million as of March 31, 2004. The Company's managed credit card loans were $6.2 billion as of March 31, 2005, compared to $6.6 billion as of December 31, 2004 and $7.5 billion as of March 31, 2004. The Company's owned credit card loan portfolio was $62.0 million as of March 31, 2005, compared to $74.1 million as of March 31, 2004.
    The managed two-cycle plus delinquency rate was 8.3% as of March 31, 2005, compared to 9.1% as of December 31, 2004 and 10.4% as of March 31, 2004. The owned two-cycle plus delinquency rate was 10.0% as of March 31, 2005, compared to 11.4% as of December 31, 2004 and 15.0% as of March 31, 2004.
    The managed net charge-off rate was 14.5% for the first quarter of 2005, compared to 15.5% in the previous quarter and 17.8% for the first quarter of 2004. The owned net charge-off rate was 10.1%, compared to 13.2% in the previous quarter and 71.0% in the first quarter of 2004.

    Metris Master Trust Data

    The three-month average excess spread in the Metris Master Trust was 6.47% for the period ended March 31, 2005, compared to 4.86% for the period ended December 31, 2004 and 4.61% for the period ended March 31, 2004. The three-month average excess spread in the Metris Master Trust for the period ended March 31, 2005 includes an incremental 28 basis points of yield due to recoveries resulting from sales of certain charged-off receivables, including cease and desist, efforts exhausted and dismissed bankruptcies. Sales of these types of charged-off receivables are not conducted monthly, but are conducted periodically dependent on market pricing. The reported two-cycle plus delinquency rate in the Metris Master Trust was 8.3% as of March 31, 2005, compared to 9.2% as of December 31, 2004 and 10.5% as of March 31, 2004. The three-month average gross default rate of the Metris Master Trust was 17.1% for the period ended March 31, 2005, compared to 17.5% for the period ended December 31, 2004 and 19.3% for the period ended March 31, 2004.

    Liquidity and Funding

    Consolidated total liquid assets were $307.2 million as of March 31, 2005, representing an $89.9 million decrease from $397.1 million as of December 31, 2004. The amount of total liquid assets held by our wholly owned subsidiary, Direct Merchants Credit Card Bank, N.A., was $183.2 million as of March 31, 2005 and $167.5 million as of December 31, 2004. The liquidity reserve deposit, which is not included in total liquid assets, was $64.0 million as of March 31, 2005, compared to $79.7 million as of December 31, 2004.
    Outstanding corporate debt was $324.2 million and $373.6 million as of March 31, 2005 and December 31, 2004, respectively. Off-balance-sheet funding was $4.9 billion, with $200 million in unused conduit capacity as of March 31, 2005, compared to $5.3 billion of off-balance-sheet funding with $840 million in unused conduit capacity as of December 31, 2004. The decrease in the unused conduit capacity was primarily due to the defeasance of the $900 million series 2002-3 asset-backed securities from the Metris Master Trust that the Company announced on February 1, 2005. Series 2002-3 was defeased through use of the two-year conduit facility and was scheduled to mature in May 2005. The Company also issued $52.8 million of asset-backed securities from the Metris Secured Note Trust 2004-2 during January of 2005. The asset-backed securities are set to mature on October 20, 2006 and were rated Ba2/BB+ by Moody's Investors Service, Inc. and Fitch Inc., respectively. Proceeds from the issuance were used to make an optional $50 million prepayment on the Company's Senior Notes due 2006. The Company expensed approximately $2.0 million in costs and charges related to the prepayment.
    Subsequent to March 31, 2005, the Company issued $544 million in series 2005-1 asset-backed securities from the Metris Master Trust. Following the issuance of series 2005-1, unused conduit capacity increased to $850 million as of April 20, 2005. In addition, the Company made an optional prepayment of $75 million on its senior-secured credit agreement due May 2007, which will result in approximately $6.5 million in costs and charges. The impact of these transactions will be reflected in the second quarter of 2005.

