CompuCredit Reports Third Quarter Results.ATLANTA Atlanta (ətlăn`tə, ăt–), city (1990 pop. 394,017), state capital and seat of Fulton co., NW Ga., on the Chattahoochee R. and Peachtree Creek, near the Appalachian foothills; inc. 1847. -- 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 third quarter 2004 net income attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk to common shareholders of $37.9 million, or $0.75 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 third quarter 2003 net income attributable to common shareholders of $56.5 million, or $1.11 per diluted share. The net interest margin was 21.2 percent in the third quarter of 2004, as compared to 22.4 percent for the third quarter of 2003. 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 8.3 percent in the third quarter of 2004, as compared to 8.9 percent for the third quarter of 2003. Also, at September September: see month. 30, 2004, 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 10.7 percent, as compared to 10.9 percent at September 30, 2003. Various references within this press release and the accompanying ac·com·pa·ny v. ac·com·pa·nied, ac·com·pa·ny·ing, ac·com·pa·nies v.tr. 1. To be or go with as a companion. 2. financial information are to the Company's managed 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 , which include the Company's non-securitized receivables, as well as the receivables underlying the Company's off balance sheet 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. 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 aggregate managed receivables are key to any evaluation of the Company's performance in managing (including 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. , 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 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 this allows a comparison of 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 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 its 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 still owned the receivables. Reconciliation of managed receivables data to the Company's GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). financial statements requires: (1) recognition that substantially all of the Company's credit card receivables (i.e., all but the credit card receivables associated with the Company's largely fee-based card offering to consumers at the lower end of the FICO FICO See: Financing corporation scoring system Noun 1. scoring system - a system of classifying according to quality or merit or amount rating system classification system - a system for classifying things ) had been sold in securitization transactions as of September 30, 2004; (2) a look-through to the receivables that the Company manages for CSG CSG - constructive solid geometry , LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control , the economics of which support the Company's investment in equity-method investee on the Company's GAAP consolidated balance sheet consolidated balance sheet A balance sheet in which assets and liabilities of a parent company and its controlled subsidiaries are combined, thereby presenting balance sheet items for the parent and its subsidiaries as if they were a single firm. ; and (3) recognition that certain de-securitized Fingerhut managed receivables are recorded at a $0.0 basis in the Company's GAAP financial statements. This reconciliation results in the removal of all but $131.8 million of the managed receivables data from the Company's books and records to yield only $131.8 million of loan and fee receivables and associated statistics under GAAP, coupled with the recording under GAAP of the Company's retained interests in various securitization structures. Further details regarding CompuCredit's third quarter financial performance will be discussed during management's conference call on Wednesday Wednesday: see week. , November November: see month. 3, 2004 at 8 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 www.CompuCredit.com. A replay of the conference call also will be available on the web site. CompuCredit is an information and technology driven marketer of branded credit cards and related financial services 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. . CompuCredit provides these services to consumers who are underserved by traditional financial institutions. Credit cards marketed by CompuCredit generally are 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. Through corporate and affinity The relationship that a person has to the blood relatives of a spouse by virtue of the marriage. The doctrine of affinity developed from a Maxim of Canon Law that a Husband and Wife were made one by their marriage. There are three types of 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.
CompuCredit Corporation (CCRT)
Financial and Statistical Summary
(Unaudited)(1)
At or For the Three Months Ended
September 30, June 30, September 30,
2004 2004 2003
-------------------------------------
(In thousands, except per share data)
Common Share Statistics
EPS -- Basic $ 0.77 $ 0.29 $ 1.12
EPS -- Diluted $ 0.75 $ 0.28 $ 1.11
Book Value Per Common Share
Outstanding (period end) (2) $ 12.64 $ 11.93 $ 10.90
Stock Price Per Share (period end) $ 18.62 $ 17.30 $ 17.50
Total Market Capitalization (period
end) $ 852,233 $ 797,461 $ 819,910
Shares Outstanding (period end) 45,770 46,096 46,852
Weighted Average Shares O/S -- Basic 50,876 51,548 51,299
Weighted Average Shares O/S --
Diluted 51,686 52,389 51,870
Average Managed Receivables
Statistics (3)
Average Managed Receivables $1,947,009 $2,007,406 $2,469,194
Average Shareholders' Equity $ 616,960 $ 607,827 $ 529,876
Net Interest Margin 21.2% 20.2% 22.4%
Return on Average Managed Receivables 8.0% 3.0% 9.3%
Return on Average Equity (ROE) 25.3% 9.8% 43.4%
Net Charge-Off Rate 13.0% 14.8% 15.5%
Adjusted Charge-Off Rate 8.3% 8.8% 8.9%
Adjusted Charge-Offs $ 40,457 $ 44,329 $ 54,798
Risk Adjusted Margin 28.7% 22.7% 21.2%
Operating Ratio 15.0% 11.3% 8.8%
Other Income ratio 15.8% 11.1% 7.3%
Period-End Selected Credit Card
Data (3)
Total Managed Receivables $1,958,735 $1,959,811 $2,518,822
Delinquency Rate (60+ days) 10.7% 9.6% 10.9%
Number of Accounts 2,388 2,222 2,637
Shareholders' Equity $ 642,140 $ 608,144 $ 560,849
Equity to Managed Receivables Ratio 32.8% 31.0% 22.3%
(1) Certain prior period amounts in this and other tables included
within this release bear the effects of reclassifications to conform
to current period presentation.
(2) Assumes preferred shares are converted into common shares as of
end of each period.
(3) Excludes receivables acquired at or near charge-off at
the time of purchase.
