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 ~~September 30, 2022~~March 31, 2023

☐ 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 ~~October 31, 2022 was 38,976,910~~May 1, 2023 w.as 39,169,763.

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 ~~(Loss)/~~Income	5
	Consolidated ~~Statement~~s Statements of Changes in Equity	6
	Consolidated Statements of Cash Flows	87
	Notes to Consolidated Financial Statements	98
	1. Organization and Business	98

	2. Finance Receivables, net	109
	3. Investments	1511
	4. Goodwill	1612
	5. Leases	1612
	6. Borrowings	1714
	7. Derivatives	2118
	8. Fair Value	2219
	9. Accumulated Other Comprehensive Loss	2421
	10. Earnings per Share	2622
	11. Income Taxes	2723
	12. Commitments and Contingencies	2723
	13. Recently Issued Accounting Standards	2824

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2925
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5245
Item 4.	Controls and Procedures	5346

Part II. Other Information

Item 1.	Legal Proceedings	5447
Item 1A.	Risk Factors	5447
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	5447
Item 3.	Defaults Upon Senior Securities	5447
Item 4.	Mine Safety Disclosures	5447
Item 5.	Other Information	5447
Item 6.	Exhibits	5447

Signatures		5649

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022

(Amounts in thousands)


		(unaudited)					(unaudited)
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	57,991	$	87,584	Cash and cash equivalents	$	116,471	$	83,376
Restricted cash and cash equivalents						Restricted cash and cash equivalents	359,208		1,382
Investments	Investments	76,171		92,977		Investments	77,877		79,948
Finance receivables, net	Finance receivables, net	3,037,360		3,428,285		Finance receivables, net	3,286,497		3,295,008
Income taxes receivable	Income taxes receivable	36,420		41,146		Income taxes receivable	41,398		31,774
Deferred tax assets, net	Deferred tax assets, net	53,949		67,760		Deferred tax assets, net	57,551		56,908
Right-of-use assets	Right-of-use assets	52,648		56,713		Right-of-use assets	53,187		54,506
Property and equipment, net	Property and equipment, net	52,061		54,513		Property and equipment, net	48,500		51,645
Goodwill	Goodwill	404,474		480,263		Goodwill	420,647		435,921
Other assets	Other assets	124,256		57,002		Other assets	82,293		85,206
Total assets	Total assets	$	3,895,330	$	4,366,243	Total assets	$	4,543,629	$	4,175,674
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities:	Liabilities:					Liabilities:
Accounts payable	Accounts payable	$	6,148	$	3,821	Accounts payable	$	4,837	$	7,329
Accrued expenses	Accrued expenses	104,059		127,802		Accrued expenses	120,640		111,395
Income taxes payable	Income taxes payable	16,412		19,276		Income taxes payable	19,809		25,693
Deferred tax liabilities, net	Deferred tax liabilities, net	49,248		36,630		Deferred tax liabilities, net	29,324		42,918
Lease liabilities	Lease liabilities	57,376		61,188		Lease liabilities	57,939		59,384
Interest-bearing deposits	Interest-bearing deposits	88,155		124,623		Interest-bearing deposits	108,779		112,992
Borrowings	Borrowings	2,379,614		2,608,714		Borrowings	2,937,895		2,494,858
Other liabilities	Other liabilities	11,729		59,352		Other liabilities	39,697		34,355

Total liabilities	Total liabilities	2,712,741		3,041,406		Total liabilities	3,318,920		2,888,924

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	—		—
Common stock, $0.01 par value, 100,000 shares authorized, 38,976 shares issued and outstanding at September 30, 2022; 100,000 shares authorized, 41,008 shares issued and outstanding at December 31, 2021		389		410
Common stock, $0.01 par value, 100,000 shares authorized, 39,170 shares issued and outstanding at March 31, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022						Common stock, $0.01 par value, 100,000 shares authorized, 39,170 shares issued and outstanding at March 31, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022	392		390
Additional paid-in capital	Additional paid-in capital	—		—		Additional paid-in capital	285		2,172
Retained earnings	Retained earnings	1,557,066		1,552,845		Retained earnings	1,514,396		1,573,025
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(426,086)		(266,909)		Accumulated other comprehensive loss	(356,730)		(347,926)
Total stockholders' equity - PRA Group, Inc.	Total stockholders' equity - PRA Group, Inc.	1,131,369		1,286,346		Total stockholders' equity - PRA Group, Inc.	1,158,343		1,227,661
Noncontrolling interest	Noncontrolling interest	51,220		38,491		Noncontrolling interest	66,366		59,089
Total equity	Total equity	1,182,589		1,324,837		Total equity	1,224,709		1,286,750
Total liabilities and equity	Total liabilities and equity	$	3,895,330	$	4,366,243	Total liabilities and equity	$	4,543,629	$	4,175,674

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Income Statements

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

(unaudited)

(Amounts in thousands, except per share amounts)


		Three Months Ended				Nine Months Ended					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Revenues:	Revenues:									Revenues:
Portfolio income	Portfolio income	$	185,853	$	212,905	$	587,394	$	663,714	Portfolio income	$	188,242	$	207,532
Changes in expected recoveries	Changes in expected recoveries	48,336		43,820		134,817		157,504		Changes in expected recoveries	(36,912)		29,914
Total portfolio revenue	Total portfolio revenue	234,189		256,725		722,211		821,218		Total portfolio revenue	151,330		237,446
Fee income		6,122		6,209		14,419		10,843
Other revenue	Other revenue	4,496		764		7,044		6,735		Other revenue	4,140		3,159
Total revenues	Total revenues	244,807		263,698		743,674		838,796		Total revenues	155,470		240,605

Operating expenses:	Operating expenses:									Operating expenses:
Compensation and employee services	Compensation and employee services	70,382		74,584		215,615		228,200		Compensation and employee services	82,403		71,096
Legal collection fees	Legal collection fees	8,963		10,993		29,390		36,208		Legal collection fees	8,838		10,873
Legal collection costs	Legal collection costs	23,391		21,450		57,694		61,231		Legal collection costs	23,945		16,557
Agency fees	Agency fees	15,160		15,646		47,374		47,145		Agency fees	17,378		17,388
Outside fees and services	Outside fees and services	24,618		29,434		71,489		71,167		Outside fees and services	24,944		19,378
Communication	Communication	9,951		9,782		32,062		33,039		Communication	10,527		12,583
Rent and occupancy	Rent and occupancy	4,669		4,571		14,289		13,694		Rent and occupancy	4,448		4,987
Depreciation and amortization	Depreciation and amortization	3,741		3,724		11,384		11,520		Depreciation and amortization	3,589		3,778
Other operating expenses	Other operating expenses	13,144		15,935		37,885		44,045		Other operating expenses	13,042		11,998

Total operating expenses	Total operating expenses	174,019		186,119		517,182		546,249		Total operating expenses	189,114		168,638

Income from operations		70,788		77,579		226,492		292,547
(Loss)/income from operations										(Loss)/income from operations	(33,644)		71,967
Other income and (expense):	Other income and (expense):									Other income and (expense):

Interest expense, net	Interest expense, net	(32,455)		(29,599)		(95,765)		(91,987)		Interest expense, net	(38,283)		(31,748)
Foreign exchange gain, net		4		1,232		791		127
Foreign exchange loss, net										Foreign exchange loss, net	(9)		(532)
Other	Other	(83)		85		(754)		294		Other	(650)		(490)
Income before income taxes		38,254		49,297		130,764		200,981
Income tax expense		11,072		12,627		29,828		41,870
Net income		27,182		36,670		100,936		159,111
(Loss)/income before income taxes										(Loss)/income before income taxes	(72,586)		39,197
Income tax (benefit)/expense										Income tax (benefit)/expense	(18,683)		4,579
Net (loss)/income										Net (loss)/income	(53,903)		34,618
Adjustment for net income/(loss) attributable to noncontrolling interests	Adjustment for net income/(loss) attributable to noncontrolling interests	2,450		2,190		(252)		10,229		Adjustment for net income/(loss) attributable to noncontrolling interests	4,726		(5,354)
Net income attributable to PRA Group, Inc.		$	24,732	$	34,480	$	101,188	$	148,882
Net income per common share attributable to PRA Group, Inc.:
Net (loss)/income attributable to PRA Group, Inc.										Net (loss)/income attributable to PRA Group, Inc.	$	(58,629)	$	39,972

Net (loss)/income per common share attributable to PRA Group, Inc.:										Net (loss)/income per common share attributable to PRA Group, Inc.:
Basic	Basic	$	0.63	$	0.76	$	2.54	$	3.27	Basic	$	(1.50)	$	0.98
Diluted	Diluted	$	0.63	$	0.76	$	2.52	$	3.24	Diluted	$	(1.50)	$	0.97
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:									Weighted average number of shares outstanding:
Basic	Basic	39,018		45,305		39,858		45,594		Basic	39,033		40,777
Diluted	Diluted	39,170		45,656		40,125		45,920		Diluted	39,033		41,304

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Comprehensive ~~(Loss)/~~Income

For the Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~

(unaudited)

(Amounts in thousands)


		Three Months Ended				Nine Months Ended					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Net income		$	27,182	$	36,670	$	100,936	$	159,111
Net (loss)/income										Net (loss)/income	$	(53,903)	$	34,618
Other comprehensive (loss)/income, net of tax:	Other comprehensive (loss)/income, net of tax:									Other comprehensive (loss)/income, net of tax:
Currency translation adjustments	Currency translation adjustments	(91,390)		(38,238)		(194,656)		(43,682)		Currency translation adjustments	(1,550)		12,270
Cash flow hedges	Cash flow hedges	19,590		5,522		44,007		19,200		Cash flow hedges	(4,831)		18,580
Debt securities available-for-sale	Debt securities available-for-sale	133		(50)		(269)		(192)		Debt securities available-for-sale	128		(160)
Other comprehensive (loss)/income	Other comprehensive (loss)/income	(71,667)		(32,766)		(150,918)		(24,674)		Other comprehensive (loss)/income	(6,253)		30,690
Total comprehensive (loss)/income	Total comprehensive (loss)/income	(44,485)		3,904		(49,982)		134,437		Total comprehensive (loss)/income	(60,156)		65,308
Less comprehensive income/(loss) attributable to noncontrolling interests		9,049		(1,154)		8,008		4,544
Less comprehensive income attributable to noncontrolling interests										Less comprehensive income attributable to noncontrolling interests	7,276		2,136
Comprehensive (loss)/income attributable to PRA Group, Inc.	Comprehensive (loss)/income attributable to PRA Group, Inc.	$	(53,534)	$	5,058	$	(57,990)	$	129,893	Comprehensive (loss)/income attributable to PRA Group, Inc.	$	(67,432)	$	63,172

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Changes in Equity

For the ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2023 and 2022

(unaudited)

(Amounts in thousands)


		Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total			Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
		Shares	Amount		Capital		Earnings		(Loss)/ Income		Interest		Equity			Shares	Amount		Capital		Earnings		(Loss)/ Income		Interest		Equity
Balance at December 31, 2021		41,008	$	410	$	—	$	1,552,845	$	(266,909)	$	38,491	$	1,324,837
Balance at December 31, 2022															Balance at December 31, 2022	38,980	$	390	$	2,172	$	1,573,025	$	(347,926)	$	59,089	$	1,286,750
Components of comprehensive income, net of tax:	Components of comprehensive income, net of tax:														Components of comprehensive income, net of tax:
Net income		—	—		—		39,972		—		(5,354)		34,618
Net loss															Net loss	—	—		—		(58,629)		—		4,726		(53,903)
Currency translation adjustments	Currency translation adjustments	—	—		—		—		4,780		7,490		12,270		Currency translation adjustments	—	—		—		—		(4,101)		2,551		(1,550)
Cash flow hedges	Cash flow hedges	—	—		—		—		18,580		—		18,580		Cash flow hedges	—	—		—		—		(4,831)		—		(4,831)
Debt securities available-for-sale	Debt securities available-for-sale	—	—		—		—		(160)		—		(160)		Debt securities available-for-sale	—	—		—		—		128		—		128
Vesting of restricted stock		262	3		(3)		—		—		—		—
Repurchase and cancellation of common stock		(860)	(9)		4,527		(43,972)		—		—		(39,454)
Share-based compensation expense		—			3,891		—		—		—		3,891
Employee stock relinquished for payment of taxes		—	—		(8,415)		—		—		—		(8,415)
Balance at March 31, 2022		40,410	$	404	$	—	$	1,548,845	$	(243,709)	$	40,627	$	1,346,167
Components of comprehensive income, net of tax:
Net income		—	—		—		36,484		—		2,652		39,136
Currency translation adjustments		—	—		—		—		(109,707)		(5,829)		(115,536)
Cash flow hedges		—	—		—		—		5,837		—		5,837

Debt securities available-for-sale		—	—		—		—		(242)		—		(242)
Distributions to noncontrolling interest		—	—		—		—		—		(3,494)		(3,494)
Contributions from noncontrolling interest		—	—		—		—		—		1,599		1,599

Vesting of restricted stock	Vesting of restricted stock	37	—		—		—		—		—		—		Vesting of restricted stock	190	2		(2)		—		—		—		—
Repurchase and cancellation of common stock		(808)	(8)		(3,835)		(31,092)		—		—		(34,935)
Share-based compensation expense		—	—		3,849		—		—		—		3,849

Employee stock relinquished for payment of taxes		—	—		(14)		—		—		—		(14)

Balance at June 30, 2022		39,639	$	396	$	—	$	1,554,237	$	(347,821)	$	35,555	$	1,242,367
Components of comprehensive income, net of tax:
Net income		—	—		—		24,732		—		2,450		27,182
Currency translation adjustments		—	—		—		—		(97,988)		6,598		(91,390)
Cash flow hedges		—	—		—		—		19,590		—		19,590
Debt securities available-for-sale		—	—		—		—		133		—		133
Distributions to noncontrolling interest		—	—		—		—		—		(1,127)		(1,127)
Contributions from noncontrolling interest		—	—		—		—		—		7,744		7,744

Repurchase and cancellation of common stock		(663)	(7)		(3,091)		(21,903)		—		—		(25,001)
Share-based compensation expense	Share-based compensation expense	—	—		3,101		—		—		—		3,101		Share-based compensation expense	—	—		3,799		—		—		—		3,799
Employee stock relinquished for payment of taxes	Employee stock relinquished for payment of taxes	—	—		(10)		—		—		—		(10)		Employee stock relinquished for payment of taxes	—	—		(5,684)		—		—		—		(5,684)
Balance at September 30, 2022		38,976	$	389	$	—	$	1,557,066	$	(426,086)	$	51,220	$	1,182,589
Balance at March 31, 2023															Balance at March 31, 2023	39,170	392		285		1,514,396		(356,730)		66,366		1,224,709


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Earnings		(Loss)/ Income		Interest		Equity
Balance at December 31, 2021	41,008	$	410	$	—	$	1,552,845	$	(266,909)	$	38,491	$	1,324,837
Components of comprehensive income, net of tax:
Net income	—	—		—		39,972		—		(5,354)		34,618
Currency translation adjustments	—	—		—		—		4,780		7,490		12,270
Cash flow hedges	—	—		—		—		18,580		—		18,580
Debt securities available-for-sale	—	—		—		—		(160)		—		(160)







Vesting of restricted stock	262	3		(3)		—		—		—		—
Repurchase and cancellation of common stock	(860)	(9)		4,527		(43,972)		—		—		(39,454)
Share-based compensation expense	—	—		3,891		—		—		—		3,891

Employee stock relinquished for payment of taxes	—	—		(8,415)		—		—		—		(8,415)

Balance at March 31, 2022	40,410	404		—		1,548,845		(243,709)		40,627		1,346,167

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of ~~Changes in Equity~~Cash Flows

For the ~~Nine~~Three Months Ended ~~September 30, 2021~~March 31, 2023 and 2022

(unaudited)

(Amounts in thousands)