    Results of Operations - Revenues

    Revenues for the quarter ended March 31, 2005 were $150.5 million, a $28.1 million or 15.7% decrease from $178.6 million for the quarter ended March 31, 2004. Securitization income was $108.1 million for the quarter ended March 31, 2005, a reduction of $10.9 million from the comparable period in 2004. This decrease is primarily due to a $28.0 million increase in loss on new securitizations and a $42.9 million decrease in the change in fair market value revenue, partially offset by a $14.0 million increase in interest-only revenue and a $32.1 million decrease in transaction and other costs. The increase in the loss on new securitizations resulted primarily from the loss on the defeasance of Series 2002-3, partially offset by a gain on the $52.8 million 2004-2 BB bond issuance during the current period. The decrease in the change in fair market value revenue from the first quarter of 2004 is primarily due to a $42.3 million decrease in the change in fair market value related to the change in conduit borrowings and receivable attrition, and an $8.6 million decrease due to lower levels of trapped excess spread released. These decreases were partially offset by a $10.3 million increase in fair market value due to the reduction of the discount rate for contractual retained interest, transferor and restricted cash from 16.0% to 15.0%. The increase in interest-only revenue resulted from a 186 basis point increase in average excess spread partially offset by a $1.3 billion reduction in average principal receivables. The $32.1 million decrease in transaction costs resulted from a reduction in financing activity during the first quarter of 2005 over the comparable period in 2004.
    Servicing income on securitized receivables was $29.4 million, a decrease of $6.8 million from the first quarter of 2004 due to a $1.3 billion reduction in average principal receivables in the Metris Master Trust. Credit card loan fees, interchange and other income was $2.8 million, a decrease of $8.0 million from the first quarter of 2004 due primarily to the reduction in average owned credit card loans of $61.4 million between the two periods. Enhancement services income was $3.5 million for the first quarter of 2005, a decrease of $4.0 million from the first quarter of 2004 primarily due to the declining number of memberships resulting from a declining portfolio. The $1.8 million gain on sale of membership and warranty business resulted from the recognition of the remaining deferred portion of the gain due to the expiration of our obligations under a temporary servicing agreement with the purchaser.

    Results of Operations - Expenses

    Total expenses were $108.2 million for the quarter ended March 31, 2005, a $6.1 million decrease from $114.3 million for the quarter ended March 31, 2004. This decrease was primarily due to lower compensation, data processing services and communications, credit protection claims and occupancy expenses due to a reduction in gross active accounts. Partially offsetting this decrease was credit card account and other product solicitation and marketing expenses, which were $19.1 million during the first quarter of 2005 compared to $15.9 million for the quarter ended March 31, 2004. This increase of $3.2 million was due primarily to the increase in account marketing.
    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: the potential impact of any failure to operate in accordance with OCC directives, including those included in our Modified Operating Agreement; the ability of regulators to impose restrictions on Direct Merchants Bank that could negatively impact our operations or financial results; the risk that failure to comply with applicable laws and regulations, and adverse changes in those laws or regulations, could have a negative impact on our financial results and could adversely affect our ability to conduct our business in a profitable manner; the fact that we are the subject of an SEC investigation; that the occurrence of certain events could result in early amortization (required repayment) of the securities issued by the Metris Master Trust and also cause all amounts outstanding under our credit agreement and our existing senior notes to become due and payable; that our target consumers generally have higher default rates and may be impacted more by general economic and social factors than lower default consumers; that we require a high degree of liquidity to operate our business, and an inability to access funding at the times and in the amounts that we need could adversely affect our ability to operate or our financial results; that we are the subject of an Internal Revenue Service examination; that changes in the interest rates on the funds we borrow and the amounts we loan to our credit card customers could adversely affect our financial results; the fact that we face intense competition; the fact that our financial results could be negatively impacted by fluctuations in our interests in our securitizations; the fact that our restatements of financial results have had, and may in the future continue to have, adverse effects on us; the risk that disputes affecting MasterCard and Visa could negatively impact our operations and financial results; and the fact that we are exposed to other industry-wide risks that could adversely affect our financial performance.
    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, April 21, 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 April 21, 2005, at 2:00 p.m. Eastern Time through April 28, 2005, at midnight. A recorded version of the conference call will be available for investors by calling 1-800-405-2236, reservation 11027480#. The recording will also be available from 2:00 p.m. Eastern Time on April 21, 2005 until midnight on Thursday, April 28, 2005.

