SOURCE: CompuCredit

August 03, 2005 16:48 ET

CompuCredit Reports Record Quarterly Earnings

ATLANTA, GA -- (MARKET WIRE) -- August 3, 2005 -- CompuCredit (NASDAQ: CCRT) reported record net income attributable to common shareholders of $66.5 million, or $1.29 per diluted share for the second quarter of 2005, as compared to $13.8 million, or $0.28 per diluted share from a year ago.

"We were very pleased with our record earnings this quarter," said David G. Hanna, Chairman and CEO. "The sale of a significant portfolio of previously charged-off receivables this quarter was a major contributor to our results, and we also feel very good about the performance of each of our business units in a terrific economic environment for our business."

The net interest margin was 22.7 percent in the second quarter of 2005, as compared to 20.2 percent for the second quarter of 2004. The adjusted charge-off rate was 8.0 percent in the second quarter of 2005, as compared to 8.8 percent for the second quarter of 2004. Also, at June 30, 2005, the 60-plus day delinquency rate was 8.3 percent, as compared to 9.6 percent at June 30, 2004.

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 $357.0 million of GAAP loans and fees receivables at gross face value) had been sold in securitization transactions as of June 30, 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 performance of our business units 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 second quarter financial performance will be discussed during management's conference call on Thursday, August 4, 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 Corporation 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 http://www.CompuCredit.com.


                    CompuCredit Corporation (CCRT)
                   Financial and Statistical Summary
                          (Unaudited)
                                       At or For the Three Months Ended
                                        June 30,     March 31,    June 30,
                                          2005         2005         2004
                                      ----------   ----------   ----------
                                      (In thousands, except per share data)

Common Share Statistics
EPS - Basic                           $     1.33   $     0.96   $     0.29
EPS - Diluted                         $     1.29   $     0.94   $     0.28
Book Value Per Common Share
 Outstanding (period end) (1)         $    14.47   $    14.25   $    11.93
Stock Price Per Share (period end)    $    34.28   $    26.62   $    17.30
Total Market Capitalization
 (period end)                         $1,667,382   $1,371,254   $  797,461
Shares Outstanding (period end)           48,640       51,507       46,096
Weighted Average Shares O/S - Basic       50,125       51,277       51,548
Weighted Average Shares O/S - Diluted     51,541       52,516       52,389

Average Managed Receivables
 Statistics (2)
Average Managed Receivables           $2,368,897   $2,335,567   $2,007,406
Average Shareholders' Equity          $  709,520   $  705,344   $  607,827
Net Interest Margin                         22.7%        20.8%        20.2%
Return on Average Managed
 Receivables                                11.2%         8.4%         3.0%
Return on Average Equity (ROE)              37.5%        27.9%         9.8%
Net Charge-Off Rate                         11.8%         9.2%        14.8%
Adjusted Charge-Off Rate                     8.0%         6.9%         8.8%
Adjusted Charge-Offs                  $   47,413   $   40,491   $   44,329
Risk Adjusted Margin                        40.3%        27.8%        22.7%
Operating Ratio                             15.4%        14.3%        11.3%
Other Income ratio                          27.3%        13.9%        11.1%

Period-End Selected Credit
 Card Data (3)
Total Managed Receivables             $2,359,903   $2,274,329   $1,959,811
Delinquency Rate (60+ days)                  8.3%         8.7%         9.6%
Number of Accounts                         3,092        3,009        2,222
Shareholders' Equity                  $  703,685   $  734,201   $  608,144
Equity to Managed Receivables
 Ratio                                      29.8%        32.3%        31.0%


(1) Assumes that any outstanding preferred shares are converted into common
shares as of end of each period.
(2) Excludes receivables acquired at or near charge-off at the time of
purchase.

              CompuCredit Corporation and Subsidiaries
                    Consolidated Balance Sheets


                                           June 30, 2005      December 31,
                                           (Unaudited)           2004
                                           -------------------------------
                                               (Dollars in thousands)

Assets
Cash and cash equivalents (including
 restricted cash of $11,839 and $11,615
 at June 30, 2005 and December 31, 2004,
 respectively)                               $216,472           $68,240
Securitized earning assets                    586,766           536,718
Non-securitized earning assets                306,373           158,430
Deferred costs, net                            35,130            34,920
Software, furniture, fixtures and
 equipment, net                                34,462            31,552
Investment in equity-method investees          74,278            42,059
Intangibles, net                               15,312            10,643
Goodwill                                      131,143           100,552
Prepaid expenses and other assets              25,241            20,412
                                           ----------        ----------
Total assets                               $1,425,177        $1,003,526
                                           ==========        ==========

Liabilities
Accounts payable and accrued expenses         $79,210           $36,088
Notes payable                                 145,609            83,624
Convertible senior notes                      250,000                 -
Deferred revenue                               87,954            29,830
Current and deferred income tax
 liabilities                                  105,532           115,786
                                           ----------        ----------
Total liabilities                             668,305           265,328