Common Stock Additional Paid-In Retained Accumulated Other Comprehensive Noncontrolling Total
Shares Amount Capital Earnings (Loss)/ Income Interest Equity
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)
— — (26,697) 12,008 — — (14,689)
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:
Net income — — — 58,406 — 3,474 61,880
Currency translation adjustments — — — — (20,108) (4,423) (24,531)
Cash flow hedges — — — — 12,323 — 12,323
Distributions to noncontrolling interest — — — — — (3,933) (3,933)
Vesting of restricted stock 214 2 (2) — — — —
Share-based compensation expense — — 4,113 — — — 4,113
Employee stock relinquished for payment of taxes — — (5,460) — — — (5,460)
Balance at March 31, 2021 45,799 $ 458 $ 47,236 $ 1,582,384 $ (253,576) $ 26,727 $ 1,403,229
Components of comprehensive income, net of tax:
Net income — — — 55,996 — 4,565 60,561
Currency translation adjustments — — — — 17,004 2,083 19,087
Cash flow hedges — — — — 1,355 — 1,355
Debt securities available-for-sale — — — — (142) — (142)
Distributions to noncontrolling interest — — — — — (13,120) (13,120)
Vesting of restricted stock 38 — — — — — —
Share-based compensation expense — — 4,040 — — — 4,040
Employee stock relinquished for payment of taxes — — (70) — — — (70)
Balance at June 30, 2021 45,837 $ 458 $ 51,206 $ 1,638,380 $ (235,359) $ 20,255 $ 1,474,940
Components of comprehensive income, net of tax:
Net income — — — 34,480 — 2,190 36,670
Currency translation adjustments — — — — (34,894) (3,344) (38,238)
Cash flow hedges — — — — 5,522 — 5,522
Debt securities available-for-sale — — — — (50) — (50)
Distributions to noncontrolling interest — — — — — (3,397) (3,397)
Contributions from noncontrolling interest — — — — — 22,743 22,743
Repurchase and cancellation of common stock (1,797) (18) (55,513) (18,316) — — (73,847)
Share-based compensation expense — — 4,317 — — — 4,317
Employee stock relinquished for payment of taxes — — (10) — — — (10)
Balance at September 30, 2021 44,040 $ 440 $ — $ 1,654,544 $ (264,781) $ 38,447 $ 1,428,650

~~(1) Reflects adjustments recorded for the January 1, 2021 adoption of an accounting update. Refer to the Company's 2021 Annual Report on Form 10-K for more information.~~

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

~~PRA Group, Inc.~~

~~Consolidated Statements of Cash Flows~~

~~For the Nine Months Ended September 30, 2022 and 2021~~

~~(unaudited)~~

~~(Amounts in thousands)~~


		Nine Months Ended					Three Months Ended March 31,
		2022		2021			2023		2022
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income		$	100,936	$	159,111
Net (loss)/income						Net (loss)/income	$	(53,903)	$	34,618
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	10,841		12,470		Share-based compensation expense	3,799		3,891
Depreciation and amortization	Depreciation and amortization	11,384		11,520		Depreciation and amortization	3,589		3,778

Amortization of debt discount and issuance costs	Amortization of debt discount and issuance costs	7,653		7,053		Amortization of debt discount and issuance costs	2,441		2,627
Changes in expected recoveries	Changes in expected recoveries	(134,817)		(157,504)		Changes in expected recoveries	36,912		(29,914)

Deferred income taxes	Deferred income taxes	8,710		(4,235)		Deferred income taxes	(12,400)		7,203
Net unrealized foreign currency transactions	Net unrealized foreign currency transactions	21,356		7,462		Net unrealized foreign currency transactions	(15,020)		(7,126)
Fair value in earnings for equity securities	Fair value in earnings for equity securities	(175)		92		Fair value in earnings for equity securities	(3)		(60)
Other	Other	159		91		Other	(59)		(253)

Changes in operating assets and liabilities:	Changes in operating assets and liabilities:					Changes in operating assets and liabilities:
Other assets	Other assets	(2,547)		7,779		Other assets	(5,197)		738

Accounts payable	Accounts payable	3,028		201		Accounts payable	(2,495)		1,765
Income taxes payable, net	Income taxes payable, net	(155)		(9,391)		Income taxes payable, net	(16,717)		(13,290)
Accrued expenses	Accrued expenses	(7,655)		3,086		Accrued expenses	8,695		(26,775)
Other liabilities	Other liabilities	(22,521)		531		Other liabilities	2,976		(87)
Right of use asset/lease liability	Right of use asset/lease liability	389		17		Right of use asset/lease liability	(139)		141

Net cash (used)/provided by operating activities		(3,414)		38,283
Net cash used in operating activities						Net cash used in operating activities	(47,521)		(22,744)
Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Purchases of property and equipment, net	Purchases of property and equipment, net	(10,698)		(6,772)		Purchases of property and equipment, net	(405)		(3,744)

Purchases of finance receivables	Purchases of finance receivables	(561,901)		(770,377)		Purchases of finance receivables	(219,030)		(147,452)
Recoveries applied to negative allowance	Recoveries applied to negative allowance	765,732		934,002		Recoveries applied to negative allowance	225,709		278,271
Purchases of investments	Purchases of investments	(2,292)		(74,485)		Purchases of investments	(60,057)		(1,521)
Proceeds from sales and maturities of investments	Proceeds from sales and maturities of investments	4,565		42,110		Proceeds from sales and maturities of investments	62,762		775
Business acquisition, net of cash acquired		—		(647)

Net cash provided by investing activities	Net cash provided by investing activities	195,406		123,831		Net cash provided by investing activities	8,979		126,329
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	1,343,434		426,135		Proceeds from lines of credit	243,431		106,371
Principal payments on lines of credit	Principal payments on lines of credit	(1,389,371)		(908,215)		Principal payments on lines of credit	(199,377)		(154,810)

Proceeds from senior notes		—		350,000

Proceeds from issuance of Senior Notes due 2028						Proceeds from issuance of Senior Notes due 2028	400,000		—
Principal payments on long-term debt	Principal payments on long-term debt	(7,500)		(7,500)		Principal payments on long-term debt	(2,500)		(2,500)
Repurchases of common stock	Repurchases of common stock	(111,371)		(73,847)		Repurchases of common stock	—		(48,702)
Payments of origination cost and fees	Payments of origination cost and fees	(7,798)		(8,835)		Payments of origination cost and fees	(5,114)		(614)
Tax withholdings related to share-based payments	Tax withholdings related to share-based payments	(8,438)		(5,540)		Tax withholdings related to share-based payments	(5,683)		(8,415)
Distributions paid to noncontrolling interest		(4,621)		(20,450)
Contributions from noncontrolling interest		9,343		22,743

Net (decrease)/increase in interest-bearing deposits		(13,732)		8,847

Net cash used in financing activities		(190,054)		(216,662)

Net decrease in interest-bearing deposits						Net decrease in interest-bearing deposits	(4,951)		(3,977)

Net cash provided by/(used in) financing activities						Net cash provided by/(used in) financing activities	425,806		(112,647)
Effect of exchange rate on cash	Effect of exchange rate on cash	(31,927)		(5,202)		Effect of exchange rate on cash	3,656		910
Net decrease in cash and cash equivalents		(29,989)		(59,750)
Cash and cash equivalents beginning of period		89,072		121,047
Net increase/(decrease) in cash and cash equivalents						Net increase/(decrease) in cash and cash equivalents	390,920		(8,152)
Cash and cash equivalents, beginning of period						Cash and cash equivalents, beginning of period	84,759		89,072
Cash and cash equivalents, end of period	Cash and cash equivalents, end of period	$	59,083	$	61,297	Cash and cash equivalents, end of period	$	475,679	$	80,920

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	$	87,912	$	88,676	Cash paid for interest	$	25,081	$	27,196
Cash paid for income taxes	Cash paid for income taxes	21,086		55,234		Cash paid for income taxes	10,555		10,610

Cash, cash equivalents and restricted cash reconciliation:	Cash, cash equivalents and restricted cash reconciliation:					Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets	Cash and cash equivalents per Consolidated Balance Sheets	$	57,991	$	56,545	Cash and cash equivalents per Consolidated Balance Sheets	$	116,471	$	79,089
Restricted cash included in Other assets per Consolidated Balance Sheets		1,092		4,752
Total cash, cash equivalents and restricted cash		$	59,083	$	61,297
Restricted cash and cash equivalents per Consolidated Balance Sheets						Restricted cash and cash equivalents per Consolidated Balance Sheets	359,208		1,831
Total cash, cash equivalents and restricted cash and cash equivalents						Total cash, cash equivalents and restricted cash and cash equivalents	$	475,679	$	80,920

The accompanying notes are an integral part of these Consolidated Financial Statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

Nature of operations: 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.").

Basis of presentation: The 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 ~~September 30, 2022,~~March 31, 2023, its Consolidated Income Statements, ~~and~~ Statements of Comprehensive ~~(Loss)/~~Income, ~~for the three and nine months ended September 30, 2022 and 2021, and its~~ Consolidated Statements of Changes in Equity and Statements of Cash Flows for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ have been included. The Company's Consolidated Income Statements for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 may not be indicative of future results.

These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 (the ~~"2021~~"2022 Form 10-K").

Reclassification of prior year presentation: Certain prior year amounts have been reclassified for consistency with the current year presentation. Restricted cash and cash equivalents has been broken out of Other assets on the Consolidated Balance Sheets. Fee income is now included within Other revenue on the Consolidated Income Statements.

Consolidation: The 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~~Income or loss from these investments ~~are included in Other assets, with income or loss~~is included in 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 and cash equivalents: Cash and cash equivalents that are subject to legal restrictions or are unavailable for general operating purposes are classified as restricted cash and cash equivalents on the Company's Consolidated Balance Sheets. The Company will use these funds to retire all or a portion of its $345.0 million aggregate principal amount of Convertible Senior Notes due June 1, 2023 or to satisfy any other obligations with respect to such notes, and to pay redress to customers as required by the Company's settlement with the Consumer Financial Protection Bureau ("CFPB"). See Note 12 for information on the CFPB settlement.

Segments: The Company has determined that it has two operating segments that meet the aggregation criteria of Accounting Standards Codification ("ASC") 280, Segment Reporting ("ASC 280") and, therefore, it has one 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.

~~The following tables show the amount of revenue generated~~

PRA Group, Inc.

Notes to Consolidated Financial Statements

Revenues and long-lived assets by geographical location: Revenue for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ and long-lived assets held at ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ 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
Three Months Ended September 30, 2022 Three Months Ended September 30, 2021
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
United States $ 138,398 $ 80,496 $ 157,124 $ 90,980
United Kingdom 37,032 10,762 42,388 2,040
Other (1)
69,377 13,451 64,186 12,745
Total $ 244,807 $ 104,709 $ 263,698 $ 105,765

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~


		As of and for the				As of and for the					As of and for the				As of and for the
		Nine Months Ended September 30, 2022				Nine months ended September 30, 2021					Three Months Ended March 31, 2023				Three Months Ended March 31, 2022
		Revenues (2)		Long-Lived Assets		Revenues (2)		Long-Lived Assets			Revenues (2)		Long-Lived Assets		Revenues (2)		Long-Lived Assets
United States	United States	$	426,675	$	80,496	$	503,994	$	90,980	United States	$	59,147	$	75,784	$	151,425	$	85,809
United Kingdom	United Kingdom	126,866		10,762		133,024		2,040		United Kingdom	33,309		11,988		43,954		6,851
Brazil										Brazil	19,266		3		(4,478)		—
Other (1)	Other (1)	190,133		13,451		201,778		12,745		Other (1)	43,748		13,912		49,704		16,834
Total	Total	$	743,674	$	104,709	$	838,796	$	105,765	Total	$	155,470	$	101,687	$	240,605	$	109,494

(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.

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 collection activities on nonperforming loans, fee-based services and investments. For additional information on the Company's investments, see Note 3.

2. Finance Receivables, net:

Finance receivables, net consisted of the following at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (amounts in thousands):

September 30, 2022 December 31, 2021
Amortized cost $ — $ —
Negative allowance for expected recoveries (1)
3,037,360 3,428,285
Balance at end of period $ 3,037,360 $ 3,428,285

~~(1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximatel~~y ~~0.8%~~ ~~of the~~ ~~balance.~~

~~Three Months Ended September 30, 2022 and 2021~~


	March 31, 2023		December 31, 2022
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	3,286,497		3,295,008
Balance at end of period	$	3,286,497	$	3,295,008

Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (amounts in thousands):


		Three Months Ended September 30, 2022							Three Months Ended March 31, 2023
		Core		Insolvency		Total			Core		Insolvency		Total
Balance at beginning of period	Balance at beginning of period	$	2,814,761	$	368,871	$	3,183,632	Balance at beginning of period	$	2,936,207	$	358,801	$	3,295,008
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	Initial negative allowance for expected recoveries - portfolio acquisitions (1)	160,206		22,898		183,104		Initial negative allowance for expected recoveries - portfolio acquisitions (1)	207,322		22,903		230,225
Foreign currency translation adjustment	Foreign currency translation adjustment	(133,263)		(14,254)		(147,517)		Foreign currency translation adjustment	19,835		4,050		23,885
Recoveries applied to negative allowance (2)	Recoveries applied to negative allowance (2)	(186,112)		(44,083)		(230,195)		Recoveries applied to negative allowance (2)	(186,386)		(39,323)		(225,709)
Changes in expected recoveries (3)	Changes in expected recoveries (3)	38,686		9,650		48,336		Changes in expected recoveries (3)	(41,128)		4,216		(36,912)
Balance at end of period	Balance at end of period	$	2,694,278	$	343,082	$	3,037,360	Balance at end of period	$	2,935,850	$	350,647	$	3,286,497


		Three Months Ended September 30, 2021							Three Months Ended March 31, 2022
		Core		Insolvency		Total			Core		Insolvency		Total
Balance at beginning of period	Balance at beginning of period	$	2,894,963	$	454,075	$	3,349,038	Balance at beginning of period	$	2,989,932	$	438,353	$	3,428,285
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	Initial negative allowance for expected recoveries - portfolio acquisitions (1)	374,645		17,302		391,947		Initial negative allowance for expected recoveries - portfolio acquisitions (1)	129,404		18,048		147,452
Foreign currency translation adjustment	Foreign currency translation adjustment	(52,650)		(5,558)		(58,208)		Foreign currency translation adjustment	(11,009)		(5,624)		(16,633)
Recoveries applied to negative allowance (2)	Recoveries applied to negative allowance (2)	(230,237)		(46,421)		(276,658)		Recoveries applied to negative allowance (2)	(231,153)		(47,118)		(278,271)
Changes in expected recoveries (3)	Changes in expected recoveries (3)	40,583		3,237		43,820		Changes in expected recoveries (3)	25,147		4,767		29,914
Balance at end of period	Balance at end of period	$	3,027,304	$	422,635	$	3,449,939	Balance at end of period	$	2,902,321	$	408,426	$	3,310,747

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Portfolio acquisitions for the three months ended March 31, 2023 and 2022 were as follows (amounts in thousands):


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Face value	$	1,507,965	$	104,809	$	1,612,774
Noncredit discount	(150,511)		(8,042)		(158,553)
Allowance for credit losses at acquisition	(1,150,132)		(73,864)		(1,223,996)
Purchase price	$	207,322	$	22,903	$	230,225


	Three Months Ended March 31, 2022
	Core		Insolvency		Total
Face value	$	948,057	$	97,083	$	1,045,140
Noncredit discount	(91,600)		(5,852)		(97,452)
Allowance for credit losses at acquisition	(727,053)		(73,183)		(800,236)
Purchase price	$	129,404	$	18,048	$	147,452

The initial negative allowance recorded on portfolio acquisitions for the three months ended March 31, 2023 and 2022 were as follows (amounts in thousands):


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(1,150,132)	$	(73,864)	$	(1,223,996)
Writeoffs, net	1,150,132		73,864		1,223,996
Expected recoveries	207,322		22,903		230,225
Initial negative allowance for expected recoveries	$	207,322	$	22,903	$	230,225


	Three Months Ended March 31, 2022
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(727,053)	$	(73,183)	$	(800,236)
Writeoffs, net	727,053		73,183		800,236
Expected recoveries	129,404		18,048		147,452
Initial negative allowance for expected recoveries	$	129,404	$	18,048	$	147,452

(2) Recoveries applied to negative allowance

Recoveries applied to the negative allowance for the three months ended March 31, 2023 and 2022 were as follows (amounts in thousands):


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Recoveries (a)	$	364,236	$	49,715	$	413,951
Less - amounts reclassified to portfolio income	177,850		10,392		188,242
Recoveries applied to negative allowance	$	186,386	$	39,323	$	225,709


	Three Months Ended March 31, 2022
	Core		Insolvency		Total
Recoveries (a)	$	425,508	$	60,295	$	485,803
Less - amounts reclassified to portfolio income	194,355		13,177		207,532
Recoveries applied to negative allowance	$	231,153	$	47,118	$	278,271

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

(3) Changes in expected recoveries

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

~~Portfolio acquisitions~~ for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (amounts in thousands):

Three Months Ended September 30, 2022
Core Insolvency Total
Face value $ 1,482,758 $ 123,369 $ 1,606,127
Noncredit discount (126,205) (7,874) (134,079)
Allowance for credit losses at acquisition (1,196,347) (92,597) (1,288,944)
Purchase price $ 160,206 $ 22,898 $ 183,104


	Three Months Ended March 31, 2023
	Core		Insolvency		Total
Changes in expected future recoveries	$	(41,414)	$	664	$	(40,750)
Recoveries received in excess of forecast	286		3,552		3,838
Changes in expected recoveries	$	(41,128)	$	4,216	$	(36,912)

