UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended ~~June 30, 2020~~March 31, 2021

☐ Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from ________ to ________

Commission File Number: 000-50058

PRA Group, Inc.

(Exact name of registrant as specified in its charter)

Delaware

75-3078675

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

120 Corporate Boulevard

Norfolk, Virginia 23502

(Address of principal executive offices)

(888) 772-7326

(Registrant's Telephone No., including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value per share	PRAA	NASDAQ Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes þ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer þ Accelerated filer ¨ Non-accelerated filer ¨ Smaller reporting company ☐ Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No þ

The number of shares of the registrant's common stock outstanding as of ~~August 4, 2020~~May 5, 2021 was ~~45,579,483.~~45,799,855.

Table of Contents


Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Income Statements	4
	Consolidated Statements of Comprehensive Income/(Loss)	5
	Consolidated Statement of Changes in Equity	6
	Consolidated Statements of Cash Flows	87
	Notes to Consolidated Financial Statements	98
	1. Organization and Business	98
	2. Change in Accounting Principle	119
	3. Finance Receivables, net	9
	4. Investments	12
	~~4. Investments~~5. Goodwill	12
	6. Leases	13
	7. Borrowings	14
	8. Derivatives	17
	~~5. Goodwill and Intangible Assets, net~~	18
	~~6. Leases~~	19
	~~7. Borrowings~~	20
	~~8. Derivatives~~	23
	9. Fair Value	2418
	10. Accumulated Other Comprehensive Loss	2621
	11. Earnings per Share	2821
	12. Income Taxes	2922
	13. Commitments and Contingencies	2922
	~~14.~~1 4 . Recently Issued Accounting Standards	3023
	~~15. Subsequent Events~~	31
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	3225
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5444
Item 4.	Controls and Procedures	5545

Part II. Other Information

Item 1.	Legal Proceedings	5646
Item 1A.	Risk Factors	5646
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5646
Item 3.	Defaults Upon Senior Securities	5646
Item 4.	Mine Safety Disclosures	5646
Item 5.	Other Information	5646
Item 6.	Exhibits	5646

Signatures		5847

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020

(Amounts in thousands)


		(unaudited)					(unaudited)
		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	115,741	$	119,774	Cash and cash equivalents	$	92,798	$	108,613
Restricted cash						Restricted cash	16,057		12,434
Investments	Investments	18,746		56,176		Investments	54,682		55,759
Finance receivables, net	Finance receivables, net	3,351,532		3,514,165		Finance receivables, net	3,372,666		3,514,788
Other receivables, net	Other receivables, net	15,532		10,606		Other receivables, net	3,223		13,194
Income taxes receivable	Income taxes receivable	23,166		17,918		Income taxes receivable	27,246		21,928
Deferred tax asset, net		64,548		63,225
Deferred tax assets, net						Deferred tax assets, net	72,523		83,205
Right-of-use assets						Right-of-use assets	50,839		52,951
Property and equipment, net	Property and equipment, net	59,285		56,501		Property and equipment, net	56,825		58,356
Right-of-use assets		58,213		68,972
Goodwill	Goodwill	444,507		480,794		Goodwill	492,751		492,989
Intangible assets, net		3,666		4,497
Other assets	Other assets	42,888		31,263		Other assets	38,920		38,844

Total assets	Total assets	$	4,197,824	$	4,423,891	Total assets	$	4,278,530	$	4,453,061
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities:	Liabilities:					Liabilities:
Accounts payable	Accounts payable	$	4,667	$	4,258	Accounts payable	$	4,817	$	5,294
Accrued expenses	Accrued expenses	72,871		88,925		Accrued expenses	76,684		97,320
Income taxes payable	Income taxes payable	31,226		4,046		Income taxes payable	31,853		29,692
Deferred tax liability, net		59,860		85,390
Deferred tax liabilities, net						Deferred tax liabilities, net	39,739		40,867
Lease liabilities	Lease liabilities	62,706		73,377		Lease liabilities	55,322		57,348
Interest-bearing deposits	Interest-bearing deposits	120,520		106,246		Interest-bearing deposits	124,998		132,739
Borrowings	Borrowings	2,580,068		2,808,425		Borrowings	2,501,133		2,661,289
Other liabilities	Other liabilities	71,044		26,211		Other liabilities	40,755		54,986

Total liabilities	Total liabilities	3,002,962		3,196,878		Total liabilities	2,875,301		3,079,535

Equity:	Equity:					Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—		—		Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	0		0
Common stock, $0.01 par value, 100,000 shares authorized, 45,579 shares issued and outstanding at June 30, 2020; 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019		456		454
Common stock, $0.01 par value, 100,000 shares authorized, 45,799 shares issued and outstanding at March 31, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020						Common stock, $0.01 par value, 100,000 shares authorized, 45,799 shares issued and outstanding at March 31, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020	458		456
Additional paid-in capital	Additional paid-in capital	70,065		67,321		Additional paid-in capital	47,236		75,282
Retained earnings	Retained earnings	1,439,680		1,362,631		Retained earnings	1,582,384		1,511,970
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(347,212)		(261,018)		Accumulated other comprehensive loss	(253,576)		(245,791)
Total stockholders' equity - PRA Group, Inc.	Total stockholders' equity - PRA Group, Inc.	1,162,989		1,169,388		Total stockholders' equity - PRA Group, Inc.	1,376,502		1,341,917
Noncontrolling interest	Noncontrolling interest	31,873		57,625		Noncontrolling interest	26,727		31,609
Total equity	Total equity	1,194,862		1,227,013		Total equity	1,403,229		1,373,526
Total liabilities and equity	Total liabilities and equity	$	4,197,824	$	4,423,891	Total liabilities and equity	$	4,278,530	$	4,453,061

The accompanying notes are an integral part of these ~~consolidated financial statements.~~Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Income Statements

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~

(unaudited)

(Amounts in thousands, except per share amounts)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Revenues:	Revenues:									Revenues:
Portfolio income	Portfolio income	$	248,284	$	—	$	510,306	$	—	Portfolio income	$	231,672	$	262,022
Changes in expected recoveries	Changes in expected recoveries	19,801		—		6,985		—		Changes in expected recoveries	50,136		(12,816)
Income recognized on finance receivables		—		249,219		—		488,055

Fee income	Fee income	2,639		2,707		4,848		9,081		Fee income	2,181		2,209
Other revenue	Other revenue	1,186		131		1,555		798		Other revenue	5,480		369
Total revenues	Total revenues	271,910		252,057		523,694		497,934		Total revenues	289,469		251,784

Net allowance charges		—		(1,196)		—		(7,291)

Operating expenses:	Operating expenses:									Operating expenses:
Compensation and employee services	Compensation and employee services	70,472		79,808		145,643		159,453		Compensation and employee services	73,984		75,171
Legal collection fees	Legal collection fees	13,742		14,297		28,314		27,356		Legal collection fees	12,926		14,572
Legal collection costs	Legal collection costs	19,507		33,121		53,954		68,350		Legal collection costs	21,312		34,447
Agency fees	Agency fees	10,343		13,013		23,719		27,045		Agency fees	15,591		13,376
Outside fees and services	Outside fees and services	18,683		16,293		38,077		31,541		Outside fees and services	20,760		19,394
Communication	Communication	8,812		10,824		22,323		24,025		Communication	12,663		13,511
Rent and occupancy	Rent and occupancy	4,471		4,491		8,955		8,854		Rent and occupancy	4,480		4,484
Depreciation and amortization	Depreciation and amortization	4,109		4,723		8,193		9,295		Depreciation and amortization	3,981		4,084
Other operating expenses	Other operating expenses	10,491		10,926		22,696		22,511		Other operating expenses	13,018		12,205

Total operating expenses	Total operating expenses	160,630		187,496		351,874		378,430		Total operating expenses	178,715		191,244

Income from operations	Income from operations	111,280		63,365		171,820		112,213		Income from operations	110,754		60,540
Other income and (expense):	Other income and (expense):									Other income and (expense):

Interest expense, net	Interest expense, net	(35,416)		(36,027)		(72,627)		(70,008)		Interest expense, net	(31,552)		(37,211)
Foreign exchange gain/(loss)		683		(311)		2,966		5,953
Foreign exchange (loss)/gain										Foreign exchange (loss)/gain	(26)		2,283
Other	Other	(1,582)		248		(1,658)		(104)		Other	26		(76)
Income before income taxes	Income before income taxes	74,965		27,275		100,501		48,054		Income before income taxes	79,202		25,536
Income tax expense	Income tax expense	14,137		5,075		17,237		8,942		Income tax expense	17,322		3,100
Net income	Net income	60,828		22,200		83,264		39,112		Net income	61,880		22,436
Adjustment for net income attributable to noncontrolling interests	Adjustment for net income attributable to noncontrolling interests	2,914		3,581		6,215		5,266		Adjustment for net income attributable to noncontrolling interests	3,474		3,301
Net income attributable to PRA Group, Inc.	Net income attributable to PRA Group, Inc.	$	57,914	$	18,619	$	77,049	$	33,846	Net income attributable to PRA Group, Inc.	$	58,406	$	19,135
Net income per common share attributable to PRA Group, Inc.:	Net income per common share attributable to PRA Group, Inc.:									Net income per common share attributable to PRA Group, Inc.:
Basic	Basic	$	1.27	$	0.41	$	1.69	$	0.75	Basic	$	1.28	$	0.42
Diluted	Diluted	$	1.26	$	0.41	$	1.68	$	0.74	Diluted	$	1.27	$	0.42
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:									Weighted average number of shares outstanding:
Basic	Basic	45,548		45,387		45,500		45,363		Basic	45,669		45,452
Diluted	Diluted	45,987		45,495		45,886		45,457		Diluted	46,045		45,784

The accompanying notes are an integral part of these ~~consolidated financial statements.~~Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Comprehensive Income/(Loss)

For the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~

(unaudited)

(Amounts in thousands)


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020
Net income	Net income	$	60,828	$	22,200	$	83,264	$	39,112	Net income	$	61,880	$	22,436
Other comprehensive income/(loss), net of tax:	Other comprehensive income/(loss), net of tax:									Other comprehensive income/(loss), net of tax:
Currency translation adjustments	Currency translation adjustments	28,923		4,740		(79,153)		3,567		Currency translation adjustments	(24,531)		(108,076)
Cash flow hedges	Cash flow hedges	(3,753)		(8,002)		(24,321)		(13,717)		Cash flow hedges	12,323		(20,568)
Debt securities available-for-sale	Debt securities available-for-sale	51		37		221		82		Debt securities available-for-sale	0		170
Other comprehensive income/(loss)		25,221		(3,225)		(103,253)		(10,068)
Other comprehensive loss										Other comprehensive loss	(12,208)		(128,474)
Total comprehensive income/(loss)	Total comprehensive income/(loss)	86,049		18,975		(19,989)		29,044		Total comprehensive income/(loss)	49,672		(106,038)
Less comprehensive (loss)/ income attributable to noncontrolling interests		(270)		3,959		(10,844)		5,213
Less comprehensive loss attributable to noncontrolling interests										Less comprehensive loss attributable to noncontrolling interests	(950)		(10,574)
Comprehensive income/(loss) attributable to PRA Group, Inc.	Comprehensive income/(loss) attributable to PRA Group, Inc.	$	86,319	$	15,016	$	(9,145)	$	23,831	Comprehensive income/(loss) attributable to PRA Group, Inc.	$	50,622	$	(95,464)

The accompanying notes are an integral part of these ~~consolidated financial statements.~~Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Changes in Equity

For the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020

(unaudited)

(Amounts in thousands)


		Common Stock					Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive (Loss)		Noncontrolling Interest		Total Equity		Common Stock					Additional Paid-In			Retained			Accumulated Other Comprehensive			Noncontrolling			Total
		Shares	Amount																		Shares			Amount			Capital			Earnings			(Loss)		Interest	Equity
Balance at December 31, 2019		45,416	$	454	$	67,321	$	1,362,631	$	(261,018)	$	57,625	$	1,227,013

Balance at December 31, 2020															Balance at December 31, 2020	45,585	$	456	$	75,282		$	1,511,970		$	(245,791)		$	31,609		$	1,373,526
Effect of change in accounting principle (1)															Effect of change in accounting principle (1)	—	—		(26,697)			12,008			—			—			(14,689)
Balance at January 1, 2021															Balance at January 1, 2021	45,585	456		48,585			1,523,978			(245,791)			31,609			1,358,837
Components of comprehensive income, net of tax:	Components of comprehensive income, net of tax:														Components of comprehensive income, net of tax:
Net income	Net income	—	—		—		19,135		—		3,301		22,436		Net income	—	—		—			58,406			—			3,474			61,880
Currency translation adjustments	Currency translation adjustments	—	—		—		—		(94,201)		(13,875)		(108,076)		Currency translation adjustments	—	—		—			—			(20,108)			(4,423)			(24,531)
Cash flow hedges	Cash flow hedges	—	—		—		—		(20,568)		—		(20,568)		Cash flow hedges	—	—		—			—			12,323			—			12,323

Debt securities available-for-sale		—	—		—		—		170		—		170

Distributions to noncontrolling interest															Distributions to noncontrolling interest	—	—		—			—			—			(3,933)			(3,933)

Vesting of restricted stock	Vesting of restricted stock	124	1		—		—		—		—		1		Vesting of restricted stock	214	2		(2)			—			—			—			0

Share-based compensation expense	Share-based compensation expense	—	—		2,857		—		—		—		2,857		Share-based compensation expense	—	—		4,113			—			—			—			4,113

Employee stock relinquished for payment of taxes	Employee stock relinquished for payment of taxes	—	—		(3,157)		—		—		—		(3,157)		Employee stock relinquished for payment of taxes	—	—		(5,460)			—			—			—			(5,460)

Balance at March 31, 2020		45,540	$	455	$	67,021	$	1,381,766	$	(375,617)	$	47,051	$	1,120,676
Balance at March 31, 2021															Balance at March 31, 2021	45,799	$	458	$	47,236		$	1,582,384		$	(253,576)		$	26,727		$	1,403,229

																Common Stock			Additional Paid-In			Retained			Accumulated Other Comprehensive			Noncontrolling			Total
																Shares	Amount		Capital			Earnings			(Loss)			Interest			Equity
Balance at December 31, 2019															Balance at December 31, 2019	45,416	$	454	$	67,321		$	1,362,631		$	(261,018)		$	57,625		$	1,227,013
Components of comprehensive income, net of tax:	Components of comprehensive income, net of tax:														Components of comprehensive income, net of tax:
Net income	Net income	—	—		—		57,914		—		2,914		60,828		Net income	—	—		—			19,135			—			3,301			22,436
Currency translation adjustments	Currency translation adjustments	—	—		—		—		32,107		(3,184)		28,923		Currency translation adjustments	—	—		—			—			(94,201)			(13,875)			(108,076)
Cash flow hedges	Cash flow hedges	—	—		—		—		(3,753)		—		(3,753)		Cash flow hedges	—	—		—			—			(20,568)			—			(20,568)
Debt securities available-for-sale	Debt securities available-for-sale	—	—		—		—		51		—		51		Debt securities available-for-sale	—	—		—			—			170			—			170
Distributions to noncontrolling interest		—	—		—		—		—		(14,908)		(14,908)

Vesting of restricted stock	Vesting of restricted stock	39	1		(1)		—		—		—		—		Vesting of restricted stock	124	1		—			—			—			—			1
Share-based compensation expense	Share-based compensation expense	—	—		3,063		—		—		—		3,063		Share-based compensation expense	—	—		2,857			—			—			—			2,857
Employee stock relinquished for payment of taxes	Employee stock relinquished for payment of taxes	—	—		(18)		—		—		—		(18)		Employee stock relinquished for payment of taxes	—	—		(3,157)			—			—			—			(3,157)

Balance at June 30, 2020		45,579	$	456	$	70,065	$	1,439,680	$	(347,212)	$	31,873	$	1,194,862

Balance at March 31, 2020															Balance at March 31, 2020	45,540	$	455	$	67,021		$	1,381,766		$	(375,617)		$	47,051		$	1,120,676

(1) Refer to

N ote 2

~~PRA Group, Inc.~~

~~Consolidated Statements of Changes in Equity~~

~~For the six months ended June 30, 2019~~

~~(unaudited)~~

~~(Amounts in thousands)~~

for further detail.

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Noncontrolling Interest Total Equity
Shares Amount
Balance at December 31, 2018 45,304 $ 453 $ 60,303 $ 1,276,473 $ (242,109) $ 28,849 $ 1,123,969
Components of comprehensive income, net of tax:
Net income — — — 15,227 — 1,685 16,912
Currency translation adjustments — — — — (742) (431) (1,173)
Cash flow hedges — — — — (5,715) — (5,715)
Debt securities available-for-sale — — — — 45 — 45
Distributions to noncontrolling interest — — — — — (6,877) (6,877)
Contributions from noncontrolling interest — — — — — 89 89
Vesting of restricted stock 80 1 (1) — — — —
Share-based compensation expense — — 2,314 — — — 2,314
Employee stock relinquished for payment of taxes — — (1,437) — — — (1,437)
Other — — (2,088) — — — (2,088)
Balance at March 31, 2019 45,384 $ 454 $ 59,091 $ 1,291,700 $ (248,521) $ 23,315 $ 1,126,039
Components of comprehensive income, net of tax:
Net income — — — 18,619 — 3,581 22,200
Currency translation adjustments — — — — 4,362 378 4,740
Cash flow hedges — — — — (8,002) — (8,002)
Debt securities available-for-sale — — — — 37 — 37
Contributions from noncontrolling interest — — — — — 3,229 3,229
Vesting of restricted stock 25 — — — — — —
Share-based compensation expense — — 2,620 — — — 2,620
Employee stock relinquished for payment of taxes — — (6) — — — (6)
Balance at June 30, 2019 45,409 $ 454 $ 61,705 $ 1,310,319 $ (252,124) $ 30,503 $ 1,150,857

The accompanying notes are an integral part of these ~~consolidated financial statements.~~Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~

(unaudited)

(Amounts in thousands)


		Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019			2021		2020
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income	Net income	$	83,264	$	39,112	Net income	$	61,880	$	22,436
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	Share-based compensation expense	5,920		4,934		Share-based compensation expense	4,113		2,857
Depreciation and amortization	Depreciation and amortization	8,193		9,295		Depreciation and amortization	3,981		4,084

Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	11,846		11,403		Amortization of debt discount and issuance costs	2,256		5,857
Changes in expected recoveries	Changes in expected recoveries	(6,985)		—		Changes in expected recoveries	(50,136)		12,816

Deferred income taxes	Deferred income taxes	(21,361)		(25,287)		Deferred income taxes	10,371		(12,755)
Net unrealized foreign currency transactions	Net unrealized foreign currency transactions	33,320		(7,437)		Net unrealized foreign currency transactions	2,134		24,873
Fair value in earnings for equity securities	Fair value in earnings for equity securities	1,412		(1,448)		Fair value in earnings for equity securities	(107)		(7,566)
Net allowance charges		—		7,291
Other	Other	(256)		—		Other	(419)		(135)

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Other assets	Other assets	256		1,863		Other assets	670		(1,242)
Other receivables, net	Other receivables, net	(4,733)		2,978		Other receivables, net	10,043		(545)
Accounts payable	Accounts payable	507		(2,956)		Accounts payable	(431)		221
Income taxes payable, net	Income taxes payable, net	22,527		(8,766)		Income taxes payable, net	(3,669)		3,835
Accrued expenses	Accrued expenses	(13,336)		(1,979)		Accrued expenses	(20,227)		(8,990)
Other liabilities	Other liabilities	1,821		1,799		Other liabilities	(336)		994
Right of use asset/lease liability	Right of use asset/lease liability	105		—		Right of use asset/lease liability	85		66
Other, net		—		146

Net cash provided by operating activities	Net cash provided by operating activities	122,500		30,948		Net cash provided by operating activities	20,208		46,806
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Net, purchases of property and equipment		(10,597)		(5,646)
Purchases of property and equipment, net						Purchases of property and equipment, net	(2,366)		(7,639)

Purchases of finance receivables	Purchases of finance receivables	(436,097)		(549,377)		Purchases of finance receivables	(159,328)		(271,845)
Recoveries applied to negative allowance	Recoveries applied to negative allowance	501,583		—		Recoveries applied to negative allowance	328,559		236,656
Collections applied to principal on finance receivables		—		443,390
Purchase of investments		(8,317)		(82,648)

Proceeds from sales and maturities of investments	Proceeds from sales and maturities of investments	41,505		43,011		Proceeds from sales and maturities of investments	764		648
Business acquisition, net of cash acquired	Business acquisition, net of cash acquired	—		(57,610)		Business acquisition, net of cash acquired	(647)		0

Proceeds from sale of subsidiaries, net		—		31,177

Net cash provided by/(used in) investing activities	Net cash provided by/(used in) investing activities	88,077		(177,703)		Net cash provided by/(used in) investing activities	166,982		(42,180)
Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Proceeds from lines of credit	Proceeds from lines of credit	395,152		769,021		Proceeds from lines of credit	45,369		315,118
Principal payments on lines of credit	Principal payments on lines of credit	(568,912)		(324,103)		Principal payments on lines of credit	(226,621)		(227,459)
Principal payments on notes payable and long-term debt		(5,000)		(308,165)

Principal payments on long-term debt						Principal payments on long-term debt	(2,500)		(2,500)

Payments of origination cost and fees	Payments of origination cost and fees	(9,781)		—		Payments of origination cost and fees	(113)		(8,203)
Tax withholdings related to share-based payments	Tax withholdings related to share-based payments	(3,176)		(1,443)		Tax withholdings related to share-based payments	(5,460)		(3,156)
Distributions paid to noncontrolling interest	Distributions paid to noncontrolling interest	(14,908)		(6,877)		Distributions paid to noncontrolling interest	(3,933)		0

Purchase of noncontrolling interest		—		(1,166)

Net increase in interest-bearing deposits		13,675		28,429
Other financing activities		—		1,141

Net increase/(decrease) in interest-bearing deposits						Net increase/(decrease) in interest-bearing deposits	303		(1,658)

Net cash (used in)/provided by financing activities	Net cash (used in)/provided by financing activities	(192,950)		156,837		Net cash (used in)/provided by financing activities	(192,955)		72,142
Effect of exchange rate on cash	Effect of exchange rate on cash	(16,503)		(3,281)		Effect of exchange rate on cash	(6,427)		(16,575)
Net increase in cash and cash equivalents		1,124		6,801
Cash and cash equivalents, beginning of period		123,807		98,695
Cash and cash equivalents, end of period		$	124,931	$	105,496
Net (decrease)/increase in cash, cash equivalents and restricted cash						Net (decrease)/increase in cash, cash equivalents and restricted cash	(12,192)		60,193
Cash, cash equivalents and restricted cash beginning of period						Cash, cash equivalents and restricted cash beginning of period	121,047		123,807
Cash, cash equivalents and restricted cash, end of period						Cash, cash equivalents and restricted cash, end of period	$	108,855	$	184,000
Supplemental disclosure of cash flow information:	Supplemental disclosure of cash flow information:					Supplemental disclosure of cash flow information:
Cash paid for interest	Cash paid for interest	$	60,618	$	54,973	Cash paid for interest	$	32,622	$	30,502
Cash paid for income taxes	Cash paid for income taxes	16,796		42,172		Cash paid for income taxes	10,463		12,100
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets		$	115,741	$	105,496
Restricted cash included in Other assets per Consolidated Balance Sheets		9,190		—
Total cash, cash equivalents and restricted cash		$	124,931	$	105,496

The accompanying notes are an integral part of these ~~consolidated financial statements.~~Consolidated Financial Statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

As used herein, the terms "PRA Group," the "Company," or similar terms refer to PRA Group, Inc. and its subsidiaries.

PRA Group, Inc., a Delaware corporation, is a global financial and business services company with operations in the Americas, Europe and Australia. The Company's primary business is the purchase, collection and management of portfolios of nonperforming loans. The Company also provides fee-based services on class action claims recoveries and by servicing consumer bankruptcy accounts in the United States ("U.S.").

On March 11, 2020, due to the global outbreak of the novel coronavirus ("COVID-19"), the World Health Organization declared a global pandemic. Since the initial outbreak was reported, COVID-19 has continued to adversely impact all countries in which the Company operates. As a result, the Company continues to operate in business continuity mode globally. The Company's business continuity plans have allowed the Company to operate its business while minimizing disruption and complying with country-specific, federal, state and local laws, regulations and governmental actions related to the pandemic.

Basis of presentation: The ~~consolidated financial statements~~Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of ~~June 30, 2020,~~March 31, 2021 and its Consolidated Income Statements, ~~and its Consolidated~~ Statements of Comprehensive Income/(Loss) ~~for the three and six months ended June 30, 2020 and 2019, and its Consolidated~~, Statements of Changes in Equity and ~~Consolidated~~ Statements of Cash Flows for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ have been included. The Company's Consolidated Income Statements ~~of the Company~~ for the three ~~and six~~ months ended ~~June 30, 2020~~March 31, 2021 may not be indicative of future results.

These unaudited ~~consolidated financial statements~~Consolidated Financial Statements should be read in conjunction with the audited ~~consolidated financial statements~~Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2019~~2020 (the ~~"2019~~"2020 Form 10-K").

Consolidation: The ~~consolidated financial statements~~Consolidated Financial Statements include the accounts of PRA Group and other entities in which the Company has a controlling interest. All significant intercompany accounts and transactions have been eliminated.

Entities in which the Company has a controlling financial interest, through ownership of the majority of the entities’ voting equity interests, or through other contractual rights that give the Company control, consist of entities which purchase and collect on portfolios of nonperforming loans.

Investments in companies in which the Company has significant influence over operating and financing decisions, but does not own a majority of the voting equity interests, are accounted for in accordance with the equity method of accounting, which requires the Company to recognize its proportionate share of the entity’s net earnings. These investments are included in ~~other~~Other assets, with income or loss included in ~~other~~Other revenue.

The Company performs on-going reassessments of whether changes in the facts and circumstances regarding the Company’s involvement with an entity cause the Company’s consolidation conclusion to change.

