CompuCredit Reports Higher Third Quarter Earnings

CompuCredit (NASDAQ:CCRT – News) reported third quarter 2006 managed earnings of $53.4 million, or $1.07 of managed earnings per fully diluted share, as compared to managed earnings of $43.5 million, or $0.87 of managed earnings per fully diluted share for the third quarter of 2005. ADVERTISEMENT Under GAAP, or generally accepted accounting principles, third quarter 2006 net income was $38.8 million, or $0.78 net income per common share on a fully diluted basis, as compared to third quarter 2005 net income of $52.7 million, or $1.05 net income per common share on a fully diluted basis.

“We are pleased with the results from all of our business segments in this year’s third quarter,” said David G. Hanna, CompuCredit’s Chairman and Chief Executive Officer. “Our credit card segment continues to perform very well and we saw good execution and contribution from our other segments. We continue to make substantial investments across our company to fuel growth and create value for our customers and shareholders.”

CompuCredit’s net interest margin was a record 26.0 percent in the third quarter of 2006, as compared to 23.2 percent for the third quarter of 2005 and 23.7 percent in the previous quarter. The adjusted charge-off rate was 9.4 percent in the third quarter of 2006, as compared to 7.8 percent for the third quarter of 2005 and 8.3 percent in the previous quarter. As of September 30, 2006, the 60-plus day delinquency rate was 14.0 percent, as compared to 9.6 percent as of September 30, 2005 and 11.5 percent as of June 30, 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 were ever transferred to securitization facilities and present the net credit losses and delinquent balances on the receivables as if CompuCredit 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 loans and fees receivable had been sold in securitization transactions as of September 30, 2006; (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 CompuCredit manages for its 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, prior to their re-securitization in September 2005, CompuCredit’s Fingerhut managed receivables were recorded at a $0.0 basis in CompuCredit’s GAAP financial statements.

Further details regarding CompuCredit’s third quarter 2006 financial performance will be discussed during management’s conference call on Monday, November 6, 2006 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.

The full statement, including financial charts, can be viewed here.