Magazine article American Banker

Metris' Loan Sales, Uptick Fail to Convince Analysts

Magazine article American Banker

Metris' Loan Sales, Uptick Fail to Convince Analysts

Article excerpt

Steps taken by Metris Co. to improve liquidity sent its stock up Wednesday morning, but that did not move the analysts who were doubtful about the card lender.

The Minnetonka, Minn., company said late Tuesday that it had sold $590 million of loans from its bank and card subsidiaries and had replaced a $610 million asset-backed securitization with a private conduit. The securitization was due to mature in January, but its accumulation period was to begin Nov. 1, and the Office of the Comptroller of the Currency had told Metris to replace it.

Metris said the loan sale will cost it $75 million to $85 million in pretax charges in the third quarter.

David Wesselink, Metris' chairman and chief executive, said in a press release Wednesday that the measures meet requirements set by the OCC.

In March, Metris agreed to reduce loans on its books by yearend to $550 million, 27% less than a year earlier. It also agreed to sell all loans by the end of next year and all new credit card loans the day they are made.

On Aug. 14 Metris disclosed that the OCC had also told it to either get rid of its Direct Merchants Credit Card Bank's deposits or eliminate their risk.

Analysts said Metris' management has made progress in complying with regulators and appears to be building confidence that it can gather the funds necessary to avert an outright shutdown by the OCC.

"This certainly takes a gun away from their head," said E. Reilly Tierney, an analyst with Swiss Reinsurance Group's Fox-Pitt, Kelton Inc. …

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