SOURCE: CompuCredit

May 07, 2008 16:32 ET

CompuCredit Reports First Quarter 2008 Results

ATLANTA, GA--(Marketwire - May 7, 2008) - CompuCredit (NASDAQ: CCRT) reported first quarter 2008 GAAP earnings of $2.5 million, or $0.05 per fully diluted common share, versus a first quarter 2007 GAAP net loss of $2.5 million, or $0.05 per fully diluted common share. First quarter 2008 GAAP earnings from continuing operations were $5.5 million, or $0.12 per fully diluted common share, as compared to $2.1 million, or $0.04 per fully diluted common share, for the first quarter of 2007.

On a managed basis, CompuCredit reported a first quarter 2008 net loss of $105.3 million, or $2.25 of managed loss per fully diluted common share, versus a first quarter 2007 managed loss of $9.5 million or $0.19 per fully diluted common share. The first quarter 2008 managed loss from continuing operations was $101.7 million, or $2.17 of managed loss per fully diluted common share, as compared to $4.7 million of managed net loss from continuing operations, or $0.10 managed loss per fully diluted common share, for the first quarter of 2007.

"Our first quarter results were significantly affected by our reduced marketing levels from mid-2007," said David G. Hanna, CompuCredit's Chairman and Chief Executive Officer. He added that "A significant number of credit card accounts added in mid-2007 reached or are reaching their peak vintage charge off levels in the first and second quarters of this year. As a result, delinquencies are lower at the end of the first quarter and are projected to fall dramatically from first quarter levels by the end of the second quarter of this year. Moreover, we are pleased with recent credit quality trends in our credit card business as our early stage delinquency rates also have improved year-over-year."

Reflecting peak charge off vintages of accounts added in mid-2007, CompuCredit's net interest margin was 13.6 percent in the first quarter of 2008, as compared to 18.0 percent for the first quarter of 2007 and 17.8 percent in the previous quarter, and its adjusted charge-off rate was 18.5 percent in the first quarter of 2008, as compared to 12.2 percent for the first quarter of 2007 and 13.2 percent in the previous quarter. Also, as of March 31, 2008, the 60-plus day delinquency rate fell 190 basis points from 18.4 percent as of December 31, 2007 to 16.5 percent as of March 31, 2008.

Various references within this press release and the accompanying financial information are to CompuCredit's "managed" results, which include the results of its non-securitized receivables, together with the receivables underlying its off-balance-sheet securitization facilities. Financial, operating and statistical data based on these aggregate managed receivables are key to any evaluation of CompuCredit's performance in managing (including underwriting, valuing purchased receivables, servicing and collecting) the portfolios of receivables reflected on CompuCredit's balance sheet and underlying its securitization facilities. In allocating CompuCredit's resources and managing its business, management relies heavily upon financial, operating and statistical data prepared on a so-called "managed basis." It is also important to analysts, investors and others that CompuCredit provides selected metrics and data on a managed basis because this allows a comparison of CompuCredit to others within the specialty finance industry. Moreover, CompuCredit's management, analysts, investors and others believe it is critical that they understand the credit performance of the entire portfolio of CompuCredit's managed receivables because it reveals information concerning the quality of loan originations and the related credit risks inherent within the securitized portfolios and CompuCredit's retained interests in its securitization facilities.

Managed receivables data assume that none of the credit card receivables underlying CompuCredit's off-balance-sheet securitization facilities was ever transferred to securitization facilities and present the net credit losses and delinquent balances on the receivables as if we still owned the receivables. Reconciliation of the managed receivables data to CompuCredit's GAAP financial statements requires: (1) recognition that substantially all of CompuCredit's credit card receivables had been sold in securitization transactions as of March 31, 2008; (2) an understanding that CompuCredit's managed receivables data are based on billings and actual charge-offs as reported to us through underlying systems of record (i.e., without regard to an allowance for uncollectible loans and fees receivable); (3) a look-through to CompuCredit's economic share of (or equity interest in) the receivables that we manage for CompuCredit's equity-method investees; (4) removal of CompuCredit's minority interest holders' interests in the managed receivables underlying CompuCredit's GAAP consolidated results; and (5) recognition that CompuCredit's Fingerhut managed receivables were recorded at a $0 basis in CompuCredit's GAAP financial statements prior to CompuCredit's re-securitization of these receivables in September 2006.

