PRA Group
Oct 27, 2011

Portfolio Recovery Associates Reports Third Quarter 2011 Results

NORFOLK, VA, Oct 27, 2011 (MARKETWIRE via COMTEX) --

Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a specialized financial services company and market leader in the consumer debt purchase and collection industry, today reported results for the quarter ended September 30, 2011.

Third Quarter Highlights

--  Revenue increased 20% to $114.3 million as cash collections grew 33%
    to a record $182.2 million
--  Net income of $25.5 million, an increase of 38% over the comparable
    year-ago period
--  EPS totaled $1.48 in the quarter, compared with EPS of $1.08 in the
    third quarter of 2010
--  Portfolio acquisitions totaled $122.1 million

"Our third quarter results are indicative of our efforts to drive the top line, identify and improve operational efficiencies and maintain a strong and flexible capital structure," said Steven D. Fredrickson, chairman, president and chief executive officer. "The key drivers of our results continue to be strong cash collections from both bankruptcy and core portfolios, supported by an impressive performance at our call centers. We were able to deliver these results despite a weak and volatile economy. Looking ahead, we will continue to focus on strengthening our core business, reducing costs and allocating the necessary resources to support continued growth in our fee-for-service businesses."

Total revenues for the third quarter of 2011 grew 20% from the year-earlier period to $114.3 million. Total revenues consist of cash collections reduced by amounts applied to principal on the Company's owned debt portfolios, plus fee income earned from our fee-for-service businesses. During the third quarter of 2011, the Company applied 43.5% of cash collections to reduce the carrying value of its owned debt portfolios, up from 41.8% in the third quarter of 2010. The third quarter 2011 principal amortization rate included a $741,000 net allowance charge against certain pools of finance receivables accounts.

Financial and Operating Review

Kevin P. Stevenson, chief financial and administrative officer, said: "The earnings power of our debt purchase business was evident during Q3, as our strong results from both bankrupt and core portfolios more than overcame soft performance at our fee-for-service businesses."

--  Cash collections rose 33% to a record $182.2 million in the third
    quarter of 2011, up from $137.4 million in the year-ago period. Call
    center and other collections increased 24%, external legal collections
    increased 35%, internal legal collections grew 36%, and purchased
    bankruptcy collections gained 40% when compared with the year-earlier
    period. The table below displays cash collections by source, by
    quarter for the past five quarters:

Cash Collection Source ($ in thousands) Q32011 Q22011 Q12011 Q42010 Q32010 ------------------------------- -------- -------- -------- -------- -------- Call Center & Other Collections $ 63,967 $ 64,566 $ 67,377 $ 53,775 $ 51,711 External Legal Collections 27,245 27,329 25,378 21,446 20,217 Internal Legal Collections 16,444 16,007 15,598 12,841 12,130 Purchased Bankruptcy Collections 74,512 68,379 58,364 56,301 53,319 -------- -------- -------- -------- -------- Total Cash Collections $182,168 $176,281 $166,717 $144,363 $137,377 ======== ======== ======== ======== ========

--  Internal legal collections grew to $16.4 million in the third quarter
    of 2011 from $12.1 million in the year-ago quarter. Internal legal
    collections, in which the Company uses its own staff, represent an
    important, developing collections channel.

-- Productivity rose to a record $245 per collector hour paid for the first nine months of 2011 from $194 for all of 2010. Productivity, the Company's key measure of collector performance, is measured by cash collections per collector hour paid. Excluding the impact of trustee remittances on purchased bankrupt accounts, the comparison is $156 for the first three quarters of 2011, compared to $129 for all of 2010. Excluding trustee remittances on purchased bankrupt accounts and external legal collections, the comparison is $118 for the first nine months of 2011 and $100 for all of 2010.

--  In the third quarter of 2011, total revenues were $114.3 million, up
    20% compared with the same period a year ago. This was driven by
    record cash receipts of $193.6 million in the third quarter, up 27%
    from $152.9 million a year earlier. Cash receipts are comprised of
    both cash collections and revenues from the Company's fee-for-service
    businesses.

-- The Company's net allowance charge totaled $0.7 million in the third quarter of 2011, representing 0.08% of net finance receivables at period-end and 0.41% of cash collections.

--  The Company purchased $5.68 billion of face-value debt during the
    third quarter of 2011 for $122.1 million. This was acquired in 95
    portfolios from 12 different sellers.

-- The Company's fee-for-service businesses generated revenues of $11.4 million in the third quarter of 2011, a decline of 27% from the same period a year ago due largely to a decrease in revenues generated by PRA Location Services. Together, the fee-for-service businesses accounted for 10% of the Company's overall revenues in the third quarter of 2011, down from 16% in the third quarter of 2010.