Three Months Ended September 30, 2021
Core Insolvency Total
Face value $ 2,499,453 $ 82,704 $ 2,582,157
Noncredit discount (280,213) (6,355) (286,568)
Allowance for credit losses at acquisition (1,844,595) (59,047) (1,903,642)
Purchase price $ 374,645 $ 17,302 $ 391,947

~~The initial negative allowance recorded on portfolio acquisitions for the three months ended September 30, 2022 and 2021 was as follows (amounts in thousands):~~

Three Months Ended September 30, 2022
Core Insolvency Total
Allowance for credit losses at acquisition $ (1,196,347) $ (92,597) $ (1,288,944)
Writeoffs, net 1,196,347 92,597 1,288,944
Expected recoveries 160,206 22,898 183,104
Initial negative allowance for expected recoveries $ 160,206 $ 22,898 $ 183,104

Three Months Ended September 30, 2021
Core Insolvency Total
Allowance for credit losses at acquisition $ (1,844,595) $ (59,047) $ (1,903,642)
Writeoffs, net 1,844,595 59,047 1,903,642
Expected recoveries 374,645 17,302 391,947
Initial negative allowance for expected recoveries $ 374,645 $ 17,302 $ 391,947

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

~~Recoveries applied to the negative allowance were calculated as follows for the three months ended September 30, 2022 and 2021 (amounts in thousands):~~

Three Months Ended September 30, 2022
Core Insolvency Total
Recoveries (a)
$ 361,089 $ 54,959 $ 416,048
Less - amounts reclassified to portfolio income 174,977 10,876 185,853
Recoveries applied to negative allowance $ 186,112 $ 44,083 $ 230,195

Three Months Ended September 30, 2021
Core Insolvency Total
Recoveries (a)
$ 429,166 $ 60,397 $ 489,563
Less - amounts reclassified to portfolio income 198,929 13,976 212,905
Recoveries applied to negative allowance $ 230,237 $ 46,421 $ 276,658

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~(3) Changes in expected recoveries~~

~~Changes in expected recoveries consisted of the following for the three months ended September 30, 2022 and 2021 (amounts in thousands):~~

Three Months Ended September 30, 2022
Core Insolvency Total
Changes in expected future recoveries $ 17,851 $ 2,361 $ 20,212
Recoveries received in excess of forecast 20,835 7,289 28,124
Changes in expected recoveries $ 38,686 $ 9,650 $ 48,336


		Three Months Ended September 30, 2021							Three Months Ended March 31, 2022
		Core		Insolvency		Total			Core		Insolvency		Total
Changes in expected future recoveries	Changes in expected future recoveries	$	4,114	$	(6,026)	$	(1,912)	Changes in expected future recoveries	$	9,771	$	(3,525)	$	6,246
Recoveries received in excess of forecast	Recoveries received in excess of forecast	36,469		9,263		45,732		Recoveries received in excess of forecast	15,376		8,292		23,668
Changes in expected recoveries	Changes in expected recoveries	$	40,583	$	3,237	$	43,820	Changes in expected recoveries	$	25,147	$	4,767	$	29,914

In order to estimate future cash collections, the Company considered historical performance, current economic forecasts, short-term and long-term growth and consumer habits in the various geographies in which the Company operates. The Company considered recent collection activity in its determination to adjust assumptions related to estimated 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 forecast period.

Changes in expected recoveries for the three months ended ~~September 30, 2022~~March 31, 2023 were a net ~~positive $48.3~~negative $36.9 million. This r~~eflects $28.1~~includes $3.8 million in recoveries received in excess of forecast ~~reflecting cash~~(cash collections ~~overperformance~~overperformance) and a ~~$20.2~~$40.8 million ~~positive~~negative adjustment to changes in expected future recoveries. Overperformance decreased by $19.8 million as a result of reduced cash collections primarily in the U.S. due to a slower tax season. The changes in expected future recoveries ~~reflects~~reflect the Company's assessment of certain pools ~~where continued strong~~ resulting in a reduction of expected cash flows as a result of slowing collection performance ~~has resulted~~ in ~~an increase to~~ the ~~Company's forecasted ERC.~~U.S. call centers resulting from weak economic conditions.

Changes in expected recoveries for the three months ended ~~September 30, 2021~~March 31, 2022 were a net positive ~~$43.8~~$29.9 million. This ~~reflected $45.7~~reflects $23.7 million in recoveries received in excess of forecast ~~which was largely due to~~reflecting strong cash collections overperformance ~~partially offset by~~in Europe and a ~~$1.9~~$6.2 million adjustment to changes in expected future recoveries. The changes in expected future recoveries included the Company's continued assumption that the majority of the overperformance was due to acceleration in the timing of ~~future~~cash collections. The Company also made near-term adjustments to expected future collections in ~~some~~certain geographies ~~to increase near-term expected collections,~~ bringing them in line with recent performance trends ~~in collections,~~ with corresponding ~~reductions~~adjustments made later in the forecast period.

~~Nine Months Ended September 30, 2022 and 2021~~

~~Changes in the negative allowance for expected recoveries by portfolio segment for the nine months ended September 30, 2022 and 2021 were as follows (amounts in thousands):~~

Nine Months Ended September 30, 2022
Core Insolvency Total
Balance at beginning of period $ 2,989,932 $ 438,353 $ 3,428,285
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
513,385 48,516 561,901
Foreign currency translation adjustment (287,901) (34,010) (321,911)
Recoveries applied to negative allowance (2)
(628,293) (137,439) (765,732)
Changes in expected recoveries (3)
107,155 27,662 134,817
Balance at end of period $ 2,694,278 $ 343,082 $ 3,037,360

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Nine Months Ended September 30, 2021
Core Insolvency Total
Balance at beginning of period $ 3,019,477 $ 495,311 $ 3,514,788
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
712,687 57,898 770,585
Foreign currency translation adjustment (56,387) (2,549) (58,936)
Recoveries applied to negative allowance (2)
(797,648) (136,354) (934,002)
Changes in expected recoveries (3)
149,175 8,329 157,504
Balance at end of period $ 3,027,304 $ 422,635 $ 3,449,939

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

~~Portfolio acquisitions for the nine months ended September 30, 2022 and 2021 were as follows (amounts in thousands):~~

Nine Months Ended September 30, 2022
Core Insolvency Total
Face value $ 3,539,705 $ 256,528 $ 3,796,233
Noncredit discount (363,138) (16,976) (380,114)
Allowance for credit losses at acquisition (2,663,182) (191,036) (2,854,218)
Purchase price $ 513,385 $ 48,516 $ 561,901

Nine Months Ended September 30, 2021
Core Insolvency Total
Face value $ 4,863,736 $ 277,831 $ 5,141,567
Noncredit discount (585,400) (19,368) (604,768)
Allowance for credit losses at acquisition (3,565,649) (200,565) (3,766,214)
Purchase price $ 712,687 $ 57,898 $ 770,585

~~The initial negative allowance recorded on portfolio acquisitions for the nine months ended September 30, 2022 and 2021 was as follows (amounts in thousands):~~

Nine Months Ended September 30, 2022
Core Insolvency Total
Allowance for credit losses at acquisition $ (2,663,182) $ (191,036) $ (2,854,218)
Writeoffs, net 2,663,182 191,036 2,854,218
Expected recoveries 513,385 48,516 561,901
Initial negative allowance for expected recoveries $ 513,385 $ 48,516 $ 561,901

Nine Months Ended September 30, 2021
Core Insolvency Total
Allowance for credit losses at acquisition $ (3,565,649) $ (200,565) $ (3,766,214)
Writeoffs, net 3,565,649 200,565 3,766,214
Expected recoveries 712,687 57,898 770,585
Initial negative allowance for expected recoveries $ 712,687 $ 57,898 $ 770,585

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

~~Recoveries applied to the negative allowance were calculated as follows for the nine months ended September 30, 2022 and 2021 (amounts in thousands):~~

Nine Months Ended September 30, 2022
Core Insolvency Total
Recoveries (a)
$ 1,179,746 $ 173,380 $ 1,353,126
Less - amounts reclassified to portfolio income 551,453 35,941 587,394
Recoveries applied to negative allowance $ 628,293 $ 137,439 $ 765,732

Nine Months Ended September 30, 2021
Core Insolvency Total
Recoveries (a)
$ 1,415,619 $ 182,097 $ 1,597,716
Less - amounts reclassified to portfolio income 617,971 45,743 663,714
Recoveries applied to negative allowance $ 797,648 $ 136,354 $ 934,002

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

~~(3) Changes in expected recoveries~~

~~Changes in expected recoveries consisted of the following for the nine months ended September 30, 2022 and 2021 (amounts in thousands):~~

Nine Months Ended September 30, 2022
Core Insolvency Total
Changes in expected future recoveries $ 43,262 $ 3,894 $ 47,156
Recoveries received in excess of forecast 63,893 23,768 87,661
Changes in expected recoveries $ 107,155 $ 27,662 $ 134,817

Nine Months Ended September 30, 2021
Core Insolvency Total
Changes in expected future recoveries $ (47,738) $ (18,871) $ (66,609)
Recoveries received in excess of forecast 196,913 27,200 224,113
Changes in expected recoveries $ 149,175 $ 8,329 $ 157,504

Changes in expected recoveries for the nine months ended September 30, 2022 were a net positive $134.8 million. This reflects $87.7 million in recoveries received in excess of forecast reflecting cash collections overperformance and a $47.2 million net positive adjustment to changes in expected future recoveries. The changes in expected future recoveries reflects the Company's assessment of certain pools, where continued strong performance has resulted in a net increase to the Company's forecasted ERC. The Company continues to believe that the majority of the overperformance in its more recent pools was due to acceleration in the timing of cash collections rather than an increase in total expected collections. The change in expected recoveries ~~also~~ included a $20.5 million write down ~~during the first quarter in 2022~~ on one portfolio in Brazil.

Changes in expected recoveries for the nine months ended September 30, 2021 were a net positive $157.5 million. The changes were the net result of recoveries received in excess of forecast of $224.1 million from significant cash collection overperformance reduced by a $66.6 million negative adjustment to changes in expected future recoveries. The changes in expected future recoveries included the Company's assumption that the majority of the overperformance was due to acceleration of future collections. The Company made adjustments in some geographies to increase near-term expected collections, bringing them in line with performance trends in collections, with corresponding reductions made later in the forecast period.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

3. Investments:

Investments consisted of the following at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (amounts in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022

Debt securities	Debt securities					Debt securities

Available-for-sale	Available-for-sale	$	62,507	$	77,538	Available-for-sale	$	65,004	$	66,813

Equity securities	Equity securities					Equity securities
Exchange traded funds		—		1,746
Private equity funds	Private equity funds	4,985		5,137		Private equity funds	4,003		4,373
Mutual funds		510		508
Equity method investments	Equity method investments	8,169		8,048		Equity method investments	8,870		8,762

Total investments	Total investments	$	76,171	$	92,977	Total investments	$	77,877	$	79,948

Debt Securities

Available-for-sale

Government securities: The Company's investments in government instruments, including bonds and treasury securities, are classified as available-for-sale and are stated at fair value. As of March 31, 2023, maturities for these securities are $61.0 million due within one year and $4.0 million due within one to five years.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The amortized cost and estimated fair value of investments in debt securities at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 were as follows (amounts in thousands):


		September 30, 2022									March 31, 2023
		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 securities	Government securities	$	62,996	$	—	$	489	$	62,507	Government securities	$	65,113	$	111	$	220	$	65,004

		December 31, 2021									December 31, 2022
		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 securities	Government securities	$	77,757	$	—	$	219	$	77,538	Government securities	$	67,049	$	1	$	237	$	66,813

Equity Securities

~~Exchange traded funds:~~ The Company invested in treasury bill exchange traded funds, which were 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. The Company sold its investment in these funds in the third quarter of 2022.

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

~~Mutual funds:~~ 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 these investments are included as a foreign exchange component of 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 contributions made and distributions received.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

4. Goodwill:

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, ~~2021~~2022 and concluded that no goodwill impairment was necessary. The Company performed its quarterly assessment by evaluating whether any triggering events had occurred as of ~~September 30, 2022,~~March 31, 2023, which included considering current market conditions and concluded that no such event had occurred as of ~~September 30, 2022.~~March 31, 2023.

The changes in goodwill for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ were as follows (amounts in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Balance at beginning of period	Balance at beginning of period	$	437,032	$	492,843	$	480,263	$	492,989	Balance at beginning of period	$	435,921	$	480,263

Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	(32,558)		(10,364)		(75,789)		(10,510)		Change in foreign currency translation adjustment	(15,274)		3,117

Balance at end of period	Balance at end of period	$	404,474	$	482,479	$	404,474	$	482,479	Balance at end of period	$	420,647	$	483,380

5. Leases:

The Company's operating lease portfolio primarily includes corporate offices and call centers. The majority of its leases have remaining lease terms of one year to 1514 years, some of which include options to extend the leases for up to five years, and others include options to terminate the leases within one 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 nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ were as follows (amounts in thousands):

Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Operating lease expense $ 2,775 $ 3,072 $ 9,095 $ 9,096
Short-term lease expense 775 695 1,874 2,118
Sublease income (118) (81) (348) (81)
Total lease expense $ 3,432 $ 3,686 $ 10,621 $ 11,133

PRA Group, Inc.

Notes to Consolidated Financial Statements


	Three Months Ended March 31,
	2023		2022
Operating lease expense	$	2,911	$	3,232
Short-term lease expense	461		904







Sublease income	(138)		(115)
Total lease expense	$	3,234	$	4,021

Supplemental cash flow information and non-cash activity related to leases for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were as follows (amounts in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	8,923	$	8,946	Cash paid for amounts included in the measurement of operating lease liabilities	$	3,146	$	3,098

ROU assets obtained in exchange for operating lease obligations	ROU assets obtained in exchange for operating lease obligations	5,910		6,436		ROU assets obtained in exchange for operating lease obligations	1,078		1,106

Lease term and discount rate information related to operating leases ~~was~~were as follows:


		Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021			2023		2022
Weighted-average remaining lease term (years)	Weighted-average remaining lease term (years)	8.2		8.6		Weighted-average remaining lease term (years)	7.8		8.4

Weighted-average discount rate	Weighted-average discount rate	4.48	%	4.64	%	Weighted-average discount rate	4.53	%	4.48	%

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Maturities of lease liabilities at ~~September 30, 2022 were~~March 31, 2023 are as follows for the following periods (amounts in thousands):


	Operating Leases
For the ~~three~~nine months ~~ending December 31, 2022~~	$	~~2,688~~
~~For the year~~ ending December 31, 2023	~~9,957~~$	7,977
For the year ending December 31, 2024	~~9,333~~10,282
For the year ending December 31, 2025	~~9,087~~10,040
For the year ending December 31, 2026	~~7,991~~8,934
For the year ending December 31, 2027	6,131
Thereafter	~~30,114~~25,875
Total lease payments	~~69,170~~69,239
Less: imputed interest	~~11,794~~11,300
Total present value of lease liabilities	$	~~57,376~~57,939

PRA Group, Inc.

Notes to Consolidated Financial Statements

6. Borrowings:

The Company's borrowings consisted of the following as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (amounts in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Americas revolving credit (1)	Americas revolving credit (1)	$	281,075	$	372,119	Americas revolving credit (1)	$	234,866	$	186,867
UK revolving credit	UK revolving credit	427,050		—		UK revolving credit	473,712		453,528
Europe revolving credit	Europe revolving credit	235,343		795,687		Europe revolving credit	401,438		419,856
Term loan	Term loan	452,500		460,000		Term loan	447,500		450,000
Senior notes		650,000		650,000
Convertible notes		345,000		345,000
Senior Notes						Senior Notes	1,050,000		650,000
Convertible Notes						Convertible Notes	345,000		345,000
		2,390,968		2,622,806			2,952,516		2,505,251
Less: Debt discount and issuance costs	Less: Debt discount and issuance costs	(11,354)		(14,092)		Less: Debt discount and issuance costs	(14,621)		(10,393)
Total	Total	$	2,379,614	$	2,608,714	Total	$	2,937,895	$	2,494,858

(1) Includes the North American revolving credit facility and an unsecured credit agreement with Banco de Occidente (the "Colombian revolving credit facility"). As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the outstanding balance under the Colombian revolving credit facility was approximately ~~$0.6~~$0.5 million and ~~$0.9~~$0.5 million, ~~respectively, with interest rates of 13.05% and 5.85%,~~ respectively.