Further details regarding CompuCredit's first quarter 2008 financial performance will be discussed during management's conference call on Wednesday, May 7, 2008 at 5:00 p.m., Eastern Time. The media and public are invited to listen to the live webcast of the call, accessible on the Internet at www.CompuCredit.com. A replay of the conference call also will be available on the web site.

CompuCredit is a specialty finance company and marketer of branded credit cards and related financial services. CompuCredit provides these services to consumers who are underserved by traditional financial institutions. Through corporate and affinity contributions focused on the underserved and un-banked communities, CompuCredit also uses its financial resources and volunteer efforts to address the numerous challenges affecting its customers. For more information about CompuCredit, visit www.CompuCredit.com.

                 CompuCredit Corporation and Subsidiaries
              Financial, Operating and Statistical Measures
                                (Unaudited)
        (In thousands, except for per share data and percentages)


                                     As Of And For The Three Months Ended
                                     -------------------------------------
                                      March 31,   December 31,   March 31,
                                         2008         2007         2007
                                     -----------  -----------  -----------
Common Share Statistics
 Net Income From Continuing
  Operations Per Common Share:
   Basic                             $      0.12  $      0.58  $      0.04
   Diluted                           $      0.12  $      0.58  $      0.04
Loss On Discontinued Operations Per
 Common Share:
   Basic                             $     (0.07) $     (0.25) $     (0.09)
   Diluted                           $     (0.07) $     (0.25) $     (0.09)
Net Income (Loss) Per Common Share:
   Basic                             $      0.05  $      0.33  $     (0.05)
   Diluted                           $      0.05  $      0.33  $     (0.05)

Book Value Per Common Share
 Outstanding (Period End)            $     16.60  $     16.73  $     17.30
Stock Price Per Common Share (Period
 End)                                $      8.87  $      9.98  $     31.22
Total Market Capitalization (Period
 End)                                $   425,157  $   472,832  $ 1,532,434
Shares Outstanding (Period End)(1)        47,933       47,378       49,085
Weighted Average Shares
 Outstanding--Basic                       46,742       47,614       50,262
Weighted Average Shares
 Outstanding--Diluted                     46,839       47,860       50,262

Average Managed Receivables
 Statistics (2)
Average Managed Receivables          $ 3,986,532  $ 4,150,117  $ 2,877,215
Average Shareholders' Equity         $   794,116  $   795,658  $   866,459
GAAP Return On Average Managed
 Receivables                                 0.6%         2.7%         0.3%
GAAP Return On Average Equity (ROE)          2.8%        13.8%         1.0%
Net Interest Margin                         13.6%        17.8%        18.0%
Other Income Ratio                           4.8%        14.9%        15.3%
Net Charge-Off Rate                         20.1%        15.6%        13.3%
Adjusted Charge-Off Rate                    18.5%        13.2%        12.2%
Risk Adjusted Margin                        -0.6%        18.9%        20.7%
Operating Ratio                             13.1%        19.3%        16.6%

Period-End Managed Receivables
 Statistics (2)
Total Managed Receivables            $ 3,813,040  $ 4,136,430  $ 2,874,882
Delinquency Rate (60+ days)                 16.5%        18.4%        12.9%
Number of Accounts                         4,983        5,306        3,925
Shareholders' Equity                 $   795,652  $   792,579  $   848,977
Equity to Managed Receivables Ratio         20.9%        19.2%        29.5%


(1) Shares outstanding balances exclude 3,651,069 shares that are
    outstanding at March, 31, 2008 and 5,677,950 shares that are
    outstanding at December 31, 2007 and March 31, 2007 but that are
    returnable to CompuCredit under the terms of a share lending
    arrangement.

(2) Receivables-based statistics are based on continuing operations only.