METRIS COMPANIES INC. AND SUBSIDIARIES Consolidated Balance Sheets (Dollars in thousands, except per-share data) March 31, 2005 December 31, (unaudited) 2004 ------------ ------------

Assets Cash and due from banks $19,772 $25,198 Federal funds sold 46,150 22,450 Short-term investments 241,316 43,070 Available for sale securities -- 306,409 Liquidity reserve deposit 63,977 79,746 Credit card loans 61,956 68,230 Less: Allowance for loan losses 9,830 12,409 ------------ ------------ Net credit card loans 52,126 55,821 ------------ ------------ Retained interests in loans securitized 865,576 784,135 Property and equipment, net 23,293 24,135 Other receivables due from credit card securitizations, net 86,841 68,021 Other assets 62,706 72,494 ------------ ------------ Total assets $1,461,757 $1,481,479 ============ ============

Liabilities Debt $324,231 $373,624 Accounts payable 25,190 37,619 Accrued expenses and other liabilities 137,014 122,934 ------------ ------------ Total liabilities 486,435 534,177 ------------ ------------

Stockholders' Equity Convertible preferred stock, par value $.01 per share; 10,000,000 shares authorized, 1,412,407 and 1,381,327 shares issued and outstanding, respectively 526,122 514,545 Common stock, par value $.01 per share; 300,000,000 shares authorized, 65,225,015 and 65,182,416 issued, respectively 652 652 Paid-in capital 234,428 233,989 Treasury stock - 7,055,300 shares (58,308) (58,308) Retained earnings 272,428 256,424 ------------ ------------ Total stockholders' equity 975,322 947,302 ------------ ------------ Total liabilities and stockholders' equity $1,461,757 $1,481,479 ============ ============

METRIS COMPANIES INC. AND SUBSIDIARIES Consolidated Statements of Income (In thousands, except per-share data) (unaudited) Three Months Ended March 31, 2005 2004 ------------ ------------ Revenues: Loss on new securitizations of receivables to the Metris Master Trust $(29,161) $(1,246) Loss on replenishment of receivables to the Metris Master Trust (11,497) (23,927) Discount accretion 61,329 59,970 Interest-only revenue 88,885 74,932 Change in fair value of retained interests in loans securitized 5,112 47,965 Transaction and other costs (6,612) (38,709) ------------ ------------ Securitization income 108,056 118,985

Servicing income on securitized receivables 29,420 36,237 Credit card loan and other interest income 4,948 5,106 Credit card loan fees, interchange and other income 2,780 10,816 Enhancement services income 3,465 7,480 Gain on sale of membership and warranty business 1,800 -- ------------ ------------ Total revenues 150,469 178,624 ------------ ------------

Expenses: Interest expense 11,381 13,931 Benefit for loan losses (948) (6,092) Credit card account and other product solicitation and marketing expenses 19,147 15,932 Employee compensation 36,509 38,945 Data processing services and communications 12,000 16,472 Credit protection claims expense 5,413 6,348 Occupancy and equipment 4,893 6,401 Other 19,759 22,375 ------------ ------------ Total expenses 108,154 114,312 ------------ ------------

Income before income taxes 42,315 64,312 Income tax expense 14,734 22,702 ------------ ------------ Net income 27,581 41,610 Convertible preferred stock dividends 11,577 10,591 ------------ ------------ Net income after preferred dividends $16,004 $31,019 ============ ============

