SOURCE: CompuCredit

November 01, 2005 16:31 ET

CompuCredit Reports Third Quarter 2005 Results

ATLANTA, GA -- (MARKET WIRE) -- November 1, 2005 -- CompuCredit (NASDAQ: CCRT) reported third quarter 2005 net income attributable to common shareholders of $52.7 million, or $1.05 per diluted share, as compared to its third quarter 2004 net income attributable to common shareholders of $37.9 million, or $0.75 per diluted share.

"CompuCredit is pleased to announce another solid earnings quarter this year," said David G. Hanna, Chairman and Chief Executive Officer. "Our third quarter results reflect the success we have had in originating new credit card accounts -- over 360,000 during the quarter -- and expanding the suite of financial products and services that we provide to our customer base."

The net interest margin was 23.2 percent in the third quarter of 2005, as compared to 21.2 percent for the third quarter of 2004. The adjusted charge-off rate was 7.8 percent in the third quarter of 2005, as compared to 8.3 percent for the third quarter of 2004. Also, at September 30, 2005, the 60-plus day delinquency rate was 9.6 percent, as compared to 10.7 percent at September 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 loan and fee receivables (i.e., all but $239.5 million of GAAP credit card loan and fee receivables at gross face value) had been sold in securitization transactions as of September 30, 2005; (2) a look through to the economic share of (or equity interest in) the receivables that the Company manages for its three 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 previously de-securitized Fingerhut managed receivables were recorded at a $0.0 basis in the Company's GAAP financial statements prior to its re-securitization of these receivables in September 2005.

Further details regarding CompuCredit's third quarter financial performance will be discussed during management's conference call on Wednesday, November 2, 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
                                September 30,    June 30,     September 30,
                                    2005           2005           2004
                                -----------------------------------------
                                  (In thousands, except per share data)


Common Share Statistics
Net Income Per Common
 Share--Basic                       $1.09           $1.33          $0.77
Net Income Per Common
 Share--Diluted                     $1.05           $1.29          $0.75
Book Value Per Common
 Share Outstanding
 (period end)(1)                   $15.58          $14.47         $12.64
Stock Price Per Share
 (period end)                      $44.42          $34.28         $18.62
Total Market Capitalization
 (period end)                  $2,170,249      $1,667,382       $852,233
Shares Outstanding
 (period end)                      48,857          48,640         45,770
Weighted Average Shares
 O/S - Basic                       48,524          50,125         50,876
Weighted Average Shares
 O/S - Diluted                     50,278          51,541         51,686

Average Managed Loans
 Statistics (2)
Average Managed Loans          $2,383,398      $2,368,897      $1,947,009
Average Shareholders' Equity     $725,192        $709,520        $616,960
Net Interest Margin                  23.2%           22.7%           21.2%
Return on Average Managed Loans       8.8%           11.2%            8.0%
Return on Average Equity (ROE)       29.0%           37.5%           25.3%
Net Charge-Off Rate                  10.4%           11.8%           13.0%
Adjusted Charge-Off Rate              7.8%            8.0%            8.3%
Adjusted Charge-Offs              $46,251         $47,413         $40,457
Risk Adjusted Margin                 31.3%           40.3%           28.7%
Operating Ratio                      14.9%           15.4%           15.0%
Other Income Ratio                   15.8%           27.6%           15.8%

Period-End Managed Loans
 Statistics (2)
Total Managed Loans            $2,402,771      $2,359,903      $1,958,735
Delinquency Rate (60+ days)           9.6%            8.3%           10.7%
Number of Accounts                  3,318           3,092           2,388
Shareholders' Equity             $761,398        $703,685        $642,140
Equity to Managed Loans Ratio        31.7%           29.8%           32.8%

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



                 CompuCredit Corporation and Subsidiaries
                      Consolidated Balance Sheets

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

Assets
Cash and cash equivalents
 (including restricted cash
 of $11,990 at September 30,
 2005 and $11,615 at December
 31, 2004)                                $    93,906          $    68,240
Securitized earning assets                    714,369              536,718
Non-securitized earning assets, net           388,756              158,430
Deferred costs, net                            30,988               34,920
Software, furniture, fixtures and
 equipment, net                                37,694               31,552
Investments in equity-method investees         69,729               42,059
Intangibles, net                               14,621               10,643
Goodwill                                      131,150              100,552
Prepaid expenses and other assets         $    26,475          $    20,412
                                          -----------          -----------

Total assets                              $ 1,507,688          $ 1,003,526
                                          ===========          ===========
Liabilities
Accounts payable and accrued expenses     $    80,201          $    36,088
Notes payable                                 161,079               83,624
Convertible senior notes                      250,000                    -
Deferred revenue                               70,895               29,830
Current and deferred income tax liabilities   133,783              115,786
                                          -----------          -----------
Total liabilities                             695,958              265,328
                                          -----------          -----------

