Credit Store Announces First Quarter Fiscal 2000 Full Results; Files Form 10 With the SEC.

Business Editors

SIOUX FALLS, S.D.--(BUSINESS WIRE)--Jan. 10, 2000

The Credit Store, Inc. (EBB:PLCR) has released its detailed results for the first quarter of its fiscal year 2000, which ended August 31, 1999.

First Quarter FY2000 Results
                                   FY 2000, 1Q           FY1999, 1Q
                                   ended 8/31/99         ended 8/31/98

Total Revenues                   $ 8.125 million      $ 10.215 million
   Core Revenue                   $8.125 million        $6.871 million
   Gain on Sales of Portfolios     $0.00                $3.344 million

Total Expenses                   $ 8.601 million       $ 8.618 million

Provision for Losses             $ 2.035 million       $ 1.389 million

Comprehensive Income (Loss)     $ (1.734)million        $0.209 million

Net Income (Loss)              $  (2.512)million       $ 0.209 million
   Preferred Dividend            $ 0.500 million       $ 0.300 million

Net Income (Loss) Applicable   $  (3.012)million       $(0.091)million
   To Common Stock

Earnings per Common Share
   Basic & Diluted                $(0.09)               $ 0.00

Weighted Average Shares Outstanding
                                    34,761,965            34,761,965

Martin J. Burke III, Chairman and Chief Executive Officer said: "We are pleased with our first quarter results which were within the expected context of our business plan. The Company's total revenue can and will fluctuate significantly from quarter to quarter based on the timing of securitizations or sales of receivables portfolios. We expect that fiscal 2000 overall will produce profitable results for The Credit Store."

The Credit Store had previously released preliminary numbers for the first fiscal quarter 2000 and said full results would be made available in conjunction with the Company's filing of its Form 10 with the Securities and Exchange Commission, which was completed Dec. 29, 1999. The full report discussed in today's release is in line with the preliminary data release earlier, the Company said.

Details on 1Q, FY 2000: Total revenue for the quarter ended August 31, 1999 (the first quarter of fiscal year 2000) was $8,124,625, a 20% decrease from $10,215,127 during the year-ago first fiscal quarter. The Company did not sell or securitize any receivables assets and so derived no revenue from this activity in the first quarter of fiscal year 2000, versus a $3,343,694 gain on sale in the same period of fiscal 1999. As the Company has previously disclosed, both total revenues and revenue derived from gains on sales will fluctuate significantly from quarter to quarter in the ordinary course of business. Core revenue, which is defined as revenue derived from the Company's regular day-to-day operations in credit cards and consumer receivables management, increased 18% to $8,124,625 during the first fiscal quarter 2000, from $6,871,433 in the same period of fiscal 1999.

Within the category of core revenue, income from credit card receivables increased 42%, from $1,453,125 in the first quarter of fiscal 1999 to $2,041,574 in the current period, due to a higher average amount of funded credit card receivables. Revenues in excess of costs recovered increased 10% from $4,718,504 in the first quarter of fiscal 1999 to $5,199,917 in the current period due to the continued maturation of acquired portfolios. Servicing fees and other income increased 26% from $699,805 in the first quarter of fiscal 1999 to $883,134 in the current period based on servicing fees earned from securitized portfolios. The provision for losses increased 47% from $1,388,679 in the first quarter of fiscal 1999 to $2,034,876 in the current period and increased as a percentage of core revenue due to a higher level of principal funded on credit cards, as noted above.

Total expenses for the first quarter of fiscal year 2000 decreased slightly to $8,601,322, from $8,617,666 in the same quarter of fiscal 1999. Salaries and employee benefits increased 4% from $3,138,712 in the first quarter of fiscal 1999 to $3,267,585 in the current period based on a higher average number of employees and increased wage rates, but declined as a percentage of core revenue from 46% to 40%. Interest expense decreased 21% from $1,282,538 in the first quarter of fiscal 1999 to $1,007,902 in the current period based on a lower average amount of debt outstanding due to the conversion of $10 million of subordinated debt into preferred stock in August 1998. Professional fees increased 27% from $393,894 in the first quarter of fiscal 1999 to $502,035 in the current period, but remained stable as a percentage of core revenues at 6%. Depreciation and amortization increased 9% from $620,539 in the first quarter of fiscal 1999 to $678,236 in the current period, due to continued investments in technology. Depreciation and amortization showed a slight decrease as a percentage of core revenue from 9% to 8%. Third party credit card services increased 3% from $1,021,907 in the first quarter of fiscal 1999 to $1,056,045 in the current period and declined as a percentage of core revenue from 15% to 13% as unit costs declined. All other operating expenses declined 3% as a group from $2,160,076 in the first quarter of fiscal 1999 to $2,089,519 in the current period and declined from 31% to 26% as a percentage of core revenue due to more efficient operating systems and declines in per unit costs.

At August 31, 1999, the Company owned or managed $88.6 million of performing credit card receivables compared to $90.5 million at August 31, 1998. The Company ended the fiscal first quarter with 95,197 cards under management, versus 88,197 cards at the end of the year ago quarter. Through August 31, 1999, the Company had made cumulative purchases inception to date of non-consuming performing debt of $3.1 billion, compared with $2.5 billion at August 31, 1998.

In the first quarter of fiscal 2000, the Company announced that its senior secured revolving credit facility provided by Coast Business Credit of Los Angeles had been renewed through July 2001 and increased to $10 million. As previously announced, Coast Business Credit subsequently increased this facility to $15 million in December 1999. Coast Business Credit is a division of Southern Pacific Bank.

Separately, the Company announced that it had filed a Registration Statement on Form 10 with the Securities and Exchange Commission. Upon being declared effective by the SEC, which could occur as early as March 2000, the Company will become a public reporting company and will begin filing all required periodic reports, including Form 10-Q and Form 10-K. Financial data in addition to that detailed in this release can be found in the Form 10 filing.

The Credit Store, Inc. is a technology-based financial services company that provides credit card products to consumers who may otherwise fail to qualify for a traditional unsecured bank credit card. The Company reaches these consumers by acquiring portfolios of non-performing consumer receivables and offering a new credit card to those consumers who agree to pay all or a portion of the outstanding amount due on their debt. The new card is issued with an initial balance and credit line equal to the agreed repayment amount. After appropriate seasoning, The Credit Store seeks to sell or securitize the credit card receivables generated by this business strategy.

This press release contains certain forward-looking statements that involve risk and uncertainties. Risks and uncertainties include the availability and cost of financing, the availability of non-performing consumer debt portfolios for acquisition by the Company, the convertibility and collectibility of receivables, the risks associated with rapid growth, labor availability, and the uncertainties associated with completed and future securitization activities and receivable sales. Future trends, actions or results may differ materially from those discussed in this press release.