UPDATE 1-Portfolio Recovery posts lower Q3 profit

* Q3 EPS $0.65 vs $0.75 last year

* Q3 includes allowance charge of $0.31/shr

* Compensation expense of $0.02/shr

* Q3 fee-for-service rev falls 10 pct

* Cash collections rise 11 pct

Oct 29 (Reuters) - Distressed-debt manager Portfolio Recovery Associates Inc (PRAA.O) posted a lower quarterly profit, hurt by an allowance charge and higher compensation expense.

For the third quarter, the company reported earnings of $10.1 million, or 65 cents a share, compared with $11.5 million, or 75 cents a share, a year earlier.

Total revenue was flat at $68.6 million.

Analysts on average expected the company to earn 77 cents a share, excluding special items, on revenue of $72.3 million, according to Thomson Reuters I/B/E/S.

The company said the latest quarter included an allowance charge of 31 cents a share.

Cash collections rose 11 percent to $92.4 million, while fee-for-service revenue fell 10 percent to $14.2 million.

Earnings for the industry, which is in the business of debt recovery and related services, are driven primarily by cash collections.

Shares of the Norfolk, Virginia-based company closed at $48.94 Thursday on Nasdaq. (Reporting by Abhinav Sharma in Bangalore; Editing by Unnikrishnan Nair)