Portfolio Recovery Associates Earnings Rise on Controlled Growth

NORFOLK, VA — Portfolio Recovery Associates, Inc. (Nasdaq: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables, today reported net income of $4.5 million, or $0.29 per fully-diluted share, for the quarter ended March 31, 2003.

The company’s first-quarter 2003 earnings compare with pro forma net income of $2.2 million, or $0.19 per fully-diluted share, for the quarter ended March 31, 2002. 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 $18.3 million in the first quarter of 2003 from $11.6 million in the same period a year ago.

“Portfolio Recovery Associates’ solid first-quarter performance again reflects our ability to successfully execute our strategy of consistent, controlled growth and careful attention to expenses,” said Steven D. Fredrickson, Chairman, President and Chief Executive Officer. “In addition to continued improvement in the efficiency of our debt-collection operations during the quarter, we once again took advantage of the market’s ample supply of defaulted consumer debt and acquired an additional $831 million of face- value paper at very compelling prices.”

Financial and Operating Highlights

• Net income of $4.5 million in the first quarter of 2003 more than doubled as compared to the pro forma net income from the year-ago period. Continued improvement in debt-collection efficiency was again an important driver of profitability, as was the quality of the debt portfolios the company has been able to acquire over time.

• First quarter 2003 total revenue of $18.3 million represents growth of 58% from the year-ago period. The revenue for the period consists of cash receipts, less an amortization rate of 33%, which was applied to reduce the carrying value of the owned debt portfolios that produced cash collections in the period.

• Cash collections totaled $26.4 million in the first quarter of 2003, up from $18.0 million in the year-ago period. Cash collections per hour paid, which is the company’s key measure of collector performance, increased to $114.41 in the first quarter of 2003 from $96.37 for full- year 2002.

• Portfolio Recovery Associates opened its third call center in Hampton, Va., in March 2003 and by the end of the first quarter employed 78 collectors at the facility. The company intends to continue to add staff to the Hampton center, which can accommodate 255 collectors, at a gradual pace driven by demand.

• The company purchased $831 million of face-value debt during the first quarter of 2003 for $17.7 million, a blended rate of 2.13%. This debt was purchased from 12 different sellers and reflects the large amount of well-priced defaulted consumer debt available in the market.

• Portfolio Recovery Associates made strong progress in key areas of the business during the first quarter, allowing us to double net income and dramatically improve productivity even as we added capacity with the opening of the Hampton facility,” said Kevin P. Stevenson, Chief Financial Officer.
• The company accomplished this while keeping our balance sheet strong, providing us with ample resources to continue expanding in a controlled and profitable manner.”

About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates 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.

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