Good afternoon ladies and gentleman. And welcome to Portfolio Recovery Associates Earnings Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. (Operator Instructions) As a reminder this conference call is being recorded. I would now like to turn the conference over to Darby Schoenfeld, Director of Investor Relations for PRA.

Thank you. Good afternoon everyone and thank you for joining us. Presenting on the call today our Steve Fredrickson, our Chairman, President, and CEO; who will give you an overview of the quarter and a quick update on our pending acquisitions; Kevin Stevenson, Executive Vice President, and CFO; Chief Administrative Officer, Treasurer and Assistant Secretary, who will take you through our financial results; and Neal Stern, Executive Vice President and COO who will review our operational results. The press release announcing our first quarter results was distributed this afternoon. The earnings release is available on the Investor Relations page of our Web site at www.portfoliorecovery.com. A replay of this call will be available shortly after the conclusion of the call. The information needed to listen to the replay is contained in the earnings press release. I’d like to remind everyone statements made by PRA on this call may constitute forward-looking statements under applicable securities laws. All statements other than statements of historical facts are considered forward-looking statements including statements regarding PRA or its management’s intentions, expectations plans or projections for the future. Statements with respect to the future contribution of Aktiv Kapital or our ability to fully realize the expected benefit from the acquisition, our ability to satisfy closing conditions or successfully if ever complete the acquisition and the ability of Aktiv Kapital or any of PRA subsidiaries contribute to earnings. Actual events or results could differ materially from historical results or those expressed or implied in any forward-looking statements as a result of various risks and uncertainties some of which are not currently known to PRA or its management. These include the risk factors and other risks that are described from time to time in PRA's filings with the Securities and Exchange Commission including PRA's most recent Annual Report on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K. Any such forward-looking statements speak only as of the date they are made except as required by applicable law or regulations, PRA has no obligation to update any forward-looking statements to reflect events or circumstances that occur after the date they are made whether as a result of new informations, future events or otherwise. I would now like to turn the call over to Steve.

Thank you, Darby. Today we’re pleased to announce the collections, revenues and net income were all up year-over-year. Our operating results in the first quarter met our expectations while we devoted a significant amount of time, the planning and getting closer to a completing the two acquisitions we announced recently. In the first quarter, cash collections were $313 million, up 14% from the first quarter a year ago, the legal collections contributing $95 million for the total. Collections help to drive revenues up to $194 million in Q1 resulting in net income of $40.8 million, up 6%. As anticipated, included in these results are $4.4 million of pretax field related expenses from our pending acquisitions at Aktiv Kapital. With that in Q1, PRA generated diluted earnings per share of $0.81, up 8% from the year ago. Also impacting the result from the quarter was incremental spending in legal costs, a move that we made as a result of an opportunity we identified due to sustained over performance from our legal collections strategy over the last two years. Legal costs was $26.5 million, up $6 million, 29% in Q1, 2013, due to continued positive results in each of the remaining quarters of this year we continue to expect spending towards the upper end of our previous $20 million to $25 million per quarter estimate. Cost associated with the active acquisition reduced Q1 earnings per share by $0.05. When combined with our additional legal cost spending we did not meet our goal of 20% return on equity for the quarter. Rather GAAP return on equity was 18.2%. Based on the continued strong results driven by our similar investment in legal costs back in 2012, we feel strongly that while depressing short-term earnings this initiative should have a positive impact on both future…

