Portfolio Recovery Associates Reports First Quarter 2008 Results

Portfolio Recovery Associates, Inc. (NASDAQ: PRAA), a company that purchases, collects and manages portfolios of defaulted consumer receivables and provides a broad range of accounts receivable management services, today reported net income of $11.9 million, or $0.78 per diluted share, for the quarter ended March 31, 2008.

The Company's first-quarter 2008 profit represents a decline of 8% from net income of $12.9 million, or $0.80 per diluted share, in the same period a year earlier. Pretax income during the 2008 quarter was reduced by approximately $2.4 million, or 10 cents a diluted share, of additional interest expense, net of tax, compared with the prior year. This stemmed from both the Company's substantial recent portfolio purchasing activity and its 2007 capital structure optimization plan.

Total revenue in the first quarter of 2008 increased 19% to a record $64.1 million, up from $54.0 million in the year-earlier period. Total revenue consists of cash collections reduced by amounts applied to principal on the Company's owned debt portfolios, plus commissions earned from its fee-for-service businesses. During the first quarter of 2008, the Company applied 33.7% of cash collections to reduce the carrying basis of its owned debt portfolios. This included a $2.8 million allowance charge, equivalent to approximately $1.7 million after tax, or 11 cents a diluted share, against certain pools of finance receivables accounts.

"Portfolio Recovery Associates continued during the first quarter to capitalize on improved market conditions in the defaulted consumer debt market, spending a near-record $95.4 million on portfolio acquisitions. Despite record cash collections of $79.4 million, higher interest expense and a non-cash allowance charge held back our bottom-line performance for the quarter. However, our substantial portfolio purchasing activity combined with progress on the collector-productivity front helps position Portfolio Recovery Associates well for future growth," said Steven D. Fredrickson, Chairman, President and Chief Executive Officer.

Financial and Operating Highlights

--  Cash collections rose 18% to a record $79.4 million in the first
    quarter of 2008, up from $67.3 million in the year-ago period.  Call
    center collections and other increased 19%, legal collections grew 5%
    and purchased bankruptcy collections gained 50% when compared with the
    year-earlier period.

    The table below displays our cash collections by source, by quarter



Cash Collection Source ($ in
 thousands)                     Q12008   Q42007   Q32007   Q22007   Q12007
                               ======== ======== ======== ======== ========
Call Center Collections &
 Other                         $ 46,702 $ 36,994 $ 37,450 $ 37,464 $ 39,241
Legal                            21,880   20,861   21,384   20,911   20,844
Purchased Bankruptcy             10,820    7,245    6,317    6,231    7,223



Cash Collection Source ($ in
 thousands)                     Q42006   Q32006   Q22006   Q12006
                               ======== ======== ======== ========
Call Center Collections &
 Other                         $ 32,437 $ 32,686 $ 33,736 $ 36,436
Legal                            19,762   19,607   19,058   17,606
Purchased Bankruptcy              6,581    7,390    6,645    4,447

--  Productivity, as measured by cash collections per hour paid, the
    Company's key measure of collector performance, finished at $133.31 for Q1
    2008, down from $135.77 for all of 2007.  Excluding the impact of trustee
    remittances from purchased bankrupt accounts, the comparison is $116.35 for
    Q1 2008 vs. $123.10 for all of 2007.

--  The Company purchased $1.5 billion of face-value debt during the first
    quarter of 2008 for $95.4 million, the second-largest amount the Company
    has spent on debt acquisitions in a single quarter.  This debt was acquired
    in 69 portfolios from 21 different sellers.

--  The Company's fee-for-service businesses generated revenue of $11.5
    million in the first quarter of 2008, up 34% from $8.5 million in the same
    period a year ago.

--  The Company's cash balances were $16.8 million as of March 31, 2008,
    up slightly from $16.7 million as of December 31, 2007.  Also during the
    quarter, the Company made draws of $48.8 million on its line of credit,
    leaving it with $216.8 million in outstanding borrowings at quarter's end.
    Remaining borrowing availability under the line was $53.2 million at
    quarter's end.
    

"In the first quarter of 2008, Portfolio Recovery Associates continued to execute its long-term plan. We made progress on a number of key operating initiatives, particularly improving collector productivity at our new Jackson, Tenn. call center. Despite the improved buyers' market for defaulted consumer debt, we continue to approach portfolio acquisitions in a disciplined and deliberate manner," said Kevin P. Stevenson, Chief Financial and Administrative Officer.