SOURCE: CompuCredit

May 04, 2005 16:22 ET

CompuCredit Reports First Quarter Results

Confirms 2005 EPS Guidance of Over $3.00 per Share

ATLANTA, GA -- (MARKET WIRE) -- May 4, 2005 -- CompuCredit (NASDAQ: CCRT) reported first quarter 2005 net income attributable to common shareholders of $49.2 million, or $0.94 per diluted share, as compared to its first quarter 2004 net income attributable to common shareholders of $17.7 million, or $0.36 per diluted share.

The net interest margin was 20.8 percent in the first quarter of 2005, as compared to 19.9 percent for the first quarter of 2004. The adjusted charge-off rate was 6.9 percent in the first quarter of 2005, as compared to 8.2 percent for the first quarter of 2004. Also, as of March 31, 2005, the 60-plus day delinquency rate was 8.7 percent, as compared to 10.5 percent as of March 31, 2004.

"Continued strength in the credit quality of our originated and acquired portfolios contributed to a terrific first quarter for us," said David Hanna, CompuCredit Chairman and Chief Executive Officer. He added, "We are most encouraged by the organic growth that we have experienced, the performance of our three acquisitions completed during the first quarter, as well as the prospects for our new auto lending segment that we added on April 1st. We continue to see 2005 as somewhat of a breakthrough year for us as we expect to exceed $3.00 per share of earnings for the first time in our company's history."

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

Managed receivables data assume that none of the credit card receivables underlying the Company's off balance sheet securitization facilities were ever transferred to securitization facilities and present the net credit losses and delinquent balances on the receivables as if the Company still owned the receivables. Reconciliation of the managed receivables data to the Company's GAAP financial statements requires: (1) recognition that a significant majority of the Company's loans and fees receivable (i.e., all but $135.1 million of GAAP loans and fees receivables at gross face value) had been sold in securitization transactions as of March 31, 2005; (2) a look-through to the Company's economic share of the receivables that it manages for its two equity-method investees; (3) removal of the Company's minority interest holders' interests in the managed receivables underlying the Company's GAAP consolidated results; and (4) recognition that the de-securitized Fingerhut managed receivables are recorded at a $0.0 basis in the Company's GAAP financial statements.

Our expectation with regard to earnings per share is a forward-looking statement. Forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond CompuCredit's control. Actual results may differ materially from those suggested by the forward-looking statements. Among the important factors that could cause actual results to differ materially from those indicated by such forward-looking statements are the factors set forth in "Item 1. Business -- Risk Factors" of the Company's Annual Report on Form 10-K for the year ended December 31, 2004, changes in the general economy that might make originated and acquired receivables more difficult to collect (and future receivables less profitable), our ability to transfer acquired receivables to our systems and effectively collect them, and our ability to successfully integrate and grow acquired businesses. CompuCredit expressly disclaims any obligation to update any forward-looking statements except as may be required by law.

Further details regarding CompuCredit's first quarter 2005 financial performance will be discussed during management's conference call on Thursday, May 5, 2005, at 8:00 a.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 (CCRT)
                  Financial and Statistical Summary
                           (Unaudited)(1)

                                       At or For the Three Months Ended
                                     March 31,   December 31,   March 31,
                                       2005          2004          2004
                                   -----------   -----------   -----------
                                    (In thousands, except per share data)

Common Share Statistics

EPS - Basic                        $      0.96   $      0.55   $      0.36
EPS - Diluted                      $      0.94   $      0.54   $      0.36
Book Value Per Common Share
 Outstanding (period end)(2)       $     14.25   $     13.24   $     11.77
Stock Price Per Share (period end) $     26.62   $     27.34   $     21.14
Total Market Capitalization
 (period end)                      $ 1,371,254   $ 1,401,164   $   995,525
Shares Outstanding (period end)         51,507        51,245        47,092
Weighted Average Shares
 Outstanding - Basic                    51,277        50,993        51,726
Weighted Average Shares
 Outstanding - Diluted                  52,516        51,961        52,681