Minority interests                             53,187            54,308
Shareholders' equity
 Common stock, no par value, 150,000,000
  shares authorized: 53,385,718 and
  53,159,253 issued at
  June 30, 2005 and December 31, 2004,
  respectively                                      -                 -
Additional paid-in capital                    312,128           303,356
 Treasury stock, at cost, 4,745,646
  and 1,914,646 shares at June 30, 2005
  and December 31, 2004, respectively        (125,927)          (26,721)
Deferred compensation                          (6,405)             (922)
Warrant                                        25,610            25,610
Retained earnings                             498,279           382,567
                                           ----------        ----------
Total shareholders' equity                    703,685           683,890
                                           ----------        ----------
Total liabilities and shareholders'
 equity                                    $1,425,177        $1,003,526
                                           ==========        ==========


           CompuCredit Corporation and Subsidiaries
    Condensed Consolidated Statements of Income (Unaudited)

                                         For the Three Months Ended
                                       June 30,    March 31,   June 30,
                                        2005         2005        2004
                                     -----------  -----------  -----------
                              (Dollars in thousands, except per share data)

Interest income:
   Consumer loans, including past
    due fees                         $    30,944  $    14,037  $     9,548
   Other(1)                                4,320        2,912        1,944
                                     -----------  -----------  -----------
Total interest income                     35,264       16,949       11,492
   Interest expense(2)                   (16,373)      (2,422)        (680)
                                     -----------  -----------  -----------
   Net interest income before fees
    and other income on non
    securitized earning assets and
    provision for loan losses             18,891       14,527       10,812
   Fees and other income on non
    securitized earning assets           171,718      100,766       37,563
   Provision for loan losses             (39,590)     (19,224)     (14,885)
                                     -----------  -----------  -----------
Net interest income, fees and other
 income on non-securitized earning
 assets                                  151,019       96,069       33,490

Other operating income:
   Fees and other income on
    securitized earning assets            22,489       43,492       35,312
   Servicing income                       37,693       30,459       21,926
   Ancillary and interchange
    revenues                               6,469        5,533        5,888
   Equity in income of equity-method
    investees                              7,362       18,819         (223)
                                     -----------  -----------  -----------
Total other operating income              74,013       98,303       62,903
Other operating expense:
   Salaries and benefits                   7,882        7,107        5,127
   Card and loan servicing                63,173       59,335       36,874
   Marketing and solicitation             20,156       18,050        9,030
   Depreciation                            4,346        4,213        3,959
   Other(3)                               21,858       19,058       10,857
                                     -----------  -----------  -----------
Total other operating expense            117,415      107,763       65,847
                                     -----------  -----------  -----------
Income before minority interest and
 income taxes                            107,617       86,609       30,546
Minority interest                         (2,842)      (9,161)      (6,754)
                                     -----------  -----------  -----------
Income before income taxes               104,775       77,448       23,792
Income taxes                             (38,243)     (28,268)      (8,941)
                                     -----------  -----------  -----------
Net income                           $    66,532  $    49,180  $    14,851
                                     ===========  ===========  ===========
Net income attributable to common
 shareholders                        $    66,532  $    49,180  $    13,754
                                     ===========  ===========  ===========
Income per share - basic             $      1.33  $      0.96  $      0.29
                                     ===========  ===========  ===========
Income per share - diluted           $      1.29  $      0.94  $      0.28
                                     ===========  ===========  ===========


                                             For the Six Months Ended
                                             June 30,         June 30,
                                               2005             2004
                                           ------------     ------------
                              (Dollars in thousands, except per share data)

Interest income:
Consumer loans, including past due fees    $     44,981     $     15,580
   Other(1)                                       7,232            3,617
                                           ------------     ------------
Total interest income                            52,213           19,197
   Interest expense(2)                          (18,795)            (771)
                                           ------------     ------------
   Net interest income before fees and
    other income on non securitized
    earning assets and provision for
    loan losses                                  33,418           18,426
   Fees and other income on non
    securitized earning assets                  272,484           68,338
   Provision for loan losses                    (58,814)         (24,000)
                                           ------------     ------------
Net interest income, fees and other
 income on non-securitized earning assets       247,088           62,764

Other operating income:
   Fees and other income on securitized
    earning assets                               59,981           75,955
   Servicing income                              74,152           47,224
   Ancillary and interchange revenues            12,002           10,126
   Equity in income of equity-method
    investees                                    26,181             (437)
                                           ------------     ------------
Total other operating income                    172,316          132,868
Other operating expense:
   Salaries and benefits                         14,989           11,372
   Card and loan servicing                      122,508           73,892
   Marketing and solicitation                    38,206           14,729
   Depreciation                                   8,559            7,952
   Other(3)                                      40,916           20,772
                                           ------------     ------------
Total other operating expense                   225,178          128,717
                                           ------------     ------------
Income before minority interest and income
 taxes                                          194,226           66,915
Minority interest                               (12,003)         (13,047)
                                           ------------     ------------
Income before income taxes                      182,223           53,868
Income taxes                                    (66,511)         (20,229)
                                           ------------     ------------
Net income                                 $    115,712     $     33,639
                                           ============     ============
Net income attributable to common
 shareholders                              $    115,712     $     31,472
                                           ============     ============
Income per share - basic                   $       2.28     $       0.65
                                           ============     ============
Income per share - diluted                 $       2.23     $       0.64
                                           ============     ============


(1) Other interest income, which is not a component of net interest
margin on the Financial and Statistical Summary, includes $320, $302,
$267, $622, and $515 (in thousands) for the respective periods related to
a minority interest partner's share of other interest income.
(2) Includes Auto Finance segment interest expense of $2,441, $0, $0,
$2,441, and $0 (in thousands) for the respective periods; Auto Finance
segment interest expense is the only component of interest expense that
is included as an offset in determining net interest margin on the
Financial and Statistical Summary.
(3) Other operating expense includes ancillary product expenses of $575,
$166, $239, $741 and $537 (in thousands) for the respective periods.