--  Cash balances were $30.0 million as of September 30, 2011, down from
    $41.1 million as of December 31, 2010. During the third quarter of
    2011, the Company had net borrowings of $10 million on its line of
    credit, leaving it with $260 million in outstanding borrowings at
    quarter end. Remaining borrowing availability under the line was
    $147.5 million as of September 30, 2011.

The Company's earnings for the first nine months of 2011 totaled $74.2 million, or $4.31 per diluted share, compared with $52.8 million, or $3.15 per diluted share, for the first nine months of 2010. Year-to-date 2011 revenues were $340.8 million, compared to $272.0 million in the first nine months of 2010.

Conference Call Information The Company will hold a conference call with investors this evening at 5:30 p.m. EDT, Thursday, October 27, 2011, to discuss its third-quarter results. Investors can access the call by dialing 888-679-8034 for domestic callers or 617-213-4847 for international callers using the pass code 49267189. The replay will be available approximately one hour after the call ends and will remain available for seven days. Investors can access the replay of the call by dialing 888-286-8010 for domestic callers or 617-801-6888 for international callers using the pass code 68599056.

Investors may also listen to the conference call via webcast, both live and archived, at the Company's website, www.portfoliorecovery.com at the Investor Relations main page.

About Portfolio Recovery Associates, Inc.
Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a specialized financial services company, is a market leader in the consumer debt purchase and collection industry. The Company, which has purchased more than $63 billion of face value defaulted consumer debt since its inception, has operations in 10 states, more than 27 million customer accounts and more than 2,500 employees. Portfolio Recovery Associates also provides a broad range of fee-based services through its subsidiaries: PRA Government Services, LLC; MuniServices, LLC; PRA Location Services, LLC; and Claims Compensation Bureau, LLC. Working every day with people in financial distress, the Company seeks to engage collaboratively with its customers to create realistic, affordable repayment plans. Portfolio Recovery Associates has a longstanding culture of compliance, and for five consecutive years has been named to the Forbes 100 Best Small Companies in America annual rankings list (2007 - 2011). Additional information about Portfolio Recovery Associates is available at www.portfoliorecovery.com.

Statements herein which are not historical, including Portfolio Recovery Associates' or management's intentions, hopes, beliefs, expectations, representations, projections, plans or predictions of the future, including future revenue and earnings growth, statements with respect to future contributions of its subsidiaries to earnings and future portfolio-purchase opportunities, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include references to Portfolio Recovery Associates' presentations and web casts. The forward-looking statements in this press release are based upon management's beliefs, assumptions and expectations of the Company's future operations and economic performance, taking into account currently available information. These statements are not statements of historical fact. Forward-looking statements involve risks and uncertainties, some of which are not currently known to us. Actual events or results may differ from those expressed or implied in any such forward-looking statements as a result of various factors, including the risk factors and other risks that are described from time to time in the Company's filings with the Securities and Exchange Commission including but not limited to its annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, filed with the Securities and Exchange Commission and available through the Company's website, which contain a more detailed discussion of the Company's business, including risks and uncertainties that may affect future results. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. Information in this press release may be superseded by more recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.

                    Portfolio Recovery Associates, Inc.
                  Unaudited Consolidated Income Statements
                  (in thousands, except per share amounts)

                                Three       Three       Nine        Nine
                               Months      Months      Months      Months
                                Ended       Ended       Ended       Ended
                              September   September   September   September
                                 30,         30,         30,         30,
                                2011        2010        2011        2010
                             ----------  ----------  ----------  ----------

Revenues:
  Income recognized on
   finance receivables, net  $  102,875  $   80,026  $  299,152  $  224,897
  Fee income                     11,401      15,518      41,696      47,054
                             ----------  ----------  ----------  ----------

    Total revenues              114,276      95,544     340,848     271,951

Operating expenses:
  Compensation and employee
   services                      33,475      31,213     102,443      91,725
  Legal collection fees           5,962       4,577      17,681      12,779
  Legal collection costs          9,731       9,329      28,949      21,398
  Agent fees                      1,643       2,842       6,005       9,396
  Outside fees and services       6,222       3,470      13,702       9,454
  Communications                  5,865       4,000      17,884      13,160
  Rent and occupancy              1,517       1,362       4,353       3,912
  Depreciation and
   amortization                   3,223       3,294       9,755       9,050
  Other operating expenses        2,808       2,634       9,161       7,488
                             ----------  ----------  ----------  ----------

    Total operating expenses     70,446      62,721     209,933     178,362

  Gain on sale of property            -           -       1,157           -
                             ----------  ----------  ----------  ----------