~~Restricted cash:~~ ~~Cash that is subject to legal restrictions or is unavailable for general operating purposes is classified as restricted cash.~~

Segments: Under the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC Topic 280 "Segment Reporting" ("ASC 280"), the Company has determined that it has several operating segments that meet the aggregation criteria of ASC 280, and, therefore, it has 1 reportable segment, accounts receivable management. This conclusion is based on similarities among the operating units, including economic characteristics, the nature of the products and services, the nature of the production processes, the types or class of customer for their products and services, the methods used to distribute their products and services and the nature of the regulatory environment.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The following table shows the amount of revenue generated for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ and long-lived assets held at ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands):


		As of and for the						As of and for the							As of and for the				As of and for the
		Three Months Ended June 30, 2020						Three Months Ended June 30, 2019							Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
		Revenues		Long-Lived Assets		Revenues		Long-Lived Assets			Revenues (2)		Long-Lived Assets		Revenues (2)		Long-Lived Assets
United States	United States	$	192,293	$	105,996	$	167,923	$	110,323	United States	$	178,181	$	96,630	$	153,335	$	115,053
United Kingdom	United Kingdom	28,041		2,755		28,292		3,917		United Kingdom	48,177		2,269		36,340		3,076
Other ⁽¹⁾	Other ⁽¹⁾	51,576		8,747		55,842		10,061		Other (1)	63,111		8,765		62,109		8,408
Total	Total	$	271,910	$	117,498	$	252,057	$	124,301	Total	$	289,469	$	107,664	$	251,784	$	126,537

		As of and for the						As of and for the
		Six Months Ended June 30, 2020						Six Months Ended June 30, 2019
		Revenues		Long-Lived Assets		Revenues		Long-Lived Assets
United States		$	345,628	$	105,996	$	335,499	$	110,323
United Kingdom		64,381		2,755		58,048		3,917
Other ⁽¹⁾		113,685		8,747		104,387		10,061
Total		$	523,694	$	117,498	$	497,934	$	124,301

(1) None of the countries included in "Other" comprise greater than 10% of the Company's consolidated revenues or long-lived assets.

(2) Based on the Company’s financial statement information used to produce the Company's general-purpose financial statements, it is impracticable to report further breakdowns of revenues from external customers by product or service.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Revenues are attributed to countries based on the location of the related operations. Long-lived assets consist of net property and equipment and right-of-use assets. The Company reports revenues earned from ~~nonperforming loan acquisitions and~~ collection activities on nonperforming loans, fee-based services and investments. For additional information on the Company's investments, see Note ~~4. It is impracticable for the Company to report further breakdowns of revenues from external customers by product or service.~~

Beginning January 1, 2020, the Company implemented Accounting Standards Update ("ASU") ASU 2016-13, "Financial Instruments - Credit Losses" ("Topic 326") ("ASU 2016-13") and ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), collectively referred to as "ASC 326", on a prospective basis. Prior to January 1, 2020, the vast majority of the Company's investment in finance receivables were accounted for under ASC 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"). Refer to Note 2.

~~Finance receivables and income recognition:~~ 4The Company accounts for its investment in finance receivables at amortized cost under the guidance of ASC Topic 310 “Receivables” (“ASC 310”) and ASC Topic 326-20 “Financial Instruments - Credit Losses - Measured at Amortized Cost” (“ASC 326-20”). ~~ASC 326-20 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.~~

~~Credit quality information~~: The Company acquires portfolios of accounts that have experienced deterioration of credit quality between origination and the Company's acquisition of the accounts. The amount paid for a portfolio reflects the Company's determination that it is probable the Company will be unable to collect all amounts due according to an account's contractual terms. The Company accounts for the portfolios in accordance with the guidance for purchased credit deteriorated ("PCD") assets. The initial allowance for credit losses is added to the purchase price rather than recorded as a credit loss expense. The Company has established a policy to writeoff the amortized cost of individual assets when it deems probable that it will not collect on an individual asset. Due to the deteriorated credit quality of the individual accounts, the Company may writeoff the unpaid principal balance of all accounts in a portfolio at the time of acquisition. However, when the Company has an expectation of collecting cash flows at the portfolio level, a negative allowance is established for expected recoveries at an amount not to exceed the amount paid for the financial portfolios.

~~Portfolio segments~~: The Company develops systematic methodologies to determine its allowance for credit losses at the portfolio segment level. The Company’s nonperforming loan portfolio segments consist of two broad categories: Core and Insolvency. The Company’s Core portfolios contain loan accounts that are in default, which were purchased at a substantial discount to face value because either the credit grantor and/or other third-party collection agencies have been unsuccessful in collecting the full balance owed. The Company’s Insolvency portfolios contain loan accounts that are in default where the customer is involved in a bankruptcy or insolvency proceeding and were purchased at a substantial discount to face value. Each of the two broad portfolio segments of purchased nonperforming loan portfolios consist of large numbers of homogeneous receivables with similar risk characteristics.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Effective interest rate and accounting pools~~: Within each portfolio segment, the Company pools accounts with similar risk characteristics that are acquired in the same year. Similar risk characteristics generally include portfolio segment and geographic region. The initial effective interest rate of the pool is established based on the purchase price and expected recoveries of each individual purchase at the purchase date. During the year of acquisition, the annual pool is aggregated, and the blended effective interest rate will change to reflect new acquisitions and new cash flow estimates until the end of the year. The effective interest rate for a pool is fixed for the remaining life of the pool once the year has ended.

~~Methodology~~: The Company develops its estimates of expected recoveries in the Consolidated Balance Sheets by applying discounted cash flow methodologies to its estimated remaining collections (“ERC”) and recognizes income over the estimated life of the pool at the constant effective interest rate of the pool. Subsequent changes (favorable and unfavorable) in expected cash flows are recognized within changes in expected recoveries in the Consolidated Income Statements by adjusting the present value of increases or decreases in ERC at a constant effective interest rate. Amounts included in the estimate of recoveries do not exceed the aggregate amount of the amortized cost basis previously written off or expected to be written off.

The measurement of expected recoveries is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Factors that may contribute to the changes in estimated cash flows include both external and internal factors. External factors that may have an impact on the collectability, and subsequently on the overall profitability of acquired pools of nonperforming loans, would include new laws or regulations relating to collections, new interpretations of existing laws or regulations, and the overall condition of the economy. Internal factors that may have an impact on the collectability, and subsequently the overall profitability of acquired pools of nonperforming loans, would include necessary revisions to initial and post-acquisition scoring and modeling estimates, operational activities, expected impact of operational strategies and changes in productivity related to turnover and tenure of the Company's collection staff.

~~Portfolio income: The recognition of income on expected recoveries is based on the constant effective interest rate established for a pool.~~

~~Changes in expected recoveries~~: The activity consists of differences between actual recoveries compared to expected recoveries for the reporting period, as well as the net present value of increases or decreases in ERC at the constant effective interest rate.

Agreements to acquire the aforementioned receivables include general representations and warranties from the sellers covering matters such as account holder death or insolvency and accounts settled or disputed prior to sale. The representation and warranty period permitting the return of these accounts from the Company to the seller is typically 90 to 180 days, with certain international agreements extending as long as 24 months. Any funds received from the seller as a return of purchase price are referred to as buybacks. Buyback funds are included in changes in expected recoveries when received.

~~Fees paid to third parties other than the seller related to the direct acquisition of a portfolio of accounts are expensed when incurred.~~

~~Goodwill and intangible assets~~: Goodwill, in accordance with ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), is not amortized but rather is reviewed for impairment annually or more frequently if indicators of potential impairment exist. On January 1, 2020, the Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). The Company performs its annual assessment of goodwill as of October 1. The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, an impairment loss is recognized. The loss will be recorded at the amount by which the carrying amount exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit.

2. Change in Accounting Principle:

~~Financial Instruments - Credit Losses~~

In ~~June 2016,~~August 2020, the FASB issued Accounting Standards Update ("ASU") 2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity ("ASU ~~2016-13, which introduced a new methodology requiring~~2020-06"). ASU 2020-06 reduces the ~~measurement~~number of ~~expected credit losses~~accounting models for ~~financial~~convertible debt instruments ~~held at the reporting date based on historical experience, current~~and convertible preferred stock. Additionally, ASU 2020-06 removes certain settlement conditions ~~and reasonable and supportable forecasts. ASU 2016-13 utilizes a lifetime “expected credit loss” measurement objective~~that are required for equity contracts to qualify for the ~~recognition of credit losses~~derivative scope exception and simplifies the diluted earnings per share ("EPS") calculation in certain areas.

The Company accounts for ~~loans, held-to-maturity debt securities~~its 3.50% Convertible Notes due 2023 (the "2023 Notes" or the "Convertible Notes") in accordance with ASC 470-20, "Debt with Conversion and ~~other receivables measured at amortized cost. The~~

~~PRA Group, Inc.~~

~~Notes~~Other Options" ("ASC 470"). Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to ~~Consolidated Financial Statements~~

~~new methodology requires an entity to present on the balance sheet the net amount expected to~~ be collected. This methodology replaces the multiple impairment methods under prior GAAP, including for purchased credit impaired ("PCI") assets, and introduces the concept of PCD assets. The Company's PCI assets previously accounted for under ASC 310-30 are now accounted for as ~~PCD assets upon adoption. ASU 2016-13 requires PCD assets to~~derivatives under ASC Topic 815 "Derivatives and Hedging" ("ASC 815"), or that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be ~~recognized~~accounted for as a single liability measured at ~~their purchase price plus the allowance for credit losses expected at the time of acquisition. ASU 2016-13 also requires that financial assets should be written off when they are deemed uncollectible.~~

In November 2019, FASB issued ASU 2019-11, which amended the PCD asset guidance in ASU 2016-13 to clarify that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account. Additionally, they should not exceed the aggregate of amounts previously written off and expected to be written off by an entity. Further, ASU 2019-11 clarifies that a negative allowance is recognized when an entity determines, after a full or partial writeoff of theits amortized ~~cost basis, that it will recover all or a portion of the basis.~~

cost. The Company adopted ~~ASC 326 on January 1, 2020 on~~the standard using a ~~prospective basis. In accordance~~modified retrospective method, with adjustments which increased retained earnings by $12.0 million, reduced additional paid-in capital by $26.7 million and increased the ~~guidance, substantially all the Company’s PCI assets were transitioned using the PCD guidance, with immediate writeoff~~net carrying amount of the amortized cost basis of individual accounts and establishment of a negative allowance for expected recoveries equal to the amortized cost basis written off. Accounts previously accounted for under ASC 310-30, were aggregated into annual pools based on similar risk characteristics and an effective interest rate was established based on the estimated remaining cash flows of the annual pool. The immediate writeoff and subsequent recognition of expected recoveries had no impact on the Company’s Consolidated Income Statements or the Consolidated Balance Sheets at the date of adoption. The Company develops its estimate of expected recoveries2023 Notes by applying discounted cash flow methodologies to its ERC and recognizes income over the estimated life of the pool at the constant effective interest rate of the pool. Changes (favorable and unfavorable) in expected cash flows are recognized in current period earnings by adjusting the present value of the changes in expected recoveries.

~~Following the transition guidance for PCD assets, the Company grossed up the amortized cost of its net finance receivables~~$19.8 million at January 1, ~~2020 as shown below (amounts in thousands):~~


~~Amortized cost~~2021. Additionally, the effect of adoption reduced interest expense for the three months ended March 31, 2021 by $2.0 million, increased net income by $1.6 million and increased earnings per share by $0.04 per share. For more information on the 2023 Notes, see Note 7.	$	~~3,514,165~~
~~Allowance for credit losses~~	~~125,757,689~~
~~Noncredit discount~~	~~3,240,131~~
~~Face value~~	$	~~132,511,985~~

~~Allowance for credit losses~~	$	~~125,757,689~~
~~Writeoffs, net~~	~~(125,757,689)~~
~~Expected recoveries~~	~~3,514,165~~
~~Initial negative allowance for expected recoveries~~	$	~~3,514,165~~

3. Finance Receivables, net:

Finance ~~Receivables, net after the adoption of ASC 326 (refer to Note 2)~~

~~Finance~~ receivables, net ~~consists~~consisted of the following at ~~June 30,~~March 31, 2021 and December 31, 2020 (amounts in thousands):


~~Amortized cost~~	$	—
~~Negative allowance for expected recoveries~~⁽¹⁾	~~3,351,532~~
~~Balance at end of period~~	$	~~3,351,532~~


	March 31, 2021		December 31, 2020
Amortized cost	$	0	$	0
Negative allowance for expected recoveries (1)	3,372,666		3,514,788
Balance at end of period	$	3,372,666	$	3,514,788

(1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximately 1% of the balance.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Three Months Ended June 30, 2020~~

Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended ~~June 30,~~March 31, 2021 and 2020 were as follows (amounts in thousands):


		For the three months ended June 30, 2020											March 31, 2021
		Core		Insolvency		Total			Core		Insolvency		Total
Balance at beginning of period	Balance at beginning of period	$	2,949,384	$	458,690	$	3,408,074	Balance at beginning of period	$	3,019,477	$	495,311	$	3,514,788
Initial negative allowance for expected recoveries - portfolio acquisitions ⁽¹⁾	Initial negative allowance for expected recoveries - portfolio acquisitions ⁽¹⁾	144,721		19,778		164,499		Initial negative allowance for expected recoveries - portfolio acquisitions (1)	133,007		25,954		158,961
Foreign currency translation adjustment	Foreign currency translation adjustment	24,215		(130)		24,085		Foreign currency translation adjustment	(24,249)		1,589		(22,660)
Recoveries applied to negative allowance ⁽²⁾	Recoveries applied to negative allowance ⁽²⁾	(231,435)		(33,492)		(264,927)		Recoveries applied to negative allowance (2)	(285,171)		(43,388)		(328,559)
Changes in expected recoveries ⁽³⁾	Changes in expected recoveries ⁽³⁾	21,251		(1,450)		19,801		Changes in expected recoveries (3)	48,410		1,726		50,136
Balance at end of period	Balance at end of period	$	2,908,136	$	443,396	$	3,351,532	Balance at end of period	$	2,891,474	$	481,192	$	3,372,666

PRA Group, Inc.

Notes to Consolidated Financial Statements


	March 31, 2020
	Core		Insolvency		Total
Balance at beginning of period	$	3,051,426	$	462,739	$	3,514,165
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	233,687		39,550		273,237
Foreign currency translation adjustment	(120,214)		(9,642)		(129,856)
Recoveries applied to negative allowance (2)	(199,038)		(37,618)		(236,656)
Changes in expected recoveries (3)	(16,477)		3,661		(12,816)
Balance at end of period	$	2,949,384	$	458,690	$	3,408,074

(1) Initial negative allowance for expected recoveries - portfolio acquisitions

Portfolio acquisitions for the three months ended ~~June 30,~~March 31, 2021 and 2020 were as follows (amounts in thousands):


		For the three months ended June 30, 2020											March 31, 2021
		Core		Insolvency		Total			Core		Insolvency		Total
Face value	Face value	$	1,288,243	$	96,964	$	1,385,207	Face value	$	1,088,655	$	134,811	$	1,223,466
Noncredit discount	Noncredit discount	(160,409)		(7,979)		(168,388)		Noncredit discount	(132,532)		(7,498)		(140,030)
Allowance for credit losses at acquisition	Allowance for credit losses at acquisition	(983,113)		(69,207)		(1,052,320)		Allowance for credit losses at acquisition	(823,116)		(101,359)		(924,475)
Purchase price	Purchase price	$	144,721	$	19,778	$	164,499	Purchase price	$	133,007	$	25,954	$	158,961


	March 31, 2020
	Core		Insolvency		Total
Face value	$	1,891,142	$	177,454	$	2,068,596
Noncredit discount	(213,289)		(13,032)		(226,321)
Allowance for credit losses at acquisition	(1,444,166)		(124,872)		(1,569,038)
Purchase price	$	233,687	$	39,550	$	273,237

The initial negative allowance recorded on portfolio acquisitions for the three months ended ~~June 30,~~March 31, 2021 and 2020 were as follows (amounts in thousands):


		For the three months ended June 30, 2020											March 31, 2021
		Core		Insolvency		Total			Core		Insolvency		Total
Allowance for credit losses at acquisition	Allowance for credit losses at acquisition	$	(983,113)	$	(69,207)	$	(1,052,320)	Allowance for credit losses at acquisition	$	(823,116)	$	(101,359)	$	(924,475)
Writeoffs, net	Writeoffs, net	983,113		69,207		1,052,320		Writeoffs, net	823,116		101,359		924,475
Expected recoveries	Expected recoveries	144,721		19,778		164,499		Expected recoveries	133,007		25,954		158,961
Initial negative allowance for expected recoveries	Initial negative allowance for expected recoveries	$	144,721	$	19,778	$	164,499	Initial negative allowance for expected recoveries	$	133,007	$	25,954	$	158,961

~~(2) Recoveries applied to negative allowance~~

~~Recoveries applied to the negative allowance were computed as follows for the three months ended June 30, 2020 (amounts in thousands):~~

For the three months ended June 30, 2020
Core Insolvency Total
Recoveries^(a)
$ 461,238 $ 51,973 $ 513,211
Less - amounts reclassified to portfolio income ^(b)
229,803 18,481 248,284
Recoveries applied to negative allowance $ 231,435 $ 33,492 $ 264,927

~~(a) Recoveries includes cash collections, buybacks and other adjustments.~~

~~(b) The Company reported income on expected recoveries based on the constant effective interest rate in portfolio income on the Company's Consolidated Income Statements.~~


	March 31, 2020
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(1,444,166)	$	(124,872)	$	(1,569,038)
Writeoffs, net	1,444,166		124,872		1,569,038
Expected recoveries	233,687		39,550		273,237
Initial negative allowance for expected recoveries	$	233,687	$	39,550	$	273,237

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(3) Changes in expected recoveries~~

~~Changes in expected recoveries consists of the following for the three months ended June 30, 2020 (amounts in thousands):~~

For the three months ended June 30, 2020
Core Insolvency Total
Changes in expected future recoveries $ (97,910) $ (1,788) $ (99,698)
Recoveries received in excess of forecast 119,161 338 119,499
Changes in expected recoveries $ 21,251 $ (1,450) $ 19,801

~~Six Months Ended June 30, 2020~~

~~Changes in the negative allowance for expected recoveries by portfolio segment for the six months ended June 30, 2020 were as follows (amounts in thousands):~~

For the six months ended June 30, 2020
Core Insolvency Total
Balance at beginning of period $ 3,051,426 $ 462,739 $ 3,514,165
Initial negative allowance for expected recoveries - portfolio acquisitions ⁽¹⁾
378,408 59,328 437,736
Foreign currency translation adjustment (95,999) (9,772) (105,771)
Recoveries applied to negative allowance ⁽²⁾
(430,473) (71,110) (501,583)
Changes in expected recoveries ⁽³⁾
4,774 2,211 6,985
Balance at end of period $ 2,908,136 $ 443,396 $ 3,351,532

~~(1) Initial negative allowance for expected recoveries - portfolio acquisitions~~

~~Portfolio acquisitions for the six months ended June 30, 2020 were as follows (amounts in thousands):~~

For the six months ended June 30, 2020
Core Insolvency Total
Face value $ 3,179,386 $ 274,418 $ 3,453,804
Noncredit discount (373,699) (21,011) (394,710)
Allowance for credit losses at acquisition (2,427,279) (194,079) (2,621,358)
Purchase price $ 378,408 $ 59,328 $ 437,736

~~The initial negative allowance recorded on portfolio acquisitions for the six months ended was as follows June 30, 2020 (amounts in thousands):~~

For the six months ended June 30, 2020
Core Insolvency Total
Allowance for credit losses at acquisition $ (2,427,279) $ (194,079) $ (2,621,358)
Writeoffs, net 2,427,279 194,079 2,621,358
Expected recoveries 378,408 59,328 437,736
Initial negative allowance for expected recoveries $ 378,408 $ 59,328 $ 437,736

1410

PRA Group, Inc.

Notes to Consolidated Financial Statements

(2) Recoveries applied to negative allowance

Recoveries applied to the negative allowance were computed as follows for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 (amounts in thousands):


		For the six months ended June 30, 2020											March 31, 2021
		Core		Insolvency		Total			Core		Insolvency		Total
Recoveries^(a)	Recoveries^(a)	$	901,932	$	109,957	$	1,011,889	Recoveries (a)	$	500,332	$	59,899	$	560,231
Less - amounts reclassified to portfolio income ^(b)	Less - amounts reclassified to portfolio income ^(b)	471,459		38,847		510,306		Less - amounts reclassified to portfolio income (b)	215,161		16,511		231,672
Recoveries applied to negative allowance	Recoveries applied to negative allowance	$	430,473	$	71,110	$	501,583	Recoveries applied to negative allowance	$	285,171	$	43,388	$	328,559


	March 31, 2020
	Core		Insolvency		Total
Recoveries (a)	$	440,694	$	57,984	$	498,678
Less - amounts reclassified to portfolio income (b)	241,656		20,366		262,022
Recoveries applied to negative allowance	$	199,038	$	37,618	$	236,656

(a) Recoveries includes cash collections, buybacks and other cash-based adjustments.

(b) ~~The Company reported income on expected recoveries based on~~For more information, refer to the ~~constant effective interest rate in~~Company's discussion of portfolio income onwithin finance receivables and income recognition within Note 1 of the Company's Consolidated ~~Income Statements.~~Financial Statements included in Item 8 of the 2020 Form 10-K.

(3) Changes in expected recoveries

Changes in expected recoveries ~~consists~~consisted of the following for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 (amounts in thousands):


		For the six months ended June 30, 2020											March 31, 2021
		Core		Insolvency		Total			Core		Insolvency		Total
Changes in expected future recoveries	Changes in expected future recoveries	$	(118,434)	$	(1,890)	$	(120,324)	Changes in expected future recoveries	$	(46,502)	$	(6,350)	$	(52,852)
Recoveries received in excess of forecast	Recoveries received in excess of forecast	123,208		4,101		127,309		Recoveries received in excess of forecast	94,912		8,076		102,988
Changes in expected recoveries	Changes in expected recoveries	$	4,774	$	2,211	$	6,985	Changes in expected recoveries	$	48,410	$	1,726	$	50,136


	March 31, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(20,524)	$	(102)	$	(20,626)
Recoveries received in excess of forecast	4,047		3,763		7,810
Changes in expected recoveries	$	(16,477)	$	3,661	$	(12,816)

In order to ~~evaluate the impact of the COVID-19 pandemic on expectations~~make estimates of future cash collections, the Company considered historical performance, current economic forecasts, ~~regarding the duration of the impact to~~ short-term and long-term growth in the various geographies in which the Company operates and ~~evolving information regarding its effect on economic activity and~~ consumer ~~habits as reopening initiatives occur.~~habits. The Company ~~also~~ considered ~~current~~recent collection activity in its determination to adjust ~~the~~assumptions related to near-term estimated ~~timing of near term ERC~~remaining collections ("ERC") for certain pools. Based on these considerations, the Company’s estimates incorporate changes in both amounts and in the timing of expected cash collections over the ~~next 6 to 18 months.~~forecast period.

For the three months ended ~~June 30, 2020,~~March 31, 2021, changes in expected recoveries ~~increased $19.8~~were a positive $50.1 million. This reflects ~~$119.5~~$103.0 million in recoveries received during the quarter in excess of forecast, partially offset by a $99.7 million decrease to the present value of expected future recoveries. The majority of the decrease reflects the Company's assumption that the overperformance was acceleration in cash collections rather than an increase to total expected collections. Additionally, the Company made forecast adjustments deemed appropriate given the current environment in which the Company operates.

~~For the six months ended June 30, 2020, changes in expected recoveries increased $7.0 million. This reflects $127.3 million in recoveries~~ in excess of forecast, which was largely due to significant cash collections overperformance, ~~during the most recent quarter. This was mostly offset~~reduced by a ~~$120.3~~$52.9 million ~~decrease~~negative adjustment to changes in ~~the present value of~~ expected future recoveries. The ~~majority of the decrease reflects~~changes in expected future recoveries reflect the Company's assumption that the majority of the current quarter overperformance was ~~primarily~~ due to acceleration in the timing of cash collections rather than an increase to total expected ~~collections. Additionally,~~collections resulting in a present value adjustment.

For the ~~Company made~~three months ended March 31, 2020, changes in expected recoveries were a negative $12.8 million. This reflected a $20.6 million negative adjustment to the present value of expected future recoveries primarily related to an expected delay in cash collections from the impact of the novel coronavirus ("COVID-19") pandemic, partially offset by $7.8 million in recoveries received in excess of forecast ~~adjustments in both quarters deemed appropriate given the current environment in which the Company operates.~~

~~Changes~~ in the ~~Company’s assumptions regarding the duration and impact of COVID-19 to cash collections could change significantly as conditions evolve.~~

~~Finance Receivables, net prior to adoption of ASC 326~~

The following information reflects finance receivables, net as previously disclosed in the Company's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019 which was under previous revenue recognition accounting standard ASC 310-30.quarter.

1511

PRA Group, Inc.

Notes to Consolidated Financial Statements

~~Changes in finance receivables, net for the three and six months ended June 30, 2019 were as follows (amounts in thousands):~~

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Balance at beginning of period $ 3,177,229 $ 3,084,777
Acquisitions of finance receivables ⁽¹⁾
284,448 597,894
Foreign currency translation adjustment (8,477) (1,041)
Cash collections (470,274) (931,445)
Income recognized on finance receivables 249,219 488,055
Net allowance charges (1,196) (7,291)
Balance at end of period $ 3,230,949 $ 3,230,949

~~(1) Includes portfolio purchases adjusted for buybacks and acquisition related costs, and portfolios from the acquisition of a business in Canada made during the first quarter of 2019.~~

During the three months ended June 30, 2019, the Company acquired finance receivable portfolios with a face value of $1.8 billion for $289.2 million. During the six months ended June 30, 2019, the Company acquired finance receivables portfolios with a face value of $6.6 billion for $608.0 million. At June 30, 2019, the ERC on the receivables acquired during the three and six months ended June 30, 2019 were $513.0 million and $1.02 billion, respectively.

