CompuCredit Reports Fourth Quarter Results.Business Editors ATLANTA--(BUSINESS WIRE)--Feb. 17, 2004 CompuCredit (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CCRT CCRT Core Conflictual Relationship Theme CCRT Conseil Canadien de la Réadaptation et du Travail (Canadian Council on Rehabilitation and Work) CCRT Cape Cod Rail Trail (Massachusetts, USA) ) reported fourth quarter 2003 net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shareholders of $10.8 million, or $0.23 per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, as compared to its fourth quarter 2002 net income attributable to common shareholders of $16.7 million, or $0.35 per diluted share. The Company's net income attributable to common shareholders for the year ended December December: see month. 31, 2003 was $117.4 million, or $2.34 per diluted share, as compared to its net income attributable to common shareholders for the year ended December 31, 2002 of $1.7 million, or $0.04 per diluted share. The net interest margin was 20.2 percent in the fourth quarter of 2003 as compared to 17.1 percent for the fourth quarter of 2002. The adjusted charge-off Eliminate or write off. The term charge-off is used to describe the process of removing from the records of a company something that was once regarded as an asset but has subsequently become worthless. rate was 7.8 percent in the fourth quarter of 2003 as compared to 9.2 percent for the fourth quarter of 2002. At December 31, 2003, the 60-plus day delinquency delinquency Criminal behaviour carried out by a juvenile. Young males make up the bulk of the delinquent population (about 80% in the U.S.) in all countries in which the behaviour is reported. rate was 12.0 percent, as compared to 13.9 percent at December 31, 2002. The Company also announced today that it has completed a new two-year $1.25 billion securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. facility with Merrill Lynch Merrill Lynch & Co., Inc. (NYSE: MER TYO: 8675 ), through its subsidiaries and affiliates, provides capital markets services, investment banking and advisory services, wealth management, asset management, insurance, banking and related products and services on a global basis. that will better enable the Company to originate o·rig·i·nate v. 1. To bring into being; create. 2. To come into being; start. new accounts and receivables Receivables An asset designation applicable to all debts, unsettled transactions or other monetary obligations owed to a company by its debtors or customers. Receivables are recorded by a company's accountants and reported on the balance sheet, and they and include all debts owed within its master trust. "We are excited about this new strategic relationship with Merrill Lynch as it will allow us to once again grow our organic business with attractive equity returns," commented David Hanna Han·na , Marcus Alonzo Known as "Mark." 1837-1904. American financier and politician who managed the 1896 and 1900 presidential campaigns of William McKinley and served as a U.S. senator from Ohio (1897-1904). , CompuCredit's Chief Executive Officer and Chairman of the Board. He added that "This new facility not only addresses our prior concerns about the market's reluctance to provide favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. advance rates, but it also should help us to achieve sustained growth in our originated portfolio, with downside Downside The dollar amount by which the market or a stock has the potential to fall. Notes: You might hear someone say that the downside on stock XYZ is $10. What that means is that the stock could fall by this amount if things got bad. liquidity protections under which we will have the cash that we need to service the originated portfolio should we ever decide to stop growing it at some point in the future." In connection with the completion of this facility, which has the potential to increase in size from $1.25 billion to $1.5 billion in its second year, the Company issued Merrill Lynch warrants to acquire up to 2.4 million shares of the Company's common stock. Michael Michael, archangel Michael (mī`kəl) [Heb.,=who is like God?], archangel prominent in Christian, Jewish, and Muslim traditions. In the Bible and early Jewish literature, Michael is one of the angels of God's presence. Blum Blum , Léon 1872-1950. French socialist politician who served as premier (1936-1937, 1938, and 1946-1947). He was imprisoned (1940-1945) by the Vichy government during World War II. , Managing Director and head of the Global Asset Based Finance, Securitization and Principal Transactions Group at Merrill Lynch, commented, "We are very pleased to significantly deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. the lending and co-investing relationship that we have had with CompuCredit over the years. This program enhances our origination Origination The process through which a mortgage lender creates a mortgage secured by some amount of the mortgagor's real property. Notes: Also known as loan origination, everyone must go through the origination process when securing a mortgage for a piece of real and principal investment capabilities and our overall presence in the credit card securitization market. By combining CompuCredit's experience in originating, underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , and servicing credit card loans with the secured financing, principal investment and asset backed securitization capabilities provided by our structured finance platform, we have created an efficient means of acquiring, originating, servicing and funding credit card assets." Various references within this press release are to the managed credit card receivables underlying the Company's off balance sheet securitization facilities. Performance metrics Performance metrics are measures of an organizations activities and performance. Performance metrics should support a range of stakeholder needs from customers, shareholders to employees [1]. and data based on these managed receivables are key to any evaluation of the Company's performance in managing (including underwriting, valuing purchased receivables, servicing and collecting) the portfolios of receivables underlying the Company's securitization facilities. The Company allocates resources within the Company and manages the Company using financial data and results prepared on a so-called so-called adj. 1. Commonly called: "new buildings ... in so-called modern style" Graham Greene. 