Earnings per common share: Distributed $-- $-- Undistributed 0.15 0.30 ------------ ------------ Total Basic $0.15 $0.30 ============ ============

Total Diluted $0.15 $0.30

Shares used to compute earnings per common share: Basic 58,146 57,791 Diluted 58,994 58,318

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

Three Months Ended March 31, Dec. 31, Sept. 30, June 30, March 31, 2005 2004 2004 2004 2004 --------- --------- --------- --------- --------- Revenues: Loss on new securitizations of receivables to the Metris Master Trust $(29,161) $(51,735) $-- $(90,640) $(1,246) Loss on replenishment of receivables to the Metris Master Trust (11,497) (16,840) (21,972) (25,454) (23,927) Discount accretion 61,329 69,168 63,747 61,570 59,970 Interest-only revenue 88,885 75,325 87,316 55,137 74,932 Change in fair value of retained interests in loans securitized 5,112 20,314 25,518 20,718 47,965 Transaction and other costs (6,612) (9,539) (6,634) (45,674) (38,709) --------- --------- --------- --------- --------- Securitization income (expense) 108,056 86,693 147,975 (24,343) 118,985

Servicing income on securitized receivables 29,420 31,085 32,496 33,847 36,237 Credit card loan and other interest income 4,948 5,435 4,549 5,010 5,106 Credit card loan fees, interchange and other income 2,780 2,150 3,736 5,264 10,816 Enhancement services income 3,465 4,939 5,692 6,976 7,480 Gain on sale of membership and warranty business 1,800 -- -- -- - --------- --------- --------- --------- --------- Total revenues 150,469 130,302 194,448 26,754 178,624 --------- --------- --------- --------- ---------

Expenses: Interest expense 11,381 13,740 14,056 18,714 13,931 (Benefit) provision for loan losses (948) 413 1,408 (491) (6,092) Credit card account and other product solicitation and marketing expenses 19,147 29,810 17,190 15,726 15,932 Employee compensation 36,509 35,131 31,554 35,723 38,945 Data processing services and communications 12,000 12,489 12,203 13,777 16,472 Credit protection claims expense 5,413 3,086 3,421 5,036 6,348 Occupancy and equipment 4,893 4,764 5,442 5,984 6,401 Other 19,759 27,964 23,985 28,735 22,375 --------- --------- --------- --------- --------- Total expenses 108,154 127,397 109,259 123,204 114,312 --------- --------- --------- --------- ---------

Income (loss) before income taxes 42,315 2,905 85,189 (96,450) 64,312 Income tax expense (benefit) 14,734 2,208 23,425 (26,124) 22,702 --------- --------- --------- --------- --------- Net income (loss) 27,581 697 61,764 (70,326) 41,610 Convertible preferred stock dividends 11,577 11,323 11,073 10,830 10,591 --------- --------- --------- --------- --------- Net (loss) income after preferred dividends $16,004 $(10,626) $50,691 $(81,156) $31,019 ========= ========= ========= ========= =========

Earnings (loss) per common share(1): Distributed earnings - Preferred $11,577 $11,323 $11,073 $10,830 $10,591 Weighted average preferred shares 1,381 1,351 1,321 1,292 1,264 --------- --------- --------- --------- --------- Distributed earnings per share - Preferred $8.38 $8.38 $8.38 $8.38 $8.38 ========= ========= ========= ========= =========

Undistributed earnings (loss) $16,004 $(10,626) $50,691 $(81,156) $31,019 Preferred ownership on a converted basis 44% 44% 44% 44% 44% --------- --------- --------- --------- --------- Preferred stockholders' interest in undistributed earnings (loss)(2) $7,042 $- $22,304 $- $13,648 --------- --------- --------- --------- --------- Weighted average preferred shares 1,381 1,351 1,321 1,292 1,264 --------- --------- --------- --------- --------- Undistributed earnings per share - Preferred $5.10 $- $16.88 $- $10.80 ========= ========= ========= ========= =========