The following principal payments ~~were~~are due on the Company's borrowings as of ~~September 30, 2022~~March 31, 2023 for the 12-month periods ending ~~September 30,~~March 31, (amounts in thousands):


2023		$	355,267
2024	2024	245,610		2024	$	355,262
2025	2025	310,066		2025	10,196
2026	2026	1,130,025		2026	310,000
2027	2027	—		2027	1,125,620
2028				2028	801,438
Thereafter	Thereafter	350,000		Thereafter	350,000
Total	Total	$	2,390,968	Total	$	2,952,516

The Company ~~determined that it~~incurred a net loss from operations of $33.6 million for the three months ended March 31, 2023. The Company requested and was ingranted a one-time prospective waiver by lenders under each of its credit facilities prior to the date the Company was required to report and certify compliance with the covenant requiring the Company to maintain positive consolidated income from operations. The effect of granting the waiver prior to certification date for such compliance resulted in the Company maintaining compliance with the applicable financial covenants of its ~~financing arrangements~~credit facilities as of ~~September 30, 2022.~~March 31, 2023.

North American Revolving Credit and Term Loan

The Company has a 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 (the "North American Credit Agreement").

The total credit facility under the North American Credit Agreement includes an aggregate principal amount of $1.5 billion (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~$452.5~~ $447.5 million term loan, (ii) a $1.0 billion domestic revolving credit facility, and (iii) a $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 lenders) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan 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, Canadian dollar offered rate, or the Eurodollar rate, for the applicable term plus 2.25% per annum, or 2.00% if the consolidated senior secured leverage ratio is less than or equal to 1.60 to 1.0. The revolving loans within the credit facility are subject to a ~~0.0%~~0% floor. The revolving credit facilities also bear an unused line fee of 0.35% per annum, or 0.30% if the consolidated senior secured leverage ratio is less than or equal to 1.60 to 1.0, payable quarterly in arrears and matures July 30, 2026. As of ~~September 30, 2022,~~March 31, 2023, the unused portion of the North American Credit Agreement was ~~$794.5~~$840.6 million. Considering borrowing base restrictions, as of ~~September 30, 2022,~~March 31, 2023, the amount available to be drawn was ~~$117.0 million~~.$118.7 million.

Borrowings under the North American Credit Agreement are guaranteed by the Company's U.S. and Canadian subsidiaries (provided that the Canadian subsidiaries only guarantee borrowings under the Canadian revolving credit facility)

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

•the ERC borrowing base is 35% for all eligible core asset pools and 55% for all insolvency eligible asset pools;

•the Company's consolidated total leverage ratio cannot exceed 3.50 to 1.0 as of the end of any fiscal quarter;

•the Company's consolidated senior secured leverage ratio cannot exceed 2.25 to 1.0 as of the end of any fiscal quarter;

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

•the Company must maintain positive consolidated income from operations during any fiscal ~~quarter.~~quarter (other than for the quarter ended March 31, 2023).

United Kingdom ("UK") Revolving Credit Facility

~~On April 1, 2022,~~ PRA Group Europe Holding I ~~S.a r.l~~S.a.r.l ("PRA Group Europe"), a wholly owned subsidiary of the Company, ~~entered into a credit agreement (the "UK Credit Agreement")~~along with PRA Group UK Limited ("PRA UK") and the Company, as guarantors, are parties to a credit agreement (the "UK Credit Agreement") with the lenders party thereto and MUFG Bank, Ltd., London Branch, as the administrative agent (the "Administrative Agent").

The UK Credit Agreement consists of an $800.0 million revolving credit facility (subject to a borrowing base), and an accordion feature for up to $200.0 million in additional commitments, subject to certain conditions. Borrowings, which are available in U.S. dollars, euro and pounds sterling, ~~will~~ accrue interest for the applicable term at the ~~risk free~~risk-free rate applicable to U.S. dollars (Secured Overnight Financing Rate) or ~~sterling (Sterling~~Sterling Overnight ~~Interbank~~Index Average ~~Rate)~~("SONIA") or, in the case of euro borrowings, Euribor plus an applicable margin of 2.50% per annum plus a credit adjustment spread of 0.10%. If the consolidated senior secured leverage ratio is greater than 1.60 to 1.0, the applicable margin will increase to 2.75%. The UK Credit Agreement also has a commitment fee of 0.30% per annum, payable quarterly in arrears. If the consolidated senior secured leverage ratio is greater than 1.60 to 1.0, the commitment fee increases to 0.35% per annum. The UK Credit Agreement matures on July 30, 2026. As of ~~September 30, 2022,~~March 31, 2023, the unused portion of the UK Credit Agreement was ~~$373.0~~$326.3 million. Considering borrowing base restrictions, as of ~~September 30, 2022,~~March 31, 2023, the amount available to be drawn under the UK Credit Agreement was ~~$76.7 million~~.$116.2 million.

The UK Credit Agreement is secured by substantially all of the assets of PRA UK, all of the equity interests in PRA UK and PRA Group Europe, certain bank accounts of PRA Group Europe and certain intercompany loans extended by PRA Group Europe to PRA UK. The UK Credit Agreement contains events of default and restrictive covenants, including the following:

•the borrowing base equals the sum of up to: (i) 35% of the ERC of PRA UK’s eligible asset pools; plus (ii) 55% of PRA UK’s insolvency eligible asset pools; minus (iii) certain reserves to be established by the Administrative Agent;

•the Company's consolidated leverage ratio ~~can not~~cannot exceed 3.50 to 1.0 as of the end of any fiscal quarter;

•the Company's consolidated senior secured leverage ratio cannot exceed 2.25 to 1.0 as of the end of any fiscal quarter; and

•the Company must maintain positive consolidated income from operations during any fiscal ~~quarter.~~quarter (other than for the quarter ended March 31, 2023).

European Revolving Credit Facility

The Company's ~~non-UK European subsidiaries~~wholly-owned subsidiary, PRA Group Europe Holding S.a.r.l. ("PRA ~~Europe"~~Group Europe Holding"), and its Swiss Branch, PRA Group Europe Holding S.a.r.l. ("PRA Group Holding"), Luxembourg, Zug Branch (together, the "Borrowers"), along with certain of its affiliates and the Company, as guarantors, are parties to a credit agreement (the "European Credit Agreement") with the lenders party thereto and DNB Bank ASA as facility agent and ~~a syndicate of lenders named therein, for a Multicurrency Revolving Credit Facility~~security agent (the ~~"European Credit Agreement"~~"Agent"). On March 29, 2022, in connection with the refinancing of the Company's European credit facilities, PRA Group Europe Holding S.a.r.l, a wholly owned subsidiary of the Company, and its Swiss Branch, PRA Group Holding S.a.r.l., Luxembourg, Zug

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Branch, executed the Eighth Amendment and Restatement to its European Credit Agreement ("Eighth Amendment"). On April 7, 2022, the Eighth Amendment was made effective and, among other things, extended the European Credit Agreement for one year to February 19, 2024, decreased the aggregate borrowing commitments by $600.0 million, removed PRA UK as a guarantor and released the shares of PRA UK that previously secured the European Credit Agreement.

The European Credit Agreement provides borrowings for an aggregate amount of approximately ~~$750.0~~€730.0 million (subject to the borrowing base)~~, accrues~~ and an uncommitted accordion feature for up to €500.0 million, subject to certain conditions. Borrowings, which are available in euro, Norwegian krone, Danish krone, Swedish krona, and Polish zloty, accrue interest at the Interbank Offered Rate plus ~~2.70%~~2.80% - 3.80% (as determined by the estimated remaining collections ratio ("ERC ~~ratio)~~Ratio") as defined in the European Credit Agreement), ~~bears~~bear an unused line fee, currently ~~1.12%~~1.085% per annum, or 35% of the margin, isare subject to a 0% floor, are payable monthly in arrears and ~~matures February 19, 2024. The European Credit Agreement also includes~~mature November 23, 2027. Additionally, the Company has a separate agreement with the Agent for 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,~~Agent, bears a facility line fee of 0.125% per quarter, payable quarterly in arrears and matures ~~February 19, 2024.~~November 23, 2027. As of ~~September 30, 2022,~~March 31, 2023, the unused portion of the European Credit Agreement (including the overdraft facility) was ~~$554.7~~$432.6 million. Considering borrowing base restrictions and other covenants

PRA Group, Inc.

Notes to Consolidated Financial Statements

as of ~~September 30, 2022,~~March 31, 2023, the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was ~~$260.6 million~~.$201.9 million.

~~Borrowings~~The European Credit Agreement is secured by a first perfected security interest in all of the equity interests in certain operating subsidiaries of the Borrowers, certain intercompany loans and certain shareholder loans extended by the Company to the Borrowers. Further, the Company guarantees all obligations and liabilities under the European Credit Agreement are guaranteed by substantially all of the Company's non-UK European subsidiaries and are secured by the shares of most of the Company's non-UK European subsidiaries and all non-UK European intercompany loans receivable in Europe.Agreement. The European Credit Agreement contains ~~events~~event of default and restrictive covenants including the following:

•the ERC ~~ratio~~Ratio cannot exceed 45%;

•the ~~gross interest-bearing debt~~Company's consolidated total leverage ratio ~~in Europe~~ cannot exceed ~~3.25~~3.50 to 1.0 as of the end of any fiscal quarter;

•the Company's consolidated senior secured leverage ratio cannot exceed 2.25 to 1.0 as of the end of any fiscal quarter;

•the Company must maintain positive consolidated income from operations at the end of any fiscal quarter (other than for the quarter ended March 31, 2023);

•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.

Senior Notes due 2029

On September 22, 2021, the Company completed the private offering of $350.0 million in aggregate principal amount of its 5.00% Senior Notes due October 1, 2029 (the "2029 Notes"). The 2029 Notes were issued pursuant to an Indenture dated September 22, 2021 (the "2021 Indenture"), between the Company and Regions Bank, as trustee. The 2021 Indenture contains customary terms and covenants, including certain events of default after which the 2029 Notes may be due and payable immediately. The 2029 Notes are senior unsecured obligations of the 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 2029 Notes is payable semi-annually, in arrears, on October 1 and April 1 of each year.

On or after October 1, 2024, the 2029 Notes may be redeemed, at the Company's option, in whole or in part at a price equal to 102.50% of the aggregate principal amount of the 2029 Notes being redeemed. The applicable redemption price changes if redeemed during the ~~12-months~~12 months beginning October 1 of each year to 101.25% for 2025 and then 100% for 2026 and thereafter.

In addition, on or before October 1, 2024, the Company may redeem up to 40% of the aggregate principal amount of the 2029 Notes at a redemption price of 105.00% plus accrued and unpaid interest ~~subject to the rights of holders of the 2029 Notes~~ with the net cash proceeds of a public offering of common stock of the Company provided, that at least 60% in aggregate principal amount of the 2029 Notes remains outstanding immediately after the occurrence of such redemption and that such redemption will occur within 90 days of the date of the closing of such public offering.

In the event of a change of control, each holder will have the right to require the Company to repurchase all or any part of such holder's 2029 Notes at an offer price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. If the 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 2029 Notes at 100% of their principal ~~amount.~~amount plus accrued and unpaid interest.

Senior Notes due 2028

On February 6, 2023, the Company completed the private offering of $400.0 million aggregate principal amount of its 8.375% Senior Notes due 2028 ("2028 Notes"). The 2028 Notes were issued pursuant to an Indenture dated February 6, 2023 (the "2023 Indenture"), between the Company and Regions Bank, as trustee. The 2023 Indenture contains customary terms and covenants, including certain events of default after which the 2028 Notes may be due and payable immediately. The 2028 Notes are senior unsecured obligations of the 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 2028 Notes is payable semi-annually, in arrears, on February 1 and August 1 of each year. Substantially all of the net proceeds received from the 2028 Notes were deposited into a newly-formed segregated deposit account, included in Restricted cash and cash equivalents on the Consolidated Balance Sheets, and the Company will use such proceeds to retire all or any portion of the 2023 Notes (as defined below) or to satisfy any other obligations with respect to the 2023 Notes. The Company used the remainder of the net proceeds to repay a portion of its outstanding borrowings under the domestic revolving credit facility under the North America Credit Agreement.

PRA Group, Inc.

Notes to Consolidated Financial Statements

On or after February 1, 2025, the 2028 Notes may be redeemed, at the Company's option in whole or in part at a price equal to 104.188% of the aggregate principal amount of the 2028 Notes being redeemed. The applicable redemption price changes if redeemed during the 12-months beginning February 1 of each year to 102.094% for 2026 and then 100% for 2027 and thereafter.

In addition, on or before February 1, 2025, the Company may redeem up to an aggregate of 40% of the aggregate principal amount of the 2028 Notes at a redemption price of 108.375% plus accrued and unpaid interest with the net cash proceeds of a public offering of common stock of the Company, provided, that at least 60% in aggregate principal amount of the 2028 Notes remains outstanding immediately after the occurrence of such redemption and that such redemption will occur within 90 days of the date of the closing of such public offering.

In the event of a change of control, each holder will have the right to require the Company to repurchase all or any part of such holder's 2028 Notes at an offer price equal to 101% of the aggregate principal amount plus accrued and unpaid interest. If the 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 2028 Notes at 100% of their principal amount plus accrued and unpaid interest.

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" and, together with the 2029 Notes and the 2028 Notes, the "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 Indenture contains customary terms and covenants, including certain events of default after which the 2025 Notes may be due and payable immediately. The 2025 Notes are senior unsecured obligations of the Company and are guaranteed on a senior unsecured basis by all of the Company's existing and future domestic restricted

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

subsidiaries that guarantee the North American Credit Agreement, subject to certain exceptions. Interest on the 2025 Notes is payable semi-annually, in arrears, on March 1 and September 1 of each year.

~~On or after September 1, 2022, the~~The 2025 Notes may be redeemed, at the Company's option, in whole or in part, at a price equal to 103.688% of the aggregate principal amount of the 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 had the option to 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 of the Company provided, that at least 60% in aggregate principal amount of the 2025 Notes remains outstanding immediately after the occurrence of such redemption and that such redemption will occur within 90 days of the date of the closing of such public offering. The Company did not exercise this option.

In the event of a change of control, each holder will have the right to require the Company to repurchase all or any part of such holder's 2025 Notes at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. If the 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 at 100% of their principal ~~amount.~~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" or "Convertible Notes"). 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.

~~The holders~~As 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 is less than 98% of the product of 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 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 on the trading day preceding the announcement of such distribution; or

•a transaction occurs that constitutes a fundamental change 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,~~31, 2023, the 2023 Notes ~~will be~~are convertible at any time. ~~As of September 30, 2022, 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 for cash, but only if the last reported sale price 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.

The conversion rate for the 2023 Notes is 21.6275 shares per $1,000 principal amount, 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 has made an irrevocable election to settle conversions by paying holders of the 2023 Notes 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 shares of the Company's common stock, at the Company's election, for the remaining amounts owed, if any.

2017

PRA Group, Inc.

Notes to Consolidated Financial Statements

In accordance with authoritative guidance related to derivatives and hedging and Earnings Per Share ("EPS"), only the conversion spread is included in the diluted EPS calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the 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 of issuance cost as debt issuance cost and the remaining $1.3 million as equity issuance cost.

As discussed above, the Company will use $345 million of the proceeds from the issuance of the 2028 Notes to retire the 2023 Notes when they mature on June 1, 2023.

The balances of the liability component of the 2023 Notes outstanding as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, were as follows (amounts in thousands):


		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Liability component - principal amount	Liability component - principal amount	$	345,000	$	345,000	Liability component - principal amount	$	345,000	$	345,000

Unamortized debt issuance costs	Unamortized debt issuance costs	(1,192)		(2,476)		Unamortized debt issuance costs	(311)		(748)
Liability component - net carrying amount	Liability component - net carrying amount	$	343,808	$	342,524	Liability component - net carrying amount	$	344,689	$	344,252

The Company amortizes debt issuance costs over the life of the debt using an effective interest rate of 4.00%.

Interest expense related to the 2023 Notes for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ were as follows (amounts in thousands):


		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
		2022		2021		2022		2021			2023		2022
Interest expense - stated coupon rate	Interest expense - stated coupon rate	$	3,019	$	3,019	$	9,057	$	9,057	Interest expense - stated coupon rate	$	3,019	$	3,019

Interest expense - amortization of debt issuance costs	Interest expense - amortization of debt issuance costs	429		412		1,284		1,234		Interest expense - amortization of debt issuance costs	437		420
Total interest expense - convertible notes	Total interest expense - convertible notes	$	3,448	$	3,431	$	10,341	$	10,291	Total interest expense - convertible notes	$	3,456	$	3,439

7. 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 Company's Consolidated Balance Sheets.

The following tables summarize the fair value of derivative instruments in the Company's Consolidated Balance Sheets as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (amounts in thousands):

September 30, 2022

December 31, 2021

March 31, 2023

December 31, 2022

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

44,842

Other assets

6,251

Interest rate contracts

Other assets

31,240

Other assets

37,305

Interest rate contracts

Other liabilities

—

Other liabilities

14,879

Interest rate contracts

Other liabilities

—

Other liabilities

—

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

29,299

Other assets

3,534

Foreign currency contracts

Other assets

115

Other assets

487

Foreign currency contracts

Other liabilities

1,218

Other liabilities

11,099

Foreign currency contracts

Other liabilities

10,066

Other liabilities

19,120

PRA Group, Inc.