Average Managed Receivables
 Statistics (3)
Average Managed Receivables        $ 2,335,567   $ 2,066,834   $ 2,219,537
Average Shareholders' Equity       $   705,344   $   665,565   $   589,632
Net Interest Margin                       20.8%         20.2%         19.9%
Return on Average Managed
 Receivables                               8.4%          5.4%          3.4%
Return on Average Equity (ROE)            27.9%         16.9%         12.7%
Net Charge-Off Rate                        9.2%         12.0%         15.7%
Adjusted Charge-Off Rate                   6.9%          8.4%          8.2%
Adjusted Charge-Offs               $    40,491   $    43,621   $    45,294
Risk Adjusted Margin                      27.8%         25.1%         20.9%
Operating Ratio                           14.3%         16.5%         10.0%
Other Income Ratio                        13.9%         13.4%          8.9%

Period-End Data (3)
Total Managed Receivables          $ 2,274,329   $ 2,194,837   $ 2,090,644
Delinquency Rate (60+ days)                8.7%         10.4%         10.5%
Number of Accounts                       3,009         2,963         2,276
Shareholders' Equity               $   734,201   $   683,890   $   610,849
Equity to Managed Receivables
 Ratio                                    32.3%         31.2%         29.2%

(1) Certain prior period amounts in this and other tables included within
    this release bear the effects of reclassifications to conform to
    current period presentation.
(2) Assumes that any outstanding preferred shares are converted into common
    shares as of end of each period.
(3) Excludes receivables acquired at or near charge-off at the time of
    purchase.


                  CompuCredit Corporation and Subsidiaries
                        Consolidated Balance Sheets

                                                  March 31,
                                                    2005       December 31,
                                                 (Unaudited)       2004
                                                 -----------   -----------
                                                   (Dollars in thousands)

Assets
Cash and cash equivalents (including restricted
 cash of $11,776 and $11,615 at March 31, 2005
 and December 31, 2004, respectively)            $    90,400   $    68,240
Securitized earning assets                           473,367       536,718
Non-securitized earning assets                       176,730       158,430
Deferred costs, net                                   31,081        34,920
Software, furniture, fixtures and
 equipment, net                                       34,298        31,552
Investment in equity-method investees                 60,744        42,059
Intangibles, net                                      10,699        10,643
Goodwill                                             108,465       100,552
Prepaid expenses and other assets                     22,789        20,412
                                                 -----------   -----------

Total assets                                     $ 1,008,573   $ 1,003,526
                                                 ===========   ===========

Liabilities
Accounts payable and accrued expenses            $    38,724   $    36,088
Notes payable                                         79,547        83,624
Deferred revenue                                       5,735         6,390
Deferred gain on Fingerhut receivables                17,635        23,440
Current and deferred income tax liabilities           77,060       115,786
                                                 -----------   -----------

Total liabilities                                    218,701       265,328
Minority interests                                    55,671        54,308

Shareholders' equity
Common stock, no par value,
 150,000,000 shares authorized:
 53,352,938 and 53,159,253 issued at
 March 31, 2005 and December 31, 2004,
 respectively                                              -             -
Additional paid-in capital                           309,379       303,356
Treasury stock, at cost, 1,845,781 and 1,914,646
 shares at March 31, 2005 and December 31, 2004,
 respectively                                        (26,358)      (26,721)
Deferred compensation                                 (6,177)         (922)
Warrant                                               25,610        25,610
Retained earnings                                    431,747       382,567
                                                 -----------   -----------

Total shareholders' equity                           734,201       683,890
                                                 -----------   -----------

Total liabilities and shareholders' equity       $ 1,008,573   $ 1,003,526
                                                 ===========   ===========


                 CompuCredit Corporation and Subsidiaries
                Consolidated Statements of Income (Unaudited)

                                        For the three months ended
                                    March 31,    December 31,  March 31,
                                      2005          2004         2004
                                   -----------   -----------   -----------
                                           (Dollars in thousands,
                                            except per share data)