Thank you, Steve. To discuss our financial results, the comparisons I make today will be between Q1 2014 and Q1 2013 unless otherwise noted. Cash collections and revenues both increased 14%, while operating expenses increased 18%. As Steve mentioned, we started off the year executing our additional legal investment strategy. So as anticipated, operating expenses in Q1 increased faster than revenues. Q1 2014 expenses also include approximately $4.4 million of costs related to our pending acquisition of Aktiv Kapital. These items combined, resulted in quarterly performance it was inline with our expectations producing a 6% increase in net income and 8% increase in earnings per share. Let me provide us some additional detail on our operating results for the quarter. Cash collections for the quarter increased 14% to $313.4 million. Payments from our bankruptcy accounts were up 10% to $120.7 million or 39% of cash collections. Call center and other collections were $97.7 million, up 10%, and legal collections were $94.9 million, up 23%. Revenues increased 14% to $193.9 million, including $178 million in net finance receivables or NFR revenue and $15.9 million in fee revenue. NFR revenue for the quarter was comprised of $120.9 million in core portfolio revenue, net allowance reversal of $1.7 million. Net core portfolio revenue increased 18%. NFR revenue also included bankruptcy portfolio revenue of $57.1 million, net allowance reversal of $250,000. Net bankruptcy portfolio revenue increased 8%. During the quarter, yields were increased on several quarterly pools in the domestic core portfolio, this included 2009 Q1 and Q3, 2011 Q4 all quarters in 2012 and all quarters in 2013 except for Q3. For the bankruptcy portfolio, yields increased on all quarterly pools from 2009 Q3 through 2011 Q4 benefits. Fee revenue increased 8% to $15.9 million from $14.8 million as higher revenue generated by…

Thanks, Kevin. As I discuss first quarter results and operations, I’ll be making comparisons with U.S. results from the first quarter 2013 unless otherwise noted. We’re seeing sustained empirical evidence that accounts repurchased over the last several years are more valuable than similar accounts acquired in earlier years. Stricter original credit underwriting and a modestly improving economy are likely explanations. As the financial health of our customer seems to be improving and the returns from our incremental legal spending continue to meet or exceed expectation, we hope for continued upward pressure on our productivity metrics. We received $2.6 million payments in the quarter, which was up by almost 12% over the prior year. Collector productivity also improved by 12%. Our average team size decreased by 1%, which although very small, was our first decrease in payment size since Q3 of 2012. We spent a fair amount of time trying to better understand changes in the financial condition of our customer base and whether or not their financial condition can be observed in average payment size. The challenge with this measurement is that tactical changes like revised scoring models and differences in purchasing activities can impact the result more than the changes and the credit quality of our customer base. Because these events have not been isolated variables, this kind of analysis is somewhat speculative. However, we have observed some encouraging data. For example, when we examine the performance of customers having the same store, the point of acquisition all the time we found that we’re collecting more from these customers now than we had in years past. More importantly, you can see in premium and payment rate has driven primarily by accounts purchased during the last two years. While these accounts have had a generally higher purchase price, the improvement…

Thank, Neal. A final comment on two executive appointments that we made recently. Our new Chief Compliance Officer, Laura White will oversee operational compliance across our company in North America and Europe. Laura joined us from Allianz Global Assistance where she was Chief Risk and Compliance Officer across countries in the Americas. We expect Laura’s experience to help PRA set new standards for global compliance. Laura reports directly to me. Our new Director of Investor Relations, Darby Schoenfeld has an extensive background in IR and is the securities analyst. Darby will help Kevin and I keep in touch with our growing universe of investors. On behalf of my management team and all PRA employees I thank you for your continued investment in PRA and your continued confidence in your ability to grow and deliver long-term to you. Operator, we’re ready for questions.

Thank you, Mr. Fredrickson. (Operator Instructions) Our first question comes from the line of Hugh Miller of Sidoti. Your line is open. Hugh M. Miller – Sidoti & Co. LLC: Hi, good afternoon.

Hi, Hugh. Hugh M. Miller – Sidoti & Co. LLC: I guess first question was just housekeeping on the fee-based business margin dilution in the quarter?

Actually I have that in front of me for you. Neal asked that question. It was 396 basis points. Hugh M. Miller – Sidoti & Co. LLC: 396 basis points, okay, great. And just a couple of questions on the purchasing dynamics. You guys mentioned how you acquired the Mackenzie portfolio that was serviced by MCM. Can you give us a sense of how large that was relative to the overall PK purchasing?

