PRAA Reports Increases Across the Board in Earnings Release

NORFOLK, VA – Portfolio Recovery Associates, Inc. (NasdaqNM: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today reported net income of $5.5 million, or $0.35 per fully-diluted share, for the quarter ended September 30, 2003.

The company’s third-quarter 2003 earnings compare with pro forma net income of $3.2 million, or $0.27 per fully-diluted share, in the same period a year ago. The pro forma adjustment reflects the impact of corporate income tax on the pre-IPO period due to the company’s conversion from a limited liability company to a corporation in connection with its November 2002 initial public offering.

Total revenue rose to $22.2 million in the third quarter of 2003 from $15.2 million in the same period a year ago.

“Portfolio Recovery Associates has completed yet another solid quarter, executing on our overall strategy in terms of both disciplined buying and increased productivity. Our business is designed to let us make progress regardless of the level of portfolio purchases, and the third quarter is a good example of this. We continued to produce strong earnings and revenue growth while reducing the amount of debt purchased, a decision we made in light of our exceptionally strong buying in the first half of 2003,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.

For the first nine months of 2003, the company’s earnings rose to $15.3 million, or $0.97 per fully-diluted share, from a pro forma $8.0 million, or $0.70 per share, for the nine months ended September 30, 2002. Total revenue for the first nine months of 2003 climbed to $61.9 million from $40.2 million in the same period a year ago.

Financial and Operating Highlights

• Net income grew 75% in the third quarter to $5.5 million, compared with pro forma net income from the year-ago period. The company’s earnings growth was driven by both the efficiency of its debt-collection operations and its ability over time to acquire debt portfolios that can be collected profitably across the maturity spectrum.

• Total revenue advanced 46% in the third quarter of 2003 to $22.2 million from $15.2 million in the year-ago period. The period’s total revenue consists of cash collections, reduced by an amortization rate of 29.2% applied to reduce the carrying value of the owned debt portfolios, plus commissions from the company’s contingent-fee collection business. Amortization was 29.0% for the same period in 2002.

• Cash collections rose 46% to $30.2 million in the third quarter of 2003 from $20.7 million in the year-ago period. Cash collections per hour paid, the company’s key measure of collector performance, improved to $110.77 for the first nine months of 2003 from $96.37 for full-year 2002. Productivity rose to record levels at all three of the company’s call centers during the quarter.

• The company purchased $323 million of face-value debt during the third quarter of 2003 for $11.8 million, representing a blended purchase rate of 3.65%. This debt was purchased in 16 transactions from 8 different sellers. Buying in the third quarter focused more heavily on early recall debt than in the recent past, due to the quality of these accounts in the marketplace.

• Cumulatively, the company has purchased $1.85 billion of face-value debt at a blended rate of 2.72% in the first nine months of 2003, which compares with $930 million at a blended rate of 2.84% for the same period in 2002.

“Portfolio Recovery Associates’ third quarter represented a period of continued focus on the core areas of our business. We achieved record productivity in all three of our call centers, including the Hampton, VA, facility, which opened in March. We spent roughly $12 million on high-quality portfolio acquisitions during the quarter, bringing our total spending for the year to more than $50 million through the end of September. And we accomplished this while nearly doubling our cash reserves from the prior quarter, positioning us to take advantage of future opportunities in the debt-purchasing market,” said Kevin P. Stevenson, Chief Financial Officer.

About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates (www.portfoliorecovery.com) is a full-service provider of outsourced receivables management. Portfolio Recovery Associates purchases, collects and manages portfolios of defaulted consumer receivables. Defaulted consumer receivables are the unpaid obligations of individuals to credit originators, including banks, credit unions, consumer and auto finance companies, retail merchants and other service providers. The defaulted consumer receivables Portfolio Recovery Associates collects are either purchased from the credit originator or are collected on behalf of clients on a commission basis.

Statements in this press release which are not historical, including Portfolio Recovery Associates’ or management’s intentions, hopes, beliefs, expectations, representations, projections, plan or predictions of the future, are forward-looking statements. Forward-looking statements in this press release include references to Portfolio Recovery Associates’ presentations and webcasts. The forward-looking statements in this press release are based upon management’s beliefs, assumptions and expectations of the Company’s future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors including the risk factors and other risks that are described from time to time in the Company’s filings with the Securities and Exchange Commission, including but not limited to its Registration Statements on Form S-1, its annual report on Form 10-K for the year ended December 31, 2002, and Form 10Q for the quarters ended March 31, 2003 and June 30, 2003.