**Conditional Approval #682**

**May 2005**

April 06, 2005 *Via Facsimile and*

*U. S. Mail*

Board of Directors

Direct Merchants Credit Card Bank, N.A.

Kierland I

16430 North Scottsdale Road

Phoenix, Arizona 85254-1518

Re: Direct Merchants Credit Card Bank, National Association

Request for Reduction of Permanent Capital

Application Control Number: 2004-WE-12- 0161

Dear Members of the Board:

The Comptroller of the Currency (OCC) has approved a request from Direct
Merchants Credit Card Bank, N.A. ("Bank") for a reduction in the Bank\'s
permanent capital of \$130 million, as outlined the Bank's application
letter dated May 3, 2004, and as amended in a letter dated March 24,
2005. OCC\'s approval is subject to the following conditions:

(1) Payment of a dividend in the amount of \$60 million from the Bank to
    Metris Direct, Inc. ("MDI" -- Bank Parent) may occur only after the
    Special Supervision Division of the OCC (\"SPSU\") has received
    written confirmation that Metris Companies, Inc. ("MCI") has
    purchased the Bank\'s receivables of approximately \$60 million.

(2) Payment of a dividend in the amount of \$70 million from the Bank to
    MDI may occur only after SPSU has received written confirmation that
    MCI has reduced its high cost debt by the amount of the previous
    Bank dividend of \$60 million.

(3) Bank shall provide a written confirmation to SPSU that MCI has
    further reduced its high cost debt in the amount of \$70 million.

Please be advised that the condition of this approval is a condition
"imposed in writing by the agency in connection with the granting of any
application or other request" within the meaning of 12 U.S.C. § 1818
and, as such, is enforceable under 12 U.S.C. § 1818.

Moreover, in reference to the amendments the Bank requested to Article V
of the Modified Operating Agreement dated December 11, 2003
("Agreement"), SPSU determined to amend the

Agreement to require a minimum Tier 1 capital of \$100 million, and the
Capital and Liquidity Maintenance Agreement will remain in effect. SPSU
will provide an amendment for your documentation.

Pursuant to 12 U.S.C. § 59, a reduction in capital stock requires
approval by shareholders owning at least two-thirds of the Bank\'s
capital stock and, if necessary, amendments to the Articles of
Association. Also following the completion of each step of the
transaction, the Bank must advise SPSU of the effective date of the
transactions, consistent with the aforementioned conditions.

This approval is granted based on a through review of all information
available, including the representations and commitments made in the
application and by the Bank\'s representatives. The change in capital
should be completed within one year of the date of this letter.

This approval and the activities and communications by OCC employees in
connection with the filing do not constitute a contract, express or
implied, or any other obligation binding upon the OCC, the United States
(U.S.), any agency or entity of the U. S., or any officer or employee of
the U. S., and do not affect the ability of the OCC to exercise its
supervisory, regulatory and examination authorities under applicable law
and regulations. The foregoing may not be waived or modified by any
employee or agent of the OCC or the U. S.

Please include the application control number on any correspondence
related to this filing.

If you have questions, contact me at (202) 874-5060 or contact Louis
Gittleman of the Western District Office Licensing Department at (720)
475-7650. You may also contact National Bank Examiner Cindy Hubbard,
SPSU at 202-874-8038.

Sincerely,

**signed**

Alfred A. Phillips

National Bank Examiner

Senior Licensing Analyst

cc: Jennifer M. Ogren

Senior Vice President, General Counsel

Metris Companies, Inc.

Minnetonka, MN