Well, first of all, just to be clear we were servicing that portfolio on behalf of MCM and we never gotten into disclosing individual portfolio purchase sizes. It was larger than a typical portfolio purchase, Hugh, but we’re not going to drill down further than that. Hugh M. Miller – Sidoti & Co. LLC: Okay. That’s fine. Good color. And, as we kind of look at some of the commentary you talked about where pricing is still somewhat high, the environment is still competitive and that the supply is still constrained a bit, can you just help us wrap our arms around why purchasing relative to 4Q was so much more meaningful domestically here? Did you see relative to 4Q just more supply coming or did the pricing environment did improve or you’re just kind of getting more deals one than you normally would? Number of deals you did on or any sense there would be great.

I think it was a combination this quarter primarily between the last point you brought up, just maybe getting a little more than our fair share this quarter as opposed to Q4. And then when you view on top of that the MCM transaction, which was a little out of the typical norm for us, that’s how we got to where we did. Hugh M. Miller – Sidoti & Co. LLC: Okay. And would you then categorize you’re winning more than your fair share? You’re getting a sense that maybe the competitive landscape is using a bit at all.

No, I would say it’s just one of those things. Some quarters you win a couple more than you had previously and other quarters it goes the opposite way. So the supply continues to be constrained and competition for deals continues to be high. Hugh M. Miller – Sidoti & Co. LLC: Okay. And you gave us some color for Aktiv around the NFR balance in ERC. Can you give us any sense as to what they deploy, capitalize for purchasing in the first quarter?

Yes. Given that we don’t have our audited numbers with them and we’re in the middle of the transaction we just thought it’d better to lay down that. Hugh M. Miller – Sidoti & Co. LLC: Okay. And then the last question I had was, as we think about the pro forma company post the deal close, how should we be thinking about the blended tax rate going forward once that does get finalized?

Well, looks like to give the answer, we haven’t gone through all that work yet, but it certainly should be excelled to where we’re at today, but I just don’t have a good number to give you. Hugh M. Miller – Sidoti & Co. LLC: Okay. We’ll revisit it in future. Thanks a lot.

Yes.

Thank you. Our next question comes from the line of Bob Napoli of William Blair. Your line is open. Robert P. Napoli – William Blair & Co. LLC: Thank you. Good afternoon. Just anything that you’ve been studying obviously the European market and the Aktiv market for some time, over the last few months anything you’ve learned in that made you more or less excited about the Aktik transaction?

No. I think we stand by the comments that we made just a couple of months ago when we announced the transaction. I think that there is a lot of exciting opportunities in many of the markets. They are really across the board geographically. We see a lot of deals even at present in play and so I think 2014 overall should be a real interesting year to be a player in Europe. Robert P. Napoli – William Blair & Co. LLC: The timing of the transaction, I think you said over the next several months – and I know the Pamplona deal you were targeting at July 1. Would you hope to close Aktiv sooner than that?

Yes. We would hope to close Aktiv prior to the end of the quarter and as you said, the Pamplona deal has a hard close date of July 1. Robert P. Napoli – William Blair & Co. LLC: Okay. And then, did you see more flow of paper in the U.S. in the first quarter than you did in the fourth quarter? Was there more opportunities? And where are you seeing – with the three big players out, are you seeing paper out of any unusual areas, the sites, obviously the bankruptcy that you pointed out, bankruptcy paper?

No, I would say that we’re seeing paper supply from generally the same sources that we see typically. I don’t know how much more color I can provide than that. Robert P. Napoli – William Blair & Co. LLC: How about competitively and why you said the competition remains pretty firm? Are there portfolios that competitors possibly could sell? Would you expect to see more consolidation in the industry this year?

There is nothing that we’re seeing aside from, I would say, much smaller competitors that maybe putting up a portfolio here and there. It seems like the consolidation in portfolio sales at least that we were seeing throughout the last 18 months or so seem to be a little bit more benign at this point in time. Robert P. Napoli – William Blair & Co. LLC: And then last question. Just on the regulatory front, if you can give us any update of what you’re seeing in the – I mean, are the expectations from the CFPB and regulators getting any more clear to you and to the debt sellers? And I think that’s really important to get clarity to get the big sellers back into the market. So what are you hearing? Are you getting more clarity and what direction? Now where do you see the biggest changes in the industry from regulatory perspective over the next year or two?