CompuCredit Corporation and Subsidiaries
Condensed Consolidated Balance Sheets
Sept. 30,
2004 Dec. 31,
(Unaudited) 2003
-------------------
(Dollars in thousands)
Assets
Cash and cash equivalents $ 46,481 $110,605
Restricted cash 10,255 11,921
Retained interests in credit card receivables
securitized 578,342 538,961
Amounts due from securitization 7,624 4,199
Loans and fees receivable, net 82,298 16,271
Deferred costs, net 32,786 7,750
Software, furniture, fixtures and equipment, net 29,129 24,307
Investment in equity-method investee 5,971 6,577
Investments in previously charged off receivables 13,896 13,960
Investments in debt securities 17,984 15,007
Intangibles 11,314 -
Goodwill 100,686 -
Prepaid expenses and other assets 10,394 11,797
-------- --------
Total assets $947,160 $761,355
======== ========
Liabilities
Accounts payable and accrued expenses $ 35,929 $ 26,436
Notes payable 75,469 1,945
Deferred revenue 6,317 9,895
Deferred gain on Fingerhut receivables 29,927 -
Income tax liability 99,447 96,491
-------- --------
Total liabilities 247,089 134,767
-------- --------
Minority interests 57,931 52,575
-------- --------
Shareholders' equity
Preferred stock, no par value, 10,000,000 shares
authorized:
Series A preferred stock, 25,000 shares issued
and outstanding at September 30, 2004
and December 31, 2003, respectively 32,157 29,816
Series B preferred stock, 10,000
shares issued and outstanding at September
30, 2004 and December 31, 2003, respectively 13,117 12,181
Common stock, no par value, 150,000,000 shares
authorized; 48,018,242 and 47,885,506
issued at September 30, 2004 and
December 31, 2003, respectively - -
Additional paid-in capital 253,570 250,943
Treasury stock, at cost, 2,248,500 and 872,900
shares at September 30, 2004 and December 31,
2003, respectively (28,459) (4,586)
Deferred compensation (354) (593)
Warrant 16,498 -
Retained earnings 355,611 286,252
-------- --------
Total shareholders' equity 642,140 574,013
-------- --------
Total liabilities and shareholders' equity $947,160 $761,355
======== ========
CompuCredit Corporation and Subsidiaries
Condensed Consolidated Statements of Income (Unaudited)
For the Three For the Nine
Months Ended Months Ended
Sept. 30,June 30, Sept. 30,Sept. 30,Sept. 30,
2004 2004 2003 2004 2003
-------- -------- -------- -------- --------
(Dollars in thousands, except per share data)
Interest income (1) $ 13,926 $ 11,492 $ 3,156 $ 33,123 $ 5,942
Interest expense (1,951) (680) (130) (2,722) (6,409)
Provision for loan losses (27,221) (14,885) (2,280) (51,221) (2,378)
-------- -------- -------- -------- --------
Net interest (expense)
income after provision
for loan losses (15,246) (4,073) 746 (20,820) (2,845)
Other operating income:
Securitization
income 1,651 - 31,385 1,651 31,385
Income from retained
interests in credit
card receivables
securitized 33,609 16,601 80,771 69,602 136,192
Servicing income 15,693 19,515 21,303 60,506 73,832
Fees and other
income 117,553 64,573 41,747 238,390 109,010
Equity in (loss)
income of equity-
method investee (169) (223) (269) (606) 27,639
-------- -------- -------- -------- --------
Total other operating
income 168,337 100,466 174,937 369,543 378,058
Other operating expense:
Salaries and
benefits 5,744 5,127 5,619 16,147 14,388
Card and loan
servicing 42,505 36,874 38,725 117,366 118,576
Marketing and
solicitation 12,251 9,030 2,646 26,980 7,060
Depreciation 4,094 3,959 3,906 12,046 11,676
Other (2) 21,347 10,857 9,108 42,119 26,332
-------- -------- -------- -------- --------
Total other operating
expense 85,941 65,847 60,004 214,658 178,032
-------- -------- -------- -------- --------
Income before minority
interests and income
taxes 67,150 30,546 115,679 134,065 197,181
Minority interests (7,131) (6,754) (26,938) (20,178) (26,938)
-------- -------- -------- -------- --------
Income before income
taxes 60,019 23,792 88,741 113,887 170,243
Income taxes (21,007) (8,941) (31,221) (41,236) (60,358)
-------- -------- -------- -------- --------
Net income $ 39,012 $ 14,851 $ 57,520 $ 72,651 $109,885
======== ======== ======== ======== ========
Net income attributable
to common shareholders $ 37,887 $ 13,754 $ 56,496 $ 69,359 $106,647
======== ======== ======== ======== ========
Average shares
outstanding - basic 50,876 51,548 51,299 51,387 51,118
======== ======== ======== ======== ========
Average shares
outstanding - diluted 51,686 52,389 51,870 52,247 51,567
======== ======== ======== ======== ========
Income per share - basic $ 0.77 $ 0.29 $ 1.12 $ 1.41 $ 2.15
======== ======== ======== ======== ========
Income per share -
diluted $ 0.75 $ 0.28 $ 1.11 $ 1.39 $ 2.13
======== ======== ======== ======== ========
(1) Interest income includes:
(a) $273, $267, $236, $788 and $236 (in thousands) for the respective
periods related to our minority interest partner's share of interest
income.
(b) $11,702, $9,551, $517, $27,283 and $517 (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.
(2) Other operating expense includes ancillary product expenses of
$227, $239, $420, $764 and $1,609 (in thousands) for the respective
periods.
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