                 CompuCredit Corporation and Subsidiaries
                        Consolidated Balance Sheets
                          (Dollars in thousands)


                                                   March 31,   December 31,
                                                      2008         2007
                                                  -----------  -----------
                                                  (Unaudited)
Assets
Cash and cash equivalents (including restricted
 cash of $28,314 at March 31, 2008 and $29,128 at
 December 31, 2007)                               $   211,901  $   137,526
Securitized earning assets                          1,000,390    1,015,579
Non-securitized earning assets, net:
  Loans and fees receivable, net (of $28,680
   and $27,199 in deferred revenue and
   $54,500 and $51,489 in allowances for
   uncollectible loans and fees receivable
   at March 31, 2008 and December  31, 2007,
   respectively)                                      364,569      357,027
  Investments in previously charged-off
   receivables                                         19,252       14,523
  Investments in securities                            21,340       27,714
Deferred costs, net                                    13,947       14,923
Property at cost, net of depreciation                  79,602       84,466
Investments in equity-method investees                 61,573       63,023
Intangibles, net                                        7,633        8,248
Goodwill                                               96,012       97,169
 Prepaid expenses and other assets                     55,105       45,247
Assets held for sale                                    9,772        8,735
                                                  -----------  -----------
Total assets                                      $ 1,941,096  $ 1,874,180
                                                  ===========  ===========


Liabilities
Accounts payable and accrued expenses             $   121,719  $   159,396
Notes payable and other borrowings                    249,864      235,591
Convertible senior notes                              550,000      550,000
Deferred revenue primarily from forward flow
 agreement                                             26,507       33,277
Current and deferred income tax liabilities           162,342       70,232
Liabilities related to assets held for sale             2,179          373
                                                  -----------  -----------
Total liabilities                                   1,112,611    1,048,869

Minority interests                                     32,833       32,732

Shareholders' equity
Common stock, no par value, 150,000,000 shares
 authorized: 60,350,228 shares issued and
 51,584,010 shares outstanding at March 31, 2008
 (including 3,651,069 loaned shares to be
 returned); and 61,938,533 shares issued and
 53,055,505 shares outstanding at December 31, 2007
 (including 5,677,950 loaned shares to be returned)         -            -
Additional paid-in capital                            407,466      409,964
Treasury stock, at cost, 8,766,218 and 8,883,028
 shares at March 31, 2008 and December 31,
 2007, respectively                                  (223,014)    (225,457)
Accumulated other comprehensive income                  1,421        1,637
Retained earnings                                     609,779      606,435
                                                  -----------  -----------

Total shareholders' equity                            795,652      792,579
                                                  -----------  -----------

Total liabilities and shareholders' equity        $ 1,941,096  $ 1,874,180
                                                  ===========  ===========



                 CompuCredit Corporation and Subsidiaries
                  Consolidated Statements of Operations
                  (In thousands, except per share data)


                                           For The Three Months Ended
                                     -------------------------------------
                                                    December
                                      March 31,       31,       March 31,
                                         2008         2007         2007
                                     -----------  -----------  -----------
                                     (Unaudited)  (Unaudited)  (Unaudited)
Interest income:
Consumer loans, including past due
 fees                                $    22,916  $   141,641  $    80,386
Other                                      2,083        5,641        5,497
                                     -----------  -----------  -----------
Total interest income                     24,999      147,282       85,883
Interest expense                         (11,474)     (26,194)     (15,784)
                                     -----------  -----------  -----------
  Net interest income before fees
   and related income on
   non-securitized earning assets
   and provision for loan losses          13,525      121,088       70,099
  Fees and related income on
   non-securitized earning assets         55,289      250,101      164,240
  Provision for loan losses              (20,406)    (330,921)    (131,624)
                                     -----------  -----------  -----------
Net interest income, fees and
 related income on non-securitized
    earning assets                        48,408       40,268      102,715