Undistributed earnings (loss) $16,004 $(10,626) $50,691 $(81,156) $31,019 Common ownership 56% 56% 56% 56% 56% --------- --------- --------- --------- --------- Common stockholders' interest in undistributed earnings (loss)(2) $8,962 $(10,626) $28,387 $(81,156) $17,371 --------- --------- --------- --------- --------- Weighted average common shares and common share equivalents 58,994 58,083 58,710 57,924 58,318 --------- --------- --------- --------- --------- Undistributed common earnings (loss) per share - Diluted $0.15 $(0.18) $0.48 $(1.40) $0.30 ========= ========= ========= ========= =========

(1)In accordance with Emerging Issues Task Force Issue No. 03-6 "Participating Securities and the Two-Class Method under FASB Statement 128," earnings per common share are calculated as net income after preferred dividends, less undistributed income allocated to preferred stockholders', divided by the sum of weighted average common shares outstanding. For diluted earnings per share purposes, common share equivalents are added to the weighted average common shares outstanding unless they are determined to be anti-dilutive. Common share equivalents do not include an assumed conversion of preferred securities. (2)Preferred stockholders' do not participate in any undistributed losses with common stockholders'.

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

Three Months Ended March 31, Dec. 31, Sept. 30, 2005 2004 2004 ----------- ----------- ----------- Metris Master Trust: Restricted Cash Cash restricted due to performance $35,059 $36,367 $94,427 Cash restricted due to corporate debt ratings 13,187 13,187 13,187 Other non-performance based cash restricted 62,296 37,770 44,716 ----------- ----------- ----------- Total cash restricted $110,542 $87,324 $152,330 =========== =========== ===========

Gross Yield(1) 28.73% 27.03% 26.49% Principal defaults 17.08% 17.52% 16.79% Interest expense and servicing fees 5.18% 4.65% 4.12% ----------- ----------- ----------- Average excess spread 6.47% 4.86% 5.58% =========== =========== ===========

Average principal receivables $5,960,984 $6,180,757 $6,460,243 Ending gross receivables $6,050,712 $6,443,919 $6,654,178 Ending principal receivables $5,753,684 $6,117,669 $6,304,711 Total two-cycle plus delinquency rate 8.3% 9.2% 9.7% Principal two-cycle plus delinquency rate 7.0% 7.7% 8.2% Average enhancement levels 12.5% 12.1% 11.1%

Selected Operating Data - Owned Basis: Balance Sheet Total liquid assets MCI and non-bank subsidiaries $124,027 $229,600 $230,400 Direct Merchants Bank 183,211 167,527 173,130 ----------- ----------- ----------- $307,238 $397,127 $403,530 =========== =========== =========== Retained interests in loans securitized: Contractual retained interests $516,983 $537,945 $493,574 Excess transferor's interests 180,886 105,237 158,307 Interest-only strip receivable 83,460 82,672 73,075 Spread accounts receivable 84,247 58,281 114,452 ----------- ----------- ----------- $865,576 $784,135 $839,408 =========== =========== =========== Valuation assumptions: Monthly payment rate 7.7% 7.6% 7.5% Gross yield 26.3% 25.9% 25.5% Annual interest expense and servicing fee 5.4% 5.0% 4.7% Annual gross principal default rate 18.2% 18.4% 18.6% Weighted average months to maturity 18.7 20.1 20.8

Average total stockholders' equity $958,492 $953,794 $914,917 Total stockholders' equity $975,322 $947,302 $945,657 Common stockholders' equity $449,200 $432,757 $442,435 Common shares outstanding 58,170 58,127 58,044 Preferred securities on a converted basis 45,054 45,054 45,054 Total book value $9.45 $9.18 $9.17 Common stockholders' book value $7.72 $7.45 $7.62

