I wrote my post on what sprung to mind from a quick glance at the report, but on later reflection I decided that PNC probably initially takes up the PDPs values at cost, because to do otherwise would be too bizarre. However, the pace of PNC's amortisation seems to be much slower than what I am used to seeing in CCP, which suggests that PNC's accounting is less conservative. CCP's conservatism shifts part of reported profits to a later date, because its management choose to do that within the constraints of what auditors and the tax authorities allow. It is like donning clothes, or cleaning the car, on any day - at times one is biased to display oneself in a good light, and at other times not, and this varies from person to person.
The easiest way to display a debt-collecting company in a good light is to report a healthy EPS, and one can effect this by a slow amortisation rate of Purchased Debtors Portfolios (PDPs), or what CCP calls Purchased Debtors Ledgers (PDLs). If the amortisation is done over six years, it would be lower per annum than five years, and there are other options to manipulate the amortisation to suit management's agenda.
CCP's ratio of amortisation to liquidations (what it calls collections) is something like 47%, whereas CLH's is a bit lower, but above 40%. Choosing to amortise over six years rather than five would suffice to explain that difference. PNC's amortisations seems to be much lower still, and I do not know why, or as a non-holder with no plan to become one, neither do I care what PNC's management agenda is, nor what its PDP valuation practice is.
I'll look further into CCP's amortisation policy, and the matter of seasonality, because I have a strong incentive to understand that stock well.
(20min delay)