At the time of acquisition and each quarter thereafter, the life of each quarterly accounting pool was estimated based on projected amounts and timing of future cash collections using the proprietary models of the Company. Based upon projections, cash collections expected to be applied to principal were estimated to be as follows for the twelve-month periods ending June 30, (amounts in thousands):

2020 $ 845,437
2021 694,169
2023 531,004
2024 393,087
2025 281,166
2026 173,283
2027 101,570
2028 77,943
2029 51,868
2030 35,070
Thereafter 46,352
Total ERC expected to be applied to principal $ 3,230,949

~~At June 30, 2019, the Company had aggregate net finance receivables balances in pools accounted for under the cost recovery method of $39.4 million.~~

Accretable yield represented the amount of income on finance receivables the Company expected to recognize over the remaining life of its existing portfolios based on estimated future cash flows as of the balance sheet date. Additions represented the original expected accretable yield on portfolios acquired during the period. Net reclassifications from nonaccretable difference to accretable yield primarily resulted from the increase in the Company's estimate of future cash flows. When applicable, net reclassifications to nonaccretable difference from accretable yield resulted from the decrease in the Company's estimates of future cash flows and allowance charges that together exceeded the increase in the Company's estimate of future cash flows.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Changes in accretable yield for the three and six months ended June 30, 2019 were as follows (amounts in thousands):~~

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Balance at beginning of period $ 3,080,168 $ 3,058,445
Income recognized on finance receivables (249,219) (488,055)
Net allowance charges 1,196 7,291
Additions from portfolio acquisitions 228,796 464,610
Reclassifications from nonaccretable difference 112,901 132,062
Foreign currency translation adjustment (829) (1,340)
Balance at end of period $ 3,173,013 $ 3,173,013

The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired finance receivables, for the three and six months ended June 30, 2019 (amounts in thousands):

Three Months Ended June 30, 2019 Six Months Ended June 30, 2019
Beginning balance $ 263,324 $ 257,148
Allowance charges 5,532 13,509
Reversal of previously recorded allowance charges (4,336) (6,218)
Net allowance charges 1,196 7,291
Foreign currency translation adjustment 71 152
Ending balance $ 264,591 $ 264,591

4. Investments:

Investments consisted of the following at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (amounts in thousands):


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020

Debt securities	Debt securities					Debt securities

Available-for-sale	Available-for-sale	$	4,767	$	5,052	Available-for-sale	$	5,308	$	5,368

Equity securities	Equity securities					Equity securities
Exchange traded funds						Exchange traded funds	34,841		34,847
Private equity funds	Private equity funds	5,588		7,218		Private equity funds	6,155		6,123
Mutual funds	Mutual funds	743		33,677		Mutual funds	896		1,023
Equity method investments	Equity method investments	7,648		10,229		Equity method investments	7,482		8,398

Total investments	Total investments	$	18,746	$	56,176	Total investments	$	54,682	$	55,759

Debt Securities

Available-for-sale

Government bonds: The Company's investments in government bonds are classified as available-for-sale and are stated at fair value.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The amortized cost and estimated fair value of investments in debt securities at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 were as follows (amounts in thousands):


		June 30, 2020															March 31, 2021
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale	Available-for-sale									Available-for-sale

Government bonds	Government bonds	$	4,589	$	178	$	—	$	4,767	Government bonds	$	5,179	$	129	$	0	$	5,308

		December 31, 2019															December 31, 2020
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale	Available-for-sale									Available-for-sale

Government bonds	Government bonds	$	5,095	$	—	$	43	$	5,052	Government bonds	$	5,239	$	129	$	0	$	5,368

Equity Securities

~~Investments~~Exchange traded funds: The Company invests in ~~private~~certain treasury bill exchange traded funds, which are accounted for as equity securities and carried at fair value. Gains and losses from these investments are included within Other income and (expense) in the Company's Consolidated Income Statements.

Private equity funds: Investments in private equity funds represent limited partnerships in which the Company has less than a 1% interest.

Mutual funds: ~~The Company invests certain excess~~Mutual funds represent funds held in Brazil in a Brazilian real denominated mutual fund benchmarked to the U.S. dollar that invests principally in Brazilian fixed income securities. The investments are carried at fair value based on quoted market prices. Gains and losses from this investment are included as a foreign exchange component of ~~other~~Other income and (expense) in the Company's Consolidated Income Statements.

Equity Method Investments

The Company has an 11.7% interest in RCB Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil. This investment is accounted for on the equity method because the Company exercises significant influence over RCB’s operating and financial activities. Accordingly, the Company’s investment in RCB is adjusted for the Company’s proportionate share of RCB’s earnings or losses, capital contribution made and distributions received.

5. ~~Goodwill and Intangible Assets, net:~~Goodwill:

In connection with the Company's business acquisitions, the Company acquired certain tangible and intangible assets. Intangible assets resulting from these acquisitions include client and customer relationships, non-compete agreements, trademarks and technology. The Company performs an annual review of goodwill as of October 1 of each year or more frequently if indicators of impairment exist. The Company performed its most recent annual review as of October 1, ~~2019~~2020 and concluded that no goodwill

PRA Group, Inc.

Notes to Consolidated Financial Statements

impairment was necessary. The Company performed its quarterly assessment by evaluating whether any triggering events had occurred as of ~~June 30, 2020,~~March 31, 2021, which included considering current market ~~conditions resulting from the global COVID-19 pandemic.~~conditions. The Company concluded that no triggering event had occurred ~~at June 30, 2020~~as of March 31, 2021 and will continue to monitor the market for any adverse ~~conditions resulting from the COVID-19 pandemic.~~conditions.

The ~~following table represents the~~ changes in goodwill for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019~~were as follows (amounts in thousands):

Three Months Ended June 30, Six Months Ended June 30,
2020 2019 2020 2019
Goodwill:
Balance at beginning of period $ 418,565 $ 480,518 $ 480,794 $ 464,116
Changes:
Acquisition ⁽¹⁾
— 4,711 — 18,364
Foreign currency translation adjustment 25,942 4,064 (36,287) 6,813
Net change in goodwill 25,942 8,775 (36,287) 25,177
Balance at end of period $ 444,507 $ 489,293 $ 444,507 $ 489,293


	Three Months Ended March 31,
	2021		2020
Balance at beginning of period	$	492,989	$	480,794






Change in foreign currency translation adjustment	(238)		(62,229)




Balance at end of period	$	492,751	$	418,565

~~(1) The $4.7 million and $18.4 million additions to goodwill during the three and six months ended June 30, 2019 respectively, were related to the acquisition of a business in Canada.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

6. Leases:

The Company's operating lease portfolio primarily includes corporate offices and call centers. The majority of its leases have remaining lease terms of 1one year to 2015 years, some of which include options to extend the leases for 5five years, and others include options to terminate the leases within 1one year. Exercises of lease renewal options are typically at the Company's sole discretion and are included in its right-of-use ("ROU") assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal options. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The components of lease expense for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020, ~~and 2019,~~ were as follows (amounts in thousands):

Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
Operating lease expense $ 2,974 $ 3,067 $ 6,037 $ 5,930
Short-term lease expense 676 720 1,369 1,562
Total lease expense $ 3,650 $ 3,787 $ 7,406 $ 7,492


	Three Months Ended March 31,
	2021		2020
Operating lease expense	$	2,981	$	3,063
Short-term lease expense	676		693







Total lease expense	$	3,657	$	3,756

Supplemental cash flow information and non-cash activity related to leases for the ~~six~~three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ were as follows (amounts in thousands):

Six months ended June 30,
2020 2019
Cash paid for amounts included in the measurement of operating lease liabilities $ 6,014 $ 5,671
ROU assets obtained in exchange for operating lease obligations (5,999) 80,543


	Three Months Ended March 31,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,865	$	2,991

ROU assets obtained in exchange for operating lease obligations	304		531

Lease term and discount rate information related to operating leases were as follows as of the dates indicated:


		June 30,							Three Months Ended March 31,
		2020		2019			2021		2020
Weighted-average remaining lease term (years)	Weighted-average remaining lease term (years)	9.5		11.0		Weighted-average remaining lease term (years)	9.0		10.6

Weighted-average discount rate	Weighted-average discount rate	4.82	%	4.96	%	Weighted-average discount rate	4.72	%	4.89	%

PRA Group, Inc.

Notes to Consolidated Financial Statements

Maturities of lease liabilities at ~~June 30, 2020~~March 31, 2021 are as follows for the following periods (amounts in thousands):


	Operating Leases
For the ~~six~~nine months ~~ending December 31, 2020~~	$	~~5,860~~
~~For the year~~ ending December 31, 2021	~~11,338~~ $	8,821
For the year ending December 31, 2022	~~9,320~~9,745
For the year ending December 31, 2023	~~7,141~~7,421
For the year ending December 31, 2024	~~6,336~~6,374
For the year ending December 31, 2025	6,178
Thereafter	~~38,919~~29,877
Total lease payments	$	~~78,914~~68,416
~~Less~~Less: imputed interest	~~16,208~~13,094
Total	$	~~62,706~~55,322

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

7. Borrowings:

The Company's borrowings consisted of the following as of the dates indicated (amounts in thousands):


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Americas revolving credit(1)	Americas revolving credit(1)	$	558,103	$	772,037	Americas revolving credit(1)	$	376,392	$	405,706
Europe revolving credit	Europe revolving credit	999,971		1,017,465		Europe revolving credit	1,023,039		1,171,890

Term loan	Term loan	420,000		425,000		Term loan	467,500		470,000

Convertible senior notes		632,500		632,500
Senior Notes						Senior Notes	300,000		300,000
Convertible Notes						Convertible Notes	345,000		345,000
		2,610,574		2,847,002			2,511,931		2,692,596
Less: Debt discount and issuance costs	Less: Debt discount and issuance costs	(30,506)		(38,577)		Less: Debt discount and issuance costs	(10,798)		(31,307)
Total	Total	$	2,580,068	$	2,808,425	Total	$	2,501,133	$	2,661,289

(1) Includes North American revolver and Colombian revolver.

The following principal payments are due on the Company's borrowings as of ~~June 30, 2020~~March 31, 2021 for the 12-month periods ending ~~June 30,~~March 31, (amounts in thousands):


2021		$	298,468
2022	2022	966,715		2022	$	10,979
2023	2023	1,345,391		2023	1,033,708

2024				2024	355,000
2025				2025	812,244
2026				2026	300,000

Total	Total	$	2,610,574	Total	$	2,511,931

The Company determined that it was in compliance with the covenants of its financing arrangements as of ~~June 30, 2020.~~March 31, 2021.

North American Revolving Credit and Term Loan

~~On May 5, 2017, the~~The Company ~~amended and restated its existing~~has a credit agreement ~~(as amended, and modified from time to time, the “North American Credit Agreement”)~~ with Bank of America, N.A., as administrative agent, Bank of America, National Association, acting through its Canada branch, as the Canadian administrative agent, and a syndicate of lenders named ~~therein. On May 6, 2020,~~ therein,(the ~~Company entered into the Second Amendment to the North~~"North American Credit ~~Agreement.~~Agreement").

The total credit facility under the North American Credit Agreement includes an aggregate principal amount of ~~$1,538.0 million~~$1.5 billion (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded ~~$420.0~~$467.5 million term loan, (ii) a ~~$1,068.0 million~~$1.0 billion domestic revolving credit facility, and (iii) a ~~$50.0~~$75.0 million Canadian revolving credit facility. The facility includes an accordion feature for up to $500.0 million in additional commitments (at the option of the lender) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan ~~sublimit~~sub-limit that would reduce amounts available for borrowing. The term and revolving loans accrue interest, at the option of the Company, at either the base rate or the Eurodollar rate (as defined in the North American Credit Agreement), for the applicable term plus 2.50% per annum in the case of the Eurodollar rate loans and 1.50% in the case of the base rate loans (unless the ERC Advance Rate Increase Period event, as defined in the North American Credit Agreement, triggers an additional 55 basis points that would be added to the margin). The base rate is the highest of (a) the Federal Funds Rate (as defined in the North American Credit Agreement) plus 0.50%, (b) Bank of America's prime rate, or (c) the one-month Eurodollar rate plus 1.00%. Canadian Prime Rate Loans bear interest at a rate per annum equal to the Canadian Prime Rate plus 1.50% (unless the ERC Advance Rate Increase Period event, as defined in the North American Credit Agreement, triggers an additional 55 basis points that would be added to the margin).loans. The revolving loans within the credit facility are subject to a 1%0.75% floor.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The revolving credit facilities also bear an unused line fee of 0.375% per annum, payable quarterly in arrears. The loans under the North American Credit Agreement mature May 5, ~~2022.~~2024. As of ~~June 30, 2020,~~March 31, 2021, the unused portion of the North American Credit Agreement was ~~$562.3~~$700.3 million. Considering borrowing base restrictions, as of ~~June 30, 2020,~~March 31, 2021, the amount available to be drawn was ~~$313.6~~$251.0 million.

The North American Credit Agreement is secured by a first priority lien on substantially all of the Company's North American assets. The North American Credit Agreement contains restrictive covenants and events of default including the following:

•borrowings under each of the domestic revolving loan facility and the Canadian revolving loan facility are subject to borrowing base calculations and may not exceed 35% of the ERC through July 30, 2020 on all domestic or Canadian, as applicable, Core eligible pools. On July 31, 2020, the ERC borrowing base ~~limit will increase to 40% until January 31, 2021. If the ERC advance rate drops back to~~is 35% ~~or below during this period, the ERC borrowing base will return to 35%.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

•~~provided no ERC increase has occurred, after January 31, 2021, borrowings under each of the domestic revolving loan facility~~for all eligible core asset pools and ~~the Canadian revolving loan facility are subject to separate borrowing base calculations and may not exceed~~ 55% ~~of the ERC of~~for all ~~domestic or Canadian, as applicable,~~ insolvency eligible asset ~~pools, plus 75% of domestic or Canadian, as applicable, eligible accounts receivable;~~pools;

•the consolidated total leverage ratio cannot exceed ~~2.75~~3.50 to 1.0 as of the end of ~~June 30, 2020. After June 30, 2020 through December 31, 2020 the limit will increase to 3.25 to 1.0. Ending after December 31, 2020, the limit will decrease to 3.0 until maturity;~~any fiscal quarter;

•the consolidated senior secured leverage ratio cannot exceed ~~2.75~~2.25 to 1.0 as of the end of any fiscal ~~quarter until March 31, 2021. On March 31, 2021, the senior secured leverage ratio will decrease to 2.25 to 1.0 until maturity;~~quarter;

•subject to no default or event of default, cash dividends and distributions during any fiscal year cannot exceed $20.0 million;

•~~subject to no default or event of default, stock repurchases during any fiscal year cannot exceed $100.0 million plus 50% of the prior year's consolidated net income;~~

•~~permitted acquisitions during any fiscal year cannot exceed $250.0 million (with a $50.0 million per year sublimit for permitted acquisitions by non-loan parties);~~

•~~indebtedness in the form of senior, unsecured convertible notes or other unsecured financings cannot exceed $750.0 million in the aggregate (without respect to the 2020 Notes);~~ and

•the Company must maintain positive consolidated income from operations during any fiscal ~~quarter; and~~

•~~restrictions on changes in control.~~quarter.

European Revolving Credit Facility ~~and Term Loan~~

~~On October 23, 2014,~~ European subsidiaries of the Company ("PRA Europe") ~~entered into~~are parties to a credit agreement with DNB Bank ASA and a syndicate of lenders named therein, for a Multicurrency Revolving Credit Facility (such agreement as later amended or modified, the "European Credit Agreement"). ~~In the first quarter of 2020,~~On March 12, 2021, the Company entered into the ~~Sixth~~Seventh Amendment and Restatement ~~Agreement~~ to its European Credit Agreement ~~which,~~that, among other things, increased ~~the total commitments~~borrowings by ~~$200.0 million, extended the majority of the facility by 2 years and includes an accordion feature of no less than~~ $50.0 million ~~not to exceed $500.0 million, to allow for future increases.~~through the accordion feature.

~~Under the terms of the~~The European Credit Agreement ~~the credit facility includes~~provides borrowings for an aggregate amount of ~~$1,300.0 million~~approximately $1.35 billion (subject to the borrowing base), accrues interest at the Interbank Offered Rate ~~("IBOR")~~ plus 2.70% - 3.80% (as determined by the estimated remaining collections ratio ("ERC Ratio") as defined in the European Credit Agreement), bears an unused line fee, currently 1.23% per annum, or 35% of the margin, is payable monthly in arrears and matures February 19, 2023. The European Credit Agreement also includes an overdraft facility in the aggregate amount of $40.0 million (subject to the borrowing base), which accrues interest (per currency) at the daily rates as published by the facility agent, bears a facility line fee of 0.125% per quarter, payable quarterly in arrears and matures February 19, 2023. As of ~~June 30, 2020,~~March 31, 2021, the unused portion of the European Credit Agreement (including the overdraft facility) was ~~$340.0~~$367.0 million. Considering borrowing base restrictions and other covenants as of ~~June 30, 2020,~~March 31, 2021, the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was ~~$97.4~~$237.0 million.

The European Credit Agreement is secured by the shares of most of the Company's European subsidiaries and all intercompany loans receivable in Europe. The European Credit Agreement contains restrictive covenants and events of default including the following:

•the ERC Ratio cannot exceed 45%;

•the gross interest-bearing debt ratio in Europe cannot exceed 3.25 to 1.0 as of the end of any fiscal quarter;

•interest bearing deposits in AK Nordic AB cannot exceed SEK 1.2 billion; and

•PRA Europe's cash collections must meet certain thresholds, measured on a quarterly basis.

Colombian Revolving Credit Facility

PRA Group Colombia Holding SAS, ~~a subsidiary of the Company in Colombia, has~~is party to a credit agreement ~~that provides for borrowings~~with Bancolombia in an aggregate amount of approximately ~~$5.4~~$5.3 million. As of ~~June 30, 2020,~~March 31, 2021, the outstanding balance under the credit agreement was ~~$2.4~~approximately $1.6 million, with a weighted average interest rate of 7.13%. The outstanding balance accrues interest at the Indicador Bancario de Referencia rate ~~("IBR")~~ plus a weighted average spread of 2.74%, is payable quarterly in arrears, amortizes quarterly and matures on October 17, 2022 (per the credit agreement, maturity represents three years from the last draw). This credit facility is fully collateralized using time deposits with the ~~lender that are subject to certain limitations regarding withdrawal and usage and are included within other assets on the Company's Consolidated Balance Sheets.~~lender. As of ~~June 30, 2020,~~March 31, 2021, the unused portion of the ~~Colombia Credit Agreement~~credit agreement was approximately ~~$3.0~~$3.7 million.

Senior Notes due 2025

On August 27, 2020, the Company completed the private offering of $300.0 million in aggregate principal amount of its 7.375% Senior Notes due September 1, 2025 (the "2025 Notes" or "Senior Notes"). The 2025 Notes were issued pursuant to an Indenture dated August 27, 2020 (the "2020 Indenture"), between the Company and Regions Bank, as a trustee. The 2020

PRA Group, Inc.

Notes to Consolidated Financial Statements

~~Convertible Senior Notes due 2020~~

On August 13, 2013, the Company completed the private offering of $287.5 million in aggregate principal amount of its 3.00% Convertible Senior Notes due August 1, 2020 (the "2020 Notes"). The 2020 Notes were issued pursuant to an Indenture, dated August 13, 2013 (the "2013 Indenture"), between the Company and Regions Bank, as successor trustee. The 2013 Indenture contains customary terms and covenants, including certain events of default after which the ~~2020~~2025 Notes may be due and payable immediately. The ~~2020~~2025 Notes are senior unsecured obligations of the ~~Company.~~Company and are guaranteed on a senior unsecured basis by all of the Company's existing and future domestic restricted subsidiaries that guarantee the North American Credit Agreement, subject to certain exceptions. Interest on the ~~2020~~2025 Notes is payable semi-annually, in arrears, on ~~February~~March 1 and ~~August~~September 1 of each year. ~~Prior~~

On or after September 1, 2022, the 2025 Notes may be redeemed, in whole or in part, at a price equal to ~~February 1, 2020, the 2020 Notes were convertible only upon the occurrence~~103.688% of ~~specified events. As of June 30, 2020 the 2020 Notes are convertible at any time.~~

The conversion rate for the 2020 Notes is initially 15.2172 shares per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $65.72 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2013 Indenture. Upon conversion, holders of the 2020 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's intent is to settle conversions through combination settlement (i.e., ~~the 2020 Notes would be convertedinto cash up to~~ the aggregate principal amount ~~and shares~~ of the ~~Company's~~2025 Notes being redeemed. The applicable redemption price changes if redeemed during the 12-months beginning September 1 of each year to, 101.844% for 2023 and then 100% for 2024 and thereafter.

In addition, on or before September 1, 2022, the Company may redeem up to 40% of the aggregate principal amount of the 2025 Notes at a redemption price of 107.375% plus accrued and unpaid interest subject to the rights of holders of the 2025 Notes with the net cash proceeds of a public offering of common stock ~~or a combination of cash and shares~~ of the ~~Company's common stock,~~Company provided, that at ~~the Company's election, for the remainder). As a result and~~least 60% in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlementaggregate principal amount of the ~~conversion spread has a dilutive effect when~~2025 Notes remains outstanding immediately after the ~~average share price~~occurrence of ~~the Company's common stock during any quarter exceeds $65.72.~~

~~The Company determined~~such redemption and that ~~the fair value~~such redemption will occur within 90 days of ~~the 2020 Notes at~~ the date of ~~issuance was approximately $255.3 million, and designated~~ the ~~residual value~~closing of ~~approximately $32.2 million as~~such public offering.

In the ~~equity component. Additionally,~~event of a Change of Control (as defined in the 2020 Indenture), the Company ~~allocated approximately $7.3 million~~must offer to repurchase all of the ~~$8.2 million 2020~~2025 Notes ~~issuance cost as debt issuance cost~~(unless otherwise redeemed) at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. If the ~~remaining $0.9 million as equity issuance cost.~~

~~The 2020~~Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company will be required to make an offer to repurchase the 2025 Notes ~~matured on August 1, 2020. For more information refer to Note 15.~~at 100% of their principal amount, plus accrued and unpaid interest.

Convertible Senior Notes due 2023

On May 26, 2017, the Company completed the private offering of $345.0 million in aggregate principal amount of its 3.50% Convertible Senior Notes due June 1, ~~2023 (the "2023 Notes" and, together with the 2020 Notes, the "Notes").~~2023. The 2023 Notes were issued pursuant to an Indenture, dated May 26, 2017 (the "2017 Indenture"), between the Company and Regions Bank, as trustee. The 2017 Indenture contains customary terms and covenants, including certain events of default after which the 2023 Notes may be due and payable immediately. The 2023 Notes are senior unsecured obligations of the Company. Interest on the 2023 Notes is payable semi-annually, in arrears, on June 1 and December 1 of each year. ~~Prior~~

The holders of the 2023 Notes have the right to convert all, or a portion of, the 2023 Notes upon occurrence of specific events prior to the close of business on the business day immediately preceding prior to March 1, 2023 including:

•if during any calendar quarter, the last reported sales price of the Company's common stock is greater than 130% of the conversion price for at least 20 trading days during the period of 30 consecutive trading days;

•if the trading price of the 2023 Notes ~~will be convertible only upon~~is less than 98% of the ~~occurrence~~product of ~~specified events.~~ the last reported sales price of the Company's common stock and the conversion rate for a 10 consecutive trading day period;

•the Company elects to issue to all, or substantially all, holders of its common stock any rights, options or warrants entitling them, for a period of more than 45 calendar days, to subscribe for or purchase shares at a price per share that is less than the average of the last reported sales price (as defined in the 2017 Indenture) for the 10 consecutive trading day-period ending on the trading day immediately preceding the date of announcement of such issuance;

•the Company elects to distribute to all, or substantially all, holders of its common stock the Company’s assets, debt securities or rights to purchase securities of the Company, which distribution has a share value exceeding 10% of the last reported sale price (as defined in the 2017 Indenture) on the trading day preceding the announcement of such distribution; or

•a transaction occurs that constitutes a fundamental change (as defined in the 2017 Indenture) or, the Company is party to a consolidation, merger, binding share exchange, or transfer or lease of all, or substantially all, of the Company’s assets.

On or after March 1, 2023, the 2023 Notes will be convertible at any time. ~~The~~As of March 31, 2021, the Company does not believe that any of the conditions allowing holders of the 2023 Notes to convert their notes has occurred.

Furthermore, the Company has the right, at its election, to redeem all or any part of the outstanding 2023 Notes at any time on or after June 1, 2021 for cash, but only if the last reported sale price (as defined in the 2017 Indenture) of the Company's common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on and including the trading day immediately before the date the Company sends the related redemption notice. ~~As of June 30, 2020, the Company does not believe that any of the conditions allowing holders of the 2023~~

PRA Group, Inc.

Notes to ~~convert their notes have occurred.~~Consolidated Financial Statements

The conversion rate for the 2023 Notes is ~~initially~~ 21.6275 shares per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $46.24 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2017 Indenture. Upon conversion, holders of the 2023 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The ~~Company's intent is~~Company has made an irrevocable election to settle conversions ~~through combination settlement (i.e~~., by paying holders of the 2023 Notes ~~would be convertedinto~~ cash up to the aggregate principal amount of the 2023 Notes and shares of the Company's common stock or a combination of cash ~~and~~and shares of the Company's common stock, at the Company's election, for the ~~remainder). As a result and in~~remaining amounts owed, if any.

In accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted ~~earnings per share~~EPS calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the ~~average share price of the Company's common stock during any quarter exceeds $46.24.~~market conversion criteria is met.

The Company determined that the fair value of the 2023 Notes at the date of issuance was approximately $298.8 million, and designated the residual value of approximately $46.2 million as the equity component. Additionally, the Company allocated approximately $8.3 million of the $9.6 million 2023 Notes issuance cost as debt issuance cost and the remaining $1.3 million as equity issuance cost.

~~PRA Group, Inc.~~

~~Notes~~ Upon adoption of ASU 2020-06, the equity classification model was eliminated, resulting in an adjustment to ~~Consolidated Financial Statements~~

retained earnings and an increase to the 2023 Notes. Refer to Note 2, Change in Accounting Principle, for further information.

The balances of the liability and equity components of the ~~Notes~~Company's convertible notes outstanding as of March 31, 2021 and December 31, 2020, were as follows ~~as of the dates indicated~~ (amounts in thousands):


		June 30, 2020		December 31, 2019			March 31, 2021		December 31, 2020
Liability component - principal amount	Liability component - principal amount	$	632,500	$	632,500	Liability component - principal amount	$	345,000	$	345,000
Unamortized debt discount	Unamortized debt discount	(24,950)		(31,414)		Unamortized debt discount	0		(20,603)
Unamortized debt issuance costs						Unamortized debt issuance costs	(3,732)		(3,335)
Liability component - net carrying amount	Liability component - net carrying amount	$	607,550	$	601,086	Liability component - net carrying amount	$	341,268	$	321,062
Equity component	Equity component	$	76,216	$	76,216	Equity component	$	0	$	44,910

The Company amortizes debt ~~discount is being amortized into interest expense~~issuance costs over the ~~remaining~~ life of the ~~2020 Notes and the 2023 Notes~~debt using the effective interest method. Upon adoption of ASU 2020-06 the debt discount was eliminated and the debt issuance costs were remeasured, resulting in an effective interest rate ~~which is 4.92% and 6.20%, respectively.~~of 4.00%.

Interest expense related to the ~~Notes~~Company's convertible notes for the three months ended March 31, 2021 and 2020, was as follows ~~for the periods indicated~~ (amounts in thousands):


		Three Months Ended June 30,						Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019		2020		2019			2021		2020 (1)
Interest expense - stated coupon rate	Interest expense - stated coupon rate	$	5,175	$	5,175	$	10,350	$	10,350	Interest expense - stated coupon rate	$	3,019	$	5,175
Interest expense - amortization of debt discount	Interest expense - amortization of debt discount	3,247		3,071		6,464		6,113		Interest expense - amortization of debt discount	0		3,217
Total interest expense - convertible senior notes		$	8,422	$	8,246	$	16,814	$	16,463
Interest expense - amortization of debt issuance costs										Interest expense - amortization of debt issuance costs	$	404	$	606
Total interest expense - convertible notes										Total interest expense - convertible notes	$	3,423	$	8,998

(1) 2020 amounts include interest expense related to the 3.00% Convertible Senior Notes due August 1, 2020, which were repaid in the third quarter of 2020. Refer to Note 7 of the Company's Consolidated Financial Statements included in Item 8 of the 2020 Form 10-K.

