CompuCredit reported a first quarter 2007 managed net loss of $9.5 million, or $0.19 of managed loss per common share on a fully diluted basis, as compared with $54.8 million of managed earnings, or $1.09 of managed earnings per common share on a fully diluted basis, for the first quarter of 2006.
Under GAAP, the first quarter 2007 net loss was $2.5 million, or a $0.05 net loss per common share on a fully diluted basis, as compared to first quarter 2006 net income of $30.7 million, or $0.61 of net income per common share on a fully diluted basis.
“Factors adversely affecting our first quarter results included lower than expected fee assessments due to lower than expected delinquencies, the timing and extent of our marketing efforts, and the final transitional effects of implementing our previously announced decision to discontinue billing finance charges and fees on credit card accounts that become over 90 days delinquent,” said David G. Hanna, CompuCredit’s Chairman and Chief Executive Officer.
“We remain happy with the fundamentals and underlying credit quality of our business, and we are pleased with the capital we deployed during and shortly after the close of the first quarter to acquire over $1.1 billion in credit card and auto finance receivables, expand our auto financing platform and capabilities, and repurchase approximately 2.9 million of our shares,” added Mr. Hanna.
CompuCredit’s net interest margin was 17.9 percent in the first quarter of 2007, as compared to 25.0 percent for the first quarter of 2006 and 22.6 percent in the previous quarter. The adjusted charge-off rate was 12.5 percent in the first quarter of 2007, as compared to 7.1 percent for the first quarter of 2006 and 11.0 percent in the previous quarter. Also, as of March 31, 2007, the 60-plus day delinquency rate was 12.8 percent, as compared to 10.6 percent as of March 31, 2006 and 14.1 percent as of December 31, 2006.
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 a significant majority of CompuCredit’s credit card receivables (i.e., all but $801.4 million of GAAP credit card receivables at gross face value) had been sold in securitization transactions as of March 31, 2007; (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 2005.
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.
For complete details on CompuCredit’s first quarter performance visit CardData ([www.carddata.com][1]).
[1]: http://www.carddata.com
