Debt buyer Asset Acceptance Capital Corp. (AACC) on Monday reported cash collections of $103.8 million, up 2.6% compared to the year-ago period.
First quarter revenues totaled $55.2 million, a decrease of 10.7% from the a year earlier, and operating expenses were $47 million, down $1.4 million.
AACC, based in Warren, Mich., in the first quarter acquired $27.1 million in charged-off consumer receivables with a face value of $431.6 million for a blended rate of 6.27% of face value. By comparison, the company purchased $21.1 million in charged-off consumer receivables with a face value of $803.2 million during the prior year’s first quarter, representing a blended rate of 2.63% of face value.
AACC's results reflected investment in the firm’s legal channel and an increase in upfront costs ahead of associated collections. Legal investments increased to $8 million during the quarter compared with $6.9 million in the year-ago period.
Despite the increased legal investment, cost to collect for the quarter was 45.3%, an improvement of 253 basis points from a year ago. Reported operating expenses and cost to collect do not include $1.9 million of costs related to the pending merger with Encore Capital Group.
In March, San Diego-based Encore announced it is acquiring AACC in a deal valued at $200 million.
AACC shareholders will be able to choose between taking cash or the equivalent amount of stock in Encore. AACC will continue to operate under that name as a separate arm of Encore.
The combined company will have purchased more than 60 million individual consumer accounts, including credit card, telecommunications, consumer loans and other related assets, with a face value of more than $130 billion.
The deal is expected to close by the end of June. Encore has been growing by buying loan portfolios from competitors, with two big transactions last year. Buying Asset Acceptance could also help it cut costs, Encore officials said.