Interest Income:
Consumer loans, including past
 due fees                          $    14,037   $    14,090   $     6,032
  Other (1)                              2,912         2,171         1,673
                                   -----------   -----------   -----------
Total interest income                   16,949        16,261         7,705
  Interest expense                      (2,422)       (2,007)          (91)
                                   -----------   -----------   -----------
  Net interest income (expense)
   before fees and other income
   on non-securitized earning
   assets and provision for
   loan losses                          14,527        14,254         7,614
  Fees and other income on
   non-securitized earning assets      100,766        96,422        30,775
  Provision for loan losses            (19,224)      (26,961)       (9,115)
                                   -----------   -----------   -----------
Net interest income (expense),
 fees and other income on
 non-securitized earning assets         96,069        83,715        29,274
Other operating income:
  Fees and other income on
   securitized earning assets           43,492        28,012        40,643
  Servicing income                      30,459        21,708        25,298
  Ancillary and interchange revenues     5,533         7,990         4,238
  Equity in income of equity-method
   investees                            18,819         2,593          (214)
                                   -----------   -----------   -----------
Total other operating income            98,303        60,303        69,965
Other operating expense:
  Salaries and benefits                  7,107         5,171         6,245
  Card and loan servicing               59,335        46,721        37,018
  Marketing and solicitation            18,050        15,090         5,699
  Depreciation                           4,213         3,927         3,993
  Other (2)                             19,058        27,760         9,915
                                   -----------   -----------   -----------
Total other operating expense          107,763        98,669        62,870
                                   -----------   -----------   -----------
Income before minority interests
 and income taxes                       86,609        45,349        36,369
Minority interests                      (9,161)       (2,167)       (6,293)
                                   -----------   -----------   -----------
Income before income taxes              77,448        43,182        30,076
Income taxes                           (28,268)      (15,114)      (11,288)
                                   -----------   -----------   -----------
Net income                         $    49,180   $    28,068   $    18,788
                                   ===========   ===========   ===========
Net income attributable to common
 shareholders                      $    49,180   $    26,955   $    17,718
                                   ===========   ===========   ===========
Net income per common share
 - basic                           $      0.96   $      0.55   $      0.36
                                   ===========   ===========   ===========
Net income per common
 share - diluted                   $      0.94   $      0.54   $      0.36
                                   ===========   ===========   ===========


(1) Other interest income includes $302, $292, and $248 (in thousands) for
    the respective periods related to a minority interest partner's share
    of other interest income.
(2) Other operating expense includes ancillary product expenses of $166,
    $159, and $298 (in thousands) for the respective periods.


                    CompuCredit Corporation and Subsidiaries
                        Business Segment Data (Unaudited)

                               Investments   Retail
                                   in        Micro-
                               Previously   Lending
   Period Ended        Credit  Charged Off    and
 March 31, 2005        Cards   Receivables Servicing    Other     Total
                    ---------- ---------- ---------- ---------- ----------

Net interest income,
 fees and other
 income on non-
 securitized
 earning assets     $   64,010 $   17,508 $   14,315 $      236 $   96,069
                    ========== ========== ========== ========== ==========
Total other
 operating income   $   92,868          - $    5,435          - $   98,303
                    ========== ========== ========== ========== ==========
Income (loss)
 before income
 taxes              $   75,263 $    7,071 $      890 $   (5,776)$   77,448
                    ========== ========== ========== ========== ==========

Total assets        $  819,472 $   19,069 $  158,414 $   11,618 $1,008,573
                    ========== ========== ========== ========== ==========


                               Investments   Retail
                                   in        Micro-
                               Previously   Lending
   Period Ended        Credit  Charged Off    and
 March 31, 2005        Cards   Receivables Servicing    Other     Total
                    ---------- ---------- ---------- ---------- ----------

Net interest income,
 fees and other
 income on non-
 securitized earning
 assets             $   15,238 $   14,019          - $       17 $   29,274
                    ========== ========== ========== ========== ==========
Total other
 operating income   $   69,965          -          -          - $   69,965
                    ========== ========== ========== ========== ==========
Income (loss)
 before income
 taxes              $   27,696 $    5,259          - $   (2,879)$   30,076
                    ========== ========== ========== ========== ==========

Total assets        $  758,154 $   24,616          - $    1,090 $  783,860
                    ========== ========== ========== ========== ==========

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