Three Months Ended June 30, March 31, 2004 2004 ----------- ----------- Metris Master Trust: Restricted Cash Cash restricted due to performance $119,703 $156,305 Cash restricted due to corporate debt ratings 13,187 13,187 Other non-performance based cash restricted 59,667 35,663 ----------- ----------- Total cash restricted $192,557 $205,155 =========== ===========

Gross Yield(1) 26.75% 27.46% Principal defaults 19.24% 19.26% Interest expense and servicing fees 3.68% 3.59% ----------- ----------- Average excess spread 3.83% 4.61% =========== ===========

Average principal receivables $6,801,726 $7,281,487 Ending gross receivables $6,944,214 $7,396,229 Ending principal receivables $6,580,659 $6,995,478 Total two-cycle plus delinquency rate 9.5% 10.5% Principal two-cycle plus delinquency rate 7.9% 8.7% Average enhancement levels 11.7% 10.8%

Selected Operating Data - Owned Basis: Balance Sheet Total liquid assets MCI and non-bank subsidiaries $234,700 $137,365 Direct Merchants Bank 166,529 182,680 ----------- ----------- $401,229 $320,045 =========== =========== Retained interests in loans securitized: Contractual retained interests $525,085 $574,275 Excess transferor's interests 52,255 32,031 Interest-only strip receivable 47,290 26,652 Spread accounts receivable 136,983 161,457 ----------- ----------- $761,613 $794,415 =========== =========== Valuation assumptions: Monthly payment rate 7.3% 7.0% Gross yield 25.7% 25.2% Annual interest expense and servicing fee 4.8% 4.0% Annual gross principal default rate 19.5% 20.4% Weighted average months to maturity 24.4 19.6

Average total stockholders' equity $912,051 $969,540 Total stockholders' equity $882,746 $952,812 Common stockholders' equity $390,597 $471,493 Common shares outstanding 57,957 57,908 Preferred securities on a converted basis 45,054 45,054 Total book value $8.57 $9.25 Common stockholders' book value $6.74 $8.14

(1)Includes cash flows from finance charges, late, overlimit, debt waiver and cash advance fees, bad debt recoveries and interchange income.

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

Three Months Ended March 31, Dec. 31, Sept. 30, 2005 2004 2004 ------------ ------------ ------------ Selected Operating Data - Owned Basis: Income Statement Loss on new securitizations of receivables to the Metris Master Trust: Defeasance of maturing ABS series into conduit $(34,525)(1) $(16,559)(3) $- Amortizing term series financing - - - New term ABS transactions - (35,176)(4) - Issuance of BB bonds 5,364(2) - - ------------ ------------ ------------ (29,161) (51,735) - Loss on replenishment of receivables to the Metris Master Trust (11,497) (16,840) (21,972) Discount Accretion 61,329 69,168 63,747 Interest-only revenue: Gross Yield(8) 414,405 414,140 424,823 Principal defaults 249,571 271,603 271,715 Interest expense and servicing fees 75,949 67,212 65,792 ------------ ------------ ------------ 88,885 75,325 87,316

Change in fair value of retained interests in loans securitized 5,112 20,314 25,518 Transaction and other costs (6,612) (9,539) (6,634) ------------ ------------ ------------ Securitization income (expense) $108,056 $86,693 $147,975 ============ ============ ============

Other Expenses MasterCard/Visa assessment and fees $1,677 $1,881 $1,625 Credit card fraud losses 533 619 696 Legal fees 861 2,306 2,788 Collection and risk management 3,091 3,066 3,301 Other professional fees 4,581 5,317 5,318 Purchased portfolio premium amortization 1,709 1,557 2,241 Asset impairment, lease write- offs and severance 35 682 1,263 General and administrative expenses 4,674 4,919 5,993 Other 2,598 7,617 760 ------------ ------------ ------------ Total other expenses $19,759 $27,964 $23,985 ============ ============ ============