                  CompuCredit Corporation and Subsidiaries
                    Business Segment Data (Unaudited)

                                                 Investments in
                                                  Previously
Three Months Ended                                Charged Off     Retail
 June 30, 2005                     Credit Cards   Receivables   Micro-Loans
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                     $   38,757    $   87,043    $   14,697
                                    ==========    ==========    ==========
Total other operating income        $   65,049    $    2,036    $    6,928
                                    ==========    ==========    ==========
Income (loss) before income taxes   $   29,030    $   77,587    $    2,717
                                    ==========    ==========    ==========

Total assets                        $  917,569    $  157,699    $  165,780
                                    ==========    ==========    ==========

                                                 Investments in
                                                  Previously
Six Months Ended                                  Charged Off     Retail
 June 30, 2005                     Credit Cards   Receivables   Micro-Loans
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                     $  102,767    $  104,551    $   29,012
                                    ==========    ==========    ==========
Total other operating income        $  157,917    $    2,036    $   12,363
                                    ==========    ==========    ==========
Income (loss) before income taxes   $  104,293    $   84,658    $    3,607
                                    ==========    ==========    ==========

Total assets                        $  917,569    $  157,699    $  165,780
                                    ==========    ==========    ==========

                                                 Investments in
                                                  Previously
Three Months Ended                                Charged Off     Retail
 June 30, 2004                     Credit Cards   Receivables   Micro-Loans
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                     $   18,329    $   12,982    $    2,105
                                    ==========    ==========    ==========
Total other operating income        $   60,492             -    $    2,411
                                    ==========    ==========    ==========
Income (loss) before income taxes   $   26,412    $    2,253    $      807
                                    ==========    ==========    ==========

Total assets                        $  699,975    $   22,384    $  115,470
                                    ==========    ==========    ==========

                                                Investments in
                                                  Previously
Six Months Ended                                  Charged Off     Retail
June 30, 2004                      Credit Cards   Receivables   Micro-Loans
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                     $   33,567    $   27,001    $    2,105
                                    ==========    ==========    ==========
Total other operating income        $  130,457             -    $    2,411
                                    ==========    ==========    ==========
Income (loss) before income taxes   $   54,108    $    7,512    $      807
                                    ==========    ==========    ==========

Total assets                        $  699,975    $   22,384    $  115,470
                                    ==========    ==========    ==========


Three Months Ended
 June 30, 2005                     Auto Finance      Other         Total
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                     $    9,553    $      969    $  151,019
                                    ==========    ==========    ==========
Total other operating income                 -             -    $   74,013
                                    ==========    ==========    ==========
Income (loss) before income taxes   $    2,973    $   (7,532)   $  104,775
                                    ==========    ==========    ==========

Total assets                        $  172,319    $   11,810    $1,425,177
                                    ==========    ==========    ==========


Six Months Ended
June 30, 2005                      Auto Finance      Other         Total
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                     $    9,553    $    1,205    $  247,088
                                    ==========    ==========    ==========
Total other operating income                 -             -    $  172,316
                                    ==========    ==========    ==========
Income (loss) before income taxes   $    2,973    $  (13,308)   $  182,223
                                    ==========    ==========    ==========

Total assets                        $  172,319    $   11,810    $1,425,177
                                    ==========    ==========    ==========


Three Months Ended
 June 30, 2004                     Auto Finance      Other         Total
                                    ----------    ----------    ----------

Net interest income,
 fees and other income
 on non-securitized
 earning assets                              -    $       74    $   33,490
                                    ==========    ==========    ==========
Total other operating income                 -             -    $   62,903
                                    ==========    ==========    ==========
Income (loss) before income taxes            -    $   (5,680)   $   23,792
                                    ==========    ==========    ==========

Total assets                                 -    $    4,040    $  841,869
                                    ==========    ==========    ==========


Six Months Ended
June 30, 2004
                                   Auto Finance      Other         Total
                                    ----------    ----------    ----------
Net interest income,
 fees and other income
 on non-securitized
 earning assets                              -    $       91    $   62,764
                                    ==========    ==========    ==========
Total other operating income                 -             -    $  132,868
                                    ==========    ==========    ==========
Income (loss) before income taxes            -    $   (8,559)   $   53,868
                                    ==========    ==========    ==========

Total assets                                 -    $    4,040    $  841,869
                                    ==========    ==========    ==========


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