8. Derivatives:

The Company periodically enters into derivative financial instruments, typically interest rate swap agreements, interest rate caps and foreign currency contracts to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. The Company does not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor does it enter into or hold derivatives for trading or speculative purposes. The Company periodically reviews the creditworthiness of the counterparty to assess the counterparty’s ability to honor its obligation. Counterparty default would expose the Company to fluctuations in interest and currency rates. Derivative financial instruments are recognized at fair value in the Consolidated Balance Sheets, in accordance with the guidance of ASC ~~Topic 815 “Derivatives and Hedging”~~815. In 2020, the Company adopted ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“~~ASC 815”~~ASU 2020-04”). ASU 2020-04 allows the Company to elect certain expedients to continue accounting for its interest rate swap contracts designated as cash flow hedges.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table summarizes the fair value of derivative instruments in the Company's Consolidated Balance Sheets as of ~~the dates indicated~~March 31, 2021 and December 31, 2020 (amounts in thousands):

June 30, 2020

December 31, 2019

March 31, 2021

December 31, 2020

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

—

Other assets

323

Interest rate contracts

Other assets

1,413

Other assets

Interest rate contracts

Other liabilities

48,279

Other liabilities

17,807

Interest rate contracts

Other liabilities

29,081

Other liabilities

43,017

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

1,804

Other assets

552

Foreign currency contracts

Other assets

3,437

Other assets

3,512

Foreign currency contracts

Other liabilities

17,858

Other liabilities

5,856

Foreign currency contracts

Other liabilities

2,369

Other liabilities

2,415

Derivatives Designated as Hedging Instruments:

Changes in fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the notional amount of interest rate contracts designated as cash flow hedging instruments was ~~$910.8~~$901.8 million and ~~$959.0~~$967.2 million, respectively. Derivatives designated as cash flow hedging instruments were evaluated and remain highly effective at ~~June 30, 2020~~March 31, 2021 and have initial terms of one to ~~six~~five years. The Company estimates that approximately ~~$9.9~~$9.1 million of net derivative loss included in OCI will be reclassified into earnings within the next 12 months.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The following table summarizes the effects of derivatives designated as cash flow hedging instruments on the ~~consolidated financial statements~~Consolidated Financial Statements for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (amounts in thousands):


		Gain or (loss) recognized in OCI, net of tax
		Three Months Ended June 30,						Six Months Ended June 30,							Gain or (loss) recognized in OCI, net of tax
Derivatives designated as cash flow hedging instruments	Derivatives designated as cash flow hedging instruments	2020		2019		2020		2019		Derivatives designated as cash flow hedging instruments	March 31, 2021		March 31, 2020
Interest rate contracts	Interest rate contracts	$	(5,515)	$	(8,121)	$	(26,865)	$	(13,915)	Interest rate contracts	$	9,692	$	(21,350)

		Gain or (loss) reclassified from OCI into income														Gain or (loss) reclassified from OCI into income
		Three Months Ended June 30,						Six Months Ended June 30,
Location of gain or (loss) reclassified from OCI into income	Location of gain or (loss) reclassified from OCI into income	2020		2019		2020		2019		Location of gain or (loss) reclassified from OCI into income	March 31, 2021		March 31, 2020
Interest expense, net	Interest expense, net	$	(2,301)	$	(119)	$	(3,313)	$	(198)	Interest expense, net	$	(3,336)	$	(1,012)

Derivatives Not Designated as Hedging Instruments:

Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. The Company also enters into foreign currency contracts to economically hedge the foreign currency re-measurement exposure related to certain balances that are denominated in currencies other than the functional currency of the entity. As of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, the notional amount of foreign currency contracts that are not designated as hedging instruments was ~~$455.6~~$447.2 million and ~~$469.9~~$500.8 million, respectively.

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s Consolidated Income Statements for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (amounts in thousands):


			Amount of gain or (loss) recognized in income								Amount of gain or (loss) recognized in income
			Three Months Ended June 30,
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	2020		2019		Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	March 31, 2021		March 31, 2020
Foreign currency contracts	Foreign currency contracts	Foreign exchange gain/(loss)	$	(1,629)	$	(2,415)	Foreign currency contracts	Foreign exchange (loss)/gain	$	2,097	$	26,786
Foreign currency contracts	Foreign currency contracts	Interest expense, net	(812)		(1,487)		Foreign currency contracts	Interest expense, net	114		(1,001)
Interest rate contracts	Interest rate contracts	Interest expense, net	—		(158)		Interest rate contracts	Interest expense, net	0		1,038

			Amount of gain or (loss) recognized in income
			Six Months Ended June 30,
Derivatives not designated as hedging instruments		Location of gain or (loss) recognized in income	2020		2019
Foreign currency contracts		Foreign exchange gain/(loss)	$	25,157	$	(7,671)
Foreign currency contracts		Interest expense, net	(1,813)		(1,487)
Interest rate contracts		Interest expense, net	—		(507)

9. Fair Value:

As defined by ASC Topic 820, "Fair Value ~~Measurements~~Measurement and Disclosures" ("ASC 820"), fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. ASC 820 requires the consideration of differing levels of inputs in the determination of fair values.

Those levels of input are summarized as follows:

•Level 1: Quoted prices in active markets for identical assets and liabilities.

PRA Group, Inc.

Notes to Consolidated Financial Statements

•Level 2: Observable inputs other than Level 1 quoted prices, such as quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market.

•Level 3: Unobservable inputs that are supported by little or no market activity. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques as well as instruments for which the determination of fair value requires significant management judgment or estimation.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety.

Financial Instruments Not Required To Be Carried at Fair Value

In accordance with the disclosure requirements of ASC Topic 825, "Financial Instruments" ("ASC 825"), the table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

The carrying amounts in the table are recorded in the Consolidated Balance Sheets at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (amounts in thousands):


		June 30, 2020						December 31, 2019							March 31, 2021				December 31, 2020
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:	Financial assets:									Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	115,741	$	115,741	$	119,774	$	119,774	Cash and cash equivalents	$	92,798	$	92,798	$	108,613	$	108,613

Restricted cash										Restricted cash	16,057		16,057		12,434		12,434
Finance receivables, net	Finance receivables, net	3,351,532		3,426,048		3,514,165		3,645,610		Finance receivables, net	3,372,666		3,365,936		3,514,788		3,541,159
Financial liabilities:	Financial liabilities:									Financial liabilities:
Interest-bearing deposits	Interest-bearing deposits	120,520		120,520		106,246		106,246		Interest-bearing deposits	124,998		124,998		132,739		132,739
Revolving lines of credit	Revolving lines of credit	1,558,074		1,558,074		1,789,502		1,789,502		Revolving lines of credit	1,399,431		1,399,431		1,577,596		1,577,596
Term loan	Term loan	420,000		420,000		425,000		425,000		Term loan	467,500		467,500		470,000		470,000

Convertible senior notes		607,550		642,499		601,086		648,968
Senior Notes										Senior Notes	300,000		321,495		300,000		324,408
Convertible Notes										Convertible Notes	345,000		370,627		324,397		376,012

Disclosure of the estimated fair values of financial instruments often requires the use of estimates. The carrying amount and estimates of the fair value of the Company's debt obligations outlined above do not include any related debt issuance costs associated with the debt obligations. The Company uses the following methods and assumptions to estimate the fair value of financial instruments:

Cash and cash ~~equivalents:~~equivalents and restricted cash: The carrying amount approximates fair value and quoted prices for identical assets that can be found in active markets. Accordingly, the Company estimates the fair value of cash, ~~and~~ cash equivalents and restricted cash using Level 1 inputs.

Finance receivables, net: The Company estimates the fair value of these receivables using proprietary pricing models that the Company utilizes to make portfolio acquisition decisions. Accordingly, the Company's fair value estimates use Level 3 inputs as there is little observable market data available and management is required to use significant judgment in its estimates.

Interest-bearing deposits: The carrying amount approximates fair value due to the short-term nature of the deposits and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

Revolving lines of credit: The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

Term loan: The carrying amount approximates fair value due to the short-term nature of the interest rate periods and the observable quoted prices for similar instruments in active markets. Accordingly, the Company uses Level 2 inputs for its fair value estimate.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Senior and Convertible ~~senior notes:~~Notes: The fair value estimates for the Senior Notes and the Convertible Notes incorporate quoted market prices, which were obtained from secondary market broker quotes, which were derived from a variety of inputs including client orders, information from their pricing vendors, modeling software and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Furthermore, in the table above, the carrying amount of December 31, 2020 represents the ~~portion~~Convertible Notes net of the ~~Notes classified as~~ debt ~~while estimated fair value pertains to~~discount. Upon adoption of ASU 2020-06, the ~~face~~carrying amount of the ~~Notes.~~

~~PRA Group, Inc.~~

Convertible Notes ~~to Consolidated Financial Statements~~

reflects face value as the debt discount was eliminated.

Financial Instruments Required To Be Carried At Fair Value

The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying Consolidated Balance Sheets at ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019~~2020 (amounts in thousands):


		Fair Value Measurements as of June 30, 2020															Fair Value Measurements as of March 31, 2021
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:

Available-for-sale investments	Available-for-sale investments									Available-for-sale investments
Government bonds	Government bonds	$	4,767	$	—	$	—	$	4,767	Government bonds	$	5,308	$	0	$	0	$	5,308
Fair value through net income	Fair value through net income									Fair value through net income
Exchange traded funds										Exchange traded funds	34,841		0		0		34,841
Mutual funds	Mutual funds	743		—		—		743		Mutual funds	896		0		0		896
Derivative contracts (recorded in other assets)	Derivative contracts (recorded in other assets)	—		1,804		—		1,804		Derivative contracts (recorded in other assets)	0		4,850		0		4,850
Liabilities:	Liabilities:									Liabilities:
Derivative contracts (recorded in other liabilities)	Derivative contracts (recorded in other liabilities)	—		66,137		—		66,137		Derivative contracts (recorded in other liabilities)	0		31,450		0		31,450

		Fair Value Measurements as of December 31, 2019															Fair Value Measurements as of December 31, 2020
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:

Available-for-sale investments	Available-for-sale investments									Available-for-sale investments
Government bonds	Government bonds	$	5,052	$	—	$	—	$	5,052	Government bonds	$	5,368	$	0	$	0	$	5,368
Fair value through net income	Fair value through net income									Fair value through net income
Exchange traded funds										Exchange traded funds	34,847		0		0		34,847
Mutual funds	Mutual funds	33,677		—		—		33,677		Mutual funds	1,023		0		0		1,023
Derivative contracts (recorded in other assets)	Derivative contracts (recorded in other assets)	—		875		—		875		Derivative contracts (recorded in other assets)	0		3,512		0		3,512
Liabilities:	Liabilities:									Liabilities:
Derivative contracts (recorded in other liabilities)	Derivative contracts (recorded in other liabilities)	—		23,663		—		23,663		Derivative contracts (recorded in other liabilities)	0		45,432		0		45,432

Available-for-sale investments

Government bonds: Fair value of the Company's investment in government bonds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

Fair value through net income investments

Exchange traded funds: Fair value of the Company's investment in exchange traded funds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

Mutual funds: Fair value of the Company's investment in mutual funds is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

Derivative contracts: The estimated fair value of the derivative contracts is determined using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Investments measured using net asset value ("NAV")

Private equity funds: This class of investments consists of private equity funds that invest primarily in loans and securities including single-family residential debt; corporate debt products; and financially-oriented, real-estate-rich and other operating companies in the Americas, Western Europe and Japan. These investments are subject to certain restrictions regarding transfers and withdrawals. The investments cannot be redeemed with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation of the underlying assets of the fund. The investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over one to five years. The fair value of these private equity funds following the application of the ~~Net Asset Value ("NAV")~~NAV practical expedient was ~~$5.6~~$6.2 million and ~~$7.2~~$6.1 million as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

10. Accumulated Other Comprehensive Loss:

The following table provides details about the reclassifications ~~out of~~from accumulated other comprehensive ~~gain/(loss)~~loss for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (amounts in thousands):

Three Months Ended June 30,
Gains and losses on cash flow hedges 2020 2019 Affected line in the consolidated income statement
Interest rate swaps $ (2,301) $ (119) Interest expense, net
Income tax effect of item above 539 — Income tax expense
Total losses on cash flow hedges $ (1,762) $ (119) Net of tax
Six Months Ended June 30,
Gains and losses on cash flow hedges 2020 2019 Affected line in the consolidated income statement
Interest rate swaps $ (3,313) $ (198) Interest expense, net
Income tax effect of item above 769 — Income tax expense
Total losses on cash flow hedges $ (2,544) $ (198) Net of tax


	Three Months Ended March 31,
Gains and losses on cash flow hedges	2021		2020		Affected line in the Consolidated Income Statement
Interest rate swaps	$	(3,336)	$	(1,012)	Interest expense, net
Income tax effect of item above	705		230		Income tax expense
Total losses on cash flow hedges	$	(2,631)	$	(782)	Net of tax

The following table represents the changes in accumulated other comprehensive ~~gain/(loss)~~loss by component, after tax, for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (amounts in thousands):


		Three Months Ended June 30, 2020															Three Months Ended March 31, 2021
		Debt Securities		Cash Flow		Currency Translation		Accumulated Other			Debt Securities		Cash Flow		Currency Translation		Accumulated Other
		Available-for-sale		Hedges		Adjustments		Comprehensive Loss ⁽¹⁾			Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Ending balance at March 31, 2020		$	126	$	(33,656)	$	(342,087)	$	(375,617)
Balance at beginning of period										Balance at beginning of period	$	127	$	(33,349)	$	(212,569)	$	(245,791)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	51		(5,515)		32,107		26,643		Other comprehensive loss before reclassifications	0		9,692		(20,108)		(10,416)
Reclassifications, net	Reclassifications, net	—		1,762		—		1,762		Reclassifications, net	0		2,631		0		2,631
Net current period other comprehensive loss	Net current period other comprehensive loss	51		(3,753)		32,107		28,405		Net current period other comprehensive loss	0		12,323		(20,108)		(7,785)
Ending balance at June 30, 2020		$	177	$	(37,409)	$	(309,980)	$	(347,212)
Balance at end of period										Balance at end of period	$	127	$	(21,026)	$	(232,677)	$	(253,576)

		Three Months Ended June 30, 2019															Three Months Ended March 31, 2020
		Debt Securities		Cash Flow		Currency Translation		Accumulated Other			Debt Securities		Cash Flow		Currency Translation		Accumulated Other
		Available-for-sale		Hedges		Adjustments		Comprehensive Loss⁽¹⁾			Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Ending balance at March 31, 2019		$	(38)	$	(5,671)	$	(242,812)	$	(248,521)
Balance at beginning of period										Balance at beginning of period	$	(44)	$	(13,088)	$	(247,886)	$	(261,018)
Other comprehensive loss before reclassifications	Other comprehensive loss before reclassifications	37		(8,121)		4,362		(3,722)		Other comprehensive loss before reclassifications	170		(21,350)		(94,201)		(115,381)
Reclassifications, net	Reclassifications, net	—		119		—		119		Reclassifications, net	0		782		0		782
Net current period other comprehensive loss	Net current period other comprehensive loss	37		(8,002)		4,362		(3,603)		Net current period other comprehensive loss	170		(20,568)		(94,201)		(114,599)
Ending balance at June 30, 2019		$	(1)	$	(13,673)	$	(238,450)	$	(252,124)
Balance at end of period										Balance at end of period	$	126	$	(33,656)	$	(342,087)	$	(375,617)

(1) ~~For the three months ended June 30, 2020 and 2019, net~~Net of deferred taxes for unrealized losses from cash flow hedges ~~were $0.7~~of $6.4 million and ~~$2.8~~$10.0 million for the three months ended March 31, 2021 and 2020, respectively.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Six Months Ended June 30, 2020
Debt Securities Cash Flow Currency Translation Accumulated Other
Available-for-sale Hedges Adjustments
Comprehensive Loss ⁽²⁾
Ending balance at December 31, 2019 $ (44) $ (13,088) $ (247,886) $ (261,018)
Other comprehensive loss before reclassifications 221 (26,865) (62,094) (88,738)
Reclassifications, net — 2,544 — 2,544
Net current period other comprehensive loss 221 (24,321) (62,094) (86,194)
Ending balance at June 30, 2020 $ 177 $ (37,409) $ (309,980) $ (347,212)
Six Months Ended June 30, 2019
Debt Securities Cash Flow Currency Translation Accumulated Other
Available-for-sale Hedges Adjustments
Comprehensive Loss⁽²⁾
Ending balance December 31, 2018 $ (83) $ 44 $ (242,070) $ (242,109)
Other comprehensive loss before reclassifications 82 (13,915) 3,620 (10,213)
Reclassifications, net — 198 — 198
Net current period other comprehensive loss 82 (13,717) 3,620 (10,015)
Ending balance June 30, 2019 $ (1) $ (13,673) $ (238,450) $ (252,124)
(2) For the six months ended June 30, 2020 and 2019, net of deferred taxes for unrealized losses from cash flow hedges were $10.7 million and $4.5 million, respectively.

11. Earnings per Share:

Basic earnings per share ("EPS") are computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS are computed using the same components as basic EPS with the denominator adjusted for the dilutive effect of the Convertible Notes and nonvested share awards, if dilutive. There has been no dilutive effect of the ~~convertible senior notes~~Convertible Notes since issuance through ~~June 30, 2020.~~March 31, 2021. Share-based awards that are contingent upon the attainment of performance goals are included in the computation of diluted EPS if the effect is dilutive. The dilutive effect of nonvested shares is computed using the treasury stock method, which assumes any proceeds that could be

PRA Group, Inc.

Notes to Consolidated Financial Statements

obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period.

The following table provides a reconciliation between the computation of basic EPS and diluted EPS for the three ~~and six~~ months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (amounts in thousands, except per share amounts):


		For the Three Months Ended June 30,																			For the Three Months Ended March 31,
		2020								2019										2021			2020
		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS			Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	Basic EPS	$	57,914	45,548	$	1.27	$	18,619	45,387	$	0.41	Basic EPS	$	58,406	45,669	$	1.28	$	19,135	45,452	$	0.42
Dilutive effect of nonvested share awards	Dilutive effect of nonvested share awards			439	(0.01)				108	—		Dilutive effect of nonvested share awards	—		376	(0.01)		—		332	0

Diluted EPS	Diluted EPS	$	57,914	45,987	$	1.26	$	18,619	45,495	$	0.41	Diluted EPS	$	58,406	46,045	$	1.27	$	19,135	45,784	$	0.42

		For the Six Months Ended June 30,
		2020								2019
		Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS		$	77,049	45,500	$	1.69	$	33,846	45,363	$	0.75
Dilutive effect of nonvested share awards				386	(0.01)				94	(0.01)
Diluted EPS		$	77,049	45,886	$	1.68	$	33,846	45,457	$	0.74

There were 0 ~~antidilutive~~ options outstanding, ~~for the three~~antidilutive or otherwise, as of March 31, 2021 and ~~six months ended June 30, 2020 and 2019.~~2020.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

12. Income Taxes:

The Company ~~follows the guidance of~~accounts for income taxes in accordance with FASB ASC Topic 740 "Income Taxes" ("ASC 740") as it relates to the provision for income taxes and uncertainty in income taxes. The guidance prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

On May 10, 2017, the Company reached a settlement with the Internal Revenue Service ("IRS") regarding the IRS assertion that tax revenue recognition using the cost recovery method did not clearly reflect taxable income. In accordance with the settlement, the Company changed its tax accounting method used to recognize finance receivables revenue effective with tax year 2017. Under the new method, a portion of the annual collections amortizes principal and the remaining portion is taxable income. The deferred tax liability related to the difference in timing between the new method and the cost recovery method has been incorporated evenly into the Company’s tax filings over four years effective with tax year 2017 and ending with tax year 2020. The Company was not required to pay any interest or penalties in connection with the settlement.

OnAt March 27, 2020, the Coronavirus Aid, Relief, and Economic Security ("CARES") Act was enacted into U.S. law in response to COVID-19 with varying legislation enacted in many of the countries in which the Company operates. While the Company is continuing to evaluate impact, the Company has implemented the tax payment and filing deferral provisions as applicable on a global basis and does not believe that any of the other provisions will have a material impact to its financial reporting. As tax legislative updates continue to be released, they will be monitored by the Company.

~~At June 30, 2020,~~31, 2021, the tax years subject to examination by the major federal, state and international taxing jurisdictions are 2013 and subsequent years.

The Company intends for predominantly all international earnings to be indefinitely reinvested in its international operations; therefore, the recording of deferred tax liabilities for such unremitted earnings is not required. If international earnings were repatriated, the Company may need to accrue and pay taxes, although foreign tax credits may be available to partially reduce U.S. income taxes. The amount of cash on hand related to international operations with indefinitely reinvested earnings was ~~$96.7~~$62.2 million and ~~$109.7~~$97.0 million as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively.

13. Commitments and Contingencies:

Employment Agreements:

The Company has entered into employment agreements ~~most~~with each of its U.S. executive officers, which expire on December 31, ~~2020, with all of its U.S. executive officers and with several members of its U.S. senior management group.~~2023. Such agreements provide for base salary payments as well as potential discretionary bonuses that ~~take into consideration~~consider the Company’s overall performance against its short and long-term financial and strategic objectives. The agreements also contain customary confidentiality and non-compete provisions. At ~~June 30, 2020,~~March 31, 2021, estimated future compensation under these agreements was approximately ~~$4.0~~$17.8 million. ~~The agreements also contain confidentiality and non-compete provisions.~~ Outside the U.S., the Company has entered into employment agreements ~~are in place~~ with certain employees pursuant to local country regulations. Generally, these agreements do not have expiration ~~dates and therefore~~dates. As a result it is impractical to estimate the amount of future compensation under these agreements. Accordingly, the future compensation under these agreements is not included in the ~~$4.0~~$17.8 million total above.

Forward Flow Agreements:

The Company is party to several forward flow agreements that allow for the purchase of nonperforming loans at pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at ~~June 30, 2020,~~March 31, 2021, was approximately ~~$383.7~~$640.7 million.

Finance Receivables:

Certain agreements for the purchase of finance receivables portfolios contain provisions that may, in limited circumstances, require the Company to refund a portion or all of the collections subsequently received by the Company on particular accounts. The potential refunds as of the balance sheet date are not considered to be significant.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Litigation and Regulatory Matters:

The Company and its subsidiaries are from time to time subject to a variety of routine legal and regulatory claims, inquiries and proceedings and regulatory matters, most of which are incidental to the ordinary course of its business. The Company initiates lawsuits against customers and is occasionally countersued by them in such actions. Also, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against the Company in which they allege that the Company has violated a state or federal law in the process of collecting on an

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

account. From time to time, other types of lawsuits are brought against the Company. Additionally, the Company receives subpoenas and other requests or demands for information from regulators or governmental authorities who are investigating the Company's debt collection activities.

The Company accrues for potential liability arising from legal proceedings and regulatory matters when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. This determination is based upon currently available information for those proceedings in which the Company is involved, taking into account the Company's best estimate of such losses for those cases for which such estimates can be made. The Company's estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the number of unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many of the claims), and the related uncertainty of the potential outcomes of these proceedings. In making determinations of the likely outcome of pending litigation, the Company considers many factors, including, but not limited to, the nature of the claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside legal counsel, the likelihood of resolving the matter through alternative mechanisms, the matter's current status and the damages sought or demands made. Accordingly, the Company's estimate will change from time to time, and actual losses could be more than the current estimate.

The Company believes that the estimate of the aggregate range of reasonably possible losses in excess of the amount accrued for its legal proceedings outstanding at ~~June 30, 2020,~~March 31, 2021, where the range of loss can be estimated, was not material.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. Loss estimates and accruals for potential liability related to legal proceedings are typically exclusive of potential recoveries, if any, under the Company's insurance policies or third-party indemnities. At June 30, 2020 and December 31, 2019, the Company had $1.8 million and $1.0 million in recoveries receivable under the Company's insurance policies or third-party indemnities, respectively. These amounts

Matters that are ~~included in other receivables, net in the Consolidated Balance Sheets.~~

~~The matter below, in addition to the matters~~not considered routine legal proceedings were disclosed previously in the ~~2019~~2020 Form ~~10-K, fall outside of the normal parameters of the Company's routine legal proceedings.~~

~~Telephone Consumer Protection Act ("TCPA") Litigation~~

~~On January 25, 2017, the Company settled the matter of~~ ~~In Re Portfolio Recovery Associates, LLC Telephone Consumer Protection Act Litigation~~, which consisted of a number of class actions and single plaintiff claims consolidated by order of the Panel for Multi-District Litigation ("MDL"). While the settlement disposed of a large number of claims, several hundred class members opted out ("Opt-Out Plaintiffs") of that settlement. Many of these Opt-Out Plaintiffs have been consolidated before the MDL appointed court, the United States District Court for the Southern District of California, and are pending a determination on cross-motions for summary judgment. On July 9, 2020, the Supreme Court of the United States granted certiorari in the matter of ~~Facebook v. Duguid~~ to resolve the split between the Circuit Courts of Appeal on the issue of the definition of an Automatic Telephone Dialing System. A decision in that case is expected to be dispositive of many or all TCPA matters currently pending, most of which are now stayed as a result of the grant of certiorari. The range of loss, if any, cannot be estimated at this time due to the uncertainty surrounding liability.10-K.

14. Recently Issued Accounting Standards:

Recently issued accounting standards ~~adopted:~~

~~Financial Instruments - Credit Losses~~

Effective January 1, 2020, the Company adopted ASC 326 on a prospective basis. Prior to January 1, 2020, substantially all of the Company's investment in finance receivables were accounted for under ASC 310-30. Refer to Note 2 for comprehensive details.

~~Intangibles - Goodwill and Other~~

In January 2017, FASB issued ASU 2017-04 which eliminates Step 2 of the goodwill impairment test. Instead, an entity performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~test is necessary. The Company adopted ASU 2017-04 on January 1, 2020 which had no impact on its consolidated financial statements.~~

~~Fair Value Measurement~~

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement” ("ASU 2018-13"). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The Company adopted ASU 2018-13 on January 1, 2020 which had no impact to the Company's Notes to Consolidated Financial Statements.