Notes to Consolidated Financial Statements

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 ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the notional amount of interest rate contracts designated as cash flow hedging instruments ~~was~~was $814.6 million and ~~$686.3 million and $869.1~~$719.7 million, respectively. Derivatives

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

designated as cash flow hedging instruments were evaluated and remained highly effective at ~~September 30, 2022~~March 31, 2023 and have remaining terms of ~~one~~three months to ~~three~~five years. The Company estimates that ~~approximately $17.8~~approximately $15.2 million of net ~~derivative~~derivative gain included in OCI will be reclassified into earnings within the next 12 months.

The following tables summarize the effects of derivatives designated as cash flow hedging instruments on the Company's Consolidated Financial Statements for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (amounts in thousands):


		Gain or (loss) recognized in OCI, net of tax									Gain/(loss) recognized in OCI, net of tax
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Derivatives designated as cash flow hedging instruments	Derivatives designated as cash flow hedging instruments	2022		2021		2022		2021		Derivatives designated as cash flow hedging instruments	2023		2022
Interest rate contracts	Interest rate contracts	$	19,983	$	3,036	$	41,106	$	11,588	Interest rate contracts	$	(629)	$	16,410

		Gain or (loss) reclassified from OCI into income									Gain/(loss) reclassified from OCI into income
		Three Months Ended September 30,				Nine Months Ended September 30,					Three Months Ended March 31,
Location of gain or (loss) reclassified from OCI into income	Location of gain or (loss) reclassified from OCI into income	2022		2021		2022		2021		Location of gain or (loss) reclassified from OCI into income	2023		2022
Interest expense, net	Interest expense, net	$	383	$	(3,165)	$	(3,819)	$	(9,644)	Interest expense, net	$	(5,498)	$	(2,734)

Derivatives Not Designated as Hedging Instruments:

The Company 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. Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. As of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, the notional amount of foreign currency contracts that were not designated as hedging instruments was ~~$490.2~~$383.3 million anand $460.8 million~~d $1,061.7 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 nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (amounts in thousands):


			Amount of gain or (loss) recognized in income						Gain/(loss) recognized in income
			Three Months Ended September 30,						Three Months Ended March 31,
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	2022		2021		Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	2023		2022
Foreign currency contracts	Foreign currency contracts	Foreign exchange gain, net	$	33,019	$	8,197	Foreign currency contracts	Foreign exchange loss, net	$	(7,697)	$	6,493
Foreign currency contracts	Foreign currency contracts	Interest expense, net	313		130		Foreign currency contracts	Interest expense, net	521		(332)

			Amount of gain or (loss) recognized in income
			Nine Months Ended September 30,
Derivatives not designated as hedging instruments		Location of gain or (loss) recognized in income	2022		2021
Foreign currency contracts		Foreign exchange gain, net	$	72,371	$	10,741
Foreign currency contracts		Interest expense, net	(638)		475

8. Fair Value:

As defined by ASC Topic 820, "Fair Value 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.

•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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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 were recorded in the Company's Consolidated Balance Sheets at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (amounts in thousands):


		September 30, 2022				December 31, 2021					March 31, 2023				December 31, 2022
		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	$	57,991	$	57,991	$	87,584	$	87,584	Cash and cash equivalents	$	116,471	$	116,471	$	84,758	$	84,758

Restricted cash and cash equivalents										Restricted cash and cash equivalents	359,208		359,208		1,382		1,382

Finance receivables, net	Finance receivables, net	3,037,360		2,933,762		3,428,285		3,317,658		Finance receivables, net	3,286,497		3,128,051		3,295,008		3,167,813
Financial liabilities:	Financial liabilities:									Financial liabilities:
Interest-bearing deposits	Interest-bearing deposits	88,155		88,155		124,623		124,623		Interest-bearing deposits	108,779		108,779		112,992		112,992
Revolving lines of credit	Revolving lines of credit	943,468		943,468		1,167,806		1,167,806		Revolving lines of credit	1,110,016		1,110,016		1,060,251		1,060,251
Term loan	Term loan	452,500		452,500		460,000		460,000		Term loan	447,500		447,500		450,000		450,000
Senior Notes	Senior Notes	650,000		573,849		650,000		673,366		Senior Notes	1,050,000		992,225		650,000		580,433
Convertible Notes	Convertible Notes	345,000		338,980		345,000		406,607		Convertible Notes	345,000		344,276		345,000		341,926

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: The carrying amount approximates fair value due to the short-term nature of the instruments and the observable quoted prices for identical assets ~~that can be found~~ in active markets. Accordingly, the Company ~~estimates the~~uses Level 1 inputs for its fair value ~~of cash and cash equivalents using Level 1 inputs.~~estimates.

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.

Senior Notes and Convertible 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.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Financial Instruments Required To Be Carried At Fair Value

The carrying amounts in the following tables were measured at fair value on a recurring basis in the Company's Consolidated Balance Sheets at ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021~~2022 (amounts in thousands):


		Fair Value Measurements as of September 30, 2022									Fair Value Measurements as of March 31, 2023
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:

Government securities	Government securities	$	62,507	$	—	$	—	$	62,507	Government securities	$	65,004	$	—	$	—	$	65,004

Mutual funds		510		—		—		510
Derivative contracts (recorded in Other assets)	Derivative contracts (recorded in Other assets)	—		74,141		—		74,141		Derivative contracts (recorded in Other assets)	—		31,355		—		31,355
Liabilities:	Liabilities:									Liabilities:
Derivative contracts (recorded in Other liabilities)	Derivative contracts (recorded in Other liabilities)	—		1,218		—		1,218		Derivative contracts (recorded in Other liabilities)	—		10,066		—		10,066

		Fair Value Measurements as of December 31, 2021									Fair Value Measurements as of December 31, 2022
		Level 1		Level 2		Level 3		Total			Level 1		Level 2		Level 3		Total
Assets:	Assets:									Assets:

Government securities	Government securities	$	77,538	$	—	$	—	$	77,538	Government securities	$	66,813	$	—	$	—	$	66,813

Exchange traded funds		1,746		—		—		1,746
Mutual funds		508		—		—		508

Derivative contracts (recorded in Other assets)	Derivative contracts (recorded in Other assets)	—		9,785		—		9,785		Derivative contracts (recorded in Other assets)	—		37,792		—		37,792
Liabilities:	Liabilities:									Liabilities:
Derivative contracts (recorded in Other liabilities)	Derivative contracts (recorded in Other liabilities)	—		25,978		—		25,978		Derivative contracts (recorded in Other liabilities)	—		19,120		—		19,120

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

~~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.

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 NAV practical ~~expedient~~expedient was ~~$5.0~~$4.0 million ~~and $5.1~~and $4.4 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

9. Accumulated Other Comprehensive Loss:

Reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2023 and 2022 were as follows (amounts in thousands):


	Three Months Ended March 31,
Gains and losses on cash flow hedges	2023		2022		Affected line in the Consolidated Income Statement
Interest rate swaps	$	5,498	$	2,734	Interest expense, net
Income tax effect of item above	(1,296)		(564)		Income tax (benefit)/expense
Total gain on cash flow hedges	$	4,202	$	2,170	Net of tax

2421

PRA Group, Inc.

Notes to Consolidated Financial Statements

~~9. Accumulated Other Comprehensive Loss:~~

The following tables ~~provide details about the reclassifications from accumulated other comprehensive loss for the three and nine months ended September 30, 2022 and 2021 (amounts in thousands):~~

Three Months Ended September 30,
Gains and losses on cash flow hedges 2022 2021 Affected line in the Consolidated Income Statement
Interest rate swaps $ 383 $ (3,165) Interest expense, net
Income tax effect of item above 10 679 Income tax expense
Total losses/(gains) on cash flow hedges $ 393 $ (2,486) Net of tax
Nine Months Ended September 30,
Gains and losses on cash flow hedges 2022 2021 Affected line in the Consolidated Income Statement
Interest rate swaps $ (3,819) $ (9,644) Interest expense, net
Income tax effect of item above 918 2,032 Income tax expense
Total gains on cash flow hedges $ (2,901) $ (7,612) Net of tax

~~The following table represents~~represent the changes in accumulated other comprehensive loss by component, after tax, for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (amounts in thousands):


		Three Months Ended September 30, 2022									Three Months Ended March 31, 2023
		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)
Balance at beginning of period	Balance at beginning of period	$	(623)	$	19,046	$	(366,244)	$	(347,821)	Balance at beginning of period	$	(237)	$	27,804	$	(375,493)	$	(347,926)

Other comprehensive gain/(loss) before reclassifications	Other comprehensive gain/(loss) before reclassifications	133		19,983		(97,988)		(77,872)		Other comprehensive gain/(loss) before reclassifications	128		(629)		(4,101)		(4,602)
Reclassifications, net	Reclassifications, net	—		(393)		—		(393)		Reclassifications, net	—		(4,202)		—		(4,202)
Net current period other comprehensive gain/(loss)	Net current period other comprehensive gain/(loss)	133		19,590		(97,988)		(78,265)		Net current period other comprehensive gain/(loss)	128		(4,831)		(4,101)		(8,804)
Balance at end of period	Balance at end of period	$	(490)	$	38,636	$	(464,232)	$	(426,086)	Balance at end of period	$	(109)	$	22,973	$	(379,594)	$	(356,730)

		Three Months Ended September 30, 2021									Three Months Ended March 31, 2022
		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)
Balance at beginning of period	Balance at beginning of period	$	(15)	$	(19,671)	$	(215,673)	$	(235,359)	Balance at beginning of period	$	(221)	$	(5,371)	$	(261,317)	$	(266,909)
Other comprehensive (loss)/gain before reclassifications	Other comprehensive (loss)/gain before reclassifications	(50)		3,036		(34,894)		(31,908)		Other comprehensive (loss)/gain before reclassifications	(160)		16,410		4,780		21,030
Reclassifications, net	Reclassifications, net	—		2,486		—		2,486		Reclassifications, net	—		2,170		—		2,170
Net current period other comprehensive (loss)/gain	Net current period other comprehensive (loss)/gain	(50)		5,522		(34,894)		(29,422)		Net current period other comprehensive (loss)/gain	(160)		18,580		4,780		23,200
Balance at end of period	Balance at end of period	$	(65)	$	(14,149)	$	(250,567)	$	(264,781)	Balance at end of period	$	(381)	$	13,209	$	(256,537)	$	(243,709)

~~(1) Net of deferred taxes for unrealized gains from cash flow hedges of $3.5 million and $1.0 million for the three months ended September 30, 2022 and 2021, respectively.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Nine Months Ended September 30, 2022
Debt Securities Cash Flow Currency Translation Accumulated Other
Available-for-sale Hedges Adjustments
Comprehensive Loss (1)
Balance at beginning of period $ (221) $ (5,371) $ (261,317) $ (266,909)
Other comprehensive (loss)/gain before reclassifications (269) 41,106 (202,915) (162,078)
Reclassifications, net — 2,901 — 2,901
Net current period other comprehensive (loss)/gain (269) 44,007 (202,915) (159,177)
Balance at end of period $ (490) $ 38,636 $ (464,232) $ (426,086)
Nine Months Ended September 30, 2021
Debt Securities Cash Flow Currency Translation Accumulated Other
Available-for-sale Hedges Adjustments
Comprehensive Loss (1)
Balance at beginning of period $ 127 $ (33,349) $ (212,569) $ (245,791)
Other comprehensive (loss)/gain before reclassifications (192) 11,588 (37,998) (26,602)
Reclassifications, net — 7,612 — 7,612
Net current period other comprehensive (loss)/gain (192) 19,200 (37,998) (18,990)
Balance at end of period $ (65) $ (14,149) $ (250,567) $ (264,781)

(1) Net of deferred taxes for unrealized (gains)/losses from cash flow ~~hedges~~hedges of ~~$(6.1)~~$(7.6) million and ~~$5.0~~$(1.2) million for the ~~nine~~three months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ respectively.

10. Earnings per Share:

Basic 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 conversion spread of the Convertible Notes and nonvested share awards, if they are dilutive. There has been no dilutive effect of the Convertible Notes since issuance through ~~September 30, 2022.~~March 31, 2023. 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 obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period.

On July 29, 2021, the Board of Directors of the Company ("Board of Directors") approved a share repurchase program to purchase up to $150.0 million of the Company's outstanding shares of common stock. On October 28, 2021, the Board of Directors authorized an increase of $80.0 million to the existing program for a total of $230.0 million. On February 25, 2022, the ~~Company completed its $230.0 million share repurchase program. Also on February 25, 2022, the~~Company's Board of Directors approved a ~~new~~ share repurchase program under which the Company is authorized to repurchase up to $150.0 million of its ~~outstanding~~ common stock.

~~For the three months ended September 30, 2022, the Company repurchased 663,005 shares of its~~ We did not repurchase any common stock ~~for approximately $25.0 million, at an average price of $37.71 per share. For~~during the ~~nine months~~first quarter ended September 30, 2022, the Company repurchased 2,331,364 shares of its common stock for approximately $99.4 million, at an average price of $42.63 per share. As of September 30, 2022, there was $67.7 million remaining for share repurchases under the new program. The Company's practice is to retire the shares it repurchases.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

March 31, 2023.

The following ~~tables provide~~table provides a reconciliation between the computation of basic EPS and diluted EPS for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ (amounts in thousands, except per share amounts):


		Three Months Ended September 30,											Three Months Ended March 31,
		2022					2021						2023					2022
		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 Loss 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	$	24,732	39,018	$	0.63	$	34,480	45,305	$	0.76	Basic EPS	$	(58,629)	39,033	$	(1.50)	$	39,972	40,777	$	0.98
Dilutive effect of nonvested share awards	Dilutive effect of nonvested share awards			152	—				351	—		Dilutive effect of nonvested share awards	—		—	—		—		527	(0.01)

Diluted EPS	Diluted EPS	$	24,732	39,170	$	0.63	$	34,480	45,656	$	0.76	Diluted EPS	$	(58,629)	39,033	$	(1.50)	$	39,972	41,304	$	0.97

		Nine Months Ended September 30,
		2022					2021
		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		$	101,188	39,858	$	2.54	$	148,882	45,594	$	3.27
Dilutive effect of nonvested share awards				267	(0.02)				326	(0.03)
Diluted EPS		$	101,188	40,125	$	2.52	$	148,882	45,920	$	3.24

There were no options outstanding, antidilutive or otherwise, as of ~~September 30, 2022~~March 31, 2023 and ~~2021.~~2022.

PRA Group, Inc.

Notes to Consolidated Financial Statements

11. Income Taxes:

The Company accounts for income taxes in accordance with Financial Accounting Standards Board ("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.

At ~~September 30, 2022,~~March 31, 2023, the tax years subject to examination by the major federal, state and international taxing jurisdictions are ~~2013~~2014 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~~earnings was ~~$51.9~~$88.4 million ~~and $61.9~~and $75.3 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively.

12. Commitments and Contingencies:

Employment Agreements:

The Company has entered into employment agreements with each of its U.S. executive officers, which expire on December 31, 2023. Such agreements provide for base salary payments as well as potential discretionary bonuses that 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 ~~September 30, 2022, estimated~~March 31, 2023, estimated future compensation under these agreements was approximately ~~$8.5~~$8.8 million. Outside the U.S., the Company has entered into employment agreements with certain employees pursuant to local country regulations. Generally, these agreements do not have expiration 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 ~~$8.5~~$8.8 million ~~total~~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~~pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at ~~September 30, 2022,~~March 31, 2023, was ~~$1,034.6~~$622.4 million.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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.

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 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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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 ~~September 30, 2022,~~March 31, 2023, 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.

~~Matters~~CFPB Investigation

Portfolio Recovery Associates, LLC ("LLC"), the Company's wholly owned subsidiary, entered into a consent order with the CFPB effective September 9, 2015 settling a previously disclosed investigation of certain debt collection practices of LLC (the "2015 Consent Order"). In response to requests and civil investigative demands from the CFPB, the Company provided certain documents and data regarding its debt collection practices to the CFPB. In December 2020, the CFPB advised the Company that the CFPB believed the Company may have violated certain provisions of the 2015 Consent Order and applicable law. On March 23, 2023, the CFPB filed a lawsuit against LLC alleging, among other things, that LLC had violated federal consumer financial law. On the same date, the CFPB and LLC entered into a final stipulated judgment and order to resolve the lawsuit. As part of the settlement, LLC agreed to pay a civil monetary penalty of $12 million and approximately $15 million to impacted consumers.

Iris Pounds vs. Portfolio Recovery Associates, LLC

Plaintiffs filed a putative class action on November 21, 2016 against the Company in Durham County, North Carolina alleging violations of the North Carolina Prohibited Practices by Collection agencies Act. Discovery in this matter is ongoing, the Company is defending this matter vigorously, and there remains uncertainty surrounding liability, class certification, and the interpretation of the statute, including statutory damages.