Well, I think the first issue deals more with the sellers and that revolves around the OCP and the interpretation of the OCC’s best practice guidelines by the various selling banks. And in our opinion we’ve seen quite a variety of interpretation to those guidelines and I think if those guidelines were turned into rules with less room for interpretation that it would be helpful for everyone because quite honestly we’ve seen a wide variety of interpretation, and it’s causing, I think some additional work on everybody’s part as we try to deal with various people with various perspectives. In our world, as that relates to the CFPB and primarily that rule-making process that’s underway that would be the process that we would anticipate, would give us a solid understanding of exactly what the rules will and won’t be for the debt purchase and collection industries. Although, given the approach that they’ve been taking and the steps that have been advertised, we anticipated that that rule-making process is definitely going to stretch out through, our expectation would be, the majority of 2014. And once we get some clarity from the rule-making I think we’ll be in a better position to assess exactly what it means operationally to the industry. Robert P. Napoli – William Blair & Co. LLC: Good. Thank you.

Thank you. Our next question comes from the line of Mark Hughes of SunTrust. Your line is open. Mark Douglas Hughes – SunTrust Robinson Humphrey: Thank you. The receivable balance of $700 million for Aktiv that you’re looking at relative to the collections of $1.9 billion, that seems like a pretty healthy collections multiple. Am I looking at that the correct way?

No, that’s why I said the $1.9 billion was for the last quarter. And I’m making commentary as probably why could it change. But the $700 million number, we think it’s a decent one and both are probably materially correct. Mark Douglas Hughes – SunTrust Robinson Humphrey: Right. There was almost a three times collection multiple. Would you anticipate that additional purchases by Aktiv post close would be as – you’d be optimistic on collections?

Again, that $1.9 million, all I can tell you right now again is the process isn’t done. I’m just trying to give you guys some color on this. So the number is kind of kind of with the (indiscernible). So, again, if you’ve done some modeling you don’t want to expect from that $1 million range for NFR. And again ERC number, then might ticked off, but those kind of deals. Mark Douglas Hughes – SunTrust Robinson Humphrey: All right and maybe the same answer for this question, but any sense you can give us on amortization, how much would be the buckets that are going to be for that remainder of the purchase price worth of profile in terms of the time and magnitude of the amortization?

No we don’t have that yet. Mark Douglas Hughes – SunTrust Robinson Humphrey: Okay, Neal and talking about the payments dynamic any change in terms of the consumers that are stopping payments or breaking payments any difference there?

Also the, stuff I went through we thought was the best way to equalize across time and all kinds of different operational and purchasing dynamics, so we just look at, always this person’s growth, point of acquisition and how much we extracted from that same-store across all of these different time periods, and that’s the data that we thought that’s most encouraging, and the one that probably provides the most insight because all of these things we do operationally and from a purchasing perspective have so much sway on all of that payment activity. Mark Douglas Hughes – SunTrust Robinson Humphrey: You said that any commentary on pricing, on portfolios in the quarter what you saw in Q1 they compared to later in 2013, either on the BK or non-BK front?

Yes, I don’t think that probably seems during the quarter changed materially it continued to be very competitive, but I think it looked much the same way it did in Q4. Mark Douglas Hughes – SunTrust Robinson Humphrey: Any possibility that it’s stabilized there?

Well, I guess if one quarter trend makes that we have the beginnings of stabilization of OS, it’s very competitive level. Mark Douglas Hughes – SunTrust Robinson Humphrey: Thank you.