~~Recently issued accounting standards not yet~~ adopted:

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“("ASU ~~2019-12”~~2019-12"). ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments and calculating income taxes in interim periods. Additionally, itthe standard adds guidance to reduce complexity in certain areas, including recognizing taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual and interim periods beginning after December 15, 2020 on a prospective basis, and early adoption is permitted. The Company ~~is currently evaluating the impact of~~adopted ASU 2019-12 on January 1, 2021 with no material impact to its ~~consolidated~~ financial statements ~~and expects to adopt January 1, 2021. The Company does not expect adoption to have a material impact on its consolidated financial statements.~~upon adoption.

Investments-Equity Securities

In January 2020, the FASB issued ASU 2020-01 “Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815” (“("ASU ~~2020-01”~~2020-01"). ASU 2020-01 clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. Additionally, it clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. ~~This standard is effective for public entities for~~The Company adopted ASU 2020-01 on January 1, 2021 with no impact to its financial statements ~~issued~~upon adoption.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Accounting for ~~fiscal years and interim periods beginning after December 15, 2020. The~~Convertible Instruments

Effective January 1, 2021, the Company ~~is evaluating the impact of~~early adopted ASU ~~2020-01 but does not expect adoption~~2020-06. Refer to ~~have a material effect on its consolidated financial statements.~~Note 2 for details.

Reference Rate Reform

In ~~March 2020,~~January 2021, the FASB issued ASU ~~2020-04, “Reference~~2021-01, "Reference Rate Reform (Topic 848): ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“~~Overall" ("ASU ~~2020-04”~~2021-01"). ASU ~~2020-04 provides temporary optional guidance~~2021-01 expands the scope of ASC 848 to ~~ease~~include derivatives affected by the ~~potential burden in accounting~~discounting transition for ~~reference rate reform. The new guidance provides~~certain optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued.exceptions. ASU ~~2020-04~~2021-01 is effective immediately for a limited time through December 31, 2022. The Company is ~~currently~~ evaluating the impact of ASU ~~2020-04.~~2021-01 but does not expect it to have a material impact on its financial statements.

Recently issued accounting standards not yet adopted:

The Company does not expect that any other recently issued accounting pronouncements will have a material effect on its ~~consolidated financial statements.~~

~~15. Subsequent Events:~~

Subsequent to June 30, 2020, the Company repaid, in full, the 2020 Notes. On July 7, 2020, the Company repurchased $21.0 million of the 2020 Notes at a discount plus accrued interest. The remaining $266.5 million aggregate principal amount was repaid, at par, plus accrued interest at maturity in accordance with the terms of the 2013 Indenture. The Company repaid the 2020 Notes primarily using borrowings under the domestic revolving loan facility in the North American Credit Agreement.Consolidated Financial Statements.

3124

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

~~Forward-Looking Statements:~~

~~This~~All references in this Quarterly Report on Form 10-Q (this "Quarterly Report") to "PRA Group," "we," "us," "the Company" or similar terms are to PRA Group, Inc. and its subsidiaries.

Forward-Looking Statements:

This Quarterly Report contains forward-looking statements ~~within~~as defined by the ~~meaning~~Private Securities Litigation Reform Act of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements,1995. Statements other than statements of historical fact are forward-looking statements, including statements regarding overall cash collection trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans, strategies and ~~strategies,~~ anticipated events or ~~trends, and similar expressions concerning matters that are not historical facts. The~~trends. Our results could differ materially from those expressed or implied by such forward-looking statements, or our forward looking statements could be wrong, as a result of risks, uncertainties and assumptions ~~referred to above may include~~including the following:

•~~a deterioration in the economic or inflationary environment in the Americas or Europe, including the interest rate environment;~~

•~~changes or volatility in the credit or capital markets, which affect our ability to borrow money or raise capital, including as a result of~~ the impact of the novel coronavirus ("COVID-19") ~~pandemic;~~

•~~our ability to replace our portfolios of nonperforming loans with additional portfolios sufficient to operate efficiently and profitably;~~

•~~our ability to continue to purchase nonperforming loans at appropriate prices;~~

•~~our ability to collect sufficient amounts on our nonperforming loans to fund our operations;~~

•~~the possibility that we could recognize significant decreases in our estimate of future recoveries on nonperforming loans;~~

•changes in, or interpretations of, federal, state, local, or international laws, including bankruptcy and collection laws, or changes in the administrative practices of various bankruptcy courts, which could negatively affect our business or our ability to collect on nonperforming loans;

•~~our ability to successfully manage the challenges associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns, including the COVID-19 pandemic;~~

•~~the impact of the COVID-19~~ pandemic on the markets in which we operate, including business disruptions, unemployment, economic disruption, overall market volatility and the inability or unwillingness of consumers to pay the amounts owed to us;

•our inability to successfully manage the challenges associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns, including the COVID-19 pandemic;

•a deterioration in the economic or inflationary environment in the markets in which we operate;

•our inability to replace our portfolios of nonperforming loans with additional portfolios sufficient to operate efficiently and profitably and/or purchase nonperforming loans at appropriate prices;

•our inability to collect sufficient amounts on our nonperforming loans to fund our operations, including as a result of restrictions imposed by federal, state and international laws and regulations;

•changes in accounting standards and their interpretations;

•the recognition of significant decreases in our ~~ability~~estimate of future recoveries on nonperforming loans;

•the occurrence of goodwill impairment charges;

•loss contingency accruals that are inadequate to cover actual losses;

•our inability to manage risks associated with our international operations;

•~~changes in tax laws and interpretations regarding earnings of our domestic and international operations;~~

•~~the impact of the Tax Cuts and Jobs Act ("Tax Act") and/or the Coronavirus Aide, Relief and Economic Security Act including interpretations and determinations by tax authorities;~~

•~~the possibility that we could incur goodwill or other intangible asset impairment charges;~~

•adverse effects from the exit of the United Kingdom ("UK") from the European Union ("EU");

•~~our loss contingency accruals may not be adequate to cover actual losses;~~changes in federal, state, local or international laws or the interpretation of these laws, including tax, bankruptcy and collection laws;

•~~adverse outcomes~~changes in ~~pending litigation or~~the administrative ~~proceedings;~~

•~~the possibility that class action suits and other litigation could divert management's attention and increase our expenses;~~

•~~the possibility that we could incur business or technology disruptions or cyber incidents;~~

•~~disruptions~~practices of ~~business operations caused by the underperformance or failure of information technology infrastructure, networks or telephone systems;~~various bankruptcy courts;

•our ~~ability to collect and enforce our nonperforming loans may be limited under federal, state, and international laws, regulations and policies;~~

•~~our ability~~inability to comply with existing and new regulations of the collection industry, the failure of which could result in penalties, fines, litigation, damage to our reputation, or the suspension or termination of or required modification to our ability to conduct our business;industry;

•investigations, reviews, or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau ("CFPB"), which could result in changes to our business practices, negatively impact our portfolio acquisitions volume, make collection of account balances more difficult or expose us to the risk of fines, penalties, restitution payments, and litigation;

•the possibility that compliance with complex and evolving international and United States ("U.S.") laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions;;

•our ~~ability~~inability to comply with data privacy regulations such as the General Data Protection Regulation ("GDPR");

•adverse outcomes in pending litigation or administrative proceedings;

•our ~~ability~~inability to retain, expand, renegotiate or replace our credit facilities and our ability to comply with the covenants under our financing arrangements;

•our ~~ability~~inability to ~~raise the funds necessary to repurchase~~manage effectively our ~~convertible senior notes~~capital and liquidity needs, including as a result of changes in credit or ~~to settle conversions in cash;~~

•~~our ability to refinance our indebtedness, including our outstanding convertible senior notes;~~capital markets;

•changes in interest or exchange ~~rates, which could reduce our net income, and the possibility that future hedging strategies may not be successful;~~

•~~the possibility that the adoption of future accounting standards could negatively impact our business;~~rates;

•default by or failure of one or more of our counterparty financial ~~institutions could cause us to incur significant losses;~~institutions;

•uncertainty about the future of the London Inter-Bank Offer ~~Rate ("LIBOR") may adversely affect our business;~~Rate;

•disruptions of business operations caused by cybersecurity incidents or the underperformance or failure of information technology infrastructure, networks or communication systems; and

•the ~~risk factors discussed herein~~"Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 ("2020 Form 10-K") and in ~~our~~ other filings with the Securities and Exchange ~~Commission ("SEC").~~Commission.

You should assume that the information appearing in this Quarterly Report is accurate only as of the date it was issued. Our business, financial condition, results of operations and prospects may have changed since that date.

You should carefully consider the factors listed above and review the following "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as the "Risk Factors" section and "Business" section of our Annual Report on Form 10-K for the year ended December 31, 2019 ("2019 Form 10-K") and the "Risk Factors" section in ~~Part II, Item 1A of our Quarterly Report on Form 10-Q for the period ended March 31, 2020 ("2020 First Quarter Form 10-Q").~~

Our forward-looking statements could be wrong in light of these and other risks, uncertainties and assumptions. The future events, developments or results described in, or implied by, this Quarterly Report could turn out to be materially different. Except as required by law, we assume no obligation to ~~publicly~~publically update or revise our forward-looking statements after the date of this Quarterly Report and you should not expect us to do so.

Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, we do not, by policy, selectively disclose to them any material nonpublic information or other confidential commercial information. Accordingly, investors should not assume that we agree with any statement or report issued by any analyst regardless of the content of the statement or report. We do not, by policy, confirm forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Frequently Used Terms

We may use the following terminology throughout this ~~document:~~

•~~"Amortization rate" refers to cash collections applied to principal on finance receivables as a percentage of total cash collections.~~Quarterly Report:

•"Buybacks" refers to purchase price refunded by the seller due to the return of ineligible accounts.

•"Cash collections" refers to collections on our owned finance receivables portfolios.

•"Cash receipts" refers to cash collections on our owned finance receivables portfolios plus fee income.

•"Change in expected recoveries" refers to the differences of actual recoveries received when compared to expected recoveries and the net present value of changes in ~~ERC.~~estimated remaining collections.

•"Core" accounts or portfolios refer to accounts or portfolios that are nonperforming loans and are not in an insolvent status upon acquisition. These accounts are aggregated separately from insolvency accounts.

•"Estimated remaining collections" or "ERC" refers to the sum of all future projected cash collections on our owned finance receivables portfolios.

•"Insolvency" accounts or portfolios refer to accounts or portfolios of receivables that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts. These accounts include Individual Voluntary Arrangements ("IVAs"), Trust Deeds in the UK, Consumer Proposals in Canada and bankruptcy accounts in the U.S., Canada, Germany and the UK.

•"Negative Allowance" refers to the present value of cash flows expected to be collected on our finance receivables, carried as an asset on the balance sheet.

•"Portfolio acquisitions" refers to all portfolios added as a result of a purchase, but also includes portfolios added as a result of a business acquisition.

•"Portfolio purchases" refers to all portfolios purchased in the normal course of business and excludes those ~~purchased via~~added as a result of business acquisitions.

•"Portfolio income" reflects revenue recorded due to the passage of time using the effective interest rate calculated based on the purchase price of portfolios and estimated remaining collections.

•"~~Principal amortization" refers to cash collections applied to principal on finance receivables.~~

•"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans. ~~Prior to the adoption of ASC 326 purchase price also included certain capitalized costs and adjustments for buybacks.~~

•"Purchase price multiple" refers to the total estimated collections (as defined below) on owned finance receivables portfolios divided by purchase price.

•"Recoveries" refers to cash collections plus buybacks and other adjustments.

•"Total estimated collections" or "TEC" refers to actual cash collections ~~including cash sales,~~ plus estimated remaining collections on our finance receivables portfolios.

~~All references in this Quarterly Report to "PRA Group," "our," "we," "us," "the Company" or similar terms are to PRA Group, Inc. and its subsidiaries.~~

3426

Overview

We are a global financial and business services company with operations in the Americas, Europe and Australia. Our primary business is the purchase, collection and management of portfolios of nonperforming loans.

We are headquartered in Norfolk, Virginia, and as of ~~June 30, 2020,~~March 31, 2021, employed ~~3,793~~3,822 full time equivalents. Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol ~~"PRAA".~~"PRAA."

COVID-19 ~~Update~~

The COVID-19 pandemic has continued to adversely impact all countries in which we operate. ~~As a result,~~We have taken steps to modify our operations to mitigate adverse effects where possible while conforming with various COVID-19 protocols within the countries in which we operate. We continue to enable employees to work remotely and follow social distancing in the workplaces that remain open. These actions have allowed us to operate inour business ~~continuity mode globally. Our business continuity plans seek to minimize disruptions to our global operations~~ while minimizing disruption and complying with country-specific, federal, state and local laws, regulations, guidelines and governmental actions related to the pandemic. ~~Impacts on our business, results of operations and financial condition have included:~~

•~~a reduction in U.S. staffing in mid-March 2020, which returned to almost normal levels by~~Additional information regarding the ~~end of April and remains at these levels;~~

•an increase in U.S. Core cash collections, which we believe is due to our increased ability to contact customers and customers choosing to use additional discretionary funds to voluntarily resolve their debts;

•a decrease in the volume of U.S. accounts sent through the legal channel, due to our decision to temporarily pause placing accounts into a legal eligible status, along with the closure of courts in many of our European countries, which resulted in decreased legal collection costs;

•~~decreases in certain expenses such as communications expenses due to mailing decisions made during the COVID-19 pandemic and interruptions in postal mailings and deliveries; and~~

•~~decreased portfolio purchases due to deferrals by sellers of nonperforming loan portfolio sales.~~

Funds generated from operations and from cash collections on finance receivables, together with existing cash, available borrowings under our revolving credit facilities and recent modifications to the terms of those facilities, have been sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases during the pandemic.

~~Our analysis of the current and future~~ impact of COVID-19 on our ~~operations is based on management’s constant monitoring of key data and information, including (1) changes~~business can be found in laws, regulations and governmental actions, (2) trends in the macroeconomic environment, consumer behavior and key operational metrics such as cash collections and (3) conditions in the nonperforming loan market. However, we cannot predict the full extent to which COVID-19 will impact our business, results of operations and financial condition due to the numerous evolving factors associated with the pandemic. See Part I, Item 2 “Forward-Looking Statements” and Part II, Item ~~1A "Risk Factors" in this~~7 to our 2020 Form ~~10-Q for additional information.~~ 10-K.

Results of Operations

The results of operations include the financial results of the Company and all of our subsidiaries. As of January 1, 2020 we adopted ASU 2016-13, "Financial Instruments - Credit Losses" ("Topic 326") ("ASU 2016-13") and ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), collectively referred to as "ASC 326", on a prospective basis. Prior period amounts were accounted for under ASC Topic 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"). For further information refer to Note 2 to our Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report. The following table sets forth Consolidated Income Statement amounts as a percentage of ~~total~~Total revenues for the periods indicated (dollars in thousands):


		For the Three Months Ended June 30,														For the Six Months Ended June 30,													For the Three Months Ended March 31,
		2020						2019						2020								2019						2021	2020
Revenues:	Revenues:																	Revenues:
Portfolio income	Portfolio income	$	248,284	91.3	%	$	—	—	%	$	510,306	97.5	%	$	—	—	%	Portfolio income	$	231,672	80.0		%	$	262,022	104.1	%
Changes in expected recoveries	Changes in expected recoveries	19,801		7.3		—		—		6,985		1.3		—		—		Changes in expected recoveries	50,136		17.3			(12,816)		(5.1)
Income recognized on finance receivables		—		—		249,219		98.9		—		—		488,055		98.0
Fee income	Fee income	2,639		1.0		2,707		1.1		4,848		0.9		9,081		1.8		Fee income	2,181		0.8			2,209		0.9
Other revenue	Other revenue	1,186		0.4		131		—		1,555		0.3		798		0.2		Other revenue	5,480		1.9			369		0.1
Total revenues	Total revenues	271,910		100.0		252,057		100.0		523,694		100.0		497,934		100.0		Total revenues	289,469		100.0			251,784		100.0

Net allowance charges		—		—		(1,196)		(0.5)		—		—		(7,291)		(1.5)

Operating expenses:	Operating expenses:																	Operating expenses:
Compensation and employee services	Compensation and employee services	70,472		25.9		79,808		31.7		145,643		27.8		159,453		32.0		Compensation and employee services	73,984		25.6			75,171		29.9
Legal collection fees	Legal collection fees	13,742		5.1		14,297		5.7		28,314		5.4		27,356		5.5		Legal collection fees	12,926		4.5			14,572		5.8
Legal collection costs	Legal collection costs	19,507		7.2		33,121		13.1		53,954		10.3		68,350		13.7		Legal collection costs	21,312		7.4			34,447		13.7
Agency fees	Agency fees	10,343		3.8		13,013		5.2		23,719		4.5		27,045		5.4		Agency fees	15,591		5.4			13,376		5.3
Outside fees and services	Outside fees and services	18,683		6.9		16,293		6.5		38,077		7.3		31,541		6.3		Outside fees and services	20,760		7.1			19,394		7.7
Communication	Communication	8,812		3.2		10,824		4.3		22,323		4.3		24,025		4.8		Communication	12,663		4.4			13,511		5.4
Rent and occupancy	Rent and occupancy	4,471		1.6		4,491		1.8		8,955		1.7		8,854		1.8		Rent and occupancy	4,480		1.5			4,484		1.8
Depreciation and amortization	Depreciation and amortization	4,109		1.5		4,723		1.9		8,193		1.6		9,295		1.9		Depreciation and amortization	3,981		1.4			4,084		1.6
Other operating expenses	Other operating expenses	10,491		3.9		10,926		4.3		22,696		4.3		22,511		4.4		Other operating expenses	13,018		4.5			12,205		4.8

Total operating expenses	Total operating expenses	160,630		59.1		187,496		74.4		351,874		67.2		378,430		76.0		Total operating expenses	178,715		61.8			191,244		76.0

Income from operations	Income from operations	111,280		40.9		63,365		25.1		171,820		32.8		112,213		22.5		Income from operations	110,754		38.2			60,540		24.0
Other income and (expense):	Other income and (expense):																	Other income and (expense):

Interest expense, net	Interest expense, net	(35,416)		(13.0)		(36,027)		(14.3)		(72,627)		(13.9)		(70,008)		(14.1)		Interest expense, net	(31,552)		(10.9)			(37,211)		(14.8)
Foreign exchange gain/(loss)		683		0.3		(311)		(0.1)		2,966		0.6		5,953		1.2
Foreign exchange (loss)/gain																		Foreign exchange (loss)/gain	(26)		—			2,283		0.9
Other	Other	(1,582)		(0.6)		248		0.1		(1,658)		(0.3)		(104)		—		Other	26		—			(76)		—
Income before income taxes	Income before income taxes	74,965		27.6		27,275		10.8		100,501		19.2		48,054		9.7		Income before income taxes	79,202		27.3			25,536		10.1
Income tax expense	Income tax expense	14,137		5.2		5,075		2.0		17,237		3.3		8,942		1.8		Income tax expense	17,322		5.9			3,100		1.2
Net income	Net income	60,828		22.4		22,200		8.8		83,264		15.9		39,112		7.9		Net income	61,880		21.4			22,436		8.9
Adjustment for net income attributable to noncontrolling interests	Adjustment for net income attributable to noncontrolling interests	2,914		1.1		3,581		1.4		6,215		1.2		5,266		1.1		Adjustment for net income attributable to noncontrolling interests	3,474		1.2			3,301		1.3
Net income attributable to PRA Group, Inc.	Net income attributable to PRA Group, Inc.	$	57,914	21.3	%	$	18,619	7.4	%	$	77,049	14.7	%	$	33,846	6.8	%	Net income attributable to PRA Group, Inc.	$	58,406	20.2		%	$	19,135	7.6	%

3627

Three Months Ended ~~June 30, 2020~~March 31, 2021 Compared To Three Months Ended ~~June 30, 2019~~March 31, 2020

Cash Collections

Cash collections for the periods indicated were as follows ~~for the periods indicated:~~(amounts in thousands):


		For the Three Months Ended June 30,						Changes				For the Three Months Ended March 31,
(Amounts in thousands)		2020		2019		2020 vs. 2019
Americas Core		$	343,269	$	294,243	$	49,026
										2021		2020		Change
Americas and Australia Core									Americas and Australia Core	$	347,638	$	305,780	$	41,858
Americas Insolvency	Americas Insolvency	38,685		49,770		(11,085)			Americas Insolvency	35,253		43,210		(7,957)
Europe Core	Europe Core	115,145		117,635		(2,490)			Europe Core	149,486		131,340		18,146
Europe Insolvency	Europe Insolvency	12,841		8,626		4,215			Europe Insolvency	23,510		14,243		9,267
Total cash collections	Total cash collections	$	509,940	$	470,274	$	39,666		Total cash collections	$	555,887	$	494,573	$	61,314

Cash collections adjusted ⁽¹⁾	Cash collections adjusted ⁽¹⁾	$	509,940	$	459,595	$	50,345		Cash collections adjusted (1)	$	555,887	$	502,305	$	53,582

(1) Cash collections adjusted refers to ~~2019~~2020 cash collections remeasured using ~~2020~~2021 exchange rates.

Cash collections were ~~$509.9~~$555.9 million for the three months ended ~~June 30, 2020,~~March 31, 2021, an increase of ~~$39.7~~$61.3 million, or ~~8.4%~~12.4%, compared to ~~$470.3~~$494.6 million for the three months ended ~~June 30, 2019. The increase was~~March 31, 2020. Cash collections increased in Americas and Australia Core largely due to our U.S. call center and other collections, including ~~increased~~higher level of collections through our digital ~~platform,~~platforms, increasing ~~$59.4~~$54.3 million, or ~~37.0%,~~32.3%. This was primarily due to what we believe to be various circumstances that have provided U.S. consumers with additional discretionary funds and a willingness to voluntarily resolve their debts. ~~The~~This increase was ~~partially~~partly offset by ~~an $11.1~~a $10.8 million, or ~~22.3%~~10.4%, decrease in ~~cash~~legal collections ~~for Americas Insolvency, mainly~~due to a lower volume of accounts in the legal channel primarily as a result of ~~investment levels not offsetting~~a shift in collections from the ~~runoff of older portfolios~~legal channel to our call centers and ~~a $6.1~~digital platforms. Cash collections in Americas Insolvency also decreased $8.0 million, or ~~18.8%~~18.4%, ~~decrease in cash collections for Other Americas Core,~~mainly due to ~~the strengthening of the U.S dollar and investment levels not offsetting~~ the runoff of older portfolios. ~~Furthermore, our U.S. legal~~While cash collections ~~were slightly lower by $4.3~~in Other Americas Core decreased $1.6 million, or ~~4.2%~~4.8%, ~~reflecting a decision we made to temporarily pause placing accounts into a legal eligible status in~~ the ~~U.S. as a result~~primary driver of the ~~COVID-19 pandemic. These legal collection activities largely returned to normal operations in June.~~decrease was foreign exchange rates. Europe cash collections increased $27.4 million, or 18.8%, primarily reflecting the impact of 2020 purchases.

Revenues

A summary of our revenue generation during the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ is as follows (amounts in thousands):


		For the Three Months Ended June 30,							For the Three Months Ended March 31,
		2020		2019			2021		2020		Change
Portfolio income	Portfolio income	$	248,284	$	—	Portfolio income	$	231,672	$	262,022	$	(30,350)
Changes in expected recoveries	Changes in expected recoveries	19,801		—		Changes in expected recoveries	50,136		(12,816)		62,952

Income recognized on finance receivables		—		249,219
Fee income	Fee income	2,639		2,707		Fee income	2,181		2,209		(28)
Other revenue	Other revenue	1,186		131		Other revenue	5,480		369		5,111
Total revenues	Total revenues	$	271,910	$	252,057	Total revenues	$	289,469	$	251,784	$	37,685

~~Total revenues were $271.9~~Portfolio Income

Portfolio income was $231.7 million for the three months ended ~~June 30, 2020, an increase~~March 31, 2021, a decrease of ~~$19.8~~$30.3 million, or ~~7.9%~~11.6%, compared to ~~$252.1~~$262.0 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The ~~increase is largely~~decrease was mainly due to our assumption that the significant cash ~~collections~~ overperformance in 2020 was largely acceleration versus an increase in total estimated collections combined with recent purchases not offsetting runoff, primarily in Americas Insolvency and Other Americas.

Changes in Expected Recoveries

Changes in expected recoveries for the ~~quarter, partially offset~~three months ended March 31, 2021, were a positive $50.1 million. The change was the net result of recoveries received in excess of forecast of $103.0 million from significant cash collection overperformance reduced by ~~adjustments~~a $52.9 million negative adjustment to ~~our estimated remaining collections to~~changes in expected future recoveries. The changes in expected future recoveries reflect our assumption that the majority of the current quarter overperformance was ~~primarily~~ due to acceleration in the timing of cash collections rather than an increase to total expected ~~collections. Additionally, we made~~collections resulting in a present value adjustment. This compares to a negative $12.8 million for the three months ended March 31, 2020. The change was the net result of recoveries in excess of forecast ~~adjustments deemed appropriate given the current environment in which we are operating.~~

~~Net Allowance Charges~~

~~In 2019, under ASC 310-30, net allowance charges were recorded for significant decreases in expected cash flows or~~of $7.8 million reduced by a ~~change in timing of cash flows which would otherwise require a reduction in the stated yield on a pool of accounts. Effective January 1, 2020, under ASC 326, changes~~$20.6 million negative adjustment to ~~expected cash flows are recorded in~~ changes in expected future recoveries ~~within revenues.~~due to an expected delay in cash collections from the impact of COVID-19.

Other Revenue

Other revenue was $5.5 million for the three months ended March 31, 2021, an increase of $5.1 million compared to $0.4 million for the three months ended March 31, 2020 reflecting a gain on sale from certain other assets.

Operating Expenses

Total operating expenses were ~~$160.6~~$178.7 million for the three months ended ~~June 30, 2020,~~March 31, 2021, a decrease of ~~$26.9~~$12.5 million, or ~~14.3%~~6.5%, compared to ~~$187.5~~$191.2 million for the three months ended ~~June 30, 2019.~~

March 31, 2020.

Compensation and Employee Services

Compensation and employee services expenses were ~~$70.5~~$74.0 million for the three months ended ~~June 30, 2020,~~March 31, 2021, a decrease of ~~$9.3~~$1.2 million, or ~~11.7%~~1.6%, compared to ~~$79.8~~$75.2 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The slight decrease in compensation expense was primarily attributable to a reduction in the U.S. call center workforce due to efficiencies realized ~~through technology, training and data and analytics.~~mostly offset by higher headcount in Europe. Total full-time equivalents decreased to ~~3,793~~3,822 as of ~~June 30, 2020,~~March 31, 2021, from ~~4,863~~4,014 as of ~~June 30, 2019.~~March 31, 2020.