    Income from operations       43,830      32,823     132,072      93,589

Other income and (expense):
  Interest income                     7           -           7          35
  Interest expense               (2,555)     (2,178)     (8,057)     (6,535)
                             ----------  ----------  ----------  ----------

    Income before income
     taxes                       41,282      30,645     124,022      87,089

    Provision for income
     taxes                       16,089      11,888      49,544      33,847
                             ----------  ----------  ----------  ----------

    Net income               $   25,193  $   18,757  $   74,478  $   53,242

      Less net (loss)/income
       attributable to
       redeemable
       noncontrolling
       interest                    (313)        276         277         431
                             ----------  ----------  ----------  ----------

    Net income attributable
     to Portfolio Recovery
     Associates, Inc.        $   25,506  $   18,481  $   74,201  $   52,811
                             ----------  ----------  ----------  ----------



Net income per common share:
  Basic                      $     1.49  $     1.08  $     4.34  $     3.15
  Diluted                    $     1.48  $     1.08  $     4.31  $     3.15

Weighted average number of
 shares outstanding:
  Basic                          17,117      17,058      17,106      16,740
  Diluted                        17,228      17,093      17,218      16,792

Portfolio Recovery Associates, Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands, except per share amounts)

September 30, December 31, ASSETS 2011 2010 ------------- -------------

Cash and cash equivalents $ 30,035 $ 41,094 Finance receivables, net 919,478 831,330 Accounts receivable, net 6,462 8,932 Property and equipment, net 22,975 24,270 Goodwill 61,678 61,678 Intangible assets, net 14,748 18,466 Other assets 8,728 10,138 ------------- -------------

Total assets $ 1,064,104 $ 995,908 ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY

Liabilities: Accounts payable and accrued liabilities $ 25,064 $ 23,576 Net deferred tax liability 192,298 164,971 Line of credit 260,000 300,000 Long term debt 1,553 2,396 ------------- -------------

Total liabilities 478,915 490,943 ------------- -------------

Redeemable noncontrolling Interest 16,884 14,449 ------------- -------------

Stockholders' equity: Preferred stock, par value $0.01, authorized shares, 2,000, issued and outstanding shares - 0 - - Common stock, par value $0.01, authorized shares, 60,000, 17,118 issued and outstanding shares at September 30, 2011, and 17,064 issued and outstanding shares at December 31, 2010 171 171 Additional paid-in capital 167,126 163,538 Retained earnings 401,008 326,807 ------------- ------------- Total stockholders' equity 568,305 490,516 ------------- -------------

Total liabilities and stockholders' equity $ 1,064,104 $ 995,908 ------------- -------------

                    Portfolio Recovery Associates, Inc.
         Unaudited Condensed Consolidated Statements of Cash Flows
                               (in thousands)

                                                Nine Months    Nine Months
                                                   Ended          Ended
                                               September 30,  September 30,
                                                    2011           2010
                                               -------------  -------------

Cash flows from operating activities:
  Net income                                   $      74,478  $      53,242
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Amortization of share-based compensation           6,110          3,114
    Depreciation and amortization                      9,756          9,050
    Deferred tax expense                              27,327         34,368
    Gain on sale of property                          (1,157)             -
    Changes in operating assets and
     liabilities:
      Other assets                                      (953)          (244)
      Accounts receivable                              2,470          1,380
      Accounts payable and accrued liabilities         5,141          2,496
                                               -------------  -------------

    Net cash provided by operating activities        123,172        103,406
                                               -------------  -------------

Cash flows from investing activities:
  Purchases of property and equipment                 (4,854)        (6,162)
  Proceeds from sale of property                       1,267              -
  Acquisition of finance receivables, net of
   buybacks                                         (314,162)      (273,858)
  Collections applied to principal on finance
   receivables                                       226,014        160,081
  Business acquisitions, net of cash acquired              -        (23,000)
  Contingent payment made for business
   acquisition                                             -           (104)
                                               -------------  -------------

    Net cash used in investing activities            (91,735)      (143,043)
                                               -------------  -------------

Cash flows from financing activities:
  Proceeds from exercise of options                      150             57
  Income tax benefit from share-based
   compensation                                          503            225
  Payment of liability-classified contingent
   consideration                                           -         (1,000)
  Proceeds from line of credit                        27,000        131,000
  Principal payments on line of credit               (67,000)      (161,800)
  Proceeds from stock offering, net of
   offering costs                                          -         71,688
  Distributions paid to noncontrolling
   interest                                           (2,306)             -
  Principal payments on long-term debt                  (843)          (501)
                                               -------------  -------------

    Net cash (used in)/provided by financing
     activities                                      (42,496)        39,669
                                               -------------  -------------

    Net (decrease)/increase in cash and cash
     equivalents                                     (11,059)            32