Other matters that are not considered routine in nature were disclosed previously in the ~~2021~~2022 Form 10-K.

13. Recently Issued Accounting Standards:

~~Recently issued accounting standards adopted:~~

~~Reference Rate Reform~~

In January 2021, the FASB issued ASU 2021-01, "Reference Rate Reform (Topic 848): Overall" ("ASU 2021-01"). ASU 2021-01 expands the scope of Reference Rate Reform ("ASC 848") to include derivatives affected by the discounting transition for certain optional expedients and exceptions. ASU 2021-01 is effective immediately for a limited time through December 31, 2022. The Company assessed whether amendments and modifications to its swap agreements and borrowing agreements qualify for any optional expedients. During the first quarter of 2022, the Company elected certain optional expedients under ASC 848 to maintain cash flow hedge accounting for swap agreements with a combined notional amount of $422.8 million after interest rate swaps that were indexed to GDP-LIBOR converted to the Sterling Overnight Index Average ("SONIA"), effective January 1, 2022. In the second quarter of 2022, the Company exited the relief provisions under ASC 848 after updating the hedged risk on these cash flow hedges to reflect SONIA-based cash flows expected to occur under the UK Credit Agreement.

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.

2824

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

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

Forward-Looking Statements:

This Quarterly Report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 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 anticipated events or 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, including the following:

•the impact of the novel coronavirus ("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 local, state, federal and international laws and regulations;

•changes in accounting standards and their interpretations;

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

•the impact of a disease outbreak, such as the COVID-19 pandemic, on the markets in which we operate and our inability to successfully manage the challenges associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns;

•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 local, state, federal or international laws or the interpretation of these laws, including tax, bankruptcy and collection laws;

•changes in the administrative practices of various bankruptcy courts;

•our inability to comply with existing and new regulations of the collection industry;

•investigations, reviews, or enforcement actions by governmental authorities, including the Consumer Financial Protection Bureau ("CFPB");

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

•adverse outcomes in pending litigation or administrative proceedings;

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

•our inability to manage effectively our capital and liquidity needs, including as a result of changes in credit or capital markets;

•changes in interest or exchange rates;

•default by or failure of one or more of our counterparty financial institutions;

•~~uncertainty about the transition from the London Inter-Bank Offer 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" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 ("~~2021~~2022 Form 10-K") and in other filings with the Securities and Exchange 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. Except as required by law, we assume no obligation to publicly update or revise our forward-looking statements after the date of this Quarterly Report and you should not expect us to do so.

2925

Frequently Used Terms

We may use the following terminology throughout this 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 nonperforming loan portfolios.

•"Cash receipts" refers to cash collections on our nonperforming loan portfolios, ~~plus fee income.~~fees and revenue recognized from our class action claims recovery service.

•"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 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 nonperforming loan portfolios.

•"Finance receivables" or "receivables" refers to the negative allowance for expected recoveries recorded on our balance sheet as an asset.

•"Insolvency" accounts or portfolios refer to accounts or portfolios of nonperforming loans 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"),~~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.

•"Portfolio acquisitions" refers to all nonperforming loan 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 nonperforming loan portfolios purchased in the normal course of business and excludes those 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 nonperforming loan portfolios and estimated remaining collections.

•"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans.

•"Purchase price multiple" refers to the total estimated collections (as defined below) on our nonperforming loan 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 plus estimated remaining collections on our nonperforming loan portfolios.

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 ~~September 30, 2022, employe~~March 31, 2023, emplo~~d 3,285 ful~~yed 3,184 full-tim~~l-time~~e equivalents. Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol "PRAA."

~~Macroeconomic Update~~Executive Overview

~~We continue to monitor developments related to~~For the ~~COVID-19 pandemic, and to date, have been able to mitigate the effects on our overall operations.~~ three months ended March 31, 2023, we had:

•Total portfolio purchases of $230.2 million.

•Total cash collections of $411.3 million.

•Estimated remaining collections of $5.7 billion.

•Cash efficiency ratio of 54.3%.

•Diluted earnings per share of $(1.50).

During 2022, ~~the trends we experienced~~excess consumer liquidity, primarily in the latter part of 2021 have largely continued with the easing or lifting of COVID-19 restrictions leading to increased consumer spending and travel. Leading financial industry publications have indicated that excess consumer liquidity hasU.S., resulted in lower levels of ~~charge offs~~charge-offs across most lending institutions. As a result, this ~~has~~ caused a decrease in the supply of ~~fresh~~ portfolios available for purchase in the U.S., resulting in a lower level of portfolio purchases and pricing ~~pressures. We~~pressures due to competition. Recent Federal Reserve data indicates that charge-offs of consumer debt are beginning to increase, and we expect ~~these trends~~ to ~~continue in the near-term; however, consistent with our experience during previous economic cycles, we believe charge offs will increase leading to~~see a greater level of supply ~~which we anticipate could occur~~and reduced pricing pressure in the ~~coming months. For additional~~U.S. The market in Europe has continued to have a consistent portfolio pipeline across most markets, supported by volumes of aged nonperforming loans. However, unlike the U.S., we have not begun to see an increase in fresh charge-offs.

We believe our cash forecast curves are appropriate given the information ~~regarding our response~~we have today. However, we continue to ~~COVID-19, see Part I, Item 7 "Management's Discussion and Analysis of Financial Condition and Results of Operations" to our 2021 Form 10-K.~~

~~Furthermore, the combination of robust demand for goods and services and supply chain constraints lingering from the prior year continues to contribute to~~operate in an economic environment that includes elevated levels of inflation, rising interest rates, ~~and~~ foreign exchange rate ~~fluctuations. The Russian invasion~~fluctuations, and concerns of ~~Ukraine, including~~a global recession. Given the ~~resulting sanctions on Russia, continues to shock the energy markets, increasing the inflationary~~continuing weak economic conditions, there may be some near-term pressure on ~~energy costs.~~cash collections. Note that factors that can cause near-term collections pressure are also typically the same factors that historically have led to more portfolio supply, as consumers struggle to manage and pay down their debt. We cannot predict the full extent to which ~~the COVID-19 pandemic, the inflationary environment or the Russian invasion of Ukraine~~these items will impact our business, results of operations and financial ~~condition due to numerous evolving factors.~~condition. See ~~Part I,~~ Item 1A ~~"Risk Factors"~~ of our ~~2021~~2022 Form 10-K.

Results of Operations

The results of operations include the financial results of the Company and all of our subsidiaries. Certain prior year amounts have been reclassified for consistency with the current year presentation. The following table sets forth our Consolidated Income Statement amounts as a percentage of Total revenues for the periods indicated (dollars in thousands):


		For the Three Months Ended September 30,								For the Nine Months Ended September 30,									For the Three Months Ended March 31,
		2022				2021				2022				2021					2023				2022
Revenues:	Revenues:																	Revenues:
Portfolio income	Portfolio income	$	185,853	75.9	%	$	212,905	80.7	%	$	587,394	79.0	%	$	663,714	79.1	%	Portfolio income	$	188,242	121.1	%	$	207,532	86.3	%
Changes in expected recoveries	Changes in expected recoveries	48,336		19.8		43,820		16.6		134,817		18.1		157,504		18.8		Changes in expected recoveries	(36,912)		(23.8)		29,914		12.4
Total portfolio revenue	Total portfolio revenue	234,189		95.7		256,725		97.3		722,211		97.1		821,218		97.9		Total portfolio revenue	151,330		97.3		237,446		98.7
Fee income		6,122		2.6		6,209		2.4		14,419		1.9		10,843		1.3

Other revenue	Other revenue	4,496		1.7		764		0.3		7,044		1.0		6,735		0.8		Other revenue	4,140		2.7		3,159		1.3
Total revenues	Total revenues	244,807		100.0		263,698		100.0		743,674		100.0		838,796		100.0		Total revenues	155,470		100.0		240,605		100.0

Operating expenses:	Operating expenses:																	Operating expenses:
Compensation and employee services	Compensation and employee services	70,382		28.8		74,584		28.3		215,615		29.0		228,200		27.2		Compensation and employee services	82,403		53.0		71,096		29.5
Legal collection fees	Legal collection fees	8,963		3.7		10,993		4.2		29,390		4.0		36,208		4.3		Legal collection fees	8,838		5.7		10,873		4.5
Legal collection costs	Legal collection costs	23,391		9.5		21,450		8.1		57,694		7.8		61,231		7.3		Legal collection costs	23,945		15.4		16,557		6.9
Agency fees	Agency fees	15,160		6.2		15,646		5.9		47,374		6.4		47,145		5.6		Agency fees	17,378		11.2		17,388		7.2
Outside fees and services	Outside fees and services	24,618		10.0		29,434		11.2		71,489		9.6		71,167		8.5		Outside fees and services	24,944		16.0		19,378		8.1
Communication	Communication	9,951		4.1		9,782		3.7		32,062		4.3		33,039		3.9		Communication	10,527		6.8		12,583		5.2
Rent and occupancy	Rent and occupancy	4,669		1.9		4,571		1.7		14,289		1.9		13,694		1.6		Rent and occupancy	4,448		2.9		4,987		2.1
Depreciation and amortization	Depreciation and amortization	3,741		1.5		3,724		1.4		11,384		1.5		11,520		1.4		Depreciation and amortization	3,589		2.3		3,778		1.6
Other operating expenses	Other operating expenses	13,144		5.4		15,935		6.1		37,885		5.1		44,045		5.3		Other operating expenses	13,042		8.4		11,998		5.0

Total operating expenses	Total operating expenses	174,019		71.1		186,119		70.6		517,182		69.6		546,249		65.1		Total operating expenses	189,114		121.7		168,638		70.1

Income from operations		70,788		28.9		77,579		29.4		226,492		30.4		292,547		34.9
(Loss)/income from operations																		(Loss)/income from operations	(33,644)		(21.7)		71,967		29.9
Other income and (expense):	Other income and (expense):																	Other income and (expense):

Interest expense, net	Interest expense, net	(32,455)		(13.3)		(29,599)		(11.3)		(95,765)		(12.9)		(91,987)		(11.0)		Interest expense, net	(38,283)		(24.6)		(31,748)		(13.2)
Foreign exchange gain, net		4		—		1,232		0.5		791		0.1		127		—
Foreign exchange loss, net																		Foreign exchange loss, net	(9)		—		(532)		(0.2)
Other	Other	(83)		—		85		—		(754)		(0.1)		294		—		Other	(650)		(0.4)		(490)		(0.2)
Income before income taxes		38,254		15.6		49,297		18.6		130,764		17.5		200,981		23.9
Income tax expense		11,072		4.5		12,627		4.7		29,828		3.9		41,870		5.0
Net income		27,182		11.1		36,670		13.9		100,936		13.6		159,111		18.9
(Loss)/income before income taxes																		(Loss)/income before income taxes	(72,586)		(46.7)		39,197		16.3
Income tax (benefit)/expense																		Income tax (benefit)/expense	(18,683)		(12.0)		4,579		1.9
Net (loss)/income																		Net (loss)/income	(53,903)		(34.7)		34,618		14.4
Adjustment for net income/(loss) attributable to noncontrolling interests	Adjustment for net income/(loss) attributable to noncontrolling interests	2,450		1.0		2,190		0.8		(252)		—		10,229		1.2		Adjustment for net income/(loss) attributable to noncontrolling interests	4,726		3.0		(5,354)		(2.2)
Net income attributable to PRA Group, Inc.		$	24,732	10.1	%	$	34,480	13.1	%	$	101,188	13.6	%	$	148,882	17.7	%
Net (loss)/income attributable to PRA Group, Inc.																		Net (loss)/income attributable to PRA Group, Inc.	$	(58,629)	(37.7)	%	$	39,972	16.6	%

3228

Three Months Ended ~~September 30, 2022~~March 31, 2023 Compared To Three Months Ended ~~September 30, 2021~~March 31, 2022

Cash Collections

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


		For the Three Months Ended September 30,									For the Three Months Ended March 31,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
Americas and Australia Core	Americas and Australia Core	$	225,775	$	276,691	$	(50,916)	(18.4)	%	Americas and Australia Core	$	227,960	$	270,284	$	(42,324)	(15.7)	%
Americas Insolvency	Americas Insolvency	31,911		37,464		(5,553)		(14.8)		Americas Insolvency	25,751		35,209		(9,458)		(26.9)
Europe Core	Europe Core	132,072		151,625		(19,553)		(12.9)		Europe Core	134,005		151,162		(17,157)		(11.4)
Europe Insolvency	Europe Insolvency	22,586		22,574		12		0.1		Europe Insolvency	23,568		24,325		(757)		(3.1)
Total cash collections	Total cash collections	$	412,344	$	488,354	$	(76,010)	(15.6)	%	Total cash collections	$	411,284	$	480,980	$	(69,696)	(14.5)	%

Cash collections adjusted (1)	Cash collections adjusted (1)	$	412,344	$	462,001	$	(49,657)	(10.7)	%	Cash collections adjusted (1)	$	411,284	$	465,282	$	(53,998)	(11.6)	%

(1) Cash collections adjusted refers to ~~2021~~2022 cash collections remeasured using ~~2022~~2023 exchange rates.

Cash collections were ~~$412.3~~$411.3 million for the three months ended ~~September 30, 2022,~~March 31, 2023, a decrease of $~~76.0~~69.7 million, or ~~15.6%~~14.5%, compared to ~~$488.4~~$481.0 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The decrease was primarily due to lower cash collections of ~~$49.9~~$48.7 million, or ~~29.3%~~30.2%, in U.S. call center and other collections and $9.5 million, or 26.9% in Americas Insolvency collections, both reflecting lower levels of portfolio ~~purchasing.~~purchasing in recent periods. Additionally, U.S. legal cash collections decreased ~~$5.1~~$13.5 million, or ~~6.7%~~16.7%, ~~mainly~~ reflecting the impact from the lower volume of accounts placed in the legal channel due to lower purchasing levels in ~~the last few years.~~recent periods. Europe cash collections decreased by ~~$19.5~~$17.9 million, or 11~~.2%, primarily reflecting~~10.2% largely due to a ~~$25.7~~strengthening U.S. dollar. These decreases were partially offset by a $19.8 million ~~impact from~~increase in cash collections in the ~~strengthening of the U.S. dollar.~~Other Americas Core pools.

Revenues

~~A summary of our revenue~~Revenue generation ~~during~~for the ~~three months ended September 30, 2022 and 2021 is~~periods indicated were as follows (amounts in thousands):


		For the Three Months Ended September 30,									For the Three Months Ended March 31,
		2022		2021		$ Change		% Change			2023		2022		$ Change		% Change
Portfolio income	Portfolio income	$	185,853	$	212,905	$	(27,052)	(12.7)	%	Portfolio income	$	188,242	$	207,532	$	(19,290)	(9.3)	%
Changes in expected recoveries	Changes in expected recoveries	48,336		43,820		4,516		10.3		Changes in expected recoveries	(36,912)		29,914		(66,826)		(223.4)

Total portfolio revenue	Total portfolio revenue	234,189		256,725		(22,536)		(8.8)		Total portfolio revenue	151,330		237,446		(86,116)		(36.3)
Fee income		6,122		6,209		(87)		(1.4)

Other revenue	Other revenue	4,496		764		3,732		488.5		Other revenue	4,140		3,159		981		31.1
Total revenues	Total revenues	$	244,807	$	263,698	$	(18,891)	(7.2)	%	Total revenues	$	155,470	$	240,605	$	(85,135)	(35.4)	%

Total Portfolio Revenue

Total portfolio revenue was ~~$234.2~~$151.3 million for the three months ended ~~September 30, 2022,~~March 31, 2023, a decrease of ~~$22.5~~$86.1 million, or ~~8.8%~~36.3%, compared to ~~$256.7~~$237.4 million for the three months ended ~~September 30, 2021. The decrease~~March 31, 2022. We experienced a softer tax season than we had anticipated with U.S. collections missing our internal forecast by $9.9 million, which then prompted a reduction in forward looking ERC. This resulted in a negative $30.7 million net present value adjustment for our U.S. Core portfolio. Nearly half of this adjustment was ~~driven~~related to the 2021 U.S. Core vintage. This vintage includes the cohort of customers whose accounts were charged off in peak stimulus periods. We believe this effect, along with inflation and other macroeconomic factors, are drivers of this underperformance. In total, Europe overperformed our expectations during the quarter by 3%. This is a lower ~~levels of portfolio purchasing, lower levels of cash overperformance~~margin than we have experienced in recent quarters and given the ~~impact of foreign exchange. These decreases were partially offset by an increase~~uncertain economic conditions globally, we made minimal adjustments to ~~our forecasted~~the future looking ERC resulting in ~~certain pools.~~a negative $1.9 million net present value adjustment.