Other operating income:
  Fees and related income on
   securitized earning assets             42,491      180,154       19,702
  Servicing income                        48,286       24,585       18,895
  Ancillary and interchange revenues      15,421       18,319       11,761
  Equity in income of equity-method
   investees                               8,474        7,413        9,719
                                     -----------  -----------  -----------
  Total other operating income           114,672      230,471       60,077
Other operating expense:
  Salaries and benefits                   18,779       18,274       18,313
  Card and loan servicing                 76,438       87,688       66,070
  Marketing and solicitation              15,859       16,983       35,789
  Depreciation                             9,954       14,066        9,594
  Goodwill impairment                          -       48,449            -
  Other                                   29,131       37,940       29,096
                                     -----------  -----------  -----------
Total other operating expense            150,161      223,400      158,862
                                     -----------  -----------  -----------
  Income from continuing operations
   before minority interest and
   income taxes                           12,919       47,339        3,930
  Minority interest                       (2,019)       1,163         (712)
                                     -----------  -----------  -----------
  Income from continuing operations
   before income taxes                    10,900       48,502        3,218
Income tax expense                        (5,387)     (20,975)      (1,087)
                                     -----------  -----------  -----------
Income from continuing operations          5,513       27,527        2,131
  Discontinued operations:
    Loss from discontinued operations
     before income tax benefit            (4,685)     (18,108)      (7,149)
    Income tax benefit                     1,640        6,338        2,502
                                     -----------  -----------  -----------
    Loss from discontinued
     operations                           (3,045)     (11,770)      (4,647)
                                     -----------  -----------  -----------
Net income (loss)                    $     2,468  $    15,757  $    (2,516)
                                     ===========  ===========  ===========

 Income from continuing operations
  per common share--basic            $      0.12  $      0.58  $      0.04
                                     ===========  ===========  ===========
 Income from continuing operations
  per common share--diluted          $      0.12  $      0.58  $      0.04
                                     ===========  ===========  ===========

 Loss from discontinued operations
  per common share--basic            $     (0.07) $     (0.25) $     (0.09)
                                     ===========  ===========  ===========
 Loss from discontinued operations
  per common share--diluted          $     (0.07) $     (0.25) $     (0.09)
                                     ===========  ===========  ===========

 Net income (loss) per common
  share--basic                       $      0.05  $      0.33  $     (0.05)
                                     ===========  ===========  ===========
 Net income (loss) per common
  share--diluted                     $      0.05  $      0.33  $     (0.05)
                                     ===========  ===========  ===========



                 CompuCredit Corporation and Subsidiaries
                          Business Segment Data
                                (Unaudited)
                               (In thousands)


                        Investments in
                          Previously
                           Charged-
Three Months                 Off     Retail
Ended March      Credit     Receiv-  Micro-    Auto
 31, 2008        Cards      ables    Loans    Finance   Other     Total
               ==========  ======= ========  ========  =======  ==========
Net interest
 income, fees
 and related
 (loss) income
 on non-
 securitized
 earning
 assets        $   (8,460) $22,010 $ 16,885  $ 15,812  $ 2,161  $   48,408
               ==========  ======= ========  ========  =======  ==========
Total other
 operating
 income        $  114,131  $   345 $      -  $    196  $     -  $  114,672
               ==========  ======= ========  ========  =======  ==========
 Income (loss)
  from continuing
  operations
  before
  income taxes $   (2,182) $16,059 $  4,432  $ (3,760) $(3,649) $   10,900
               ==========  ======= ========  ========  =======  ==========
Loss from
 discontinued
 operations
 before income
 taxes         $        -  $     - $ (4,185) $      -  $  (500) $   (4,685)
               ==========  ======= ========  ========  =======  ==========
Loans and fees
 receivable,
 gross         $    6,302  $22,093 $ 33,472  $370,939  $14,943  $  447,749
               ==========  ======= ========  ========  =======  ==========
Loans and fees
 receivable,
 net           $    5,837  $17,445 $ 28,088  $303,744  $ 9,455  $  364,569
               ==========  ======= ========  ========  =======  ==========
Total assets   $1,338,953  $53,503 $ 98,222  $390,547  $59,871  $1,941,096
               ==========  ======= ========  ========  =======  ==========