Thank you. And our next question comes from Robert Dodd of Raymond James. Your line is open. Bob J. Dodd – Raymond James & Associates, Inc.: Thanks. Just following on from that question on kind of stabilization, would have been on the BK side, I mean, 125% you described it, versus 130% for last year in terms of the purchase price multiple for and that's includes a secured portfolio which really you said when we takes comes in our multiple. So I mean 4% decline compared to, I think was 7% or 11%, 10% or on the non-BK side. So I mean would it be fair to say that you see maybe more stabilization on the BK side than you are on the core. And if that is the case should we expect that to have for you to be deploying more capital on that side of the business and that having a positive effect on the cash collection ratio.

I don’t think that we see enough of a difference in the behavior of the bankruptcy in core markets to say that. I think that both remain highly competitive, pricing trends in both I would say are roughly the same from Q4 to Q1. There are some moving pieces there between the observation points that you described. Each portfolio has different age and cash flow dynamics and especially this most recently purchased that was included in the bankruptcy acquisitions for Q1. It had a lot of very material cash flowing accounts in it. So I don’t think, I think it is probably premature to make a statement like you suggested. Bob J. Dodd – Raymond James & Associates, Inc.: : : Steven D. Fredrickson: : Bob J. Dodd – Raymond James & Associates, Inc.: Okay, thank you. I’ve got one more on kind of the year not active specifically. But I mean you give some color before obviously when you look at UK versus other areas there has been or had been some more flow of capital into some other regions. Basically I need people chasing some of the returns that are available over there versus in the U.S. Has anything changed from that front is there more flow into say the UK is that competitive, dynamic in that market shift is relative to some of the others or any color that would be useful. Thanks.

I think that the markets that active has been participating in there for the most part are all competitive and we see multiple qualified both in terms of operating experience and in terms of checkbook bidders on virtually every deal that would be looked at. So there’s no lack of competition over there. I don’t know that the competition dynamics have shifted measurably over the last few quarters. Bob J. Dodd – Raymond James & Associates, Inc.: Okay. Thank you.

Our next question comes from the line of David Scharf of JMP Securities. Your line is open. David M. Scharf – JMP Securities LLC: Thank you. Good afternoon. I apologize some of this has been asked already, I hopped on later. First is more just quantitative. I think there’s a discussion surrounding average payment size and some of the scoring metrics. Did you actually give a figure for the increase in average payment size? I think you provided that.

It actually went down by 1%, which is the first time since the Q3 of 2012. We had to decrease. So it was only 1% that was directionally different. But again we thought the better measurement was to go through this, how the same score of people look across time and I would pickup some of the noise from that. That looks pretty encouraging. David M. Scharf – JMP Securities LLC: Got it, got it. Steve, so tougher question to answer to, but as we think about how much so-called pent-up supply is residing with the banks in the U.S. while they raise some regulatory clarity. I’m just curious what you’re hearing either anecdotally from the sellers or just industry professionals about whether the banks have peered back outsourcing to third-party contingency collection agencies as much as they peered back from debt sales, and maybe and a sort of a follow-on if they actually increased the amount of outsourcing to the point where a lot of liquidations and otherwise would have gone your way are actually already being absorbed.

Yes, we I don’t think we are in a position to give a good call on that I think that some of the issues that are preventing debt sale are also causing concern with placing accounts for agency collection, but we are simply not I would say in that intelligence loop to have a fantastic read on it, and our particular situation probably made a little more opaque by the fact that we use no collection agencies and so our relationships there aren’t particularly strong. David M. Scharf – JMP Securities LLC: Right, great okay. Thank you.

Thank you. And our next question comes from the line – it’s a follow-up from Bob Napoli of William Blair. Bob P. Napoli – William Blair & Co. LLC: Thanks. I just want to get a little color on your Texas call center the transition of the accounts from the Philippines to that call center. How was the transition of the accounts gone, so there have been any issues with that, and then how is the productivity. And then secondly, just on the collector side, is there been any change in turnover rates?