Cash and cash equivalents, beginning of year          41,094         20,265
                                               -------------  -------------

Cash and cash equivalents, end of period       $      30,035  $      20,297
                                               -------------  -------------

Supplemental disclosure of cash flow
 information:
  Cash paid for interest                       $       7,771  $       6,508
  Cash paid for income taxes                          19,058             89

Noncash investing and financing activities:
  Adjustment of the noncontrolling interest
   measurement amount                          $       3,175  $           -
  Common stock issued for acquisition                      -          4,950
  Net unrealized change in fair value of
   derivative instrument                                   -            164




FINANCIAL HIGHLIGHTS

Three Months Ended Nine Months Ended September 30, % September 30, % (dollars in thousands) 2011 2010 Change 2011 2010 Change ---------------- ---------- ---------- ------ ---------- ---------- ------ EARNINGS ---------------- Income recognized on finance receivables, net $ 102,875 $ 80,026 29% $ 299,152 $ 224,897 33% Fee income 11,401 15,518 -27% 41,696 47,054 -11% Total revenues 114,276 95,544 20% 340,848 271,951 25% Operating expenses 70,446 62,721 12% 209,933 178,362 18% Income from operations 43,830 32,823 34% 132,072 93,589 41% Net interest expense 2,548 2,178 17% 8,050 6,500 24% Net income 25,193 18,757 34% 74,478 53,242 40% Net income attributable to Portfolio Recovery Associates, Inc. 25,506 18,481 38% 74,201 52,811 41% ---------------- ---------- ---------- ------ ---------- ---------- ------

PERIOD-END BALANCES ---------------- Cash and cash equivalents $ 30,035 $ 20,297 48% $ 30,035 $ 20,297 48% Finance receivables, net 919,478 807,239 14% 919,478 807,239 14% Goodwill and intangible assets, net 76,426 81,610 -6% 76,426 81,610 -6% Total assets 1,064,104 947,737 12% 1,064,104 947,737 12% Line of credit 260,000 288,500 -10% 260,000 288,500 -10% Total liabilities 478,915 464,781 3% 478,915 464,781 3% Total equity 568,305 468,425 21% 568,305 468,425 21% ---------------- ---------- ---------- ------ ---------- ---------- ------

FINANCE RECEIVABLE COLLECTIONS ---------------- Cash collections $ 182,168 $ 137,377 33% $ 525,166 $ 384,978 36% Principal amortization without allowance charges 78,552 50,831 55% 218,950 140,372 56% Principal amortization with allowance charges 79,293 57,351 38% 226,014 160,081 41% Principal amortization w/ allowance charges as % of cash collections: Including fully amortized pools 43.5% 41.7% 4% 43.0% 41.6% 4% Excluding fully amortized pools 45.7% 44.7% 2% 45.6% 45.0% 1% Estimated remaining collections - core $1,154,406 $ 934,942 23% $1,154,406 $ 934,942 23% Estimated remaining collections - bankruptcy 770,886 734,632 5% 770,886 734,632 5% Estimated remaining collections - total 1,925,292 1,669,574 15% 1,925,292 1,669,574 15% ---------------- ---------- ---------- ------ ---------- ---------- ------

ALLOWANCE FOR FINANCE RECEIVABLES ---------------- Balance at period-end $ 83,471 $ 70,965 18% $ 83,471 $ 70,965 18% Allowance charge $ 741 $ 6,520 -89% $ 7,064 $ 19,710 -64% Allowance charge to period-end net finance receivables 0.08% 0.81% -90% 0.77% 2.44% -69% Allowance charge to net finance receivable income 0.72% 8.15% -91% 2.36% 8.76% -73% Allowance charge to cash collections 0.41% 4.75% -91% 1.35% 5.12% -74% ---------------- ---------- ---------- ------ ---------- ---------- ------

PURCHASES OF FINANCE RECEIVABLES ---------------- Purchase price - core $ 57,240 $ 31,831 80% $ 170,857 $ 105,145 62% Face value - core 5,027,874 588,551 754% 7,071,530 2,067,011 242% Purchase price - bankruptcy 64,848 60,687 7% 148,659 176,774 -16% Face value - bankruptcy 654,508 788,967 -17% 1,515,501 2,869,052 -47% Purchase price - total 122,088 92,518 32% 319,516 281,919 13% Face value - total 5,682,382 1,377,518 313% 8,587,031 4,936,063 74% Number of portfolios - total 95 68 40% 250 230 9% ---------------- ---------- ---------- ------ ---------- ---------- ------