                        Investments in
                          Previously
                           Charged-
Three Months                 Off     Retail
Ended March      Credit     Receiv-  Micro-    Auto
 31, 2007        Cards      ables    Loans    Finance   Other     Total
               ==========  ======= ========  ========  =======  ==========
Net interest
 income, fees
 and related
 income on non-
 securitized
 earning
 assets        $   55,218  $17,730 $ 18,175  $ 11,592  $     -  $  102,715
               ==========  ======= ========  ========  =======  ==========
Total other
 operating
 income        $   59,216  $   316 $      -  $    545  $     -  $   60,077
               ==========  ======= ========  ========  =======  ==========
 Income (loss)
  from continuing
  operations
  before
  income taxes $  (11,706) $11,439 $  4,078  $   (593) $     -  $    3,218
               ==========  ======= ========  ========  =======  ==========
Loss from
 discontinued
 operations
 before income
 taxes         $        -  $     - $ (3,067) $      -  $(4,082) $   (7,149)
               ==========  ======= ========  ========  =======  ==========
Loans and fees
 receivable,
 gross         $  787,929  $13,452 $ 73,077  $280,793  $ 6,744  $1,161,995
               ==========  ======= ========  ========  =======  ==========
Loans and fees
 receivable,
 net           $  477,221  $10,964 $ 65,918  $259,928  $ 5,127  $  819,158
               ==========  ======= ========  ========  =======  ==========
Total assets   $1,613,526  $45,118 $204,456  $332,537  $38,554  $2,234,191
               ==========  ======= ========  ========  =======  ==========



                 CompuCredit Corporation and Subsidiaries
           Managed Earnings and Reconciliation of Reported GAAP
                     Net Income to Managed Earnings
                                (Unaudited)
                  (In thousands, except per share data)


                                      For The Three Months Ended
                                  ----------------------------------
                                  March 31,   December 31, March 31,
                                     2008        2007        2007
                                  ----------  ----------  ----------

GAAP net income (loss) as
 reported                         $    2,468  $   15,757  $   (2,516)
Securitization adjustment,
 net of tax                         (102,348)    193,314      (7,942)
Provision to charge off
 adjustment, net of tax               (5,393)   (237,174)        999
                                  ----------  ----------  ----------
Managed net loss                  $ (105,273) $  (28,103) $   (9,459)
                                  ==========  ==========  ==========
Managed net loss per common share $    (2.25) $    (0.59) $    (0.19)
                                  ==========  ==========  ==========


                                     For The Three Months Ended
                                           March 31, 2008
                                  ----------------------------------
                                     GAAP     Adjustments  Managed
                                  ----------  ----------  ----------
Net interest margin on loans
 receivable                       $   22,916  $  112,708  $  135,624
Net interest expense                  (9,391)      3,884      (5,507)
Provision / charge offs              (20,406)   (163,798)   (184,204)
Other operating income               169,961    (122,287)     47,674
Marketing expense                    (15,859)        (31)    (15,890)
Ancillary product expense               (344)          -        (344)
Operating expenses                  (133,958)      3,259    (130,699)
Minority interests                    (2,019)      2,019           -
                                  ----------  ----------  ----------
Pre-tax income (loss) from
 continuing operations                10,900    (164,246)   (153,346)
Income tax (expense) benefit          (5,387)     56,995      51,608
                                  ----------  ----------  ----------
Income (loss) from continuing
 operations                            5,513    (107,251)   (101,738)
                                  ----------  ----------  ----------
Pre-tax discontinued operations
 loss                                 (4,685)       (753)     (5,438)
Income tax benefit of
 discontinued operations               1,640         263       1,903
                                  ----------  ----------  ----------
Loss from discontinued operations     (3,045)       (490)     (3,535)
                                  ----------  ----------  ----------
Net income (loss)                 $    2,468  $ (107,741) $ (105,273)
                                  ==========  ==========  ==========

Weighted average shares
 outstanding                          46,839                  46,743
                                  ----------  ----------  ----------
Income (loss) from continuing
 operations per common share      $     0.12  $    (2.29) $    (2.17)
                                  ==========  ==========  ==========
Loss from discontinued operations
 per common share                 $    (0.07) $    (0.01) $    (0.08)
                                  ==========  ==========  ==========
Net income (loss) per common
 share                            $     0.05  $    (2.30) $    (2.25)
                                  ==========  ==========  ==========