2. "managed basis." It is also important to analysts, investors and others that the Company provides selected metrics metrics Managed care A popular term for standards by which the quality of a product, service, or outcome of a particular form of Pt management is evaluated. See TQM. and data on a managed basis because it is through the Company's reporting on this basis that they are able to compare CompuCredit to others within the specialty A contract under seal. A specialty is a written document that has been sealed and delivered and is given as security for the payment of a specifically indicated debt. 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 credit card receivables because it reveals information concerning the quality of loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. and the related credit risks inherent within the securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. portfolios and the Company's retained interests Retained interest (also colloquially known as a payout penalty) is future, currently unpaid, interest that some lenders add to the remaining principal of a loan to determine a payout figure in the event that the loan is terminated before the completion of the original term. in the securitization facilities. Managed receivables data assumes that none of the credit card receivables underlying the Company's off balance sheet securitization facilities were ever transferred to securitization facilities and presents the net credit losses and delinquent delinquent 1) adj. not paid in full amount or on time. 2) n. short for an underage violator of the law as in juvenile delinquent. DELINQUENT, civil law. He who has been guilty of some crime, offence or failure of duty. balances on the receivables as if the Company had still owned the receivables. Reconciliation of the managed receivables data to CompuCredit's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial statements requires recognition that substantially all (i.e., all but $23.4 million) of the Company's credit card receivables had been sold in securitization transactions as of December 31, 2003; this reconciliation requires the removal of all but $23.4 million of the managed receivables data from the Company's books and records to yield only the $23.4 million of originated credit card receivables and associated statistics under GAAP, coupled with the recording under GAAP of retained interests in various securitization structures. Further details regarding CompuCredit's fourth quarter financial performance will be discussed during management's conference call on Wednesday Wednesday: see week. , February February: see month. 18, 2004 at 8:30 a.m. Eastern Time. The media and public are invited to listen to the live webcast of the call, accessible on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at http://www.CompuCredit.com. The conference call will be archived at the above web site for those interested parties that are unable to attend at this time. CompuCredit is a credit card company that uses analytical techniques An analytical technique is a method that is used to determine the concentration of a chemical compound or chemical element. There are a wide variety of techniques used for analysis, from simple weighing (gravimetric) to titrations (titrimetric)to very advanced techniques using to serve consumers it believes to be underserved by traditional grantors of credit. Credit cards marketed by CompuCredit are generally issued by Columbus Columbus. 1 City (1990 pop. 178,681), seat of Muscogee co., W Ga., at the head of navigation on the Chattahoochee River; settled and inc. 1828 on the site of a Creek village. Bank and Trust Company under an agreement with CompuCredit. For more information about CompuCredit, visit http://www.CompuCredit.com. This release includes forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. , including the Company's expectations with respect to growing its originated portfolio and the impact of the new Merrill Lynch facility. The words "will," "looking forward," "should" and similar expressions also are intended to identify forward-looking statements; however, this release also contains other forward-looking statements that may not be so identified. 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. Accordingly, there can be no assurance that such indicated results will be realized. 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/A for the year ended December 31, 2002, and (1) competition from other credit card issuers on the ability of the Company to grow its originated credit card portfolio, (2) the ability of the Company to efficiently and effectively identify profitable customers, and (3) general economic conditions and their impact on consumer and debt repayment Repayment The act of paying back a debt. Notes: Everyone has to repay their debts eventually. See also: Debt, Defeasance, Loan practices. CompuCredit expressly disclaims any obligation to update any forward-looking statements in any manner except as may be required by law.
