Post from twincities.com regarding First Premier Bankcard. It looks like they are in trouble. Possibly why they are increasing fees and such. Turning the same route as Nextcard and Providian. Thought it might be interesting reading. http://www.twincities.com/mld/twincities/2003/09/26/business/6862354.htm Posted on Fri, Sep. 26, 2003 U donor Sanford's banks face restrictions BY SHERYL JEAN Pioneer Press Federal regulators on Thursday imposed severe regulatory restrictions on the South Dakota bank and credit card business owned by T. Denny Sanford, the donor who recently pledged $35 million to help build a University of Minnesota football stadium. The Federal Reserve Board issued a "written agreement" against United National Corp. and its two subsidiaries, First Premier Bank and Premier Bankcard, all based in Sioux Falls, S.D. Sanford is chairman of United National Corp., which is privately owned. First Premier Bank, with just under $1 billion in assets, was South Dakota's third-largest bank last year. It's uncertain how or if the regulatory action against First Premier Bank will affect Sanford's pledge to help build the University of Minnesota football stadium. Neither Sanford, who was on vacation in Europe, nor his Minneapolis lawyer could be reached for comment on Thursday. University officials could not be reached for comment. The bank's regulatory issues should not have any impact on Sanford's financial commitment to the University of Minnesota, Miles Beacom, president of Premier Bankcard, said Thursday. "They're two separate issues," he said. "(Sanford) has a foundation for his charitable giving that's separate from First Premier bank and Premier Bankcard." The agreement issued by the Fed, which is one step before a "cease-and-desist" action, sets up strict requirements that United and First Premier must meet or it will be forced to sell or liquidate its $470 million credit card portfolio. The Fed has ordered the bank and its management to better manage credit card growth, increase its capital levels, establish stricter controls and diversify its funding options. The bank has been working with the Fed since March and already has started taking many of the steps required, Beacom said. First Premier Bank and its affiliates are the latest in a string of sub-prime credit card companies that have come under the scrutiny of federal regulators in the past two years. Metris Cos. Inc., the Minnetonka-based credit card issuer, has operated under a federal regulatory agreement for the past 18 months and has had to make major cuts to its business. The weak economy has hurt both companies' customers, many of whom have poor credit histories, and led to loan defaults. The Federal Reserve Bank of Minneapolis, which is the supervisory agency for the bank, had no comment. The 89-year-old First Premier Bank began growing rapidly in 1989, when it entered the credit card business. It now has 1.7 million credit cards issued, and credit card loans make up more than 60 percent of the bank's total loans. Under the Fed agreement, the bank's growth is restricted: Total credit card loans must increase no more than 8 percent a year until it meets certain capital and liquidity levels and controls loan losses. The bank must maintain total risk-based capital of at least 12 percent of assets, which is higher than usual, and reduce its reliance on federally insured deposits to fund loan growth. It cannot increase salaries or bonuses, pay dividends or distribute interest without prior written approval by the Fed. To reach the author of this article, click Contact Us at the top of this page and go to Pioneer Press Contacts.