Gross loans and fees receivable   $  447,749  $3,365,291  $3,813,040
                                  ==========  ==========  ==========


                                       For The Three Months Ended
                                             March 31, 2007
                                  ----------------------------------
                                     GAAP     Adjustments  Managed
                                  ----------  ----------  ----------
Net interest margin on loans
 receivable                       $   80,386  $   49,188  $  129,574
Net interest expense                 (10,287)      6,837      (3,450)
Provision / charge offs             (131,624)     44,115     (87,509)
Other operating income               224,317    (114,373)    109,944
Marketing expense                    (35,789)          -     (35,789)
Ancillary product expense               (485)          2        (483)
Operating expenses                  (122,588)      2,825    (119,763)
Minority interests                      (712)        712           -
                                  ----------  ----------  ----------
Pre-tax income (loss) from
 continuing operations                 3,218     (10,694)     (7,476)
Income tax (expense) benefit          (1,087)      3,850       2,763
                                  ----------  ----------  ----------
Income (loss) from continuing
 operations                            2,131      (6,844)     (4,713)
                                  ----------  ----------  ----------
Pre-tax discontinued operations
 loss                                 (7,149)       (153)     (7,302)
Income tax benefit of
 discontinued operations               2,502          54       2,556
                                  ----------  ----------  ----------
Loss from discontinued operations     (4,647)        (99)     (4,746)
                                  ----------  ----------  ----------
Net income (loss)                 $   (2,516) $   (6,943) $   (9,459)
                                  ==========  ==========  ==========

Weighted average shares
 outstanding                          50,262                  50,262
                                  ----------  ----------  ----------
Income (loss) from continuing
 operations per common share      $     0.04  $    (0.14) $    (0.10)
                                  ==========  ==========  ==========
Loss from discontinued operations
 per common share                 $    (0.09) $        -  $    (0.09)
                                  ==========  ==========  ==========
Net income (loss) per common
 share                            $    (0.05) $    (0.14) $    (0.19)
                                  ==========  ==========  ==========

Gross loans and fees receivable   $1,161,995  $1,712,887  $2,874,882
                                  ==========  ==========  ==========


                                      For The Three Months Ended
                                          December 31, 2007
                                  ----------------------------------
                                     GAAP    Adjustments   Managed
                                  ----------  ----------  ----------
Net interest margin on loans
 receivable                       $  141,641  $   42,885  $  184,526
Net interest expense                 (20,553)     15,071      (5,482)
Provision / charge offs             (330,921)    193,701    (137,220)
Other operating income               480,572    (326,390)    154,182
Marketing expense                    (16,982)          -     (16,982)
Ancillary product expense               (691)          -        (691)
Operating expenses                  (205,727)      5,870    (199,857)
Minority interests                     1,163      (1,163)          -
                                  ----------  ----------  ----------
Pre-tax income (loss) from
 continuing operations                48,502     (70,026)    (21,524)
Income tax (expense) benefit         (20,975)     26,500       5,525
                                  ----------  ----------  ----------
Income (loss) from continuing
 operations                           27,527     (43,526)    (15,999)
                                  ----------  ----------  ----------
Pre-tax discontinued operations
 loss                                (18,108)       (513)    (18,621)
Income tax benefit of
 discontinued operations               6,338         179       6,517
                                  ----------  ----------  ----------
Loss from discontinued operations    (11,770)       (334)    (12,104)
                                  ----------  ----------  ----------
Net income (loss)                 $   15,757  $  (43,860) $  (28,103)
                                  ==========  ==========  ==========

Weighted average shares
 outstanding                          47,860                  47,614
                                  ----------  ----------  ----------
Income (loss) from continuing
 operations per common share      $     0.58  $    (0.92) $    (0.34)
                                  ==========  ==========  ==========
Loss from discontinued operations
 per common share                 $    (0.25) $        -  $    (0.25)
                                  ==========  ==========  ==========
Net income (loss) per common
 share                            $     0.33  $    (0.92) $    (0.59)
                                  ==========  ==========  ==========

Gross loans and fees receivable   $  435,715  $3,700,715  $4,136,430
                                  ==========  ==========  ==========

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