Minority interests                             50,332               54,308

Shareholders' equity
Common stock, no par value, 150,000,000
 shares authorized: 53,389,205 and
 53,159,253 issued at September 30,
 2005 and December 31, 2004, respectively           -                    -
Additional paid-in capital                    315,358              303,356
Treasury stock, at cost, 4,531,722 and
 1,914,646 shares at September 30, 2005
 and December 31, 2004, respectively         (124,805)             (26,721)
Deferred compensation                          (5,707)                (922)
Warrant                                        25,610               25,610
Retained earnings                             550,942              382,567
                                          -----------          -----------

Total shareholders' equity                    761,398              683,890
                                          -----------          -----------


Total liabilities and shareholders'
 equity                                   $ 1,507,688          $ 1,003,526
                                          ===========          ===========




                              CompuCredit Corporation and Subsidiaries
                          Consolidated Statements of Operations (Unaudited)

                                           For Three Months Ended
                                        Sept. 30,  June 30,  Sept. 30,
                                           2005      2005      2004
                                        ---------- --------- ----------
                            (Dollars in thousands, except per share data)
Interest income:
  Consumer loans, including past
   due fees                             $   37,479 $  30,944 $   11,702
    Other (1)                                2,468     4,320      2,224
                                        ---------- --------- ----------
Total interest income                       39,947    35,264     13,926
  Interest expense (2)                      (6,345)  (16,373)    (1,951)
                                        ---------- --------- ----------
Net interest income before fees and
 other income on non-securitized earning
 assets and provision for loan losses       33,602    18,891     11,975
  Fees and other income on
   non-securitized earning assets          112,347   171,718     84,600
  Provision for loan losses                (48,012)  (39,590)   (27,221)
                                        ---------- --------- ----------
Net interest income, fees and other
 income on non-securitized earning
 assets                                     97,937   151,019     69,354
                                        ---------- --------- ----------

Other operating income:
  Fees and other income on securitized
   earning assets                           56,503    22,489     54,386
  Servicing income                          33,667    37,693     23,365
  Ancillary and interchange revenues         7,325     6,469      6,155
  Equity in income (loss) of
   equity-method investees                   9,708     7,362       (169)
                                        ---------- --------- ----------
Total other operating income               107,203    74,013     83,737
                                        ---------- --------- ----------
Other operating expense:
  Salaries and benefits                      9,174     7,882      5,744
  Card and loan servicing                   55,115    63,173     42,505
  Marketing and solicitation                26,748    20,156     12,251
  Depreciation                               4,846     4,346      4,094
  Other (3)                                 23,617    21,858     21,347
                                        ---------- --------- ----------
Total other operating expense              119,500   117,415     85,941
                                        ---------- --------- ----------
Income before minority interests
 and income taxes                           85,640   107,617     67,150
Minority interests                          (2,706)   (2,842)    (7,131)
                                        ---------- --------- ----------
Income before income taxes                  82,934   104,775     60,019
Income taxes                               (30,271)  (38,243)   (21,007)
                                        ---------- --------- ----------
Net income                              $   52,663 $  66,532 $   39,012
                                        ========== ========= ==========
Net income attributable to common
 shareholders                           $   52,663 $  66,532 $   37,887
                                        ========== ========= ==========
 Net income per common share—basic      $     1.09 $    1.33 $     0.77
                                        ========== ========= ==========
 Net income per common share—diluted    $     1.05 $    1.29 $     0.75
                                        ========== ========= ==========


                              CompuCredit Corporation and Subsidiaries
                          Consolidated Statements of Operations (Unaudited)

                                       For the Nine Months Ended
                                         Sept. 30,   Sept. 30,
                                           2005      2004
                                        ---------- ---------
                            (Dollars in thousands, except per share data)

Interest income:
  Consumer loans, including past
   due fees                             $   82,460 $  27,282
    Other (1)                                8,028     5,841
                                        ---------- ---------
Total interest income                       90,488    33,123
  Interest expense (2)                     (25,140)   (2,722)
                                        ---------- ---------
Net interest income before fees and
 other income on non-securitized earning
 assets and provision for loan losses       65,348    30,401
  Fees and other income on
   non-securitized earning assets          386,503   153,099
  Provision for loan losses               (106,826)  (51,221)
                                        ---------- ---------
Net interest income, fees and other
 income on non-securitized earning
 assets                                    345,025   132,279
                                        ---------- ---------
Other operating income:
  Fees and other income on securitized
   earning assets                          116,484   130,180
  Servicing income                         107,819    70,589
  Ancillary and interchange revenues        19,327    16,281
  Equity in income (loss) of
   equity-method investees                  35,889      (606)
                                        ---------- ---------
Total other operating income               279,519   216,444
                                        ---------- ---------
Other operating expense:
  Salaries and benefits                     24,163    17,116
  Card and loan servicing                  177,623   116,397
  Marketing and solicitation                64,954    26,980
  Depreciation                              13,405    12,046
  Other (3)                                 64,533    42,119
                                        ---------- ---------
Total other operating expense              344,678   214,658
                                        ---------- ---------
Income before minority interests
 and income taxes                          279,866   134,065
Minority interests                         (14,709)  (20,178)
Income before income taxes                 265,157   113,887
Income taxes                               (96,782)  (41,236)
                                        ---------- ---------
Net income                              $  168,375 $  72,651
                                        ========== =========
Net income attributable to common
 shareholders                           $ 168,375  $  69,359
                                         ========== =========
 Net income per common share—basic      $    3.37  $    1.41
                                        ========== =========
 Net income per common share—diluted    $    3.27  $    1.39
                                        ========== =========