Legal Collection Fees

Legal collection fees represent contingent fees incurred for the cash collections generated by our independent third-party attorney network. Legal collection fees were ~~$13.7~~$12.9 million for the three months ended ~~June 30, 2020,~~March 31, 2021, a decrease of ~~$0.6~~$1.7 million, or ~~4.2%~~11.6%, compared to ~~$14.3~~$14.6 million for the three months ended ~~June 30, 2019 primarily~~March 31, 2020. The decrease was due to ~~a slight decrease in~~lower external legal cash collections in the U.S.

Legal Collection Costs

Legal collection costs primarily consist of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account. Legal collection costs were ~~$19.5~~$21.3 million for the three months ended ~~June 30, 2020,~~March 31, 2021, a decrease of ~~$13.6~~$13.1 million, or ~~41.1%~~38.1%, compared to ~~$33.1~~$34.4 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The decrease was primarily ~~reflects a decision we made~~due to ~~temporarily pause placing~~lower levels of accounts ~~into a legal eligible status~~placed in the ~~U.S., along with~~legal channel in the ~~closure~~U.S. primarily reflecting a shift in collections from the legal channel to our call centers and digital platforms partially offset by higher levels of ~~courts~~accounts placed in ~~many of our European countries, as a result of~~ the ~~COVID-19 pandemic. These~~ legal ~~collection activities largely returned to normal operations~~channel in ~~June.~~Europe.

Agency Fees

Agency fees primarily represent third-party collection fees. Agency fees were ~~$10.3~~$15.6 million for the three months ended ~~June 30, 2020, a decrease~~March 31, 2021, an increase of ~~$2.7~~$2.2 million, or ~~20.8%~~16.4%, compared to ~~$13.0~~$13.4 million for the three months ended ~~June 30, 2019. The decrease was due to lower cash collections~~March 31, 2020 primarily reflecting an increase in ~~areas~~agency fees primarily outside of the U.S. ~~where we utilize third party collection agencies.~~

Outside Fees and Services

Outside fees and services expenses were ~~$18.7~~$20.8 million for the three months ended ~~June 30, 2020,~~March 31, 2021, an increase of ~~$2.4~~$1.4 million, or ~~14.7%~~7.2%, compared to ~~$16.3~~$19.4 million for the three months ended ~~June 30, 2019. The increase was~~March 31, 2020 primarily due to higher ~~corporate legal expenses and higher~~ fees ~~associated with processing~~related to an increased number of debit card ~~transactions due~~transactions.

Interest Expense, Net

Interest expense, net was $31.6 million during the three months ended March 31, 2021, a decrease of $5.6 million, or 15.1%, compared to ~~the increase in cash collections.~~

~~Communication~~

~~Communication expense primarily represents postage and telephone related expenses incurred as a result of our collection efforts. Communication expenses were $8.8~~$37.2 million for the three months ended ~~June 30,~~March 31, 2020 ~~a decrease~~primarily reflecting the 2021 change in accounting related to our convertible notes (see Note 2 to our Consolidated Financial Statements included in Part I, Item 1 of ~~$2.0 million, or 18.5%, compared to $10.8 million~~this Quarterly Report for ~~the three months ended June 30, 2019. The decrease primarily reflects lower postage costs due to mailing decisions made during the COVID-19 pandemic.~~

~~Interest Expense, Net~~

Interest expense, net was $35.4 million during the three months ended June 30, 2020, a decrease of $0.6 million, or 1.7%, compared to $36.0 million for the three months ended June 30, 2019. The decrease was primarily related tofurther information) and lower levels of average outstanding borrowings ~~coupled with lower average interest rates.~~on our debt obligations.

Interest expense, net consisted of the following for the three months ended ~~June 30,~~March 31, 2021 and 2020 ~~and 2019~~ (amounts in thousands):


		For the Three Months Ended June 30,											For the Three Months Ended March 31,
		2020		2019		Change			2021		2020		Change
Interest on debt obligations and unused line fees	Interest on debt obligations and unused line fees	$	24,565	$	25,645	$	(1,080)	Interest on debt obligations and unused line fees	$	20,910	$	26,498	$	(5,588)
Interest on senior notes								Interest on senior notes	5,531		—		5,531
Coupon interest on convertible debt	Coupon interest on convertible debt	5,175		5,175		—		Coupon interest on convertible debt	3,019		5,175		(2,156)
Amortization of convertible debt discount	Amortization of convertible debt discount	3,247		3,071		176		Amortization of convertible debt discount	—		3,217		(3,217)
Amortization of loan fees and other loan costs	Amortization of loan fees and other loan costs	2,743		2,655		88		Amortization of loan fees and other loan costs	2,256		2,640		(384)

Interest income	Interest income	(314)		(519)		205		Interest income	(164)		(319)		155
Interest expense, net	Interest expense, net	$	35,416	$	36,027	$	(611)	Interest expense, net	$	31,552	$	37,211	$	(5,659)

~~Net~~ Foreign ~~Currency Transaction Gains~~Exchange (Loss)/Gain

Foreign currency transaction losses were near zero for the three months ended March 31, 2021, compared to foreign currency gains ~~were $0.7~~of $2.3 million for the three months ended ~~June 30, 2020, compared to foreign currency transaction losses of $0.3 million for the three months ended June 30, 2019.~~March 31, 2020. In any given period, we may incur foreign currency transaction gains or losses from transactions in currencies other than the functional currency.

Income Tax Expense

Income tax expense was ~~$14.1~~$17.3 million for the three months ended ~~June 30, 2020,~~March 31, 2021, an increase of ~~$9.0~~$14.2 million, or ~~176.5%~~458.1%, compared to ~~$5.1~~$3.1 million for the three months ended ~~June 30, 2019.~~March 31, 2020. The increase was primarily due to higher income before taxes, which increased ~~$47.7~~$53.7 million, or ~~174.7%.~~210.6%, and the mix of earnings between jurisdictions. During the three months ended ~~June 30, 2020,~~March 31, 2021, our effective tax rate was ~~18.9%~~21.9%, compared to ~~18.6%~~12.1% for the three months ended ~~June 30, 2019.~~

~~Six Months Ended June 30, 2020 Compared To Six Months Ended June 30, 2019~~

~~Cash Collections~~

~~Cash collections were as follows for the periods indicated:~~

For the Six Months Ended June 30, Change
(Amounts in thousands) 2020 2019 2020 vs. 2019
   Americas-Core $ 649,049 $ 584,966 $ 64,083
   Americas-Insolvency 81,895 94,383 (12,488)
   Europe-Core 246,485 234,493 11,992
   Europe-Insolvency 27,084 17,603 9,481
Total cash collections $ 1,004,513 $ 931,445 $ 73,068
Cash collections adjusted ⁽¹⁾
$ 1,004,513 $ 914,201 $ 90,312

~~(1) Cash collections adjusted refers to 2019 cash collections remeasured using 2020 exchange rates.~~

~~Cash collections were $1,004.5 million for the six months ended June 30, 2020, an increase of $73.1 million, or 7.8%, compared to $931.4 million for the six months ended June 30, 2019.~~March 31, 2020. The increase was largely due to our U.S. call center and other collections, including increased collections through our digital platform, increasing $57.8 million or 17.5%, primarily due to what we believe to be various circumstances that have provided U.S. consumers with additional discretionary funds and a willingness to voluntarily resolve their debts. Additionally, Europe cash collections increased $21.5 million, or 8.5%, reflecting higher 2019 purchases. Furthermore, our U.S. legal collections increased $5.6 million, or 2.8%, mainly due to a higher number of accounts placed in the legal channel in 2019 partially offset by, a decision we made to temporarily pause placing accounts into a legal eligible status in the U.S. as a result of the COVID-19 pandemic. These legal collection activities largely returned to normal operations in June. These increases were partially offset by a decline of $12.5 million, or 13.2%, in Americas Insolvency cash collections mainly reflecting~~investment levels not offsetting the runoff of older portfolios.~~

~~Revenues~~

~~A summary of our revenue generation during the six months ended June 30, 2020 and 2019 is as follows (amounts in thousands):~~

For the Six Months Ended June 30,
2020 2019
Portfolio income $ 510,306 $ —
Changes in expected recoveries 6,985 —
Income recognized on finance receivables — 488,055
Fee income 4,848 9,081
Other revenue 1,555 798
Total revenues $ 523,694 $ 497,934

Total revenues were $523.7 million for the six months ended June 30, 2020, an increase of $25.8 million, or 5.2%, compared to $497.9 million for the six months ended June 30, 2019. The increase was driven primarily by a record level of portfolio purchases in 2019.

~~Net Allowance Charges~~

In 2019, under ASC 310-30, net allowance charges were recorded for significant decreases in expected cash flows or a change in timing of cash flows which would otherwise require a reduction in the stated yield on a pool of accounts. Effective January 1, 2020, under ASC 326, changes to expected cash flows are recorded in changes in expected recoveries within revenues.

~~Operating Expenses~~

~~Operating expenses were $351.9 million for the six months ended June 30, 2020, a decrease of $26.5 million, or 7.0%, compared to $378.4 million for the six months ended June 30, 2019.~~

~~Compensation and Employee Services~~

Compensation and employee services expenses were $145.6 million for the six months ended June 30, 2020, a decrease of $13.9 million, or 8.7%, compared to $159.5 million for the six months ended June 30, 2019. The decrease in compensation expense was primarily attributable to a reduction in U.S. call center workforce due to efficiencies realized through technology, training and data and analytics. Total full-time equivalents decreased to 3,793 as of June 30, 2020, compared to 4,863 as of June 30, 2019.

~~Legal Collection Fees~~

~~Legal collection fees were $28.3 million for the six months ended June 30, 2020, an increase of $0.9 million, or 3.3%, compared to $27.4 million for the six months ended June 30, 2019. The increase~~rate was primarily due to an ~~increase in external legal cash collections~~estimated provision to return adjustment recorded in the ~~U.S. during the first quarter.~~

~~Legal Collection Costs~~

~~Legal collection costs were $54.0 million for the six months ended June 30, 2020,~~prior year and a ~~decrease~~change in mix of $14.4 million, or 21.1%, compared to $68.4 million for the six months ended June 30, 2019. The decrease primarily reflects a decision we made to temporarily pause placing accounts into a legal eligible status in the U.S., along with the closureincome between countries of ~~courts in many of our European countries, as a result of the COVID-19 pandemic. These legal collection activities largely returned to normal operations in June.~~

~~Agency Fees~~

Agency fees were $23.7 million for the six months ended June 30, 2020, a decrease of $3.3 million, or 12.2%, compared to $27.0 million for the six months ended June 30, 2019. The decrease was primarily due to lower cash collections in areas outside the U.S. where we utilize third party collection agencies.

~~Outside Fees and Services~~

Outside fees and services expenses were $38.1 million for the six months ended June 30, 2020, an increase of $6.6 million, or 21.0%, compared to $31.5 million for the six months ended June 30, 2019. The increase was primarily the result of higher corporate legal expenses and higher fees associated with processing an increased number of debit card transactions due to the increase in cash collections.

~~Interest Expense, Net~~

Interest expense, net was $72.6 million for the six months ended June 30, 2020, an increase of $2.6 million, or 3.7%, compared to $70.0 million for the six months ended June 30, 2019. The increase was primarily due to higher levels of outstanding borrowings partially offset by lower average interest rates.

~~Interest expense, net consisted of the following for the six months ended June 30, 2020 and 2019 (amounts in thousands):~~

For the Six Months Ended June 30,
2020 2019 Change
Interest on debt obligations and unused line fees $ 51,063 $ 49,391 $ 1,672
Coupon interest on convertible debt 10,350 10,350 —
Amortization of convertible debt discount 6,464 6,113 351
Amortization of loan fees and other loan costs 5,382 5,291 91
Interest income (632) (1,137) 505
Interest expense, net $ 72,627 $ 70,008 $ 2,619

~~Net Foreign Currency Transaction Gains~~

Foreign currency transaction gains were $3.0 million for the six months ended June 30, 2020, compared to $6.0 million for the six months ended June 30, 2019. The decrease was primarily related to lower foreign currency gains in Europe and slightly lower gains on U.S. dollar linked investments held in Brazil during the first quarter.operation.

~~Income Tax Expense~~

~~Income tax expense was $17.2 million for the six months ended June~~ 30 2020, an increase of $8.3 million, or 93.3%, compared to $8.9 million for the six months ended June 30, 2019. The increase was primarily due to higher income before income taxes which increased $52.4 million or 108.9%. The increase was partially offset by estimated return to provision adjustments during the first quarter. During the six months ended June 30, 2020, our effective tax rate was 17.2%, compared to 18.6% for the six months ended June 30, 2019. The decrease was due to the mix of international earnings between jurisdictions.

Supplemental Performance Data

Finance Receivables Portfolio Performance

~~The following tables show certain data related to our finance receivables portfolios. Certain adjustments, as noted in~~We purchase nonperforming loans from a variety of credit originators and segregate them into two main portfolio segments: Core or Insolvency, based on the ~~footnotes to these tables, have been made to reduce~~status of the ~~impact of foreign currency fluctuations on ERC and purchase price multiples.~~

account upon acquisition. In addition, the accounts are further segregated into geographical regions based upon where the account was purchased. The accounts represented in the Insolvency tables below are those portfolios of accounts that were in an insolvency status at the time of purchase. This contrasts with accounts in our Core portfolios that file for bankruptcy/insolvency protection after we purchase them, which continue to be tracked in their corresponding Core portfolio. Core customers sometimes file for bankruptcy/insolvency protection subsequent to our purchase of the related Core portfolio. When this occurs, we adjust our collection practices to comply with bankruptcy/insolvency rules and procedures; however, for accounting purposes, these accounts remain in the original Core ~~portfolio.~~pool. Insolvency accounts may be dismissed voluntarily or involuntarily subsequent to our purchase of the Insolvency portfolio. Dismissal occurs when the terms of the bankruptcy are not met by the petitioner. When this occurs, we are typically free to pursue collection outside of bankruptcy procedures; however, for accounting purposes, these accounts remain in the original Insolvency pool.

Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, age of the receivables acquired, and changes in our operational efficiency. For example, increased pricing competition during the 2005 to 2008 period negatively impacted purchase price multiples of our Core portfolio compared to prior years. Conversely, during the 2009 to 2011 period, additional supply occurred as a result of the economic downturn. This created unique and advantageous purchasing opportunities, particularly within the Insolvency market, relative to the prior four years. Purchase price multiples can also vary among types of finance receivables. For example, we generally incur lower collection costs on our Insolvency portfolio compared with our Core portfolio. This allows us, in general, to pay more for an Insolvency portfolio and experience lower purchase price multiples, while generating similar net income margins when compared with a Core portfolio.

When competition increases and/or supply decreases, pricing often becomes negatively impacted relative to expected collections, and yields tend to trend lower. The opposite tends to occur when competition decreases and/or supply increases.

Within a given portfolio type, to the extent that lower purchase price multiples are the result of more competitive pricing and lower net yields, this will generally lead to lower profitability. As portfolio pricing becomes more favorable on a relative basis, our profitability will tend to increase. Profitability within given Core portfolio types may also be impacted by the age and quality of the receivables, which impact the cost to collect those accounts. Fresher accounts, for example, typically carry lower associated collection expenses, while older accounts and lower balance accounts typically carry higher costs and, as a result, require higher purchase price multiples to achieve the same net profitability as fresher paper.

Revenue recognition under Accounting Standards Codification ("ASC") Topic 326 "Financial Instruments-Credit Losses" ("ASC ~~310-10 and ASC 326~~326") is driven by estimates of the amount and timing of collections. We record new portfolio acquisitions at the purchase price which reflects the amount we expect to collect discounted at an effective interest rate. During the year of acquisition, the annual pool is aggregated and the blended effective interest rate will change to reflect new buying and new cash flow estimates until the end of the year. At that time, the effective interest rate is fixed at the amount we expect to collect discounted at the rate to equate purchase price to the recovery estimate. During the first year of purchase, we typically do not allow purchase price multiples to expand. Subsequent to the initial year, as we gain collection experience and confidence with a pool of accounts, we regularly update ERC. As a result, our estimate of total collections has often increased as pools have aged. These processes have tended to cause the ratio of ERC to purchase price for any given year of buying to gradually increase over time. Thus, all factors being equal in terms of pricing, one would typically tend to see a higher collection to purchase price ratio from a pool of accounts that was six years from acquisition than a pool that was just two years from acquisition.

The numbers presented in the following tables represent gross cash collections and do not reflect any costs to collect; therefore, they may not represent relative profitability. Due to all the factors described above, readers should be cautious when making comparisons of purchase price multiples among periods and between types of receivables.

4331


Purchase Price Multiples as of June 30, 2020 Amounts in thousands
Purchase Price Multiples as of March 31, 2021 Amounts in thousands														Purchase Price Multiples as of March 31, 2021 Amounts in thousands
Purchase Period	Purchase Period	Purchase Price ⁽¹⁾⁽²⁾		ERC-Historical Period Exchange Rates ⁽³⁾		Total Estimated Collections ⁽⁴⁾		ERC-Current Period Exchange Rates ⁽⁵⁾		Current Estimated Purchase Price Multiple		Original Estimated Purchase Price Multiple⁽⁶⁾		Purchase Period	Purchase Price (1)(2)		Total Estimated Collections (3)		Estimated Remaining Collections (4)		Current Purchase Price Multiple	Original Estimated Purchase Price Multiple(5)
Americas Core
1996-2009		$	930,026	$	25,275	$	2,876,410	$	25,275	309	%	238	%
2010		148,193		16,361		527,054		16,361		356	%	247	%
Americas and Australia Core														Americas and Australia Core
1996-2010														1996-2010	$	1,078,219	$	3,397,952	$	24,585	315%	240%
2011	2011	209,602		29,000		725,887		29,000		346	%	245	%	2011	209,602		719,618		15,897		343%	245%
2012	2012	254,076		35,475		661,919		35,475		261	%	226	%	2012	254,076		652,293		18,061		257%	226%
2013	2013	390,826		62,664		912,274		62,664		233	%	211	%	2013	390,826		894,640		30,051		229%	211%
2014	2014	404,117		99,011		891,394		96,700		221	%	204	%	2014	404,117		859,775		45,345		213%	204%
2015	2015	443,114		163,023		933,558		162,489		211	%	205	%	2015	443,114		913,857		106,551		206%	205%
2016	2016	455,767		301,974		1,099,686		287,328		241	%	201	%	2016	455,767		1,098,295		207,608		241%	201%
2017	2017	532,851		453,291		1,207,541		448,520		227	%	193	%	2017	532,851		1,211,584		325,675		227%	193%
2018	2018	653,975		670,175		1,340,743		657,985		205	%	202	%	2018	653,975		1,368,879		447,682		209%	202%
2019	2019	581,476		898,263		1,222,926		868,031		210	%	206	%	2019	581,476		1,239,777		622,713		213%	206%
2020	2020	283,041		543,573		580,673		543,573		205	%	205	%	2020	435,668		931,493		717,342		214%	213%
2021														2021	88,822		188,644		184,196		212%
Subtotal	Subtotal	5,287,064		3,298,085		12,980,065		3,233,401						Subtotal	5,528,513		13,476,807		2,745,706
Americas Insolvency	Americas Insolvency															Americas Insolvency
1996-2009		397,453		681		835,919		681		210	%	178	%
2010		208,942		868		546,829		868		262	%	184	%
1996-2010														1996-2010	606,395		1,382,677		920		228%	180%
2011	2011	180,432		743		370,148		743		205	%	155	%	2011	180,432		370,183		493		205%	155%
2012	2012	251,395		495		392,466		495		156	%	136	%	2012	251,395		392,723		184		156%	136%
2013	2013	227,834		1,380		354,901		1,380		156	%	133	%	2013	227,834		354,943		651		156%	133%
2014	2014	148,420		2,088		217,662		2,074		147	%	124	%	2014	148,420		218,432		1,695		147%	124%
2015	2015	63,170		4,344		87,824		4,344		139	%	125	%	2015	63,170		87,087		876		138%	125%
2016	2016	91,442		14,160		115,267		14,146		126	%	123	%	2016	91,442		117,159		6,736		128%	123%
2017	2017	275,257		86,263		345,821		86,263		126	%	125	%	2017	275,257		349,209		51,318		127%	125%
2018	2018	97,879		81,259		130,790		81,259		134	%	127	%	2018	97,879		131,461		58,999		134%	127%
2019	2019	123,077		132,192		160,420		132,061		130	%	128	%	2019	123,077		158,692		105,361		129%	128%
2020	2020	35,298		44,941		47,686		44,941		135	%	135	%	2020	62,130		84,972		75,489		137%	136%
2021														2021	9,486		13,185		13,168		139%
Subtotal	Subtotal	2,100,599		369,414		3,605,733		369,255						Subtotal	2,136,917		3,660,723		315,890
Total Americas		7,387,663		3,667,499		16,585,798		3,602,656
Total Americas and Australia														Total Americas and Australia	7,665,430		17,137,530		3,061,596
Europe Core	Europe Core													Europe Core
2012	2012	20,409		292		40,720		221		200	%	187	%	2012	20,409		41,543		—		204%	187%
2013	2013	20,334		148		25,132		110		124	%	119	%	2013	20,334		25,653		—		126%	119%
2014	2014	773,811		731,226		2,215,272		632,283		286	%	208	%	2014	773,811		2,240,653		586,113		290%	208%
2015	2015	411,340		308,026		733,076		273,940		178	%	160	%	2015	411,340		725,713		250,732		176%	160%
2016	2016	333,090		298,696		556,757		290,948		167	%	167	%	2016	333,090		562,194		285,405		169%	167%
2017	2017	252,174		218,286		359,556		197,823		143	%	144	%	2017	252,174		354,024		184,108		140%	144%
2018	2018	341,775		374,650		524,165		361,620		153	%	148	%	2018	341,775		529,154		346,370		155%	148%
2019	2019	518,610		668,732		782,184		637,980		151	%	152	%	2019	518,610		776,604		587,133		150%	152%
2020	2020	94,763		165,081		172,597		165,081		182	%	182	%	2020	324,119		557,506		491,301		172%
2021														2021	43,635		77,780		76,397		178%
Subtotal	Subtotal	2,766,306		2,765,137		5,409,459		2,560,006						Subtotal	3,039,297		5,890,824		2,807,559
Europe Insolvency	Europe Insolvency															Europe Insolvency
2014	2014	10,876		573		18,136		490		167	%	129	%	2014	10,876		18,228		130		168%	129%
2015	2015	18,973		4,220		29,099		3,534		153	%	139	%	2015	18,973		29,018		1,997		153%	139%
2016	2016	39,338		12,951		56,808		13,132		144	%	130	%	2016	39,338		56,926		8,784		145%	130%
2017	2017	39,235		24,680		48,839		22,626		124	%	128	%	2017	39,235		49,255		17,707		126%	128%
2018	2018	44,908		41,089		55,096		39,915		123	%	123	%	2018	44,908		52,080		32,060		116%	123%
2019	2019	77,218		85,331		101,282		79,841		131	%	130	%	2019	77,218		101,866		72,242		132%	130%
2020	2020	23,017		29,757		30,776		29,757		134	%	134	%	2020	105,440		135,896		121,891		129%
2021														2021	16,621		20,786		20,151		125%
Subtotal	Subtotal	253,565		198,601		340,036		189,295						Subtotal	352,609		464,055		274,962
Total Europe	Total Europe	3,019,871		2,963,738		5,749,495		2,749,301						Total Europe	3,391,906		6,354,879		3,082,521
Total PRA Group	Total PRA Group	$	10,407,534	$	6,631,237	$	22,335,293	$	6,351,957					Total PRA Group	$	11,057,336	$	23,492,409	$	6,144,117

(1)Includes the acquisition date finance receivables portfolios that were acquired through our business acquisitions.

(2)For our ~~non-US~~non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the ~~pool~~portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the ~~pool~~portfolio are presented at the year-end exchange rate for the respective year of purchase.

(3)For our ~~non-US~~non-U.S. amounts, ~~ERC-Historical Period Exchange Rates~~TEC is presented at the year-end exchange rate for the respective year of purchase.

(4)For our ~~non-US~~non-U.S. amounts, ~~TEC~~ERC is presented at the ~~year-end exchange rate for the respective year of purchase.~~

~~(5)For our non-U.S. amounts, ERC-Current Period Exchange Rates is presented at the June 30, 2020~~March 31, 2021 exchange rate.

~~(6)~~(5)The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.

