Investment in Receivable Portfolios, Net (Tables)

6 Months Ended

Jun. 30, 2013

Summary of Accretable Yield and an Estimate of Zero Basis Future Cash Flows

The following table summarizes the Company’s accretable yield and an estimate of zero basis future cash flows at the beginning and end of the period presented (in thousands):


	Accretable Yield		Estimate of Zero Basis Cash Flows		Total
Balance at December 31, 2012	$	984,944	$	17,366	$	1,002,310
Revenue recognized, net		(135,072)		(5,611)		(140,683)
Net additions to existing portfolios⁽¹⁾		173,634		7,061		180,695
Additions for current purchases⁽¹⁾		66,808		—		66,808

Balance at March 31, 2013	$	1,090,314	$	18,816	$	1,109,130

Revenue recognized, net		(144,186)		(7,838)		(152,024)
Net additions to existing portfolios⁽¹⁾		30,458		10,784		41,242
Additions for current purchases^(1), (2)		645,865		—		645,865

Balance at June 30, 2013	$	1,622,451	$	21,762	$	1,644,213


	Accretable Yield		Estimate of Zero Basis Cash Flows		Total
Balance at December 31, 2011	$	821,527	$	32,676	$	854,203
Revenue recognized, net		(119,340)		(7,065)		(126,405)
Net additions to existing portfolios⁽¹⁾		131,039		3,608		134,647
Additions for current purchases⁽¹⁾		119,533		—		119,533

Balance at March 31, 2012	$	952,759	$	29,219	$	981,978

Revenue recognized, net		(131,624)		(7,107)		(138,731)
Net additions to existing portfolios⁽¹⁾		77,473		13,738		91,211
Additions for current purchases⁽¹⁾		178,332		—		178,332

Balance at June 30, 2012	$	1,076,940	$	35,850	$	1,112,790

⁽¹⁾	Estimated remaining collections and accretable yield include anticipated collections beyond the 84 to 96 month collection forecast.

⁽²⁾	Includes $381.2 million of portfolios acquired in connection with the AACC Merger discussed in Note 3 “Business Combinations.”

Summary of Changes in the Balance of the Investment in Receivable Portfolios

The following tables summarize the changes in the balance of the investment in receivable portfolios during the following periods (in thousands, except percentages):


	Three Months Ended June 30, 2013
	Accrual Basis Portfolios		Cost Recovery Portfolios		Zero Basis Portfolios		Total
Balance, beginning of period	$	801,525	$	—	$	—	$	801,525
Purchases of receivable portfolios⁽¹⁾		423,113		—		—		423,113
Transfer of portfolios		(6,649)		6,649		—		—
Gross collections⁽²⁾		(269,710)		(842)		(7,836)		(278,388)
Put-backs and recalls		(1,543)		(31)		(2)		(1,576)
Revenue recognized		143,607		—		4,743		148,350
Portfolio allowances reversals, net		579		—		3,095		3,674

Balance, end of period	$	1,090,922	$	5,776	$	—	$	1,096,698

Revenue as a percentage of collections⁽³⁾		53.2%		0.0%		60.5%		53.3%


	Three Months Ended June 30, 2012
	Accrual Basis Portfolios		Cost Recovery Portfolios		Zero Basis Portfolios		Total
Balance, beginning of period	$	741,580	$	—	$	—	$	741,580
Purchases of receivable portfolios⁽¹⁾		230,983		—		—		230,983
Gross collections⁽²⁾		(233,437)		—		(7,107)		(240,544)
Put-backs and recalls		(891)		—		—		(891)
Revenue recognized		131,443		—		6,126		137,569
Portfolio allowances reversals, net		181		—		981		1,162

Balance, end of period	$	869,859	$	—	$	—	$	869,859

Revenue as a percentage of collections⁽³⁾		56.3%		0.0%		86.2%		57.2%


	Six Months Ended June 30, 2013
	Accrual Basis Portfolios		Cost Recovery Portfolios		Zero Basis Portfolios		Total
Balance, beginning of period	$	873,119	$	—	$	—	$	873,119
Purchases of receivable portfolios⁽¹⁾		481,884		—		—		481,884
Transfer of portfolios		(6,649)		6,649		—		—
Gross collections⁽²⁾		(534,269)		(842)		(13,447)		(548,558)
Put-backs and recalls		(2,421)		(31)		(2)		(2,454)
Revenue recognized		278,622		—		9,405		288,027
Portfolio allowances reversals, net		636		—		4,044		4,680

Balance, end of period	$	1,090,922	$	5,776	$	—	$	1,096,698

Revenue as a percentage of collections⁽³⁾		52.2%		0.0%		69.9%		52.5%


	Six Months Ended June 30, 2012
	Accrual Basis Portfolios		Cost Recovery Portfolios		Zero Basis Portfolios		Total
Balance, beginning of period	$	716,454	$	—	$	—	$	716,454
Purchases of receivable portfolios⁽¹⁾		361,446		—		—		361,446
Gross collections⁽²⁾		(457,380)		—		(14,172)		(471,552)
Put-backs and recalls		(1,625)		—		—		(1,625)
Revenue recognized		252,189		—		12,158		264,347
(Portfolio allowances) portfolio allowance reversals, net		(1,225)		—		2,014		789

Balance, end of period	$	869,859	$	—	$	—	$	869,859

Revenue as a percentage of collections⁽³⁾		55.1%		0.0%		85.8%		56.1%

⁽¹⁾	Purchases of portfolio receivables for the three and six month periods ended June 30, 2013 include $381.2 million acquired in connection with the AACC Merger discussed in Note 3 “Business Combinations.”

⁽²⁾	Does not include amounts collected on behalf of others.

⁽³⁾	Revenue as a percentage of collections excludes the effects of net portfolio allowances or net portfolio allowance reversals.

Summary of Change in the Valuation Allowance for Investment in Receivable Portfolios

The following table summarizes the change in the valuation allowance for investment in receivable portfolios during the periods presented (in thousands):


	Valuation Allowance
	Three Months Ended June 30,						Six Months Ended June 30,
	2013			2012			2013			2012
Balance at beginning of period	$	104,267		$	109,867		$	105,273		$	109,494
Provision for portfolio allowances		—			2,116			479			3,875
Reversal of prior allowances		(3,674	)		(3,278	)		(5,159	)		(4,664	)

Balance at end of period	$	100,593		$	108,705		$	100,593		$	108,705

Summary of Total Collections by Collection Channel

The following table summarizes the total collections by collection channel (in thousands):


	Three Months Ended June 30,				Six Months Ended June 30,
	2013		2012		2013		2012
Legal collections	$	133,682	$	114,876	$	255,955	$	224,448
Collection sites		116,853		111,641		243,415		221,511
Collection agencies ⁽¹⁾		27,853		14,043		49,188		25,629

	$	278,388	$	240,560	$	548,558	$	471,588

⁽¹⁾	Collections through our collection agency channel include accounts subject to bankruptcy filings collected by others.