So, we’re happy it’s gone very smoothly and very well, so kind of a seamless transition, hiring it very well and we are pleased with productivity. We normally would look at the productivity levels into other call centers we started up and make sure that they are sort of on that team path Dallas is ahead of the other startups we had, but I’m not sure that indicative of anything other they are working the Spanish portfolio, which we have been working in a lighter manner prior to than taking it although so. Obviously at a positive but we are certainly pleased, the numbers, productivity standpoint. From an attrition standpoint things just continue to trend the right direction. Bob P. Napoli – William Blair & Co. LLC: Okay, is there anything you’re doing to improve it there has been helping improve attrition?

We work very hardly creating a great environment of people on our shop to everyday and there is going to be enthused about working and so that’s an ongoing work in progress. Bob P. Napoli – William Blair & Co. LLC: Okay and then just Steve, I know you guys have a lot on your hands we are closing two acquisitions. But I guess given and you’re going into a lot of new markets, but are there additional I mean at this point, are you even considering looking at additional products or markets or are you just thoroughly focused on making sure that these acquisitions get on and are executed.

Well, our first mission obviously is to get these deals closed and integrate it effectively. But as you would potentially suspect not every individual that is here would be the same individual working on getting these deals closed as those that are working on business development concepts. And because of the long lead time involved and looking at new things be it geography or product type. We’re hopefully moving the ball forward on all these things, right, getting the deals closed and still keeping an iron in the fire as it relates to being able to access future growth opportunities. But as far as really committing the organization and putting it behind something substantial the vast majority of our efforts are going to closing and integrating these two existing deals. Bob P. Napoli – William Blair & Co. LLC: Great. And then just last question. The paper that you purchased this quarter, last quarter, this quarter, clearly it is a more competitive market. You are paying more. Your operating efficiency has improved. I mean are you confident that the paper that you’ve purchased in the last few quarters hits your IRR targets or allows you to meet your ROE targets or are you comfortable having a slightly lower target than you’ve had historically, so I just wondered if you can answer that please?

I think the answer is yes, so over the course of the last 12 to 18 months, we have accepted marginally lower IRRs over time. We think that again over time, we are going to be able to feel back some of that the difference between as underwritten and as realized because of some of the operational strategy changes that we put in place, including the expanded use of legal collections but also just the normal enhancements that Neal and his team have generally been able to make over time. So we think we’re going to be able to continue to push on things that way. Bob P. Napoli – William Blair & Co. LLC: Great. Thank you.

(Operator Instructions) And our next question comes from the line of Hugh Miller of Sidoti. Your line is open. Hugh M. Miller – Sidoti & Co. LLC: I just had two quick follow-up questions. First one, with regards to previous and last call, you guys you had indicated aside from the longer term you’re achieving 15% earnings growth. Excluding the Aktiv merger cost you felt to grow still the potential for the company to deliver on that earnings growth in 2014, but the timing of the deal closing could obviously sway things, but as you get a little deeper into the closing process, do you still feel confident in the company will be able to deliver 15% earnings growth pro forma this year?

: Hugh M. Miller – Sidoti & Co. LLC: Okay. And then as we look at – your purchasing activity has obviously gone for one month of the second quarter. But the trend has been as winning more of your fair share of the deals. Any color you can provide if that’s extended into April.

Again I would not characterize it as a trend. I would characterize it more as a random event that occurs as a result of blind bid and sometimes you win and sometimes you lose and we had a little more successful than usual quarter in Q1, I’d characterize Q4 as one of those where we had a little less successful bidding experience. So I don’t think it signifies anything other than your deal on the right side of a few basis points a couple more times in Q1 and than we were in the prior quarter. Hugh M. Miller – Sidoti & Co. LLC: Okay and then was there any noticeable difference in the yields on those purchases for Q4 relative to Q1?

No, I think you characterize them as both competitive, but not changing dramatically from Q4 to Q1. Hugh M. Miller – Sidoti & Co. LLC: Okay, understood thank you.

I’m showing no further questions at this time. I’d like to turn the call back to Mr. Fredrickson for closing remarks.

Okay, if there is no further questions that’s all we have, I want to thank everybody for joining us this quarter. And we look forward to speaking with you again three months from now.