CompuCredit Reports Fourth Quarter 2006 Earnings

CompuCredit reported fourth quarter 2006 managed earnings of $19.9 million, or $0.40 of managed earnings per fully diluted share, as compared to managed earnings of $18.1 million, or $0.36 of managed earnings per fully diluted share for the fourth quarter of 2005.

Under GAAP, or generally accepted accounting principles, fourth quarter 2006 net income was $9.7 million, or $0.19 net income per common share on a fully diluted basis, as compared to fourth quarter 2005 net income of $3.0 million, or $0.06 net income per common share on a fully diluted basis.

The managed and GAAP fourth quarter 2006 results are net of CompuCredit’s $15 million charitable contribution (which reduced net income by $0.19 per diluted share) under the 2006 CompuCredit Corporation Shareholder Charitable Designation Program, and the managed and GAAP fourth quarter 2005 results are net of CompuCredit’s $12 million charitable contribution (which reduced net income by $0.15 per diluted share) under the 2005 CompuCredit Corporation Shareholder Charitable Designation Program.

CompuCredit’s net interest margin was 22.6 percent in the fourth quarter of 2006, as compared to 22.4 percent for the fourth quarter of 2005 and 26.0 percent in the previous quarter. The adjusted charge-off rate decreased to 11.0 percent in the fourth quarter of 2006 from 11.2 percent for the fourth quarter of 2005 and increased from 9.4 percent in the previous quarter. As of December 31, 2006, the 60-plus day delinquency rate was 14.1 percent, up from 9.3 percent as of December 31, 2005 and 14.0 percent as of September 30, 2006.

Various references within this press release and the accompanying financial information are to CompuCredit’s "managed" results, which include the results of its non-securitized receivables, together with the receivables underlying its off-balance-sheet securitization facilities. Financial, operating and statistical data based on these aggregate managed receivables are key to any evaluation of CompuCredit’s performance in managing (including underwriting, valuing purchased receivables, servicing and collecting) the portfolios of receivables reflected on CompuCredit’s balance sheet and underlying its securitization facilities. In allocating CompuCredit’s resources and managing its business, management relies heavily upon financial, operating and statistical data prepared on a so-called "managed basis." It is also important to analysts, investors and others that CompuCredit provides selected metrics and data on a managed basis because this allows a comparison of CompuCredit to others within the specialty finance industry. Moreover, CompuCredit’s management, analysts, investors and others believe it is critical that they understand the credit performance of the entire portfolio of CompuCredit’s managed receivables because it reveals information concerning the quality of loan originations and the related credit risks inherent within the securitized portfolios and CompuCredit’s retained interests in its securitization facilities.

Managed receivables data assume that none of the credit card receivables underlying CompuCredit’s off-balance-sheet securitization facilities were ever transferred to securitization facilities and present the net credit losses and delinquent balances on the receivables as if we still owned the receivables. Reconciliation of the managed receivables data to CompuCredit’s GAAP financial statements requires: (1) recognition that a significant majority of CompuCredit’s credit card receivables (i.e., all but $760.8 million of GAAP credit card receivables at gross face value) had been sold in securitization transactions as of December 31, 2006; (2) an understanding that CompuCredit’s managed receivables data are based on billings and actual charge-offs as reported to us through underlying systems of record (i.e., without regard to an allowance for uncollectible loans and fees receivable); (3) a look-through to CompuCredit’s economic share of (or equity interest in) the receivables that we manage for CompuCredit’s equity-method investees; (4) removal of CompuCredit’s minority interest holders’ interests in the managed receivables underlying CompuCredit’s GAAP consolidated results; and (5) recognition that CompuCredit’s Fingerhut managed receivables were recorded at a $0 basis in CompuCredit’s GAAP financial statements prior to CompuCredit’s re-securitization of these receivables in September 2005.