PRA Group on Thursday reported third-quarter revenue of $229.4 million, a 4% drop that fell far short of 9% growth expectations. The debt-buying giant’s net income dropped by nearly two-thirds from year-ago levels, to $17.4 million.
The company, based in Norfolk, Va., invested $344.6 million in new finance receivables in the third quarter and reported a 2% increase in cash collections to $380.8 million compared to a year ago. The company’s pace for purchasing receivables didn’t match the high levels reached in the third quarter last year and new purchases focused on Europe - approximately two-thirds of the total. Purchasing activity in the Americas slowed from last year. "Many of the same trends that have been prevalent throughout the last year continued in the third quarter. Our operational performance remained solid, cash collections in the U.S. call centers continued to grow dramatically, up over 27% year over year, and investment [in new finance receivables] was formidable," said Steve Fredrickson, chairman and CEO at PRA Group. “The original underwritten portfolio associated with the acquisition of Aktiv Kapital continues to perform better than expected and we continue to invest a substantial amount of capital in European markets. The progress we have made in the last year and the performance of our European team has exceeded our expectations.” PRA
The case surfaces a month after the Consumer Financial Protection Bureau imposed up to $79 million in penalties and refunds in enforcement actions against both PRA and San Diego-based Encore Capital Group after finding the companies allegedly bought debts that were potentially inaccurate or lacked documentation. The companies, without verifying debts, allegedly collected payments by pressuring consumers with false statements and churning out lawsuits using robo-signed court documents.