~~Portfolio Financial Information~~

~~Year-to-date as of June 30, 2020~~

~~Amounts in thousands~~

~~Purchase Period~~

~~Cash Collections~~ ⁽¹⁾

~~Portfolio Income~~ ⁽¹⁾

~~Changes in Expected Recoveries~~ ⁽¹⁾

~~Total Portfolio Revenue~~ ⁽¹⁾⁽²⁾

~~Net Finance Receivables as of June 30, 2020~~ ⁽³⁾

~~Americas Core~~

~~1996-2009~~

~~7,348~~

~~5,560~~

~~(1,406)~~

~~4,154~~

~~6,071~~

~~2010~~

~~3,678~~

~~3,536~~

~~(857)~~

~~2,679~~

~~2,486~~

~~2011~~

~~6,281~~

~~5,941~~

~~(2,248)~~

~~3,693~~

~~5,117~~

~~2012~~

~~6,802~~

~~6,093~~

~~(4,225)~~

~~1,868~~

~~11,070~~

~~2013~~

~~13,149~~

~~9,990~~

~~(8,009)~~

~~1,981~~

~~22,418~~

~~2014~~

~~18,121~~

~~14,251~~

~~(15,672)~~

~~(1,421)~~

~~35,200~~

~~2015~~

~~32,948~~

~~19,999~~

~~(13,822)~~

~~6,177~~

~~66,386~~

~~2016~~

~~57,081~~

~~32,839~~

~~(755)~~

~~32,084~~

~~113,660~~

~~2017~~

~~108,504~~

~~50,175~~

~~17,559~~

~~67,734~~

~~200,463~~

~~2018~~

~~183,021~~

~~76,976~~

~~6,452~~

~~83,428~~

~~356,085~~

~~2019~~

~~175,029~~

~~95,119~~

~~14,877~~

~~109,996~~

~~448,861~~

~~2020~~

~~37,087~~

~~21,374~~

~~10,312~~

~~31,686~~

~~277,335~~

~~Subtotal~~

~~649,049~~

~~341,853~~

~~2,206~~

~~344,059~~

~~1,545,152~~

~~Americas Insolvency~~

~~1996-2009~~

~~197~~

~~235~~

~~(38)~~

~~197~~

—

~~2010~~

~~269~~

~~312~~

~~(43)~~

~~269~~

—

~~2011~~

~~275~~

~~229~~

~~275~~

—

~~2012~~

~~546~~

~~458~~

~~174~~

~~632~~

—

~~2013~~

~~742~~

~~763~~

~~(20)~~

~~743~~

—

~~2014~~

~~1,378~~

~~1,789~~

~~(896)~~

~~893~~

~~262~~

~~2015~~

~~5,624~~

~~2,819~~

~~(219)~~

~~2,600~~

~~2,755~~

~~2016~~

~~7,709~~

~~2,060~~

~~(616)~~

~~1,444~~

~~11,164~~

~~2017~~

~~32,245~~

~~9,047~~

~~(2,692)~~

~~6,355~~

~~69,529~~

~~2018~~

~~15,394~~

~~4,655~~

~~3,010~~

~~7,665~~

~~66,722~~

~~2019~~

~~14,770~~

~~5,870~~

~~2,790~~

~~8,660~~

~~108,218~~

~~2020~~

~~2,746~~

~~1,098~~

~~(264)~~

~~834~~

~~33,190~~

~~Subtotal~~

~~81,895~~

~~29,335~~

~~1,232~~

~~30,567~~

~~291,840~~

~~Total Americas~~

~~730,944~~

~~371,188~~

~~3,438~~

~~374,626~~

~~1,836,992~~

~~Europe Core~~

~~2012~~

~~591~~

~~454~~

~~137~~

~~591~~

—

~~2013~~

~~320~~

~~216~~

~~104~~

~~320~~

—

~~2014~~

~~72,661~~

~~54,323~~

~~2,336~~

~~56,659~~

~~166,870~~

~~2015~~

~~26,772~~

~~15,775~~

~~(213)~~

~~15,562~~

~~142,997~~

~~2016~~

~~23,270~~

~~13,529~~

~~(1,336)~~

~~12,193~~

~~167,532~~

~~2017~~

~~17,870~~

~~6,932~~

~~(1,285)~~

~~5,647~~

~~136,984~~

~~2018~~

~~35,776~~

~~13,293~~

~~3,562~~

~~16,855~~

~~234,775~~

~~2019~~

~~61,779~~

~~22,118~~

~~(2,085)~~

~~20,033~~

~~422,528~~

~~2020~~

~~7,446~~

~~2,966~~

~~1,348~~

~~4,314~~

~~91,298~~

~~Subtotal~~

~~246,485~~

~~129,606~~

~~2,568~~

~~132,174~~

~~1,362,984~~

~~Europe Insolvency~~

~~2014~~

~~410~~

~~320~~

~~(17)~~

~~303~~

~~192~~

~~2015~~

~~1,603~~

~~769~~

~~862~~

~~2,154~~

~~2016~~

~~4,064~~

~~1,700~~

~~(241)~~

~~1,459~~

~~9,262~~

~~2017~~

~~4,747~~

~~1,054~~

~~191~~

~~1,245~~

~~19,580~~

~~2018~~

~~4,845~~

~~1,521~~

~~(237)~~

~~1,284~~

~~33,977~~

~~2019~~

~~10,386~~

~~3,429~~

~~992~~

~~4,421~~

~~63,555~~

~~2020~~

~~1,029~~

~~719~~

~~198~~

~~917~~

~~22,836~~

~~Subtotal~~

~~27,084~~

~~9,512~~

~~979~~

~~10,491~~

~~151,556~~

~~Total Europe~~

~~273,569~~

~~139,118~~

~~3,547~~

~~142,665~~

~~1,514,540~~

~~Total PRA Group~~

~~1,004,513~~

~~510,306~~

~~6,985~~

~~517,291~~

~~3,351,532~~


Portfolio Financial Information Year-to-date as of March 31, 2021 Amounts in thousands
Purchase Period	Cash Collections (1)		Portfolio Income (1)		Changes in Expected Recoveries (1)		Total Portfolio Revenue (1)(2)		Net Finance Receivables as of March 31, 2021 (3)
Americas and Australia Core
1996-2010	$	3,726	$	2,319	$	447	$	2,766	$	5,178
2011	2,259		1,405		309		1,714		2,596
2012	2,786		1,286		375		1,661		5,638
2013	4,968		2,526		(351)		2,175		13,495
2014	6,937		3,494		(2,154)		1,340		19,677
2015	11,958		6,355		(4,961)		1,394		45,306
2016	24,893		11,990		3,908		15,898		84,015
2017	41,722		18,236		3,937		22,173		145,799
2018	75,462		25,404		10,591		35,995		245,467
2019	88,246		35,129		6,417		41,546		331,169
2020	80,231		35,446		16,613		52,059		369,418
2021	4,450		2,728		838		3,566		87,902
Subtotal	347,638		146,318		35,969		182,287		1,355,660
Americas Insolvency
1996-2010	181		186		(5)		181		—
2011	76		73		3		76		—
2012	190		72		120		192		—
2013	201		181		20		201		—
2014	298		355		(90)		265		190
2015	446		247		(202)		45		497
2016	2,727		491		241		732		5,429
2017	11,752		2,621		468		3,089		43,107
2018	7,812		1,778		751		2,529		50,368
2019	8,594		2,488		(1,786)		702		89,380
2020	2,960		1,897		535		2,432		57,174
2021	16		101		(14)		87		9,553
Subtotal	35,253		10,490		41		10,531		255,698
Total Americas and Australia	382,891		156,808		36,010		192,818		1,611,358
Europe Core
2012	283		—		283		283		—
2013	171		—		171		171		—
2014	37,843		25,589		7,184		32,773		159,401
2015	13,464		7,427		(6,091)		1,336		130,541
2016	11,956		6,431		(649)		5,782		164,228
2017	9,565		3,191		(1,076)		2,115		127,233
2018	18,365		6,289		4,576		10,865		226,773
2019	32,020		10,111		2,450		12,561		390,892
2020	24,425		9,595		4,578		14,173		293,315
2021	1,394		210		1,015		1,225		43,431
Subtotal	149,486		68,843		12,441		81,284		1,535,814
Europe Insolvency
2014	88		48		6		54		55
2015	530		225		5		230		1,335
2016	1,762		546		118		664		6,487
2017	2,484		398		140		538		15,696
2018	2,967		640		(764)		(124)		27,919
2019	6,222		1,554		183		1,737		59,244
2020	8,817		2,410		850		3,260		98,227
2021	640		200		1,147		1,347		16,531
Subtotal	23,510		6,021		1,685		7,706		225,494
Total Europe	172,996		74,864		14,126		88,990		1,761,308
Total PRA Group	$	555,887	$	231,672	$	50,136	$	281,808	$	3,372,666

(1)For our non-U.S. amounts, amounts are presented using the average exchange rates during the current reporting period.

(2)Total Portfolio Revenue refers to ~~portfolio income~~Portfolio Income and ~~changes~~Changes in ~~expected recoveries~~Expected Recoveries combined.

(3)For our non-U.S. amounts, ~~net finance receivables~~Net Finance Receivables are presented at the ~~June 30, 2020~~March 31, 2021 exchange rate.

4533

The following table, which excludes any proceeds from cash sales of finance receivables, illustrates historical cash collections, by year, on our portfolios.


Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of June 30, 2020 Amounts in millions
Cash Collections by Year, By Year of Purchase (1) as of March 31, 2021 Amounts in millions																														Cash Collections by Year, By Year of Purchase (1) as of March 31, 2021 Amounts in millions
				Cash Collections																																																					Cash Collections
Purchase Period	Purchase Period	Purchase Price ⁽²⁾⁽³⁾		1996- 2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		Total		Purchase Period	Purchase Price (2)(3)		1996-2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		Total
Americas Core
1996-2009		$	930.0	$	1,647.7	$	295.7	$	253.5	$	201.6	$	146.4	$	101.8	$	71.2	$	45.7	$	30.5	$	23.3	$	19.2	$	7.3	$	2,843.9
2010		148.2		—		47.1		113.6		109.9		82.0		55.9		38.1		24.5		15.6		11.1		9.2		3.7		510.7
Americas and Australia Core																														Americas and Australia Core
1996-2010																														1996-2010	$	1,078.2	$	1,990.5	$	367.1	$	311.5	$	228.4	$	157.7	$	109.3	$	70.2	$	46.0	$	34.4	$	28.4	$	18.8	$	3.7	$	3,366.0
2011	2011	209.6		—		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		6.3		696.9		2011	209.6		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		10.9		2.3		703.8
2012	2012	254.1		—		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		6.8		626.5		2012	254.1		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		2.8		634.3
2013	2013	390.8		—		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		13.2		849.6		2013	390.8		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		5.0		864.6
2014	2014	404.1		—		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		18.2		786.3		2014	404.1		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		6.9		806.9
2015	2015	443.1		—		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		32.9		774.4		2015	443.1		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		12.0		810.7
2016	2016	455.8		—		—		—		—		—		—		—		138.7		256.5		194.6		140.6		57.1		787.5		2016	455.8		—		—		—		—		—		—		138.7		256.5		194.6		140.6		105.9		24.9		861.2
2017	2017	532.9		—		—		—		—		—		—		—		—		107.3		278.7		256.5		108.5		751.0		2017	532.9		—		—		—		—		—		—		—		107.3		278.7		256.5		192.5		41.7		876.7
2018	2018	654.0		—		—		—		—		—		—		—		—		—		122.7		361.9		183.0		667.6		2018	654.0		—		—		—		—		—		—		—		—		122.7		361.9		337.7		75.5		897.8
2019	2019	581.5		—		—		—		—		—		—		—		—		—		—		143.8		175.0		318.8		2019	581.5		—		—		—		—		—		—		—		—		—		143.8		349.0		88.2		581.0
2020	2020	283.0		—		—		—		—		—		—		—		—		—		—		—		37.1		37.1		2020	435.7		—		—		—		—		—		—		—		—		—		—		133.0		80.2		213.2
2021																														2021	88.8		—		—		—		—		—		—		—		—		—		—		—		4.4		4.4
Subtotal	Subtotal	5,287.1		1,647.7		342.8		429.1		542.9		656.5		752.9		844.8		837.1		860.9		945.0		1,141.5		649.1		9,650.3		Subtotal	5,528.6		1,990.5		429.1		542.9		656.5		752.9		844.8		837.1		860.8		945.0		1,141.5		1,271.9		347.6		10,620.6
Americas Insolvency	Americas Insolvency																																	Americas Insolvency
1996-2009		397.5		204.3		147.1		156.7		145.4		109.3		57.0		7.6		3.6		2.2		1.1		0.7		0.2		835.2
2010		208.9		—		39.5		104.5		125.0		121.7		101.9		43.6		5.0		2.4		1.4		0.7		0.3		546.0
1996-2010																														1996-2010	606.4		390.9		261.2		270.4		231.0		158.9		51.2		8.6		4.6		2.5		1.4		0.8		0.2		1,381.7
2011	2011	180.4		—		—		15.2		66.4		82.8		85.8		76.9		36.0		3.7		1.6		0.7		0.3		369.4		2011	180.4		—		15.2		66.4		82.8		85.8		76.9		36.0		3.7		1.6		0.7		0.5		0.1		369.7
2012	2012	251.4		—		—		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.5		391.9		2012	251.4		—		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		0.2		392.5
2013	2013	227.8		—		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		0.7		353.5		2013	227.8		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.2		354.3
2014	2014	148.4		—		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		1.4		215.6		2014	148.4		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		0.3		216.7
2015	2015	63.2		—		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		5.6		83.5		2015	63.2		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		0.4		86.2
2016	2016	91.4		—		—		—		—		—		—		—		18.9		30.4		25.0		19.9		7.7		101.9		2016	91.4		—		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		2.7		111.3
2017	2017	275.3		—		—		—		—		—		—		—		—		49.1		97.3		80.9		32.3		259.6		2017	275.3		—		—		—		—		—		—		—		49.1		97.3		80.9		58.8		11.8		297.9
2018	2018	97.9		—		—		—		—		—		—		—		—		—		6.7		27.4		15.4		49.5		2018	97.9		—		—		—		—		—		—		—		—		6.7		27.4		30.5		7.8		72.4
2019	2019	123.1		—		—		—		—		—		—		—		—		—		—		13.4		14.8		28.2		2019	123.1		—		—		—		—		—		—		—		—		—		13.3		31.4		8.6		53.3
2020	2020	35.3		—		—		—		—		—		—		—		—		—		—		—		2.7		2.7		2020	62.1		—		—		—		—		—		—		—		—		—		—		6.6		3.0		9.6
2021																														2021	9.5		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	Subtotal	2,100.6		204.3		186.6		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		181.0		81.9		3,237.0		Subtotal	2,136.9		390.9		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		180.9		155.3		35.3		3,345.6
Total Americas		7,387.7		1,852.0		529.4		705.5		897.1		1,126.4		1,211.3		1,189.0		1,086.9		1,083.3		1,152.9		1,322.5		731.0		12,887.3
Total Americas and Australia																														Total Americas and Australia	7,665.5		2,381.4		705.5		897.1		1,126.4		1,211.3		1,189.0		1,086.9		1,083.2		1,152.9		1,322.4		1,427.2		382.9		13,966.2
Europe Core	Europe Core																															Europe Core
2012	2012	20.4		—		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		0.6		37.7		2012	20.4		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		0.3		38.6
2013	2013	20.3		—		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.3		22.9		2013	20.3		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.2		23.5
2014	2014	773.8		—		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		72.6		1,364.2		2014	773.8		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		37.8		1,479.2
2015	2015	411.3		—		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		26.7		406.0		2015	411.3		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		13.4		447.0
2016	2016	333.1		—		—		—		—		—		—		—		40.4		78.9		72.6		58.0		23.3		273.2		2016	333.1		—		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		12.0		310.2
2017	2017	252.2		—		—		—		—		—		—		—		—		17.9		56.0		44.1		17.9		135.9		2017	252.2		—		—		—		—		—		—		—		17.9		56.0		44.1		36.1		9.6		163.7
2018	2018	341.8		—		—		—		—		—		—		—		—		—		24.3		88.7		35.8		148.8		2018	341.8		—		—		—		—		—		—		—		—		24.3		88.7		71.2		18.4		202.6
2019	2019	518.6		—		—		—		—		—		—		—		—		—		—		48.0		61.8		109.8		2019	518.6		—		—		—		—		—		—		—		—		—		47.9		125.7		32.0		205.6
2020	2020	94.8		—		—		—		—		—		—		—		—		—		—		—		7.5		7.5		2020	324.1		—		—		—		—		—		—		—		—		—		—		32.4		24.4		56.8
2021																														2021	43.6		—		—		—		—		—		—		—		—		—		—		—		1.4		1.4
Subtotal	Subtotal	2,766.3		—		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.2		246.5		2,506.0		Subtotal	3,039.2		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		149.5		2,928.6
Europe Insolvency	Europe Insolvency																																	Europe Insolvency
2014	2014	10.9		—		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.4		15.9		2014	10.9		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.1		16.4
2015	2015	19.0		—		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		1.6		22.7		2015	19.0		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		0.5		24.5
2016	2016	39.3		—		—		—		—		—		—		—		6.2		12.7		12.9		10.7		4.0		46.5		2016	39.3		—		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		1.8		52.2
2017	2017	39.2		—		—		—		—		—		—		—		—		1.2		7.9		9.2		4.8		23.1		2017	39.2		—		—		—		—		—		—		—		1.2		7.9		9.2		9.8		2.5		30.6
2018	2018	44.9		—		—		—		—		��		—		—		—		—		0.6		8.4		4.9		13.9		2018	44.9		—		—		—		—		—		—		—		—		0.6		8.4		10.3		3.0		22.3
2019	2019	77.2		—		—		—		—		—		—		—		—		—		—		5.0		10.3		15.3		2019	77.2		—		—		—		—		—		—		—		—		—		5.1		21.1		6.2		32.4
2020	2020	23.0		—		—		—		—		—		—		—		—		—		—		—		1.0		1.0		2020	105.4		—		—		—		—		—		—		—		—		—		—		6.1		8.8		14.9
2021																														2021	16.7		—		—		—		—		—		—		—		—		—		—		—		0.6		0.6
Subtotal	Subtotal	253.5		—		—		—		—		—		—		7.3		14.5		22.1		28.8		38.7		27.0		138.4		Subtotal	352.6		—		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		23.5		193.9
Total Europe	Total Europe	3,019.8		—		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		273.5		2,644.4		Total Europe	3,391.8		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		173.0		3,122.5
Total PRA Group	Total PRA Group	$	10,407.5	$	1,852.0	$	529.4	$	705.5	$	908.7	$	1,142.5	$	1,378.6	$	1,539.6	$	1,492.0	$	1,512.4	$	1,625.1	$	1,841.4	$	1,004.5	$	15,531.7	Total PRA Group	$	11,057.3	$	2,381.4	$	705.5	$	908.7	$	1,142.5	$	1,378.6	$	1,539.6	$	1,492.0	$	1,512.3	$	1,625.1	$	1,841.3	$	2,005.8	$	555.9	$	17,088.7

(1)For our non-U.S. amounts, cash collections are presented using the average exchange rates during the cash collection period.

(2)Includes the ~~acquisition date~~ finance receivables portfolios that were acquired through our business acquisitions.

(3)For our ~~non-US~~non-U.S. amounts, purchase price is presented at the exchange rate at the end of the year in which the ~~pool~~portfolio was purchased. In addition, any purchase price adjustments that occur throughout the life of the pool are presented at the year-end exchange rate for the respective year of purchase.

4634

Estimated remaining collections

The following chart shows our ERC of ~~$6,352.0~~$6,144.1 million at ~~June 30, 2020~~March 31, 2021 by geographical region (amounts in millions).

The following chart shows our ERC by year for the 12 month periods ending March 31 in each of the years represented below. The forecast amounts reflect our estimate at March 31, 2021 of how much we expect to collect on our portfolios. These estimates are translated to U.S. dollar at the March 31, 2021 exchange rate (amounts in millions).

Seasonality

~~Cash~~Although 2020 deviated from usual seasonal patterns due to the impact of COVID-19, typically cash collections in the Americas tend to be higher in the first half of the year due to the high volume of income tax refunds received by individuals in the U.S., and trend lower as the year progresses. Customer payment patterns in all of the countries in which we operate can be affected by seasonal employment trends, income tax refunds, and holiday spending habits.

Cash Collections

The following table displays our quarterly cash collections by geography and portfolio type, for the periods ~~indicated.~~indicated (amounts in thousands).

Cash Collections by Geography and Type
Amounts in thousands
2020 2019 2018
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
Americas Core $ 343,269 $ 305,780 $ 276,639 $ 279,902 $ 294,243 $ 290,723 $ 233,937 $ 231,253
Americas Insolvency 38,685 43,210 40,801 45,759 49,770 44,613 48,000 48,518
Europe Core 115,145 131,340 126,649 118,917 117,635 116,858 113,154 102,780
Europe Insolvency 12,841 14,243 12,520 8,639 8,626 8,977 7,618 6,731
Total Cash Collections $ 509,940 $ 494,573 $ 456,609 $ 453,217 $ 470,274 $ 461,171 $ 402,709 $ 389,282


Cash Collections by Geography and Type
	2021		2020								2019
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	347,638	$	286,524	$	336,322	$	343,269	$	305,780	$	276,639	$	279,902	$	294,243
Americas Insolvency	35,253		36,048		37,344		38,685		43,210		40,801		45,759		49,770
Europe Core	149,486		141,471		131,702		115,145		131,340		126,649		118,917		117,635
Europe Insolvency	23,510		17,830		13,971		12,841		14,243		12,520		8,639		8,626
Total Cash Collections	$	555,887	$	481,873	$	519,339	$	509,940	$	494,573	$	456,609	$	453,217	$	470,274

The following table provides additional details on the composition of our ~~U.S.~~ Core cash collections for the periods ~~indicated.~~indicated (amounts in thousands).


U.S. Core Portfolio Cash Collections by Source Amounts in thousands
Cash Collections by Source - Core Portfolios Only																		Cash Collections by Source - Core Portfolios Only
		2020						2019													2018																							2021		2020				2019
		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3																Q1			Q4			Q3		Q2		Q1		Q4		Q3		Q2
Call Center and Other Collections	Call Center and Other Collections	$	219,856	$	168,166	$	139,399	$	149,782	$	160,479	$	169,753	$	134,543	$	137,325											Call Center and Other Collections				$	355,043		$	296,865		$	325,898	$	319,236	$	288,596	$	262,570	$	254,798	$	264,478
External Legal Collections	External Legal Collections	62,792		66,190		58,831		64,301		63,490		57,419		47,410		41,935												External Legal Collections				65,613			58,481			68,861		70,310		75,699		70,867		75,082		75,624
Internal Legal Collections	Internal Legal Collections	34,467		38,111		33,944		35,679		38,065		37,018		30,724		32,064												Internal Legal Collections				76,468			72,649			73,265		68,868		72,825		69,851		68,939		71,776
Total U.S. Core Cash Collections		$	317,115	$	272,467	$	232,174	$	249,762	$	262,034	$	264,190	$	212,677	$	211,324
Total Core Cash Collections																		Total Core Cash Collections	$	497,124		$	427,995	$	468,024	$	458,414		$	437,120	$	403,288		$	398,819		$	411,878

Collections Productivity (U.S. Portfolio)

The following tables ~~display certain~~displays a collections productivity ~~measures:~~measure for our U.S. Portfolios for the periods indicated.


Cash Collections per Collector Hour Paid U.S. Portfolio	Cash Collections per Collector Hour Paid U.S. Portfolio																					Cash Collections per Collector Hour Paid U.S. Portfolio
		Call center and other cash collections ⁽¹⁾																			Call center and other cash collections (1)
		2020		2019		2018		2017		2016			2021		2020		2019		2018		2017
First Quarter	First Quarter	$	172	$	139	$	121	$	161	$	168	First Quarter	$	279	$	172	$	139	$	121	$	161
Second Quarter	Second Quarter	263		139		101		129		167		Second Quarter	—		263		139		101		129
Third Quarter	Third Quarter	—		124		107		125		177		Third Quarter	—		246		124		107		125
Fourth Quarter	Fourth Quarter	—		128		104		112		153		Fourth Quarter	—		204		128		104		112

(1)Represents total cash collections less internal legal cash collections, external legal cash collections, and ~~Insolvency~~insolvency cash collections from trustee-administered accounts.

~~Portfolio Acquisitions~~Cash Efficiency Ratio

The following table displays our cash efficiency for the periods indicated.





























Cash Efficiency Ratio (1)
	2021	2020	2019
First Quarter	68.0%	61.5%	59.2%
Second Quarter	—	68.7	60.4
Third Quarter	—	65.6	60.2
Fourth Quarter	—	61.9	59.7
Full Year	—	64.5	59.9

(1) Calculated by dividing cash receipts less operating expenses by cash receipts.

Portfolio Acquisitions

The following graph shows the purchase price of our portfolios by year since ~~2010.~~2011. It includes the acquisition date finance receivable portfolios that were acquired through our business acquisitions. The ~~2020~~2021 totals represent portfolio acquisitions through the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 while the prior year totals are for the full year.

The following table displays our quarterly portfolio acquisitions for the periods ~~indicated.~~indicated (amounts in thousands).

Portfolio Acquisitions by Geography and Type
Amounts in thousands
2020 2019 2018
Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
Americas Core $ 110,474 $ 172,697 $ 118,153 $ 168,185 $ 121,996 $ 169,189 $ 172,511 $ 170,426
Americas Insolvency 14,527 20,772 22,650 26,311 26,092 48,243 52,871 17,151
Europe Core 34,247 60,990 218,919 64,728 136,344 94,283 231,810 45,754
Europe Insolvency 5,251 18,778 42,613 19,772 4,715 7,134 33,661 4,159
Total Portfolio Acquisitions $ 164,499 $ 273,237 $ 402,335 $ 278,996 $ 289,147 $ 318,849 $ 490,853 $ 237,490


Portfolio Acquisitions by Geography and Type
	2021		2020								2019
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	88,912	$	67,460	$	84,139	$	110,474	$	172,697	$	118,153	$	168,185	$	121,996
Americas Insolvency	9,486		12,504		14,328		14,527		20,772		22,650		26,311		26,092
Europe Core	44,095		137,647		74,930		34,247		60,990		218,919		64,728		136,344
Europe Insolvency	16,468		72,171		4,203		5,251		18,778		42,613		19,772		4,715
Total Portfolio Acquisitions	$	158,961	$	289,782	$	177,600	$	164,499	$	273,237	$	402,335	$	278,996	$	289,147

Portfolio Acquisitions by Stratification (U.S. Only)

The following table categorizes our quarterly U.S. portfolio acquisitions for the periods indicated into major asset type and delinquency category. Since our inception in 1996, we have acquired more than 5657 million customer accounts in the ~~U.S.~~U.S (amounts in thousands).


U.S. Portfolio Acquisitions by Major Asset Type Amounts in thousands
U.S. Portfolio Acquisitions by Major Asset Type																								U.S. Portfolio Acquisitions by Major Asset Type
		2020															2019																											2021					2020
		Q2						Q1						Q4					Q3				Q2											Q1					Q4					Q3					Q2	Q1
Major Credit Cards	Major Credit Cards	$	50,270	40.9	%	$	71,225	38.3	%	$	30,337	24.3	%		$	50,500	40.1	%	$	39,468	28.2	%			Major Credit Cards	$	28,230	31.1	%	$	22,500	28.9	%		$	23,322	25.7	%		$	50,270	40.9	%		$	71,225	38.3	%
Private Label Credit Cards	Private Label Credit Cards	69,651		56.7		104,300		56.0		85,351		68.4			72,714		57.7		70,536		50.4				Private Label Credit Cards	50,180		55.4		48,335		62.1			60,331		66.5			69,651		56.7			104,300		56.0
Consumer Finance	Consumer Finance	2,430		2.0		2,109		1.1		2,046		1.7			2,090		1.7		28,649		20.4				Consumer Finance	11,861		13.1		5,978		7.6			6,333		7.0			2,430		2.0			2,109		1.1
Auto Related	Auto Related	460		0.4		8,510		4.6		6,991		5.6			638		0.5		1,407		1.0				Auto Related	381		0.4		1,081		1.4			680		0.8			460		0.4			8,510		4.6
Total	Total	$	122,811	100.0	%	$	186,144	100.0	%	$	124,725	100.0	%		$	125,942	100.0	%	$	140,060	100.0	%			Total	$	90,652	100.0	%	$	77,894	100.0	%		$	90,666	100.0	%		$	122,811	100.0	%		$	186,144	100.0	%

U.S. Portfolio Acquisitions by Delinquency Category
Amounts in thousands
2020 2019
Q2 Q1 Q4 Q3 Q2
Fresh ⁽¹⁾
$ 28,847 26.6 % $ 51,126 30.9 % $ 35,330 34.6 % $ 27,600 27.1 % $ 33,288 29.3 %
Primary ⁽²⁾
9,887 9.1 18,152 11.0 5,796 5.7 17,658 17.3 40,027 35.1
Secondary ⁽³⁾
67,609 62.5 92,855 56.1 52,899 51.8 50,082 49.2 34,920 30.6
Tertiary ⁽³⁾
1,941 1.8 3,239 2.0 4,409 4.3 6,483 6.4 5,733 5.0
Other ⁽⁴⁾
— — — — 3,641 3.6 — — — —
Total Core 108,284 100.0 % 165,372 100.0 % 102,075 100.0 % 101,823 100.0 % 113,968 100.0 %
Insolvency 14,527 20,772 22,650 24,119 26,092
Total $ 122,811 $ 186,144 $ 124,725 $ 125,942 $ 140,060


U.S. Portfolio Acquisitions by Delinquency Category
	2021				2020
	Q1				Q4				Q3				Q2				Q1
Fresh (1)	$	21,502	26.4	%	$	21,985	33.6	%	$	25,236	33.1	%	$	28,847	26.6	%	$	51,126	30.9	%
Primary (2)	1,360		1.7		1,002		1.5		5,187		6.8		9,887		9.1		18,152		11.0
Secondary (3)	50,546		62.1		41,164		63.0		44,534		58.3		67,609		62.5		92,855		56.1
Other (4)	8,050		9.8		1,239		1.9		1,381		1.8		1,941		1.8		3,239		2.0

Total Core	81,458		100.0	%	65,390		100.0	%	76,338		100.0	%	108,284		100.0	%	165,372		100.0	%
Insolvency	9,194				12,504				14,328				14,527				20,772
Total	$	90,652			$	77,894			$	90,666			$	122,811			$	186,144

(1)Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and are either being sold prior to any post-charge-off collection activity or placement with a third-party for the first time.