CompuCredit Corporation (CCRT)
Financial and Statistical Summary
(Unaudited)
At or For the Three Months Ended
Dec. 31, Sept. 30, Dec. 31,
2003 2003 2002
-------------------------------------
(In thousands, except per share data)
Common Share Statistics
EPS - Basic $ 0.23 $ 1.12 $ 0.35
EPS - Diluted $ 0.23 $ 1.11 $ 0.35
Book Value Per Common Share
Outstanding (period end) (1) $ 11.10 $ 10.90 $ 8.82
Stock Price Per Share (period
end) $ 21.28 $ 17.50 $ 7.07
Total Market Capitalization
(period end) $1,000,437 $ 819,893 $ 325,052
Shares Outstanding (period end) 47,013 46,851 45,976
Weighted Average Shares O/S -
Basic 51,493 51,299 50,633
Weighted Average Shares O/S -
Diluted 52,482 51,870 50,703
Average Managed Receivables
Statistics (2)
Average Managed Receivables $2,419,674 $2,469,194 $2,912,482
Average Shareholders' Equity $ 569,897 $ 529,876 $ 440,007
Net Interest Margin 20.2% 20.9% 17.1%
Return on Average Managed
Receivables 2.0% 9.3% 2.4%
Return on Average Equity (ROE) 8.3% 43.4% 16.2%
Net Charge-Off Rate 15.0% 15.5% 17.0%
Adjusted Charge-Off Rate 7.8% 8.9% 9.2%
Adjusted Charge-Offs $ 47,304 $ 54,798 $ 67,193
Risk Adjusted Margin 21.9% 21.1% 13.7%
Operating Ratio 8.4% 8.8% 8.3%
Other Credit Card Income ratio 9.3% 8.8% 6.0%
Period-End Selected Credit Card
Data (2)
Total Managed Receivables $2,340,898 $2,518,822 $2,795,888
Delinquency Rate (60+ days) 12.0% 10.9% 13.9%
Number of Accounts 2,416 2,637 3,562
Shareholders' Equity $ 574,013 $ 560,849 $ 447,868
Equity to Managed Receivables
Ratio 24.5% 22.3% 16.0%
(1) Assumes preferred shares are converted into common shares as of
end of each period.
(2) Excludes receivables at or near charge-off at the time
of purchase.
CompuCredit Corporation and Subsidiaries
Consolidated Balance Sheets
December December
31, 31,
2003 2002
--------------------
(Dollars in
thousands)
Assets
Cash and cash equivalents $110,605 $120,416
Restricted cash 11,921 10,112
Retained interests in credit card receivables
securitized 538,961 291,439
Amounts due from securitization 4,199 7,235
Accounts receivable, net 16,271 -
Deferred costs, net 7,750 8,314
Software, furniture, fixtures and equipment, net 24,307 29,296
Investment in equity method investee 6,577 15,593
Investment in previously charged off receivables 13,960 -
Investment in debt securities 15,007 18,819
Prepaid expenses and other assets 11,797 17,691
--------- ---------
Total assets $761,355 $518,915
========= =========
Liabilities
Accounts payable and accrued expenses $ 28,381 $ 32,570
Deferred revenue 9,895 8,979
Income tax liability 96,491 29,498
--------- ---------
Total liabilities 134,767 71,047
--------- ---------
Minority interest 52,575 -
--------- ---------
Shareholders' equity
Preferred stock, no par value, 10,000,000 shares
authorized:
Series A preferred stock, 30,000 shares issued
and 25,000 and 30,000 shares outstanding
at December 31, 2003 and December 31, 2002,
respectively 29,816 32,466
Series B preferred stock, 10,000 shares issued
and outstanding at December 31, 2003 and
December 31, 2002, respectively 12,181 11,035
Common stock, no par value, 150,000,000 shares
authorized; 47,885,506 and 46,809,165 issued at
December 31, 2003 and December 31, 2002,
respectively - -
Additional paid-in capital 250,943 241,400
Treasury stock, at cost, 872,900 and 832,900
shares at December 31, 2003 and
December 31, 2002, respectively (4,586) (4,338)
Deferred compensation (593) (1,013)
Note issued to purchase stock - (500)
Retained earnings 286,252 168,818
