Net income at PRA Group dropped slightly to $18.6 million during the second quarter of 2019, down from $19.6 million during the same quarter of last year, the company announced yesterday. The company announced a record amount of collections — $470.3 million, or 16% higher than the second quarter of last year, driven largely by an increase in the legal collections channel, a trend that company executives say will continue into the future.
The amount of collections the company recovered in its legal channel — by filing lawsuits against individuals — was 39% higher in the second quarter than the same period a year ago. PRA Group executives said the company was willing to spend more money on court costs early in the year, even at the expense of reducing profits at the company, because they knew it would pay off down the line.
“As more U.S. account were eligible and selected the legal channel, we drove process improvements to ensure the accounts pass through efficiently and expeditiously,” PRA Group Chief Executive Kevin Stephenson said on a conference call discuss the company’s results yesterday. “We did not shy away from expensing materially more in court costs in order to address the volumes.”
PRA Group also said it made investments into its data analytics, hiring staff and “exploring additional data” that could be used in predicting collection returns, Stephenson said, adding that the investments “created improved models including those associated with portfolio pricing, our collection operation, predicting optimal staffing levels and determining the accounts that qualify for legal collection.”
The company also said it expanded its payment plan offerings in the second quarter, which allowed it to collect more using fewer agents. Collection rates were 12% higher in the second quarter despite a 24% reduction in the amount of collectors, Stephenson said.