PER SHARE DATA ---------------- Net income per common share - diluted $ 1.48 $ 1.08 37% $ 4.31 $ 3.15 37% Weighted average number of shares outstanding - diluted 17,228 17,093 1% 17,218 16,792 3% Closing market price $ 62.22 $ 64.66 -4% $ 62.22 $ 64.66 -4% ---------------- ---------- ---------- ------ ---------- ---------- ------

RATIOS AND OTHER DATA ---------------- Return on average equity (1) 18.27% 16.04% 14% 18.57% 16.36% 14% Return on revenue (2) 22.05% 19.63% 12% 21.85% 19.58% 12% Operating margin (3) 38.35% 34.35% 12% 38.75% 34.41% 13% Operating expense to cash receipts (4) 36.39% 41.02% -11% 37.03% 41.28% -10% Debt to equity (5) 46.02% 61.80% -26% 46.02% 61.80% -26% Cash collections per collector hour paid: Core cash collections $ 152 $ 127 20% $ 156 $ 129 21% Total cash collections $ 249 $ 200 25% $ 245 $ 190 29% Excluding external legal collections $ 212 $ 170 25% $ 207 $ 161 29% Excluding bankruptcy and external legal collections $ 115 $ 97 19% $ 118 $ 101 17% Number of collectors 1,520 1,422 7% 1,520 1,422 7% Number of employees 2,504 2,421 3% 2,504 2,421 3% Cash receipts (4) $ 193,569 $ 152,895 27% $ 566,862 $ 432,032 31% Line of credit - unused portion at period end 147,500 76,500 93% 147,500 76,500 93% ---------------- ---------- ---------- ------ ---------- ---------- ------ Notes: ---------------- (1) Calculated as annualized net income divided by average equity for the period (2) Calculated as net income divided by total revenues (3) Calculated as income from operations divided by total revenues (4) "Cash receipts" is defined as cash collections plus fee income (5) For purposes of this ratio, "debt" equals the line of credit balance plus long-term debt



FINANCIAL HIGHLIGHTS

For the Quarter Ended ---------------------------------------------------------- September December September (dollars in 30 June 30 March 31 31 30 thousands) 2011 2011 2011 2010 2010 ---------------- ---------- ---------- ---------- ---------- ---------- EARNINGS ---------------- Income recognized on finance receivables, net $ 102,875 $ 100,303 $ 95,974 $ 84,783 $ 80,026 Fee income 11,401 14,492 15,803 15,972 15,518 Total revenues 114,276 114,795 111,777 100,755 95,544 Operating expenses 70,446 70,415 69,072 64,480 62,721 Income from operations 43,830 45,537 42,705 36,275 32,823 Net interest expense 2,548 2,635 2,867 2,488 2,178 Net income 25,193 25,576 23,709 20,631 18,757 Net income attributable to Portfolio Recovery Associates, Inc. 25,506 25,574 23,121 20,645 18,481 ---------------- ---------- ---------- ---------- ---------- ----------

PERIOD-END BALANCES ---------------- Cash and cash equivalents $ 30,035 $ 25,481 $ 35,443 $ 41,094 $ 20,297 Finance receivables, net 919,478 879,515 866,992 831,330 807,239 Goodwill and intangible assets, net 76,426 77,643 78,893 80,144 81,610 Total assets 1,064,104 1,021,617 1,020,099 995,908 947,737 Line of credit 260,000 250,000 290,000 300,000 288,500 Total liabilities 478,915 463,153 489,136 490,943 464,781 Total equity 568,305 542,396 515,710 490,516 468,425 ---------------- ---------- ---------- ---------- ---------- ----------

FINANCE RECEIVABLE COLLECTIONS ---------------- Cash collections $ 182,168 $ 176,281 $ 166,717 $ 144,363 $ 137,377 Principal amortization without allowance 78,552 73,695 66,703 54,139 50,831 Principal amortization with allowance 79,293 75,978 70,743 59,580 57,351 Principal amortization w/ allowance as % of cash collections: Including fully amortized pools 43.5% 43.1% 42.4% 41.3% 41.7% Excluding fully amortized pools 45.7% 45.7% 45.3% 44.3% 44.7% Estimated remaining collections - core $1,154,406 $1,072,777 $1,040,140 $ 974,108 $ 934,942 Estimated remaining collections - bankruptcy 770,886 743,228 753,130 749,410 734,632 Estimated remaining collections - total 1,925,292 1,816,005 1,793,270 1,723,518 1,669,574 ---------------- ---------- ---------- ---------- ---------- ----------

ALLOWANCE FOR FINANCE RECEIVABLES ---------------- Balance at period-end $ 83,471 $ 82,730 $ 80,447 $ 76,407 $ 70,965 Allowance charge $ 741 $ 2,283 $ 4,040 $ 5,442 $ 6,520 Allowance charge to period-end net finance receivables 0.08% 0.26% 0.47% 0.65% 0.81% Allowance charge to net finance receivable income 0.72% 2.28% 4.21% 6.42% 8.15% Allowance charge to cash collections 0.41% 1.30% 2.42% 3.77% 4.75% ---------------- ---------- ---------- ---------- ---------- ----------