--------- ---------
Total shareholders' equity 574,013 447,868
--------- ---------
Total liabilities and shareholders' equity $761,355 $518,915
========= =========
CompuCredit Corporation and Subsidiaries
Consolidated Statements of Income (Unaudited)
For the Three Months Ended For the Year Ended
Dec. 31, Sept. 30, Dec. 31, Dec. 31, Dec. 31,
2003 2003 2002 2003 2002
--------- --------- -------- --------- --------
(Dollars in thousands, except per share data)
Net Interest income
(expense) (1)(2) $ 5,126 $ 3,026 ($725) $ 4,659 ($5,085)
Other operating
income:
Securitization
income (loss), net - 31,385 - 31,385 (18)
Income (loss) from
retained interests
in credit card
receivables
securitized 10,166 76,873 8,462 134,112 (25,049)
Servicing income 23,641 21,303 31,125 97,473 66,665
Fees and other
income 49,504 41,747 30,472 158,514 126,590
Equity in income
(loss) of equity-
method investee 37 (269) 21,620 27,676 45,717
--------- --------- -------- --------- --------
Total other operating
income 83,348 171,039 91,679 449,160 213,905
Other operating
expense:
Salaries and
benefits 5,017 5,619 6,227 19,405 18,514
Credit card
servicing 32,236 34,827 43,047 138,566 122,939
Marketing and
solicitation 4,343 2,646 2,505 11,403 11,907
Depreciation 3,955 3,906 3,861 15,631 14,801
Bad debt provision 4,681 2,280 - 7,059 -
Other (3) 9,480 9,108 7,961 35,812 31,627
--------- --------- -------- --------- --------
Total other operating
expense 59,712 58,386 63,601 227,876 199,788
Income before income
taxes and minority
interest 28,762 115,679 27,353 225,943 9,032
Minority interest (10,295) (26,938) - (37,233) -
--------- --------- -------- --------- --------
Income before income
taxes 18,467 88,741 27,353 188,710 9,032
Income taxes (6,634) (31,221) (9,573) (66,992) (3,161)
--------- --------- -------- --------- --------
Net income $ 11,833 $ 57,520 $17,780 $121,718 $5,871
========= ========= ======== ========= ========
Net income
attributable to
common shareholders $ 10,787 $ 56,496 $16,699 $117,434 $1,703
========= ========= ======== ========= ========
Average shares
outstanding - basic 51,493 51,299 50,633 51,212 46,384
========= ========= ======== ========= ========
Average shares
outstanding - diluted 52,482 51,870 50,703 51,914 46,412
========= ========= ======== ========= ========
Net income per share -
basic (4) $ 0.23 $ 1.12 $ 0.35 $ 2.38 $ 0.04
========= ========= ======== ========= ========
Net income per share -
diluted (4) $ 0.23 $ 1.11 $ 0.35 $ 2.34 $ 0.04
========= ========= ======== ========= ========
(1) Interest income, net includes $447, $236, $0, $683, and $0 (in
thousands) for the respective periods related to our minority
interest partner's share of interest income.
(2) Interest income, net, includes $2,544, $512, $0, $3,056, and $0
(in thousands) for the respective periods related to interest earned
on unsecuritized credit card receivables, the interest on which is
reflected in the Company's net interest margin calculation and the
receivables of which are reflected in the Company's average managed
receivables balances.
(3) Other operating expense includes ancillary product expenses of
$285, $420, $770, $1,895 and $4,832 (in thousands) for the
respective periods.
(4) For the twelve months ended December 31, 2002, the effects of the
preferred shares, which are convertible into common shares, were
excluded from the EPS computations because their inclusion would have
been anti-dilutive.
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