Three Months Ended June 30, March 31, 2004 2004 ------------ ------------ Selected Operating Data - Owned Basis: Income Statement Loss on new securitizations of receivables to the Metris Master Trust: Defeasance of maturing ABS series into conduit $(78,008)(5) $- Amortizing term series financing - (1,246)(7) New term ABS transactions (12,632)(6) - Issuance of BB bonds - - ------------ ------------ (90,640) (1,246) Loss on replenishment of receivables to the Metris Master Trust (25,454) (23,927) Discount Accretion 61,570 59,970 Interest-only revenue: Gross Yield(8) 441,130 486,792 Principal defaults 324,723 348,090 Interest expense and servicing fees 61,270 63,770 ------------ ------------ 55,137 74,932

Change in fair value of retained interests in loans securitized 20,718 47,965 Transaction and other costs (45,674) (38,709) ------------ ------------ Securitization income (expense) $(24,343) $118,985 ============ ============

Other Expenses MasterCard/Visa assessment and fees $1,547 $1,809 Credit card fraud losses 433 510 Legal fees 1,929 219 Collection and risk management 3,173 4,094 Other professional fees 4,006 5,402 Purchased portfolio premium amortization 2,105 2,397 Asset impairment, lease write- offs and severance 1,791 1,461 General and administrative expenses 8,242 6,483 Other 5,509 - ------------ ------------ Total other expenses $28,735 $22,375 ============ ============

(1)Loss represents $204 million retained bond (18.5% required subordination) discounted at 16% for 15 months and a $33 million spread account floor discounted at 16% for 15 months, partially offset by the present value of future 15 months assumed excess spread discounted at 30%. (2)Gain represents the reversal of the remaining discount (16% over 21 months) on a $53 million retained bond, partially offset by a $7 million interest reserve account discounted at 16% for 21 months and increased interest expense on $53 million of BB bonds discounted monthly at 30%. (3)Loss represents discount on a $82 million retained bond (18.5% required subordination) discounted at 16% for 18 months and a $15 million spread account floor discounted at 16% for 18 months, partially offset by the present value of future 18 months assumed excess spread discounted at 30%. (4)Loss represents discount on $155 million retained bond (20.5% required subordination) discounted at 16% for 23 months, partially offset by the present value of future 23 months assumed excess spread discounted at 30%. (5)Loss represents discount on a $250 million retained bond (18.5% required subordination) at 16% for 24 months and a $47 million spread account floor discounted at 15.25% for 24 months, partially offset by the present value of future 24 months assumed excess spread discounted at 30%. (6)Loss represents discount on $27 million retained bond (12% required subordination) discounted at 16% for 36 months and a $7 million spread account floor discounted at 15.25% for 36 months, partially offset by the present value of future 36 months assumed excess spread discounted at 30%. (7)Loss represents discount on a $113 million retained bond (18.5% required subordination) at 16% for one month, partially offset by the present value of future one month assumed excess spread discounted at 30%. (8)Includes cash flows from finance charges, late, overlimit, debt waiver and cash advance fees, bad debt recoveries and interchange income.

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 March 31, Dec. 31, Sept. 30, 2005 2004 2004 ------------ ------------ ------------ Selected Operating Data - Managed Basis: Account Originations Partner 34 42 28 Non-partner 129 166 90 ------------ ------------ ------------ Total account originations 163 208 118 ============ ============ ============

