Portfolio Recovery sheds sideline business

NORFOLK

Portfolio Recovery Associates Inc., which buys pools of defaulted consumer debt and attempts to collect it, said Friday it will no longer collect for credit-card lenders and other creditors.

The fees generated from recovering debt on behalf of others has contributed very little to Portfolio’s income at a time when the company has stepped up its purchases of debt to collect, said Steve Fredrickson, chairman, president and CEO of the Norfolk-based company, in a statement.

Portfolio said employees at its third-party collections subsidiary Anchor Receivables Management will be shifted to jobs collecting company-owned debt. Portfolio said it expected to have no job losses because of the change.

The company’s Anchor subsidiary has about 100 employees at call centers in Norfolk and Birmingham, Ala. The entire company employs slightly more than 1,100, including 750 in Norfolk.

Portfolio, which began collecting debt on behalf of creditors in 2000, said it expected the change to have no material impact on its financial results. Anchor, it said, generated only 2 percent of the company’s first-quarter revenues and less than 0.5 percent of its operating income for the recent quarter.

During the January-through-March quarter, Portfolio spent $95.4 million buying troubled consumer debt from credit-card companies and other lenders. That was more than twice the $39.6 million it spent buying debt during last year’s first quarter.

Earlier this week, Portfolio reported that its banks increased the company’s line of credit by $70 million to $340 million. The additional credit will enable the company to take advantage of more opportunities to buy debt, Fredrickson said.

Portfolio’s share price jumped $1.61 in active trading to close at $46.19.

Tom Shean, (757) 446-2379, tom.shean@pilotonline.com