Portfolio Recovery Associates Reports First Quarter 2006 Results

Portfolio Recovery Associates, Inc., a company that purchases and manages portfolios of defaulted consumer receivables and provides a broad range of accounts receivable management services, today reported net income of $10.7 million, or $0.67 per diluted share, for the quarter ended March 31, 2006. The Company’s first-quarter 2006 earnings represent growth of 20% from net income of $8.9 million, or $0.55 per diluted share, in the same period a year earlier.

Total revenue increased 27% to $45.3 million in the first quarter of 2006, up from $35.8 million in the year-earlier period. Total revenue consists of cash collections reduced by amounts applied to the Company’s owned debt portfolios plus commissions from its fee-for-service businesses. During the first quarter of 2006, the Company applied 32.7% of cash collections to reduce the carrying basis of its owned debt portfolios. This included a $175,000 allowance charge against two pools of accounts.

“Portfolio Recovery Associates celebrated 10 years in business on March 20th, and our performance in the first quarter is representative of the success we have had over that period. Cash collections rose 22% in the quarter to $58.5 million, and in March we set a monthly collections record — surpassing $20 million for the first time ever. On the purchasing side, we spent a solid $16.2 million, returning to more historical debt-acquisition levels following our remarkable fourth quarter. While portfolio pricing remains very competitive, deal flow was good during the period,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.

Financial and Operating Highlights

• Cash collections rose 22% to $58.5 million in the first quarter of 2006, up from $47.8 million in the year-ago period.

• Productivity, as measured by cash collections per hour paid, the Company’s key measure of collector performance, stands at a record $151.60 for the first three months of 2006, up from $133.39 for all of 2005. Excluding the impact of trustee remittances from purchased bankrupt accounts, the comparison is $140.74 for the first quarter of 2006 vs. $132.03 in the year-earlier period and $128.02 for all of 2005.

• The Company purchased $3.87 billion of face-value debt during the first quarter of 2006 for $16.2 million. This debt was acquired in 36 pools from 16 different sellers.

• The Company’s fee-for-service businesses generated record revenue of $6 million in the first quarter of 2006, up from $3.5 million in the same period a year ago.

• The Company’s cash balances were $23.4 million as of March 31, 2006, up from $16 million as of December 31, 2005. During the 2006 first quarter, the Company completely repaid the $15 million outstanding on its $75 million line of credit. No amount was outstanding on the line as of March 31, 2006.

“Portfolio Recovery Associates continued to demonstrate the value of our long-term, disciplined approach to debt purchasing and collection in the first quarter. Cash collections were strong, and despite solid debt purchases we were able to completely repay the $15 million that had been outstanding on our line of credit at year-end 2005. In addition, we were able to build our cash balances to $23.4 million by quarter’s end. Our fee-for-service businesses executed nicely, producing record revenue of $6 million in the quarter. We remain pleased with the progress of these businesses,” said Kevin P. Stevenson, Chief Financial and Administrative Officer.