Other Revenue

Other revenue was ~~$4.5~~$4.1 million for the three months ended ~~September 30, 2022,~~March 31, 2023, an increase of ~~$3.7~~$0.9 million, compared to ~~$0.8~~$3.2 million for the three months ended ~~September 30, 2021, primarily driven by the timing of settlements of purchased claims.~~March 31, 2022.

Operating Expenses

Total operating expenses were ~~$174.0~~$189.1 million for the three months ended ~~September 30, 2022, a decrease~~March 31, 2023, an increase of ~~$12.1~~$20.5 million, or ~~6.5%~~12.2%, compared to ~~$186.1~~$168.6 million for the three months ended ~~September 30, 2021.~~March 31, 2022.

Compensation and Employee Services

Compensation and employee services expenses were ~~$70.4~~$82.4 million for the three months ended ~~September 30, 2022~~March 31, 2023, ~~a decrease~~an increase of ~~$4.2~~$11.3 million, or ~~5.6%~~15.9%, compared to ~~$74.6~~$71.1 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~decrease~~increase was

primarily attributable to ~~the level and timing~~severance expenses of ~~compensation accruals in the prior year and lower collector compensation expenses in the U.S. call centers.~~$7.5 million. Total full-time equivalents decreased to ~~3,285~~3,184 as of ~~September 30, 2022,~~March 31, 2023, from ~~3,521~~3,444 as of ~~September 30, 2021.~~March 31, 2022.

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 ~~$9.0~~$8.8 million for the three months ended ~~September 30, 2022,~~March 31, 2023, a decrease of ~~$2.0~~$2.1 million, or ~~18.2%~~19.3%, compared to ~~$11.0~~$10.9 million for the three months ended ~~September 30, 2021,~~March 31, 2022, primarily reflecting 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 ~~$23.4~~$23.9 million for the three months ended ~~September 30, 2022,~~March 31, 2023, an increase of ~~$1.9~~$7.3 million, or ~~8.8%~~44.0%, compared to ~~$21.5~~$16.6 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The increase reflects the higher volume of accounts placed into the legal channel in the U.S during the three months ended ~~September 30, 2022.~~March 31, 2023.

~~Agency Fees~~Communication

~~Agency fees~~Communication expenses primarily represent ~~third-party~~postage and telephone related expenses incurred as a result of our collection ~~fees. Agency fees~~efforts. Communications expenses were ~~$15.2~~$10.5 million for the three months ended ~~September 30, 2022, compared to $15.6 million for the three months ended September 30, 2021.~~

~~Outside Fees and Services~~

~~Outside fees and services expenses were $24.6 million for the three months ended September 30, 2022,~~March 31, 2023, a decrease of ~~$4.8~~$2.1 million, or ~~16.3%, compared to $29.4 million for the three months ended September 30, 2021. The decrease was primarily due to the timing of corporate legal expenses.~~

~~Other~~

Other expenses were $13.1 million for the three months ended September 30, 2022, a decrease of $2.8 million, or 17.6%, compared to $15.9 million for the three months ended September 30, 2021. The decrease primarily reflects lower advertising costs.

~~Interest Expense, Net~~

Interest expense, net was $32.5 million for the three months ended September 30, 2022, an increase of $2.9 million, or 9.6%, compared to $29.6 million for the three months ended September 30, 2021, primarily reflecting increased interest rates.

~~Interest expense, net consisted of the following for the three months ended September 30, 2022 and 2021 (amounts in thousands):~~

For the Three Months Ended September 30,
2022 2021 $ Change % Change
Interest on debt obligations and unused line fees $ 17,635 $ 18,541 $ (906) (4.9) %
Interest on senior notes 9,906 5,920 3,986 67.3
Coupon interest on convertible notes 3,019 3,019 — —
Amortization of loan fees and other loan costs 2,555 2,406 149 6.2
Interest income (660) (287) (373) 130.0
Interest expense, net $ 32,455 $ 29,599 $ 2,856 9.6 %

~~Foreign Exchange Gain/(Loss)~~

Foreign exchange gains for the three months ended September 30, 2022 were essentially zero compared to $1.2 million for the three months ended September 30, 2021. In any given period, we may incur foreign currency exchange gains or losses from transactions in currencies other than the functional currency.

~~Income Tax Expense~~

~~Income tax expense was $11.1 million for the three months ended September 30, 2022, a decrease of $1.5 million, or 11.9%~~16.7%, compared to $12.6 million for the three months ended ~~September 30, 2021.~~March 31, 2022. The decrease mainly reflects a decrease in postage expenses due to lower portfolio purchasing in the U.S in recent periods.

Outside Fees and Services

Outside fees and services expenses were $24.9 million for the three months ended March 31, 2023, an increase of $5.5 million, or 28.4%, compared to $19.4 million for the three months ended March 31, 2022. The increase was due to an accrual in corporate legal costs of $7.6 million related to certain case-specific litigation expenses, slightly offset by decreased costs for other fees and services.

Interest Expense, Net

Interest expense, net was $38.3 million for the three months ended March 31, 2023, an increase of $6.6 million, or 20.8%, compared to $31.7 million for the three months ended March 31, 2022, primarily reflecting increased interest rates. Interest income increased $3.5 million as a result of the cash we received and invested from the issuance of our 2028 Notes (as defined below), which will be used to retire our 2023 Convertible Notes (as defined below), which mature on June 1, 2023.

Interest expense, net consisted of the following:


	For the Three Months Ended March 31,
	2023		2022		$ Change		% Change
Interest on debt obligations and unused line fees	$	21,824	$	16,795	$	5,029	29.9	%
Interest on senior notes	15,073		9,907		5,166		52.1
Coupon interest on convertible notes	3,019		3,019		—		—
Amortization of loan fees and other loan costs	2,441		2,627		(186)		(7.1)
Interest income	(4,074)		(600)		(3,474)		579.0
Interest expense, net	$	38,283	$	31,748	$	6,535	20.6	%

Income Tax (Benefit)/Expense

Income tax (benefit)/expense for the three months ended March 31, 2023 was a net tax benefit of $18.7 million compared to income tax expense of $4.6 million for the three months ended March 31, 2022. During the three months ended ~~September 30, 2022,~~March 31, 2023, our effective tax rate was ~~28.9%~~25.7%, compared to ~~25.6%~~11.7% for the three months ended ~~September 30, 2021.~~March 31, 2022. The ~~decrease in~~ income tax ~~expense~~benefit was ~~primarily due to lower~~driven by the consolidated net loss before income ~~before~~ taxes of $72.6 million incurred during the ~~three months ended September~~ first quarter of 2023. The

30 ~~2022, which decreased $11.0 million, or 22.3%. The~~

increase in our effective tax rate was mainly due to a change in ~~total~~ discrete items and changes in the mix of income from different taxing jurisdictions.

~~Nine Months Ended September 30, 2022 Compared To Nine Months Ended September 30, 2021~~

~~Cash Collections~~

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

For the Nine Months Ended September 30,
2022 2021 $ Change % Change
Americas and Australia Core $ 740,436 $ 949,174 $ (208,738) (22.0) %
Americas Insolvency 101,398 110,485 (9,087) (8.2)
Europe Core 425,704 458,748 (33,044) (7.2)
Europe Insolvency 69,846 69,663 183 0.3
Total cash collections $ 1,337,384 $ 1,588,070 $ (250,686) (15.8)
Cash collections adjusted (1)
$ 1,337,384 $ 1,535,825 $ (198,441) (12.9) %

~~(1) Cash collections adjusted refers to 2021 cash collections remeasured using 2022 exchange rates.~~

~~Cash collections were $1,337.4 million~~ for the nine months ended September 30, 2022, a decrease of $250.7 million, or 15.8%, compared to $1,588.1 million for the nine months ended September 30, 2021. The decrease was largely due to a decrease of $177.7 million, or 29.7%, in cash collections in U.S. call center and other collections, which we believe was mainly due to higher collections driven by excess consumer liquidity during 2021 coupled with lower levels of portfolio purchasing. Additionally, U.S. legal cash collections decreased $32.2 million, or 12.5%, mainly reflecting the impact from the lower volume of accounts placed in the legal channel in the last few years. Europe cash collections decreased by $32.9 million, or 6.2%, reflect~~ing a $53.5 million impact from the strengthening of the U.S. dollar partially offset by higher levels of portfolio purchases in the last few years.~~

~~A summary of our revenue generation during the nine months ended September 30, 2022 and 2021 is as follows (amounts in thousands):~~

For the Nine Months Ended September 30,
2022 2021 $ Change % Change
Portfolio income $ 587,394 $ 663,714 $ (76,320) (11.5) %
Changes in expected recoveries 134,817 157,504 (22,687) (14.4)
Total portfolio revenue 722,211 821,218 (99,007) (12.1)
Fee income 14,419 10,843 3,576 33.0
Other revenue 7,044 6,735 309 4.6
Total revenues $ 743,674 $ 838,796 $ (95,122) (11.3) %

~~Total Portfolio Revenue~~

~~Total portfolio revenue was $722.2 million for nine months ended September 30, 2022, a decrease of $99.0 million, or 12.1%, compared to $821.2 million for the nine months ended September 30, 2021~~. The decrease was primarily driven by lower levels of portfolio purchasing, lower levels of cash overperformance, the impact of foreign exchange, and our first quarter $20.5 million write down on one portfolio in Brazil. These decreases were partially offset by an increase to our forecasted ERC in certain pools.

~~Fee Income~~

~~Fee income was $14.4 million for nine months ended September 30, 2022, an increase of $3.6 million, compared to $10.8 million for the nine months ended September 30, 2021. The increase was primarily attributable to settlement timing in our claims processing company, Claims Compensation Bureau, LLC.~~

~~Operating Expenses~~

~~Operating expenses were $517.2 million for the nine months ended September 30, 2022, a decrease of $29.0 million, or 5.3%, compared to $546.2 million for the nine months ended September 30, 2021.~~

~~Compensation and Employee Services~~

Compensation and employee services expenses were $215.6 million for the nine months ended September 30, 2022, a decrease of $12.6 million, or 5.5%, compared to $228.2 million for the nine months ended September 30, 2021~~. The decrease~~ ~~was primarily attributable to lower levels of compensation accruals and a decrease in collector compensation expenses in the U.S. call centers.~~

~~Legal Collection Fees~~

~~Legal collection fees were $29.4 million for the nine months ended September 30, 2022, a decrease of $6.8 million, or 18.8%, compared to $36.2 million for the nine months ended September 30, 2021. The decrease was mainly due to lower external legal cash collections in the U.S.~~

~~Legal Collection Costs~~

Legal collection costs were $57.7 million for the nine months ended September 30, 2022, a decrease of $3.5 million, or 5.7%, compared to $61.2 million for the nine months ended September 30, 2021. The decrease was primarily due to the impact from lower levels of accounts placed into the legal channel in the U.S. as a result of the prior year shift in cash collections from the legal channel to the call centers.

~~Agency Fees~~

~~Agency fees were $47.4 million for the nine months ended September 30, 2022, compared to $47.1 million for the nine months ended September 30, 2021.~~

~~Other~~

Other expenses were $37.9 million for the nine months ended September 30, 2022, a decrease of $6.1 million, or 13.9%, compared to $44.0 million for the nine months ended September 30, 2021. The decrease primarily reflects lower advertising costs.

~~Interest Expense, Net~~

Interest expense, net was $95.8 million for the nine months ended September 30, 2022, an increase of $3.8 million, or 4.1%, compared to $92.0 million for the nine months ended September 30, 2021, primarily reflecting increased interest rates.

~~Interest expense, net consisted of the following for the nine months ended September 30, 2022 and 2021 (amounts in thousands):~~

For the Nine Months Ended September 30,
2022 2021 $ Change % Change
Interest on debt obligations and unused line fees $ 51,150 $ 59,645 $ (8,495) (14.2) %
Interest on senior notes 29,719 16,982 12,737 75.0
Coupon interest on convertible notes 9,057 9,057 — —
Amortization of loan fees and other loan costs 7,653 7,053 600 8.5
Interest income (1,814) (750) (1,064) 141.9
Interest expense, net $ 95,765 $ 91,987 $ 3,778 4.1 %

~~Foreign Exchange Gain/(Loss)~~

Foreign exchange gains were $0.8 million for the nine months ended September 30, 2022, compared to $0.1 million for the nine months ended September 30, 2021. In any given period, we may incur foreign currency exchange gains or losses from transactions in currencies other than the functional currency.

~~Income Tax Expense~~

Income tax expense was $29.8 million for the nine months ended September 30, 2022, a decrease of $12.1 million, or 28.9%, compared to $41.9 million for the nine months ended September 30, 2021. During the nine months ended September 30, 2022, our effective tax rate was 22.8%, compared to 20.8% for the nine months ended September 30, 2021. The decrease in income tax expense was primarily due to lower income before taxes during the nine months ended September 30, 2022, which

~~decreased $70.2 million, or 34.9%. The increase in effective tax rate was mainly due to a change in total discrete items and change in the mix of income from different taxing jurisdictions.~~

3831

Supplemental Performance Data

Finance Receivables Portfolio Performance

We purchase portfolios of nonperforming loans from a variety of credit originators or acquire portfolios through business acquisitions and segregate them into two main portfolio ~~segments:~~segments, Core or Insolvency, based on the status of the account upon acquisition. In addition, the accounts are ~~further~~ segregated into geographical regions based upon where the account was ~~purchased. The~~acquired. Ultimately, accounts ~~represented in the Insolvency tables below~~ are ~~those portfolios~~aggregated into annual pools based on portfolio segment, geography, and year of acquisition.Portfolios of accounts that were in an insolvency status at the time of ~~purchase. This contrasts with~~acquisition are represented in the Insolvency tables below.All other acquisitions of portfolios of accounts are included in our Core ~~portfolios that file~~portfolio tables as represented below.Once an account is initially segregated, it is not later transferred from an Insolvency pool to a Core pool or vice versa and the account continues to be accounted for ~~bankruptcy/~~as originally segregated regardless of any future changes in operational status.Specifically, if a Core account files for bankruptcy or 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,acquisition, we adjust our collection practices to comply with ~~bankruptcy/~~any respective bankruptcy or insolvency rules ~~and procedures;~~or policies; however, ~~for accounting purposes, these accounts remain~~the account remains in the ~~original~~ Core pool. ~~Insolvency accounts may be~~In the event an insolvency account is dismissed from its bankruptcy or insolvency status whether 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 alternative collection ~~outside of bankruptcy procedures;~~activities; however ~~for accounting purposes, these accounts remain~~the account remains in the ~~original~~ Insolvency pool.

The purchase price multiple represents our estimate of total cash collections over the original purchase price of the portfolio. Purchase price multiples can vary over time due to a variety of factors, including pricing competition, supply levels, paper type, age of the accounts acquired, mix of portfolios purchased and changes in ~~our~~ operational efficiency.For example, increased pricing due to elevated levels of competition ~~during the 2005 to 2008 period~~or supply constraints negatively ~~impacted~~impacts purchase price multiples as we pay more to buy similar portfolios of ~~our Core~~nonperforming loans.

Further, there is a direct relationship between the price we pay for a portfolio, ~~compared to prior years. Conversely, during~~ the ~~2009 to 2011 period, additional supply occurred as a result~~purchase price multiple and the effective interest rate of the ~~economic downturn. This variance created unique~~pool.When we pay more for a portfolio, the purchase price multiple and ~~advantageous purchasing opportunities, particularly within the Insolvency market, relative~~effective interest rates are lower. The opposite tends to ~~the prior four years. Purchase price multiples can also vary among~~occur when we pay less for a portfolio. Certain types of ~~finance receivables. For example, we generally incur~~accounts have lower collection costs ~~on our Insolvency portfolio compared with our Core portfolio. This allows us, in general, to~~and we generally pay more for ~~an Insolvency portfolio and experience~~these types of accounts resulting in a lower purchase price ~~multiples,~~multiple while ~~generating~~realizing 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 effective interest rates tend to trend lower. The opposite tends to occur when competition decreases and/or supply increases.

other portfolio purchases. 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 accounts, which impact the cost to collect those accounts. Fresher accounts, for example, typically carry lower associated collection costs, 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 is driven by estimates of the amount and timing of future cash 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~~portfolios are aggregated into annual ~~pool is aggregated~~pools, 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 purchase price amount is fixed at the aggregated amounts paid to acquire the portfolio, 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.~~ estimate and the currency rates are fixed for purposes of comparability in future periods.Depending on the level of performance and expected future impacts from our operations, we may update ERC and TEC levels based on the results of our cash forecasting with the correlating adjustment to the purchase price multiple.We follow an established process to evaluate ERC.During the first ~~year~~years following purchase, we typically do not ~~allow~~increase our purchase price ~~multiples to expand. Subsequent to~~multiples. Following the initial ~~year,~~years, as we gain collection experience and confidence with a pool of accounts we may ~~update ERC. As a result,~~begin to increase our ~~estimate of total collections~~purchase price multiples.Over time, our TEC has often increased as pools have ~~aged. These processes have tended to cause~~aged resulting in the ratio of ~~ERC~~TEC to purchase price for any given year of buying to gradually ~~increase over time.~~increase. 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 categories of portfolio segments and related geographies.

