Magazine article American Banker

2Q Earnings: CompuCredit Neutral on Mortgages, to Push Cards

Magazine article American Banker

2Q Earnings: CompuCredit Neutral on Mortgages, to Push Cards

Article excerpt

After taking a large hit on investments in mortgage-backed securities in the second quarter - and saying that irrational market pricing may be creating buying opportunities - CompuCredit Corp. has declined to say how likely it is that it would actually invest further in the sector.

But the Atlanta company, which is principally in the business of marketing credit cards to subprime consumers, said on Wednesday that it is aggressively seeking portfolio growth in its core business and in auto and payday lending.

CompuCredit disclosed last week that a subsidiary through which it invests in asset-backed securities lost about $25.5 million in the quarter, mainly because of exposure to subprime mortgages.

During a conference call late Wednesday on the second-quarter results, David Hanna, CompuCredit's chief executive, reiterated its belief that market conditions are "somewhat irrational" and that this "obviously creates opportunities."

But he said, "It's not likely or unlikely that we will use any ... additional capital" to invest further in the products.

CompuCredit spent $50.9 million on marketing in the quarter, almost twice as much as a year earlier. It said that it will maintain an accelerated level of marketing expenditures this year.

"With our innovative marketing techniques and card products, along with the strong employment market and seemingly good overall health of the financially underserved consumer, we are very comfortable with marketing our cards at higher levels than at any other time in our history," Mr. …

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