(2)Primary accounts are typically 360 to 450 days past due and charged-off and have been previously placed with one contingent fee servicer.

(3)Secondary ~~and tertiary~~ accounts are typically more than 660 days past due and charged-off and have been placed with two ~~or three~~ contingent fee servicers.

(4)Other accounts are typically two to three years or more past due and charged-off and have previously been worked by ~~four~~three or more contingent fee servicers.

Non-GAAP Financial Measures

We report financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, management uses certain non-GAAP financial measures including adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), to evaluate our operating and financial performance as well as to set performance goals. We present Adjusted EBITDA because we consider it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance, as it excludes certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business, and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. In addition, our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures presented by other companies.

Adjusted EBITDA is calculated starting with our GAAP financial measure, net income attributable to PRA Group, Inc. and is adjusted for:

•income tax expense (or less income tax benefit);

•foreign exchange loss (or less foreign exchange gain);

•interest expense, net (or less interest income, net);

•other expense (or less other income);

•depreciation and amortization;

•net income attributable to noncontrolling interests; and

•recoveries applied to negative allowance less changes in expected recoveries.

The following table is a reconciliation of net income, as reported in accordance with GAAP, to Adjusted EBITDA for the last 12 months ("LTM") as of March 31, 2021 and for the year ended December 31, 2020 (amounts in thousands):


Reconciliation of Non-GAAP Financial Measures
	LTM		For the Year Ended
	March 31, 2021		December 31, 2020
Net income attributable to PRA Group, Inc.	$	188,610	$	149,339
Adjustments:
Income tax expense	55,425		41,203
Foreign exchange losses/(gains)	304		(2,005)
Interest expense, net	136,053		141,712
Other expense (1)	947		1,049
Depreciation and amortization	18,362		18,465
Adjustment for net income attributable to noncontrolling interests	18,576		18,403

Recoveries applied to negative allowance less Changes in expected recoveries	997,313		968,362
Adjusted EBITDA	$	1,415,590	$	1,336,528

(1) Other expense reflects non-operating expenses.

Additionally, we evaluate our business using certain ratios that use Adjusted EBITDA. Debt to Adjusted EBITDA is calculated by dividing borrowings by Adjusted EBITDA.The following table reflects our Debt to Adjusted EBITDA for the LTM as of March 31, 2021 and for the year ended December 31, 2020 (amounts in thousands):


Debt to Adjusted EBITDA
	LTM			For the Year Ended
	March 31, 2021			December 31, 2020
Borrowings	$	2,501,133		$	2,661,289
Adjusted EBITDA	$	1,415,590		$	1,336,528
Debt to Adjusted EBITDA	1.77		x	1.99		x

Liquidity and Capital Resources

We actively manage our liquidity to help provide access to sufficient funding to meet our business needs and financial obligations. As of ~~June 30, 2020,~~March 31, 2021, cash and cash equivalents totaled ~~$115.7~~$92.8 million. Of the cash and cash equivalent balance as of ~~June 30, 2020, $96.7~~March 31, 2021, $62.2 million consisted of cash on hand related to international operations with indefinitely reinvested earnings. See the "Undistributed Earnings of International Subsidiaries" section below for more information.

At ~~June 30, 2020,~~March 31, 2021, we had ~~approximately $2.6 billion in~~the following borrowings outstanding ~~with $905.3 million of~~and availability under ~~all of~~ our credit facilities ~~(subject to the~~(amounts in thousands):


	Outstanding		Available without Restrictions		Available with Restrictions (1)
Americas revolving credit (2)	$	376,392	$	703,995	$	254,772
European revolving credit	1,023,039		366,961		236,961
Term loan	467,500		—		—
Senior Notes	300,000		—		—
Convertible Notes	345,000		—		—
Less: Debt discounts and issuance costs	(10,798)		—		—
Total	$	2,501,133	$	1,070,956	$	491,733

(1) Available borrowings after calculation of current borrowing base and ~~applicable~~ debt covenants). Considering borrowing base restrictions, as of June 30, 2020, the amount available to be drawn was $414.0 million. Of the $905.3 million of borrowing availability, $340.0 million was available under our European credit facility, $562.3 million was available under ourcovenants.

(2) Includes North American ~~credit facility~~revolver and ~~$3.0 million was available under our~~ Colombian revolving credit facility. Of the $414.0 million available considering borrowing base restrictions, $97.4 million was available under our European credit facility, $313.6 million was available under our North American credit facility and $3.0 million was available under the Colombian revolving credit facility. For more information, see Note 7 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.revolver.

An additional funding source for our Europe operations is interest-bearing deposits. Per the terms of our European credit facility, we are permitted to obtain interest-bearing deposit funding of up to SEK 1.2 billion (approximately ~~$128.5~~$137.4 million as of ~~June 30, 2020)~~March 31, 2021). Interest-bearing deposits as of ~~June 30, 2020~~March 31, 2021 were ~~$120.5~~$125.0 million.

We determined that we were in compliance with the covenants of our financing arrangements as of ~~June 30, 2020.~~March 31, 2021.

We have the ability to slow the purchase of finance receivables if necessary, and use the net cash flow generated from our cash collections from our existing finance receivables to temporarily service our debt and fund existing operations.

Contractual obligations over the next year are primarily related to ~~debt maturities and~~ purchase commitments. Our North American credit facility expires in May 2022. Our European credit facility expires in February 2023. Of our $420.0 million in term loans outstanding at June 30, 2020, $10.0 million in principal is due within one year.

~~At June 30, 2020,~~As of March 31, 2021, we had outstanding $287.5 million aggregate principal amount of 3.00% Convertible Senior Notes due August 1, 2020. Subsequently, we retired the notes in full through repurchase and cash settlement in connection with their maturity. For more information, see Note 15 to our Consolidated Financial Statements included in Part. I, Item 1 to this Quarterly Report.

We have ~~in place~~ forward flow commitments in place for the purchase of nonperforming loans ~~primarily over the next 12 months~~ with a maximum purchase price of ~~$383.1~~$640.7 million, as of ~~June 30, 2020.~~which $621.2 million is due within the next 12 months. The ~~$383.1~~$640.7 million is comprised of ~~$271.7~~$452.7 million for the Americas and ~~$111.4~~Australia and $188.0 million for Europe. We may also enter into new or renewed forward flow commitments and close on spot transactions in addition to the aforementioned forward flow agreements.

~~In May 2017, we reached a settlement with~~Additionally, of our $2.5 billion borrowings at March 31, 2021, estimated interest, unused fees and principal payments for the ~~Internal Revenue Service ("IRS") in regard~~next 12 months are approximately $106.7 million, of which, $11.0 million relates to the IRS assertion that tax revenue recognition using the cost recovery method did not clearly reflect taxable income. In accordance with the settlement, our tax accounting method to recognize finance receivables revenue changed effective with tax year 2017. Under the new method, a portion of the annual collections amortizesprincipal. Our principal ~~and the remaining portion is taxable income. The revenue~~payment obligations related to ~~the difference~~debt maturities occur within three to five years as our European credit facility expires in ~~timing between the new method and the cost recovery method has been included evenly into~~February 2023, our tax filings over four years effective with tax year 2017 and ending with tax year 2020. We estimate the related tax payments to be approximately $9.2 million per quarter through the year 2020. No interest or penalties were assessed as part of the settlement.

~~We continue to monitor the recent outbreak of COVID-19 on~~convertible notes mature in June 2023, our ~~operations and how that may impact our cash flows~~North American credit facility expires in May 2024 and our ~~ability to settle debt. As a result of COVID-19, global financial markets have experienced overall volatility and disruptions to capital and credit markets.~~ senior notes mature in September 2025.

We believe that funds generated from operations and from cash collections on finance receivables, together with existing cash, available borrowings under our revolving credit ~~facilities, including recent modifications to the terms of those~~ facilities, and access to the capital markets will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases during the next 12 months. We may, however, seek to access the debt or equity capital markets as we deem appropriate, market ~~conditions permit.~~permitting. Business acquisitions ~~adverse outcomes in pending litigation~~ or higher than expected levels of portfolio purchasing could require additional financing from other sources.

For more information, see Note 7 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Cash Flows Analysis

The following table summarizes our cash flow activity for the ~~six~~three months ended ~~June 30, 2020~~March 31, 2021 compared to the ~~six~~three months ended ~~June 30, 2019~~March 31, 2020 (amounts in thousands):


		Six Months Ended June 30,							Three Months Ended March 31,
		2020		2019			2021		2020		Change
Total cash provided by (used in):	Total cash provided by (used in):					Total cash provided by (used in):
Operating activities	Operating activities	$	122,500	$	30,948	Operating activities	$	20,208	$	46,806	$	(26,598)
Investing activities	Investing activities	88,077		(177,703)		Investing activities	166,982		(42,180)		209,162
Financing activities	Financing activities	(192,950)		156,837		Financing activities	(192,955)		72,142		(265,097)
Effect of exchange rate on cash	Effect of exchange rate on cash	(16,503)		(3,281)		Effect of exchange rate on cash	(6,427)		(16,575)		10,148
Net increase in cash and cash equivalents		$	1,124	$	6,801
Net (decrease)/increase in cash and cash equivalents						Net (decrease)/increase in cash and cash equivalents	$	(12,192)	$	60,193	$	(72,385)

Operating Activities

Cash provided by operating activities mainly reflects cash collections recognized as revenue partially offset by cash paid for operating expenses, interest and income taxes. Key drivers of operating activities were adjusted for (i) non-cash items included in net income such as provisions for unrealized gains and losses, changes in expected recoveries, depreciation and amortization, deferred taxes, fair value changes in equity securities, and stock-based compensation as well as (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.

Net cash provided by operating activities ~~increased $91.6~~decreased $26.6 million during the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021, mainly driven by ~~higher~~lower cash collections ~~lower operating expenses, the impact of unrealized foreign currency transactions~~recognized as revenue and ~~lower levels of income tax payments.~~other various offsetting noncash items.

Investing Activities

Cash provided by investing activities mainly reflects recoveries applied to our negative allowance. Cash used in investing activities mainly reflects ~~acquisitions~~purchases of nonperforming loans.

Net cash provided by investing activities increased ~~$265.8~~$209.2 million during the ~~six~~three months ended ~~June 30, 2020,~~March 31, 2021 primarily ~~from~~driven by a ~~$113.3~~$112.5 million decrease in purchases of nonperforming loans and a ~~$58.2~~$91.9 million increase in recoveries applied to our negative allowance in the current year versus of collections applied to principal in the prior year, a $72.8 million decrease in net purchases of investments and $57.6 million of cash used related to a business acquisition during the first quarter of 2019. These changes were partially offset by $31.2 million of cash received during the first quarter of 2019 related to the sale of a subsidiary in the fourth quarter of 2018 and a $5.0 million increase in net purchases of property and equipment.allowance.

Financing Activities

Cash provided by financing activities is normally provided by draws on our lines of credit and proceeds from debt offerings. Cash used in financing activities is primarily driven by principal payments on our lines of credit and long-term debt.

~~Cash used~~Changes in net cash flow related to financing activities ~~increased $349.8 million during the six months ended June 30, 2020,~~was driven primarily ~~from~~by a ~~$373.9~~$269.7 million decrease in proceeds from our lines of credit, a $14.8 million decrease in cash provided by interest-bearing deposits and an $8.0 million increase in distributions paid to noncontrolling interests. These changes were partially offset by a $48.6 million increase in net payments on our lines of credit, origination costs and long-term debt.credit.

Undistributed Earnings of International Subsidiaries

We intend to use predominantly all of our accumulated and future undistributed earnings of international subsidiaries to expand operations outside the U.S.; therefore, such undistributed earnings of international subsidiaries are considered to be indefinitely reinvested outside the U.S. Accordingly, no provision for income tax and withholding tax has been provided thereon. If management's intentions change and eligible undistributed earnings of international subsidiaries are repatriated, we could be subject to additional income taxes and withholding taxes. This could result in a higher effective tax rate in the period in which such a decision is made to repatriate accumulated or future undistributed international earnings. The amount of cash on hand related to international operations with indefinitely reinvested earnings was ~~$96.7~~$62.2 million and ~~$109.7~~$97.0 million as of ~~June 30, 2020~~March 31, 2021 and December 31, ~~2019,~~2020, respectively. Refer to Note 12 to our Consolidated Financial Statements

included in Part I, Item 1 of this Quarterly Report for further information related to our income taxes and undistributed international earnings.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Recent Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our Consolidated Financial Statements see Note 14 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Critical Accounting Policies and Estimates

Our Consolidated Financial Statements have been prepared in accordance with GAAP. Our significant accounting policies are discussed in Note 1 to our Consolidated Financial Statements included in Item 8 of our ~~2019~~2020 Form 10-K. Our significant accounting policies are fundamental to understanding our results of operations and financial condition because they require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets, and liabilities.

Three of these policies are considered to be critical because they are important to the portrayal of our financial condition and results, and because they require management to make judgments and estimates that are difficult, subjective, and complex regarding matters that are inherently uncertain.

We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ significantly from actual results, the impact on our Consolidated Financial Statements may be material.

Management has reviewed these critical accounting policies with the Audit Committee of our Board of Directors.

Revenue Recognition - Finance Receivables

We account for the majority of our investment in finance receivables under the guidance of ASC ~~Topic 310 “Receivables” (“ASC 310”) and ASC Topic 326-20 “Financial Instruments - Credit Losses - Measured at Amortized Cost” (“ASC 326-20”).~~326. Revenue recognition for finance receivables involves the use of estimates and the exercise of judgment on the part of management. These estimates include projections of the quantity and timing of future cash flows and economic lives of our pools of finance receivables. Significant changes in such estimates could result in increased or decreased revenue as we immediately recognize the discounted value of such changes using the constant effective interest rate of the pool.

We account for our finance receivables as follows:

We create each annual accounting pool using our projections of estimated cash flows and expected economic life. We then compute a constant effective interest rate based on the net carrying amount of the pool and reasonable projections of estimated cash flows and expectation of its economic life. As actual cash flow results are received we record the time value of the expected cash as ~~portfolio~~Portfolio income and over and under performance and changes in expected future cash flows from expected cash as ~~changes~~Changes in expected recoveries. We review each pool watching for trends, actual performance versus projections and curve shape (a graphical depiction of the timing of cash flows). We then re-forecast future cash flows by applying discounted cash flow methodologies to our ERC and recognize income over the estimated life of the pool at the constant effective interest rate of the pool.

Significant judgment is used in evaluating expected recoveries using the discounted cash flow approach and the estimated life of the pool.

Valuation of ~~Acquired Intangibles and~~ Goodwill

In accordance with ~~FASB~~ ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), we ~~amortize intangible assets over their estimated useful lives.~~evaluate Goodwill ~~pursuant to ASC 350, is not amortized but rather evaluated~~ for impairment annually and more frequently if indicators of potential impairment exist. Goodwill is reviewed for potential impairment at the reporting unit level. ~~A reporting unit is an operating segment or one level below an operating segment.~~

Goodwill is evaluated for impairment either under the qualitative assessment ~~option.~~option or using a quantitative forecast approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in the last valuation, changes in the business environment and changes of the reporting unit or its composition. If upon evaluation of the qualitative factors, we ~~qualitatively~~ determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, anthere is no impairment loss to record and a quantitative assessment is ~~recognized for the amount by which~~not required. If the carrying amount exceeds the reporting unit’s fair ~~value.~~value, then we are required to determine the reporting unit’s fair value and record as an impairment loss the amount the carrying value exceeds fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit.

We determine the fair value of a reporting unit by applying the approaches prescribed under ~~the fair value measurement accounting framework:~~ASC Topic 820 "Fair Value Measurements and Disclosures": the income approach and the market approach. Depending on the availability of public data and suitable comparables, we may or may not use the market approach or we may emphasize the results from the approach differently. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value. Cash flow projections are based on management's estimates of revenue growth rates, operating margins, necessary working capital and capital expenditure requirements, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to the reporting unit's ability to execute on the projected cash flows. Under the market approach, we estimate fair value based on prices and other relevant market transactions involving comparable publicly-traded companies with operating and investment characteristics similar to the reporting unit.

Income Taxes

We are subject to income taxes throughout the ~~income tax laws of the various jurisdictions~~U.S. and in ~~which we operate, including U.S. federal, state, local, and~~numerous international jurisdictions. These tax laws are complex and are subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and international income tax expense, we ~~must~~ make judgments about the application of these inherently complex laws.

We follow the guidance of ~~FASB~~ ASC Topic 740 "Income Taxes" ("ASC 740") as it relates to the provision for income taxes and uncertainty in income taxes. Accordingly, we record a tax provision for the anticipated tax consequences of the reported results of operations. ~~In accordance with ASC 740, the~~The provision for income taxes is ~~computed~~estimated using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets ~~and liabilities~~ are expected to be realized or settled. ~~The evaluation of~~

We exercise significant judgment in estimating the potential exposure to unresolved tax matters and apply a more-likely-than-not criteria approach for recording tax ~~position~~benefits related to uncertain tax positions in ~~accordance with~~ the guidance is a two-step process. The first step is recognition: we determine whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical meritsapplication of the ~~position. In evaluating whether a~~complex tax ~~position has met~~laws. While actual results could vary, we believe we have adequate tax accruals with respect to the ~~more-likely-than-not recognition threshold, we should presume that the position will be examined by the appropriate taxing authority that would have full knowledge~~ultimate outcome of ~~all relevant information. The second step is measurement: a~~such unresolved tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.matters. We record interest and penalties related to ~~unrecognized~~unresolved tax ~~benefits~~matters as a component of income tax ~~expense.~~expense when the more-likely-than-not standards are met.

In the event that all or part of the deferred tax assets are determined not to be realizable in the future, we would establish a valuation allowance ~~would be established~~ and ~~charged~~charge to earnings the impact in the period such a determination is made. If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a positive adjustment to ~~earnings in the period such determination is made.~~earnings. The establishment or release of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the use of loss carryforwards or other deferred tax assets in future periods. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our activities are subject to various financial risks, including market risk, currency and interest rate risk, credit risk, liquidity risk and cash flow risk. Our financial risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. We may periodically enter into derivative financial instruments, typically interest rate and currency derivatives, to reduce our exposure to fluctuations in interest rates on variable-rate debt, fluctuations in currency rates and their impact on earnings and cash flows. We do not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor do we enter into or hold derivatives for trading or speculative purposes. Derivative instruments involve, to varying degrees, elements of non-performance, or credit risk. We do not believe that we currently face a significant risk of loss in the event of non-performance by the counterparties associated with these instruments, as these transactions were executed with a diversified group of major financial institutions with an investment-grade credit rating. Our intention is to spread our counterparty credit risk across a number of counterparties so that exposure to a single counterparty is minimized.

Interest Rate Risk

We are subject to interest rate risk from outstanding borrowings on our variable rate credit facilities. As such, our consolidated financial results are subject to fluctuations due to changes in the market rate of interest. We assess this interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates. The borrowings on our variable rate credit facilities were approximately ~~$2.0~~$1.9 billion as of ~~June 30, 2020.~~March 31, 2021. Based on our debt structure at ~~June 30, 2020,~~March 31, 2021, assuming a 50 basis point decrease in interest rates, for example, interest expense over the following 12 months would decrease by an estimated ~~$3.4~~$1.8 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated ~~$3.4~~$3.7 million.

To reduce the exposure to changes in the market rate of interest and to be in compliance with the terms of our European credit facility, we have entered into interest rate derivative contracts for a portion of our borrowings under our floating rate financing arrangements. We apply hedge accounting to certain of our interest rate derivative contracts. By applying hedge accounting, changes in market value are reflected as adjustments in Other Comprehensive Income. All derivatives to which we have applied hedge accounting were evaluated and remained highly effective at ~~June 30, 2020.~~March 31, 2021. Terms of the interest rate derivative contracts require us to receive a variable interest rate and pay a fixed interest rate. The sensitivity calculations above consider the impact of our interest rate derivative ~~contracts.~~contracts and a 75 basis point floor on revolving loans in our North American credit facility.

Currency Exchange Risk

We operate internationally and enter into transactions denominated in various foreign currencies. During the three months ended ~~June 30, 2020,~~March 31, 2021, we generated ~~$79.6~~$111.3 million of revenues from operations outside the U.S. and used ~~eleven~~12 functional currencies, excluding the U.S. dollar. Weakness in one particular currency might be offset by strength in other currencies over time.

As a result of our international operations, fluctuations in foreign currencies could cause us to incur foreign currency exchange gains and losses, and could adversely affect our comprehensive income and stockholders' equity. Additionally, our reported financial results could change from period to period due solely to fluctuations between currencies.

Foreign currency gains and losses are primarily the result of the re-measurement of transactions in certain other currencies into an entity's functional currency. Foreign currency gains and losses are included as a component of other income and (expense) in our Consolidated Income Statements. From time to time we may elect to enter into foreign exchange derivative contracts to reduce these variations in our Consolidated Income Statements.

When an entity's functional currency is different than the reporting currency of its parent, foreign currency translation adjustments may occur. Foreign currency translation adjustments are included as a component of other comprehensive (loss)/income in our Consolidated Statements of Comprehensive Income and as a component of equity in our Consolidated Balance Sheets.

We have taken measures to mitigate the impact of foreign currency fluctuations. We have organized our European operations so that portfolio ownership and collections generally occur within the same entity. Our European credit facility is a multi-currency facility, allowing us to better match funding and portfolio acquisitions by currency. We actively monitor the value of our finance receivables by currency. In the event adjustments are required to our liability composition by currency we may, from time to time, execute re-balancing foreign exchange contracts to more closely align funding and portfolio acquisitions by currency.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. We conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that, as of ~~June 30, 2020,~~March 31, 2021, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended ~~June 30, 2020~~March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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Part II. Other Information

Item 1. Legal Proceedings

For information regarding legal proceedings as of ~~June 30, 2020,~~March 31, 2021, refer to Note 13 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Item 1A. Risk Factors

There have been no material changes in our risk factors from those disclosed in Part I, Item 1A, of our ~~2019~~2020 Form ~~10-K and in Part II, Item 1A of our 2020 First Quarter Form 10-Q.~~10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


3.1			Fi ~~fth~~Fifth Amended and Restated Certificate of Incorporation of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K ~~(File No. 000-50058) filed on~~ filed June 17, 2020 (File No. 000-50058 )).
3.2			Amended and Restated By-Laws of PRA Group, Inc. (Incorporated by reference to Exhibit 3.2 3.2 of the Current Report on Form 8-K ~~(File No. 000-50058)~~ filed on June 17, 2020 (File No. 000-50058)).
4.1			Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Registration Statement on Form S-1 filed October 15, 2002 (Registration No. 333-99225) ~~filed on October 15, 2002)~~).
4.2			Form of Warrant (Incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the Registration Statement on Form S-1 filed October 30, 2002 (Registration No. 333-99225) ~~filed on October 30, 2002)~~).
4.34.3			Indenture dated May 26, 2017 between PRA Group, Inc. and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K ~~(File~~ filed May 26, 2017 (File No. 000-50058) ~~filed on May 26, 2017)~~).
4.4.4			Indenture dated as of August 27,4 2020 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Bank, or Trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 1, 2020(File No. 000-50058)).
4.5			Description of the Registrant's Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit ~~4.5~~4.3 of the ~~Current~~Annual Report on Form 10-K ~~(File~~filed February 26, 2021(File No. 000-50058) ~~filed on March 2, 2020)~~).
~~10.~~1			~~Second Amendment to the~~ ~~Credit~~ ~~Agreement~~ ~~dated as of May 6, 2020~~, ~~by and among PRA Group Inc. and PRA Group Canada Inc.,the Guarantors, the Lenders party thereto, Bank of America, N.A., as Administrative Agent and Bank of America, N.A., acting through its Can~~a ~~da Branch, as Canadian Administrative Agent~~ ~~(filed herewith).~~
~~10.2~~			~~Form of Restricted Stock Unit Agreement~~ ~~(filed herewith)~~
~~10.3~~10.1			Form of Performance Stock Unit Agreement (filed ~~herewith)~~herein).
~~31.~~10.12			Seventh Amendment and Restatement Agreement to the Multicurrency Revolving Credit Facility Agreement, dated as of March 12, 2021 by and among PRA Group Europe Holding S.à .r.l., PRA Group Europe Holding S.à .r.l., Luxembourg, Zug Branch and DNB Bank ASA (filed herewith).
31.1			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
31.2			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
32.1			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkable Document
101.LAB			XBRL Taxonomy Extension Label Linkable Document
101.PRE			XBRL Taxonomy Extension Presentation Linkable Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document


104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRA Group, Inc.

(Registrant)

~~August~~May 6, ~~2020~~2021

By:

/s/ Kevin P. Stevenson

Kevin P. Stevenson

President and Chief Executive Officer

(Principal Executive Officer)




~~August~~May 6, ~~2020~~2021	By:	/s/ Peter M. Graham
		Peter M. Graham
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

5847


2020	$	845,437
2021	694,169
2023	531,004
2024	393,087
2025	281,166
2026	173,283
2027	101,570
2028	77,943
2029	51,868
2030	35,070
Thereafter	46,352
Total ERC expected to be applied to principal	$	3,230,949


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Beginning balance	$	263,324	$	257,148
Allowance charges	5,532		13,509
Reversal of previously recorded allowance charges	(4,336)		(6,218)
Net allowance charges	1,196		7,291
Foreign currency translation adjustment	71		152
Ending balance	$	264,591	$	264,591