Benchmark Information for Debt Buyers - August '03

Debt buying collection yields are different today than they were two or three years ago, but by how much? How are my debt collection efforts doing relative to the industry average? The SunTrust Robinson Humphrey SIFI was designed to try to answer these questions.

Click below to read our latest Settlement-In-Full Index (SIFI) results for August, 2003. If you have any questions, please call Bill Warmington at (617) 345-6534.

• MIXED RESULTS: The August SIFI deteriorated relative to strong July comps on both a m/m and y/y basis. Preliminary 3Q03 results, however, improved relative to 2Q03 with double-digit growth in three of four tranches.
• OUTLOOK: Although collectability trends continue to improve after bottoming in April and May 2003, industry sources confirm that August was a difficult month and September appears only marginally better. We believe sustained improvement will require strengthening trends in consumer sentiment, earnings, and job growth that can offset negative impact from decelerating mortgage refinancings.
• NCOG: We expect 3% y/y organic growth in 3Q U.S. Service revenue vs. flat 2Q.
• SIFI CONTRIBUTORS: Arrow Financial Services, Capital Acquisitions & Management Company (CAMCO), Century Liquidation, Oliphant Financial Corporation, Phoenix Credit Solutions, Risk Management Alternatives, and Zenith Acquisition Corp. We thank each of these participants for their help.

What's a SIFI? The SunTrust Robinson Humphrey Settlement-In-Full Index SM ("SIFI") is a proprietary monthly research tool designed to give investors and debt buyers an overview of the relative strength of the debt collection market and the direction of the U.S. economy. The SIFI measures the success of collections agencies in collecting the bad debts that they have purchased, specifically the ratio of Settlements-in-Full (SIFs) and Payments-in-Full (PIFs) versus the face value of the debt at acquisition. We gather data on this ratio in four categories based on the debt amount: less than $500, $500-$1,000, $1,000-$3,000, and $3,000-$7,000. It should be noted that the total dollars collected by an agency typically represent a small fraction of the face value of a bad debt portfolio, and that SIFs and PIFs represent a subset of those payments (typically 10-40%).

The SIFI is confidential and easy to do. We maintain the confidentiality of each firm’s information by using boiled-down numbers that do not reflect gross revenue, profitability, etc., and STRH personnel maintain the information in an anonymous fashion. The data is easy to gather on a monthly basis, requiring a single easy-to-execute query that takes literally seconds to output the four numbers. In exchange for participating in the SIFI, you receive a copy of the monthly data and analysis, recognition as a contributor to the industry’s first index (there is an opt-out if you wish to remain anonymous), and information on short- and long-term trends as they impacts collections, which could help in price negotiations, etc.

Read the current report (Adobe PDF Format; 281kb)

If you would like to find out more about participating in the SIFI, please contact Bill Warmington, Director, SunTrust Robinson Humphrey. bill_warmington@rhco.com