(1) Other interest income, which is not a component of net interest margin
    on the Financial and Statistical Summary, includes $312, $320, $273,
    $934, and $788 (in thousands) for the respective periods related to our
    minority interest partner’s share of interest income.
(2) Includes Auto Finance segment interest expense of $2,565, $2,441, $0,
    $5,006, 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 $414,
    $575, $227, $1,154 and $764 (in thousands) for the respective periods.




                CompuCredit Corporation and Subsidiaries
                    Business Segment Data (Unaudited)


 Three                 Investments
 Months                     in
 Ended                 Previously    Retail
 September     Credit  Charged-Off   Micro-    Auto
 30, 2005      Cards   Receivables   Loans   Finance    Other       Total
             ---------- --------- --------- --------- ---------  ----------
Net
 interest
 income,
 fees and
 other
 income on
 non-
 securitized
 earning
 assets      $   66,266 $   6,628 $  16,607 $   8,675 $    (239) $   97,937
             ========== ========= ========= ========= =========  ==========
Total other
 operating
 income          99,443     2,279     5,481         -         -     107,203
             ========== ========= ========= ========= =========  ==========
Income
 before
 income
 taxes           84,303     5,047     2,953     2,006   (11,375)     82,934
             ========== ========= ========= ========= =========  ==========
Total assets $1,104,905 $  36,347 $ 187,565 $ 168,807 $  10,064  $1,507,688
             ========== ========= ========= ========= =========  ==========


 Nine                  Investments
 Months                     in
 Ended                 Previously    Retail
 September     Credit  Charged-Off   Micro-    Auto
 30, 2005      Cards   Receivables   Loans   Finance    Other       Total
             ---------- --------- --------- --------- ---------  ----------
Net
 interest
 income,
 fees and
 other
 income on
 non-
 securitized
 earning
 assets      $  169,033 $ 111,179 $  45,619 $  18,228 $     966  $  345,025
             ========== ========= ========= ========= =========  ==========
Total other
 operating
 income         257,380     4,295    17,844         -         -     279,519
             ========== ========= ========= ========= =========  ==========
Income
 before
 income
 taxes          188,596    89,705     6,560     4,979   (24,683)    265,157
             ========== ========= ========= ========= =========  ==========
Total assets $1,104,905 $  36,347 $ 187,565 $ 168,807 $  10,064  $1,507,688
             ========== ========= ========= ========= =========  ==========


 Three                 Investments
 Months                     in
 Ended                 Previously    Retail
 September     Credit  Charged-Off   Micro-    Auto
 30, 2004      Cards   Receivables   Loans   Finance    Other       Total
             ---------- --------- --------- --------- ---------  ----------
Net
 interest
 income,
 fees and
 other
 income on
 non-
 securitized
 earning
 assets      $   44,376 $  13,857 $  11,164         - $     118  $   69,515
             ========== ========= ========= ========= =========  ==========
Total other
 operating
 income          75,783         -     7,793         -         -      83,576
             ========== ========= ========= ========= =========  ==========
Income
 before
 income
 taxes           59,265     3,915     2,705         -    (5,866)     60,019
             ========== ========= ========= ========= =========  ==========
Total assets $  774,797 $  12,739 $ 155,421         - $   4,203  $  947,160
             ========== ========= ========= ========= =========  ==========


 Nine                  Investments
 Months                     in
 Ended                 Previously    Retail
 September     Credit  Charged-Off   Micro-    Auto
 30, 2004      Cards   Receivables   Loans   Finance    Other       Total
             ---------- --------- --------- --------- ---------  ----------
Net
 interest
 income,
 fees and
 other
 income on
 non-
 securitized
 earning
 assets      $   77,943 $  40,858 $  13,269         - $     209  $  132,279
             ========== ========= ========= ========= =========  ==========
Total other
 operating
 income         206,240         -    10,204         -         -     216,444
             ========== ========= ========= ========= =========  ==========
Income
 before
 income
 taxes          113,373    11,427     3,512         -   (14,425)    113,887
             ========== ========= ========= ========= =========  ==========
Total assets $  774,797 $  12,739 $ 155,421         - $   4,203  $  947,160
             ========== ========= ========= ========= =========  ==========

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