Encore Takes Loss to Pay Off Future Interest

Debt purchaser Encore Capital Group reported late yesterday a net loss of $800,000 for the second quarter compared with net income of $7.5 million in the year ago quarter. Encore attributed the swing primarily due to a $6.9 million charge for an agreement with the firm’s previous lender to pay off all future contingent interest.

Gross collections in the quarter rose 18 percent to $93.6 million. Revenues were $67.2 million, up 2 percent from $65.9 million. Revenues from the receivables portfolio were $64 million, a 7 percent increase from $59.6 million in the same period a year ago.

Revenues from bankruptcy servicing in the quarter fell nearly 50 percent to $3.2 million, down due to the decline in bankruptcies this year following the spike that occurred in 2006.

Encore spent $41.1 million to buy $1.3 billion in face value debt during the quarter, compared with $21.3 million for $594 million in the same period a year ago.