CompuCredit Reports Second Quarter Earnings

CompuCredit reported second quarter 2006 managed earnings of $48.8 million, or $0.97 of managed earnings per fully diluted share, as compared to managed earnings of $80.6 million, or $1.56 of managed earnings per fully diluted share for the second quarter of 2005.

Under GAAP, second quarter 2006 net income was $28.3 million, or $0.56 net income per common share on a fully diluted basis, as compared to second quarter 2005 net income of $66.5 million, or $1.29 net income per common share on a fully diluted basis.

Last year’s second quarter results included $44.2 million or $.86 per share of gain associated with CompuCredit’s sale of approximately $2.9 billion in face amount of previously charged-off receivables to Encore Capital Group, Inc. David G. Hanna, CompuCredit Chairman and Chief Executive Officer, commented that, “We are pleased with our fundamental earnings growth over last year’s second quarter. The consumer credit environment within our sector continues to be favorable, and we continue to focus on delivering value to both our customers and shareholders.”

CompuCredit’s net interest margin was 23.7 percent in the second quarter of 2006, as compared to 22.7 percent for the second quarter of 2005 and 25.0 percent in the previous quarter. The adjusted charge-off rate was 8.3 percent in the second quarter of 2006, as compared to 8.0 percent for the second quarter of 2005 and 7.1 percent in the previous quarter. As of June 30, 2006, the 60-plus day delinquency rate was 11.5 percent, as compared to 8.3 percent as of June 30, 2005 and 10.6 percent as of March 31, 2006.

Various references within this press release and the accompanying financial information are to CompuCredit’s “managed” results, which include the results of its non-securitized receivables, together with the receivables underlying its off-balance-sheet securitization facilities. Financial, operating and statistical data based on these aggregate managed receivables are key to any evaluation of CompuCredit’s performance in managing (including underwriting, valuing purchased receivables, servicing and collecting) the portfolios of receivables reflected on CompuCredit’s balance sheet and underlying its securitization facilities. In allocating CompuCredit’s resources and managing its business, management relies heavily upon financial, operating, and statistical data prepared on a so-called “managed basis.” It is also important to analysts, investors and others that CompuCredit provides selected metrics and data on a managed basis because this allows a comparison of CompuCredit to others within the specialty finance industry. Moreover, CompuCredit’s management, analysts, investors and others believe it is critical that they understand the credit performance of the entire portfolio of CompuCredit’s managed receivables because it reveals information concerning the quality of loan originations and the related credit risks inherent within the securitized portfolios and CompuCredit’s retained interests in its securitization facilities.

Managed receivables data assume that none of the credit card receivables underlying CompuCredit’s off-balance-sheet securitization facilities were ever transferred to securitization facilities and present the net credit losses and delinquent balances on the receivables as if CompuCredit still owned the receivables. Reconciliation of the managed receivables data to CompuCredit’s GAAP financial statements requires: (1) recognition that a significant majority of CompuCredit’s loans and fees receivable had been sold in securitization transactions as of June 30, 2006; (2) an understanding that our managed receivables data are based on billings and actual charge-offs as reported to us through underlying systems of record (i.e., without regard to an allowance for uncollectible receivables); (3) a look through to CompuCredit’s economic share of the receivables that it manages for its equity-method investees; (4) removal of CompuCredit’s minority interest holders’ interests in the managed receivables underlying CompuCredit’s GAAP consolidated results; and (5) recognition that, prior to their re-securitization, CompuCredit’s Fingerhut managed receivables were recorded at a $0.0 basis in CompuCredit’s GAAP financial statements.