Gross active accounts Historical vintages(1) 1,555 1,678 1,802 New vintages(1) 613 499 375 ------------ ------------ ------------ 2,168 2,177 2,177 ============ ============ ============ Period-end loans Historical vintages(1) $5,261,812 $5,787,904 $6,164,106 New vintages(1) 908,165 792,316 617,358 ------------ ------------ ------------ $6,169,977 $6,580,220 $6,781,464 ============ ============ ============ Period-end loans(2): Credit card loans $61,956 $68,230 $70,389 Receivables held by the Metris Master Trust 6,108,021 6,511,990 6,711,075 ------------ ------------ ------------ Managed $6,169,977 $6,580,220 $6,781,464 ============ ============ ============ Average loans(2): Credit card loans $65,571 $69,310 $72,581 Receivables held by the Metris Master Trust 6,346,605 6,589,913 6,892,481 ------------ ------------ ------------ Managed $6,412,176 $6,659,223 $6,965,062 ============ ============ ============ Two-cyle plus delinquencies: Credit card loans $6,205 $7,781 $8,886 Receivables held by the Metris Master Trust 504,840 593,819 648,321 ------------ ------------ ------------ Managed $511,045 $601,600 $657,207 ============ ============ ============ Two-cycle plus delinquency ratio: Credit card loans 10.0% 11.4% 12.6% Receivables held by the Metris Master Trust 8.3% 9.1% 9.7% Managed 8.3% 9.1% 9.7% Net charge-offs Credit card loans $1,632 $2,298 $2,490 Receivables held by the Metris Master Trust 227,591 257,106 253,782 ------------ ------------ ------------ Managed $229,223 $259,404 $256,272 ============ ============ ============ Net charge-off ratio annualized(3): Credit card loans 10.1% 13.2% 13.6% Receivables held by the Metris Master Trust 14.5% 15.5% 14.6% Managed 14.5% 15.5% 14.6%

Three Months Ended June 30, March 31, 2004 2004 ------------ ------------ Selected Operating Data - Managed Basis: Account Originations Partner 15 9 Non-partner 81 49 ------------ ------------ Total account originations 96 58 ============ ============

Gross active accounts Historical vintages(1) 1,947 2,112 New vintages(1) 292 239 ------------ ------------ 2,239 2,351 ============ ============ Period-end loans Historical vintages(1) $6,596,605 $7,142,451 New vintages(1) 486,550 393,550 ------------ ------------ $7,083,155 $7,536,001 ============ ============ Period-end loans(2): Credit card loans $72,491 $74,085 Receivables held by the Metris Master Trust 7,010,664 7,461,916 ------------ ------------ Managed $7,083,155 $7,536,001 ============ ============ Average loans(2): Credit card loans $80,779 $126,957 Receivables held by the Metris Master Trust 7,258,288 7,787,351 ------------ ------------ Managed $7,339,067 $7,914,308 ============ ============ Two-cyle plus delinquencies: Credit card loans $9,321 $11,079 Receivables held by the Metris Master Trust 658,650 773,592 ------------ ------------ Managed $667,971 $784,671 ============ ============ Two-cycle plus delinquency ratio: Credit card loans 12.9% 15.0% Receivables held by the Metris Master Trust 9.4% 10.4% Managed 9.4% 10.4% Net charge-offs Credit card loans $3,080 $22,400 Receivables held by the Metris Master Trust 307,563 327,607 ------------ ------------ Managed $310,643 $350,007 ============ ============ Net charge-off ratio annualized(3): Credit card loans 15.3% 71.0% Receivables held by the Metris Master Trust 17.0% 16.9% Managed 17.0% 17.8%

(1)New vintages include credit card account originations between 2003 and 2005. Historical vintages include credit card account originations and portfolio purchases prior to 2003. (2)Included in period-end loans and average loans are principal receivables, accrued finance charges and net deferred acquisition costs. (3)The net charge-off ratio for the three months ended March 31, 2004 was impacted by a portfolio of approximately $38 million in receivables accounted for as held for sale during the period.

--30--CP/ms*

CONTACT: Metris Companies Inc., Minnetonka Investor / Media Relations: Jeff Grosklags, 952-525-5074

KEYWORD: MINNESOTA INDUSTRY KEYWORD: CHEMICALS/PLASTICS BANKING MANUFACTURING EARNINGS CONFERENCE CALLS SOURCE: Metris Companies Inc.

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