The first year of the new millennium was challenging for everyone. CompuCredit grew and was profitable, but we did not escape the effects of a recession and a slowdown in consumer spending. In the opening weeks of 2002 we continue to see growth opportunities but we will not grow at the expense of credit quality or liquidity. We will be ready to capitalize on opportunities that should become available when economic conditions improve.

The 2001 Environment, and Our Strategy
Longtime shareholders know that CompuCredit achieved an impressive growth rate after our founding in 1996, surpassing two million cardholders in just three years. Then, in the latter part of 2000, the national economy slowed and traditional credit card companies began trying to duplicate our success in the underserved market. We believe this environment called for a twin focus on profitability and targeted marketing, and so we tightened lending standards and enhanced our products and services targeted to those customers who meet these standards.

This two-pronged strategy served us well as the economy slid into recession in March 2001 and remained there throughout the year. Growth in credit card balances slowed, as we expected, but still increased by 24 percent during 2001.

For the year ending December 31, 2001, we reported net income of $2.9 million or $0.06 per share. These final results include a loss of approximately $39 million, net of tax, related to securitizations completed during the fourth quarter. We are disappointed with our 2001 financial results. Nevertheless, the $39 million loss has had no impact on our cash flow, and we believe that our business model performed reasonably well in a challenging period for our industry.

We continued to welcome new customers at a healthy rate during the year with 697,000 new accounts, while purging 182,000 inactive accounts in addition to normal attrition. We believe that our aggressive approach to jettisoning dormant accounts is a sound business decision, especially in an uncertain economic environment. Through this action we reduced our committed credit lines by approximately $386 million and improved our overall risk profile.

Charge offs stabilized at acceptable levels, and net interest margins narrowed but remained healthy. CompuCredit continues to remain near the top of the industry in net interest margins, as well as in risk adjusted margins.

We saw positive income trends from value-added, discounted products and services – vision care, prescription drugs, travel services and others – that many of our customers would not be able to access otherwise.

A Higher Profile
We continued to expand our marketing efforts during 2001, though CompuCredit’s core focus remains on the underserved but creditworthy customer. Through our Aspire^® Classic, Diamond, Gold and Platinum Visa^® Cards, and our FreedomCard MasterCard, we have a product for all of these customers. And, during 2001 we introduced three new products with distinctive appeal to specific audiences.

Aspire A Más (“Aspire to More”)
We have made CompuCredit a bilingual company in order to better serve members of the Hispanic community who are new to our country and language. They can now respond to pre-qualified offers, communicate in Spanish with our customer service associates, and receive Spanish-language brochures, statements and other written materials.

We are reaching out in other ways to the rapidly growing Hispanic market, which accounts for about 12 percent of our cardholders. Our research indicates that education is an especially important issue among people of Hispanic origin in the United States, so we have established scholarship funds at predominantly Hispanic colleges in Miami, San Francisco, Dallas, Chicago and New York. We are pleased that each school is matching our contributions dollar for dollar. We are also proud to support an elementary school specifically designed to serve Hispanic students in the Atlanta area. This school is located in the heart of Hispanic neighborhoods and employs bilingual teachers to effectively communicate with both the children and their parents.

FreedomCard MasterCard
In another expression of support for the concerns and interests of our cardholders, we introduced the FreedomCard. One percent of net purchases from the card is donated to selected charities that primarily serve African-American-related causes. FreedomCard cardholders help feed hungry children, contribute to academic scholarships, assist foster children and commemorate black history.

We are proud of these initiatives that combine philanthropy and commerce, and we will continue to seek opportunities to serve communities as well as customers.

Putting Customers “INcharge”
Central to the CompuCredit mission is helping creditworthy but underserved consumers enter the financial mainstream. Consistent with this commitment is our new INcharge program, a proprietary educational program on building and maintaining a strong credit record. Customers can use INcharge to obtain complimentary copies of their credit reports and credit scores, and to receive personalized tips via their monthly statements on how to improve their credit profiles. If this service benefits our cardholders as we intend, many of them will, through consistently good credit behavior, earn higher limits and/or improved pricing on their Aspire Visa cards.

Some Things Never Change
We are excited about all of these improvements in our business, but we are even prouder of one distinction that never changes, and that is CompuCredit’s commitment to the best customer service in our industry.

Our proprietary marketing technology allows us to spend substantially less than the industry average to win a new customer. But we are also keenly focused on keeping customers and building long-term relationships. Our retention strategy is twofold: 1) Be respectful and professional at every point of contact – telemarketing, customer service, disclosures and even billing statements; and 2) Show respect in other ways that matter to customers, like keeping information confidential and rewarding responsible credit behavior with better terms. That sounds simple, but it can be done only with smart, courteous and empathetic professionals who are properly trained and motivated.

While we believe we are doing the right things to develop and nurture long-lasting relationships, we are not willing to accept that conclusion on faith alone. We conduct ongoing customer surveys that are designed and evaluated by an outside consulting firm. The feedback continues to be good and places us in the top tier in our industry in customer satisfaction.

Feedback is so important to us that our executive officers participate directly in quarterly customer calls. Our proactive calls to customers – made for no other reason but to say “thanks” and ask if we’re serving them as well as we intend – tells them more about our commitment to service than anything we can ever put into writing. This practice also helps keep us focused on why we are in business – not just to evaluate credit and develop and sell products, but to serve people better than anyone else.

Looking Ahead and Planning for the Future
While taking care of customers, we are also negotiating the economic landscape. Late in the year we were able to raise $40 million of equity capital through a private placement of convertible preferred stock, which will help us take advantage of an economic upturn. We were pleased to attract significant interest from a group of top-quality investors, especially given the environment.

Though the economic environment has been challenging for everyone, there have been ancillary benefits for CompuCredit. Our competitors have withdrawn dramatically from our market, thus improving the competitive landscape. Consequently, we have seen the continued success of our marketing programs. Additionally, we have been successful in purchasing portfolios in the past, and we believe that there will be new opportunities to grow through portfolio acquisitions in the coming year.

As the nation and our economy continue to work through a challenging period, we will remain vigilant and will concentrate on those objectives which are under our control. For example, we are reducing operating expenses where opportunities exist, without impeding our ability to respond to a rebounding market. We are identifying and acting on new initiatives to grow the business strategically. And we are always focused on customer service.

More than ever, we believe that our team, technology and strategy are the best in our business. We are focused on profitability, growth and shareholder returns. Without any doubt, management’s interests are aligned with yours – our executive team owns a majority of the company.

We like where CompuCredit is positioned today, and we are excited about the opportunities ahead. Thank you for your investment and loyalty, and please accept our best wishes for a safe, happy and prosperous year.

David G. Hanna
Chairman and Executive Officer

April 2, 2002

Richard R. House, Jr.
President