PURCHASES OF FINANCE RECEIVABLES ---------------- Purchase price - core $ 57,240 $ 52,323 $ 61,294 $ 44,852 $ 31,831 Face value - core 5,027,874 1,034,898 1,008,758 1,357,301 588,551 Purchase price - bankruptcy 64,848 37,204 46,607 40,671 60,687 Face value - bankruptcy 654,508 378,051 482,941 511,588 788,967 Purchase price - total 122,088 89,527 107,901 85,523 92,518 Face value - total 5,682,382 1,412,949 1,491,699 1,868,889 1,377,518 Number of portfolios - total 95 76 79 75 68 ---------------- ---------- ---------- ---------- ---------- ----------

PER SHARE DATA ---------------- Net income per common share - diluted $ 1.48 $ 1.48 $ 1.34 $ 1.20 $ 1.08 Weighted average number of shares outstanding - diluted 17,228 17,225 17,199 17,165 17,093 Closing market price $ 62.22 $ 84.79 $ 85.13 $ 75.20 $ 64.66 ---------------- ---------- ---------- ---------- ---------- ----------

RATIOS AND OTHER DATA ---------------- Return on average equity (1) 18.27% 19.20% 18.25% 17.09% 16.04% Return on revenue (2) 22.05% 22.28% 21.21% 20.48% 19.63% Operating margin (3) 38.35% 39.67% 38.21% 36.00% 34.35% Operating expense to cash receipts (4) 36.39% 36.91% 37.84% 40.22% 41.02% Debt to equity (5) 46.02% 46.43% 56.64% 61.65% 61.80% Cash collections per collector hour paid: Core cash collections $ 152 $ 154 $ 162 $ 129 $ 127 Total cash collections $ 249 $ 243 $ 241 $ 204 $ 200 Excluding external legal collections $ 212 $ 205 $ 204 $ 174 $ 170 Excluding bankruptcy and external legal collections $ 115 $ 116 $ 125 $ 98 $ 97 Number of collectors 1,520 1,517 1,486 1,472 1,422 Number of employees 2,504 2,504 2,482 2,473 2,421 Cash receipts (4) $ 193,569 $ 190,773 $ 182,520 $ 160,335 $ 152,895 Line of credit - unused portion at period end 147,500 157,500 117,500 107,500 76,500 ---------------- ---------- ---------- ---------- ---------- ---------- Notes: ---------------- (1) Calculated as annualized net income divided by average equity for the period (2) Calculated as net income divided by total revenues (3) Calculated as income from operations divided by total revenues (4) "Cash receipts" is defined as cash collections plus fee income (5) For purposes of this ratio, "debt" equals the line of credit balance plus long-term debt

                   Net Allowance Charges, Entire Portfolio
($ in thousands)
----------------------------------------------------------------------------
                                             Purchase Period
Allowance Period             1996-2003     2004        2005        2006
                            ----------  ----------  ----------  ----------
            2005            $      200  $        -  $        -  $        -
            2006                   275           -         825           -
            2007                   235         470       1,885         340
            2008                  (110)      1,290       3,040       7,170
            2009                  (600)       (375)      4,190       4,860
           Q1 10                     -           -       2,795       1,175
           Q2 10                     -         (80)      1,600       2,100
           Q3 10                     -         (80)      1,650       2,050
           Q4 10                     -         (10)        832       1,720
           Q1 11                     -         (15)        455        (100)
           Q2 11                     -           -        (217)          -
           Q3 11                     -           -         641         100
                            ----------  ----------  ----------  ----------
Total                       $        -  $    1,200  $   17,696  $   19,415
                            ==========  ==========  ==========  ==========

Portfolio Purchases, net    $  203,026  $   59,177  $  143,169  $  107,704
                            ----------  ----------  ----------  ----------


                Net Allowance Charges, Entire Portfolio
($ in thousands)
-----------------------------------------------------------------------
                                    Purchase Period
Allowance Period              2007        2008     2009-2011    Total
                           ----------  ---------- ---------- ----------
            2005           $        -  $        - $        - $      200
            2006                    -           -          -      1,100
            2007                    -           -          -      2,930
            2008                7,380         620          -     19,390
            2009                3,435      16,125          -     27,635
           Q1 10                2,900           -          -      6,870
           Q2 10                  700       2,000          -      6,320
           Q3 10                2,750         150          -      6,520
           Q4 10                1,150       1,750          -      5,442
           Q1 11                  400       3,300          -      4,040
           Q2 11                    -       2,500          -      2,283
           Q3 11                 (500)        500          -        741
                           ----------  ---------- ---------- ----------
Total                      $   18,215  $   26,945 $        - $   83,471
                           ==========  ========== ========== ==========

