Metris Companies reported net income for the quarter ended March 31, 2004 of $41.6 million, or $0.47 per share. This compares to a net loss of $82.8 million or a $1.62 loss per share for the quarter ended March 31, 2003.
“Our first quarter results continue the trend of improvement we have seen during the previous two quarters,” said David Wesselink, Metris Chairman and Chief Executive Officer. “Our delinquency rate in the Metris Master Trust decreased to 10.5% as of March 31, 2004 the lowest level since July 2002, while the three-month average excess spread increased to 4.61%. We are also announcing a new two-year conduit facility that will help us to meet our funding requirements through April 2006, a significant achievement in our funding plan. We are pleased with the two-year term of the deal considering most conduit structures mature within 364 days.”
During the quarter the Company changed the presentation of its income statement to better represent the ongoing operations of the Company. Revenues for the quarter ended March 31, 2004 were $178.6 million, a 59.7% increase over $111.8 million for the quarter ended March 31, 2003. The increase is primarily due to a $157.0 million increase in securitization income, reflecting improved performance in the Metris Master Trust. This increase was partially offset by a $42.6 million reduction in credit card loan interest and fee income due to a $624.7 million reduction in average credit cards loans, and a $36.0 million reduction in enhancement services income due to the sale of our membership club and warranty business in the third quarter of 2003.
Total expenses were $114.3 million for the quarter ended March 31, 2004, a decrease of $125.0 million from $239.3 million for the quarter ended March 31, 2003. Provision for loan losses was income of $6.1 million for the quarter ended March 31, 2004, compared to expense of $44.8 million for the quarter ended March 31, 2003, reflecting the significant reduction in credit card loans during the past year and slightly improved credit quality. The remaining $74.1 million reduction in expense reflects the sale of our membership club and warranty business and the significant reduction in our credit card operations during the past year.
The three-month average excess spread in the Metris Master Trust was 4.61 percent as of March 31, 2004, compared to 3.62 percent as of December 31, 2003, and 2.37 percent as of March 31, 2003. The two-cycle plus delinquency rate in the Metris Master Trust was 10.5 percent as of March 31, 2004, compared to 11.0 percent as of December 31, 2003, and 11.7 percent as of March 31, 2003. The gross default rate of the Metris Master Trust for the first quarter of 2004 was 19.28 percent, compared to 19.10 percent in the fourth quarter of 2003 and 21.45 percent in the first quarter of 2003.
As of March 31, 2004, the Company’s managed credit card loans were $7.5 billion compared to $8.1 billion as of December 31, 2003. The Company’s owned credit card portfolio was $74 million, down from $129 million at December 31, 2003.
The managed net charge-off rate for the first quarter of 2004 was 17.8 percent, compared to 21.7 percent in the previous quarter, and 18.0 percent for the first quarter of 2003. The owned net charge-off rate was 71.0 percent, compared with 56.6 percent in the previous quarter, and 4.5 percent in the first quarter of 2003.
The managed delinquency rate was 10.4 percent as of March 31, 2004, compared to 11.1 percent as of December 31, 2003, and 11.5 percent as of March 31, 2003. The owned delinquency rate was 15.0 percent as of March 31, 2004, compared to 15.8 percent as of December 31, 2003, and 8.2 percent as of December 31, 2003.
Metris Receivables Inc., a wholly owned subsidiary of Metris Companies Inc., has entered into an agreement to establish a committed, two-year $800 million conduit facility for the purpose of financing credit card receivables in the Metris Master Trust, subject to certain initial funding conditions, all of which are expected to be met. The first funding into the conduits is expected to be in May 2004 to defease Series 2001-3, which is currently scheduled to mature in August 2004.
This two-year conduit facility will allow for the maturing term securitization transaction to be funded into the conduit as it matures and will provide for the future defeasance of those maturing deals through April 2006. The conduit is expected to be repaid through the periodic issuance of future term securitization transactions issued from the Metris Master Trust and through future attrition of the loan portfolio.
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 complete details on Metris’ first quarter performance visit CardData ([www.carddata.com])