Portfolio Recovery Associates Income up 20% in Q3

Portfolio Recovery Associates, Inc., a company that purchases and manages portfolios of defaulted consumer receivables and provides a broad range of accounts receivable management services, today reported net income of $11.2 million, or $0.70 per diluted share, for the quarter ended September 30, 2006.

The Company’s third-quarter 2006 earnings represent growth of 20% from net income of $9.3 million, or $0.58 per diluted share, in the same period a year earlier.

Total revenue increased 28% to $47.8 million in the third quarter of 2006, up from $37.5 million in the year-earlier period. Total revenue consists of cash collections reduced by amounts applied to the Company’s owned debt portfolios plus commissions from its fee-for-service businesses. During the third quarter of 2006, the Company applied 30.0% of cash collections to reduce the carrying basis of its owned debt portfolios. This included a $275,000 allowance charge against various pools of accounts.

“Portfolio Recovery Associates executed well across the board in the third quarter, operating with great efficiency even as we continued to expand our workforce. Cash collections and fee-for-service revenue set new records, despite the normal seasonal headwinds we experience in the third quarter. Portfolio buying remained robust, thanks to our very talented acquisition team,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.

The Company’s earnings for the first nine months of 2006 totaled $33.1 million, or $2.06 per diluted share, compared with $27.3 million, or $1.69 per diluted share, for the first nine months of 2005. Revenue for the first nine months of 2006 was $139.4 million, compared with $109.2 million in first nine months of 2005.

Financial and Operating Highlights

• Cash collections rose 26% to a record $59.7 million in the third quarter of 2006, up from $47.5 million in the year-ago period.

• Productivity, as measured by cash collections per hour paid, the Company’s key measure of collector performance, stands at $147.54 for the first nine months of 2006, up from $133.39 for all of 2005. Excluding the impact of trustee remittances from purchased bankrupt accounts, the comparison is $133.83 for the first nine months of 2006 vs. $128.02 for all of 2005.

• The Company purchased $1.19 billion of face-value debt during the third quarter of 2006 for $35.6 million. This debt was acquired in 35 pools from 15 different sellers.

• The Company’s fee-for-service businesses generated record revenue of $6.1 million in the third quarter of 2006, up from $3.5 million in the same period a year ago.

• The Company’s cash balances were $26.7 million as of September 30, 2006, up from $25.2 million as of June 30, 2006. During the 2006 third quarter, the Company made no use of its $75 million line of credit. No amount was outstanding on the line as of September 30, 2006.

“Our strong third-quarter performance highlights Portfolio Recovery Associates’ ability to effectively compete and produce strong financial results even in periods of elevated portfolio pricing. The Company’s results were driven by our great collector force, our growing bankruptcy team, and the record performance of our fee-for-service businesses. Our overall strategy of continuously improving operating effectiveness, investing in new and improved skills, and focusing on cost efficiency remains firmly in place. This is an approach that has served us well since the Company’s inception, and we remain confident as ever in its ability to drive growth,” said Kevin P. Stevenson, Chief Financial and Administrative Officer.