Portfolio Purchases, net   $  258,401  $  275,162 $  957,578 $2,004,217
                           ----------  ---------- ---------- ----------

            Net Allowance Charges, Purchased Bankruptcy Portfolio
($ in thousands)
----------------------------------------------------------------------------
                                             Purchase Period
Allowance Period              1996-2003    2004        2005        2006
                             ---------- ----------  ----------  ----------
            2007             $        - $      470  $      160  $      150
            2008                      -        770         375       1,210
            2009                      -         45         265         120
            Q1 10                     -          -          95          50
            Q2 10                     -        (30)         25           -
            Q3 10                     -        (30)          -        (100)
            Q4 10                     -        (10)        (18)        (30)
            Q1 11                     -        (15)        (95)       (100)
            Q2 11                     -          -         (17)          -
            Q3 11                     -          -         (59)       (100)
                             ---------- ----------  ----------  ----------
Total                        $        - $    1,200  $      731  $    1,200
                             ========== ==========  ==========  ==========

Portfolio Purchases, net     $        - $    7,468  $   29,301  $   17,645
                             ---------- ----------  ----------  ----------

         Net Allowance Charges, Purchased Bankruptcy Portfolio
($ in thousands)
-----------------------------------------------------------------------
                                     Purchase Period
Allowance Period               2007       2008     2009-2011    Total
                            ---------- ---------- ---------- ----------
            2007            $        - $        - $        - $      780
            2008                     -          -          -      2,355
            2009                   110          -          -        540
            Q1 10                1,200          -          -      1,345
            Q2 10                    -          -          -         (5)
            Q3 10                  600          -          -        470
            Q4 10                  950          -          -        892
            Q1 11                1,150      1,300          -      2,240
            Q2 11                    -        500          -        483
            Q3 11                    -          -          -       (159)
                            ---------- ---------- ---------- ----------
Total                       $    4,010 $    1,800 $        - $    8,941
                            ========== ========== ========== ==========

Portfolio Purchases, net    $   78,547 $  108,609 $  511,762 $  753,332
                            ---------- ---------- ---------- ----------

                    Net Allowance Charges, Core Portfolio
($ in thousands)
----------------------------------------------------------------------------
                                             Purchase Period
Allowance Period              1996-2003     2004        2005        2006
                             ----------  ----------  ----------  ----------
            2005             $      200  $        -  $        -  $        -
            2006                    275           -         825           -
            2007                    235           -       1,725         190
            2008                   (110)        520       2,665       5,960
            2009                   (600)       (420)      3,925       4,740
            Q1 10                     -           -       2,700       1,125
            Q2 10                     -         (50)      1,575       2,100
            Q3 10                     -         (50)      1,650       2,150
            Q4 10                     -           -         850       1,750
            Q1 11                     -           -         550           -
            Q2 11                     -           -        (200)          -
            Q3 11                     -           -         700         200
                             ----------  ----------  ----------  ----------
Total                        $        -  $        -  $   16,965  $   18,215
                             ==========  ==========  ==========  ==========

Portfolio Purchases, net     $  203,026  $   51,709  $  113,868  $   90,059
                             ----------  ----------  ----------  ----------

                  Net Allowance Charges, Core Portfolio
($ in thousands)
------------------------------------------------------------------------
                                     Purchase Period
Allowance Period               2007        2008     2009-2011    Total
                            ----------  ---------- ---------- ----------
            2005            $        -  $        - $        - $      200
            2006                     -           -          -      1,100
            2007                     -           -          -      2,150
            2008                 7,380         620          -     17,035
            2009                 3,325      16,125          -     27,095
            Q1 10                1,700           -          -      5,525
            Q2 10                  700       2,000          -      6,325
            Q3 10                2,150         150          -      6,050
            Q4 10                  200       1,750          -      4,550
            Q1 11                 (750)      2,000          -      1,800
            Q2 11                    -       2,000          -      1,800
            Q3 11                 (500)        500          -        900
                            ----------  ---------- ---------- ----------
Total                       $   14,205  $   25,145 $        - $   74,530
                            ==========  ========== ========== ==========

Portfolio Purchases, net    $  179,854  $  166,553 $  445,816 $1,250,885
                            ----------  ---------- ---------- ----------


      Purchase Price Multiples at September 30, 2011, Entire Portfolio
($ in thousands)
----------------------------------------------------------------------------
                                                                       Total
                                                                     Estimat
                                 Net Finance Actual Cash                ed
                                 Receivables Collections             Collect
                        Total     Balance at  Including   Estimated  ions to
Purchase   Purchase   Estimated   September      Cash     Remaining  Purchas
 Period     Price    Collections   30, 2011     Sales    Collections e Price
----------------------------------------------------------------------------
  1996   $     3,080 $    10,244 $         - $    10,133 $       111    333%
  1997         7,685      25,542           -      25,276         266    332%
  1998        11,089      37,372           -      36,870         502    337%
  1999        18,898      69,217           -      67,958       1,259    366%
  2000        25,020     115,723           -     112,831       2,892    463%
  2001        33,481     173,562           -     169,712       3,850    518%
  2002        42,325     194,567           -     189,071       5,496    460%
  2003        61,448     258,690           -     250,428       8,262    421%
  2004        59,177     193,917           -     185,401       8,516    328%
  2005       143,169     309,864      13,377     284,295      25,569    216%
  2006       107,704     218,184      19,983     183,555      34,629    203%
  2007       258,401     507,831      70,611     388,573     119,258    197%
  2008       275,162     531,849     114,070     339,458     192,391    193%
  2009       281,442     744,873     146,078     377,599     367,274    265%
  2010       358,349     793,259     252,628     251,198     542,061    221%
YTD 2011     317,787     654,370     302,731      41,414     612,956    206%
----------------------------------------------------------------------------
  Total  $ 2,004,217 $ 4,839,064 $   919,478 $ 2,913,772 $ 1,925,292    241%
----------------------------------------------------------------------------

    Purchase Price Multiples at September 30, 2011, Purchased Bankruptcy
                                  Portfolio
($ in thousands)
----------------------------------------------------------------------------
                                                                      Total
                                                                     Estimat
                                 Net Finance Actual Cash                ed
                                 Receivables Collections             Collect
                        Total     Balance at  Including   Estimated  ions to
Purchase   Purchase   Estimated   September      Cash     Remaining  Purchas
 Period     Price    Collections   30, 2011     Sales    Collections e Price
----------------------------------------------------------------------------
  1996-
   2003  $         - $         - $         - $         - $         -      0%
  2004         7,468      14,383           -      14,273         110    193%
  2005        29,301      43,326          79      43,146         180    148%
  2006        17,645      31,189         141      30,279         910    177%
  2007        78,547     111,082      15,837      92,058      19,024    141%
  2008       108,609     184,083      49,641     115,115      68,968    169%
  2009       156,061     367,213      95,034     174,834     192,379    235%
  2010       209,284     386,164     160,891     115,781     270,383    185%
YTD 2011     146,417     225,631     144,687       6,699     218,932    154%
----------------------------------------------------------------------------
  Total  $   753,332 $ 1,363,071 $   466,310 $   592,185 $   770,886    181%
----------------------------------------------------------------------------

       Purchase Price Multiples at September 30, 2011, Core Portfolio
($ in thousands)
----------------------------------------------------------------------------
                                                                       Total
                                                                     Estimat
                                 Net Finance Actual Cash                ed
                                 Receivables Collections             Collect
                        Total     Balance at  Including   Estimated  ions to
Purchase   Purchase   Estimated   September      Cash     Remaining  Purchas
 Period     Price    Collections   30, 2011     Sales    Collections e Price
----------------------------------------------------------------------------
  1996   $     3,080 $    10,244 $         - $    10,133 $       111    333%
  1997         7,685      25,542           -      25,276         266    332%
  1998        11,089      37,372           -      36,870         502    337%
  1999        18,898      69,217           -      67,958       1,259    366%
  2000        25,020     115,723           -     112,831       2,892    463%
  2001        33,481     173,562           -     169,712       3,850    518%
  2002        42,325     194,567           -     189,071       5,496    460%
  2003        61,448     258,690           -     250,428       8,262    421%
  2004        51,709     179,534           -     171,128       8,406    347%
  2005       113,868     266,538      13,298     241,149      25,389    234%
  2006        90,059     186,995      19,842     153,276      33,719    208%
  2007       179,854     396,749      54,774     296,515     100,234    221%
  2008       166,553     347,766      64,429     224,343     123,423    209%
  2009       125,381     377,660      51,044     202,765     174,895    301%
  2010       149,065     407,095      91,737     135,417     271,678    273%
YTD 2011     171,370     428,739     158,044      34,715     394,024    250%
----------------------------------------------------------------------------
  Total  $ 1,250,885 $ 3,475,993 $   453,168 $ 2,321,587 $ 1,154,406    278%
----------------------------------------------------------------------------

SOURCE: Portfolio Recovery Associates, Inc.