3932


Purchase Price Multiples as of September 30, 2022 Amounts in thousands
Purchase Price Multiples as of March 31, 2023 Amounts in thousands										Purchase Price Multiples as of March 31, 2023 Amounts in thousands
Purchase Period	Purchase Period	Purchase Price (2)(3)		Total Estimated Collections (4)		Estimated Remaining Collections (5)		Current Purchase Price Multiple	Original Purchase Price Multiple (6)	Purchase Period	Purchase Price (2)(3)		Total Estimated Collections (4)		Estimated Remaining Collections (5)		Current Purchase Price Multiple	Original Purchase Price Multiple (6)
Americas and Australia Core	Americas and Australia Core									Americas and Australia Core
1996-2011		$	1,287,821	$	4,131,141	$	26,086	321%	240%
2012		254,076		659,669		13,453		260%	226%
1996-2012										1996-2012	$	1,541,896	$	4,797,375	$	36,563	311%	238%
2013	2013	390,826		904,736		18,529		231%	211%	2013	390,826		905,829		14,434		232%	211%
2014	2014	404,117		870,923		28,317		216%	204%	2014	404,117		872,324		23,500		216%	204%
2015	2015	443,114		909,486		62,917		205%		2015	443,114		899,293		45,410		203%	205%
2016	2016	455,767		1,095,092		112,073		240%	201%	2016	455,767		1,075,915		81,221		236%	201%
2017	2017	532,851		1,217,840		179,774		229%	193%	2017	532,851		1,200,467		135,622		225%	193%
2018	2018	653,975		1,464,063		250,068		224%	202%	2018	653,975		1,464,662		199,190		224%	202%
2019	2019	581,476		1,287,770		314,269		221%	206%	2019	581,476		1,294,091		256,184		223%	206%
2020	2020	435,668		948,148		374,739		218%	213%	2020	435,668		947,844		299,252		218%	213%
2021	2021	435,846		819,353		599,229		188%	191%	2021	435,846		781,115		486,989		179%	191%
2022	2022	285,725		509,846		475,780		178%		2022	406,082		721,791		610,010		178%	179%
2023										2023	117,160		204,528		201,535		175%
Subtotal	Subtotal	6,161,262		14,818,067		2,455,234				Subtotal	6,398,778		15,165,234		2,389,910
Americas Insolvency	Americas Insolvency									Americas Insolvency
1996-2011		786,827		1,752,754		367		223%	174%
2012		251,395		393,385		24		156%	136%
1996-2012										1996-2012	1,038,223		2,146,434		203		207%	165%
2013	2013	227,834		355,528		188		156%	133%	2013	227,834		355,606		103		156%	133%
2014	2014	148,420		218,903		774		147%	124%	2014	148,420		218,685		280		147%	124%
2015	2015	63,170		87,568		74		139%	125%	2015	63,170		87,919		201		139%	125%
2016	2016	91,442		116,938		460		128%	123%	2016	91,442		117,460		433		128%	123%
2017	2017	275,257		355,601		7,413		129%	125%	2017	275,257		355,158		2,686		129%	125%
2018	2018	97,879		137,083		21,314		140%	127%	2018	97,879		137,184		11,869		140%	127%
2019	2019	123,077		168,549		55,014		137%	128%	2019	123,077		168,061		38,651		137%	128%
2020	2020	62,130		88,093		50,152		142%	136%	2020	62,130		89,842		41,929		145%	136%
2021	2021	55,187		76,130		58,000		138%	136%	2021	55,187		72,875		46,009		132%	136%
2022	2022	24,475		33,903		32,255		139%		2022	33,442		46,205		41,226		138%	139%
2023										2023	15,701		21,079		20,811		134%
Subtotal	Subtotal	2,207,093		3,784,435		226,035				Subtotal	2,231,762		3,816,508		204,401
Total Americas and Australia	Total Americas and Australia	8,368,355		18,602,502		2,681,269				Total Americas and Australia	8,630,540		18,981,742		2,594,311
Europe Core	Europe Core									Europe Core
2012	2012	20,409		43,461		—		213%	187%	2012	20,409		43,973		—		215%	187%
2013	2013	20,334		26,767		—		132%	119%	2013	20,334		27,039		1		133%	119%
2014 (1)	2014 (1)	773,811		2,344,788		385,634		303%	208%	2014 (1)	773,811		2,365,846		385,266		306%	208%
2015	2015	411,340		726,850		147,316		177%	160%	2015	411,340		727,491		146,999		177%	160%
2016	2016	333,090		565,943		179,084		170%	167%	2016	333,090		567,548		179,801		170%	167%
2017	2017	252,174		357,463		114,430		142%	144%	2017	252,174		358,180		115,098		142%	144%
2018	2018	341,775		533,804		207,082		156%	148%	2018	341,775		540,907		215,509		158%	148%
2019	2019	518,610		781,071		346,028		151%	152%	2019	518,610		805,423		366,897		155%	152%
2020	2020	324,119		556,213		293,408		172%		2020	324,119		557,152		292,626		172%
2021	2021	412,411		702,838		478,614		170%		2021	412,411		698,282		472,516		169%	170%
2022	2022	199,320		364,842		304,229		183%		2022	359,447		580,548		534,007		162%
2023										2023	91,945		157,933		155,919		172%
Subtotal	Subtotal	3,607,393		7,004,040		2,455,825				Subtotal	3,859,465		7,430,322		2,864,639
Europe Insolvency	Europe Insolvency									Europe Insolvency
2014 (1)	2014 (1)	10,876		18,558		1		171%	129%	2014 (1)	10,876		18,669		—		172%	129%
2015	2015	18,973		28,871		196		152%	139%	2015	18,973		29,000		70		153%	139%
2016	2016	39,338		56,951		1,811		145%	130%	2016	39,338		57,076		1,156		145%	130%
2017	2017	39,235		50,887		5,447		130%	128%	2017	39,235		51,169		3,700		130%	128%
2018	2018	44,908		52,395		12,644		117%	123%	2018	44,908		52,454		9,681		117%	123%
2019	2019	77,218		102,147		30,380		132%	130%	2019	77,218		110,875		31,642		144%	130%
2020	2020	105,440		142,743		60,582		135%	129%	2020	105,440		156,589		62,485		149%	129%
2021	2021	53,230		71,526		45,048		134%		2021	53,230		71,526		42,227		134%
2022	2022	21,526		29,050		27,043		135%		2022	44,604		61,034		54,759		137%
2023										2023	7,352		10,087		10,011		137%
Subtotal	Subtotal	410,744		553,128		183,152				Subtotal	441,174		618,479		215,731
Total Europe	Total Europe	4,018,137		7,557,168		2,638,977				Total Europe	4,300,639		8,048,801		3,080,370
Total PRA Group	Total PRA Group	$	12,386,492	$	26,159,670	$	5,320,246			Total PRA Group	$	12,931,179	$	27,030,543	$	5,674,681

(1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our ~~2021~~2022 Form 10-K).

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

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

(4)Non-U.S. amounts are presented at the year-end exchange rate for the respective year of purchase.

(5)Non-U.S. amounts are presented at the ~~September 30, 2022~~March 31, 2023 exchange rate.

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

4033

Portfolio Financial Information
Year-to-date as of September 30, 2022
Amounts in thousands
Purchase Period
Cash
Collections (2)
Portfolio Income (2)
Changes in Expected Recoveries (2)
Total Portfolio Revenue (2)
Net Finance Receivables as of September 30, 2022 (3)
Americas and Australia Core
1996-2011 $ 13,134 $ 7,292 $ 4,835 $ 12,127 $ 5,422
2012 5,724 2,423 3,188 5,611 4,334
2013 9,928 3,523 5,619 9,142 7,975
2014 11,829 4,580 6,521 11,101 11,250
2015 15,857 10,007 (1,342) 8,665 24,192
2016 31,174 22,699 (11,293) 11,406 38,183
2017 62,608 32,415 987 33,402 78,847
2018 118,715 43,169 47,990 91,159 138,982
2019 144,093 60,488 21,204 81,692 175,831
2020 154,569 69,885 (1,727) 68,158 210,540
2021 137,971 87,411 (34,705) 52,706 322,937
2022 34,834 23,347 543 23,890 273,718
Subtotal 740,436 367,239 41,820 409,059 1,292,211
Americas Insolvency
1996-2011 405 423 (18) 405 —
2012 411 43 367 410 —
2013 439 186 255 441 —
2014 565 593 (87) 506 83
2015 478 154 165 319 58
2016 1,449 251 453 704 315
2017 18,072 2,180 2,329 4,509 6,729
2018 19,482 2,688 3,063 5,751 19,525
2019 29,637 4,706 5,303 10,009 49,692
2020 15,307 4,524 2,027 6,551 41,694
2021 13,505 5,179 1,555 6,734 46,112
2022 1,648 930 725 1,655 24,195
Subtotal 101,398 21,857 16,137 37,994 188,403
Total Americas and Australia 841,834 389,096 57,957 447,053 1,480,614
Europe Core
2012 684 — 685 685 —
2013 380 — 380 380 —
2014 (1)
92,922 56,246 30,385 86,631 105,512
2015 31,962 14,986 6,222 21,208 79,865
2016 28,843 13,916 2,215 16,131 105,874
2017 19,486 6,797 1,868 8,665 78,211
2018 39,948 13,343 4,585 17,928 137,042
2019 69,957 21,255 8,356 29,611 237,146
2020 53,882 20,731 4,395 25,126 180,980
2021 69,485 30,813 2,453 33,266 286,915
2022 18,155 6,127 3,791 9,918 190,522
Subtotal 425,704 184,214 65,335 249,549 1,402,067
Europe Insolvency
2014 (1)
192 13 167 180 1
2015 502 163 (66) 97 159
2016 2,218 532 65 597 1,375
2017 5,278 484 1,355 1,839 5,022
2018 7,513 971 691 1,662 11,475
2019 15,806 2,788 914 3,702 26,865
2020 25,557 4,753 6,747 11,500 52,940
2021 10,608 3,626 1,015 4,641 36,157
2022 2,172 754 637 1,391 20,685
Subtotal 69,846 14,084 11,525 25,609 154,679
Total Europe 495,550 198,298 76,860 275,158 1,556,746
Total PRA Group $ 1,337,384 $ 587,394 $ 134,817 $ 722,211 $ 3,037,360


Portfolio Financial Information Year-to-date as of March 31, 2023 Amounts in thousands
Purchase Period	Cash Collections (2)		Portfolio Income (2)		Changes in Expected Recoveries (2)		Total Portfolio Revenue (2)		Net Finance Receivables as of March 31, 2023 (3)
Americas and Australia Core
1996-2012	$	4,930	$	3,132	$	345	$	3,477	$	8,799
2013	2,590		1,119		429		1,548		6,395
2014	3,117		1,429		161		1,590		8,983
2015	3,789		2,453		(1,852)		601		18,065
2016	6,740		4,712		(3,078)		1,634		26,353
2017	13,064		7,622		(5,636)		1,986		57,300
2018	27,614		11,442		(1,040)		10,402		108,717
2019	33,145		14,841		(2,958)		11,883		138,869
2020	38,142		16,845		(6,426)		10,419		167,501
2021	40,213		23,087		(22,356)		731		260,663
2022	51,622		26,692		937		27,629		360,224
2023	2,994		1,811		378		2,189		116,249
Subtotal	227,960		115,185		(41,096)		74,089		1,278,118
Americas Insolvency
1996-2012	234		83		153		236		—
2013	67		39		28		67		—
2014	123		66		12		78		—
2015	106		40		29		69		102
2016	190		47		9		56		348
2017	1,605		181		(123)		58		2,424
2018	4,401		455		(133)		322		11,128
2019	7,705		1,036		57		1,093		35,596
2020	4,919		1,226		145		1,371		35,750
2021	4,339		1,309		(20)		1,289		37,812
2022	1,794		1,018		(27)		991		31,722
2023	268		215		(31)		184		15,614
Subtotal	25,751		5,715		99		5,814		170,496
Total Americas and Australia	253,711		120,900		(40,997)		79,903		1,448,614
Europe Core
2012	191		—		191		191		—
2013	95		—		95		95		—
2014 (1)	25,462		18,404		109		18,513		107,836
2015	8,748		4,274		(408)		3,866		80,755
2016	7,515		4,040		(807)		3,233		105,983
2017	5,322		1,963		(558)		1,405		79,388
2018	10,568		3,930		(123)		3,807		142,505
2019	19,118		6,210		4,178		10,388		250,616
2020	14,641		5,794		(994)		4,800		179,990
2021	19,176		8,685		(2,405)		6,280		284,941
2022	21,193		8,965		(124)		8,841		334,594
2023	1,976		397		816		1,213		91,123
Subtotal	134,005		62,662		(30)		62,632		1,657,731
Europe Insolvency
2014 (1)	49		—		49		49		—
2015	98		12		41		53		61
2016	454		83		86		169		864
2017	1,295		90		237		327		3,436
2018	1,942		216		(122)		94		8,864
2019	4,714		736		330		1,066		27,828
2020	8,233		1,307		3,089		4,396		55,042
2021	3,745		976		156		1,132		34,889
2022	2,963		1,201		131		1,332		41,786
2023	75		59		118		177		7,382
Subtotal	23,568		4,680		4,115		8,795		180,152
Total Europe	157,573		67,342		4,085		71,427		1,837,883
Total PRA Group	$	411,284	$	188,242	$	(36,912)	$	151,330	$	3,286,497

(1) Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our ~~2021~~2022 Form 10-K).

(2)Non-U.S. amounts are presented using the average exchange rates during the current reporting period.

(3)Non-U.S. amounts are presented at the ~~September 30, 2022~~March 31, 2023 exchange rate.

4134

~~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 September 30, 2022 Amounts in millions
Cash Collections by Year, By Year of Purchase (1) Year-to-date as of March 31, 2023 Amounts in millions																														Cash Collections by Year, By Year of Purchase (1) Year-to-date as of March 31, 2023 Amounts in millions
				Cash Collections																													Cash Collections
Purchase Period	Purchase Period	Purchase Price (3)(4)		1996-2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		Total		Purchase Period	Purchase Price (3)(4)		1996-2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		Total
Americas and Australia Core	Americas and Australia Core																													Americas and Australia Core
1996-2011		$	1,287.8	$	2,419.5	$	486.0	$	381.3	$	266.3	$	183.1	$	119.0	$	78.0	$	56.0	$	45.0	$	29.7	$	20.8	$	13.1	$	4,097.8
2012		254.1		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		9.0		5.7		646.2
1996-2012																														1996-2012	$	1,541.9	$	2,962.4	$	554.9	$	412.5	$	280.3	$	178.9	$	118.1	$	83.8	$	62.9	$	41.5	$	29.9	$	23.5	$	5.1	$	4,753.8
2013	2013	390.8		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		16.7		9.9		886.2		2013	390.8		—		101.6		247.9		194.0		120.8		78.9		56.5		36.9		23.2		16.7		12.5		2.6		891.6
2014	2014	404.1		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		22.3		11.8		834.1		2014	404.1		—		—		92.7		253.5		170.3		114.2		82.2		55.3		31.9		22.3		15.0		3.1		840.5
2015	2015	443.1		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		15.9		849.5		2015	443.1		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		19.5		3.8		856.9
2016	2016	455.8		—		—		—		—				138.7		256.5		194.6		140.6		105.9		74.2		31.2		941.7		2016	455.8		—		—		—		—		138.7		256.5		194.6		140.6		105.9		74.2		38.4		6.7		955.6
2017	2017	532.9		—		—		—		—		—		—		107.3		278.7		256.5		192.5		130.0		62.6		1,027.6		2017	532.9		—		—		—		—		—		107.3		278.7		256.5		192.5		130.0		76.3		13.1		1,054.4
2018	2018	654.0		—		—		—		—		—		—		—		122.7		361.9		337.7		239.9		118.7		1,180.9		2018	654.0		—		—		—		—		—		—		122.7		361.9		337.7		239.9		146.1		27.6		1,235.9
2019	2019	581.5		—		—		—		—		—		—		—		—		143.8		349.0		289.8		144.1		926.7		2019	581.5		—		—		—		—		—		—		—		143.8		349.0		289.8		177.7		33.1		993.4
2020	2020	435.7		—		—		—		—		—		—		—		—		—		133.0		284.3		154.6		571.9		2020	435.7		—		—		—		—		—		—		—		—		132.9		284.3		192.0		38.1		647.3
2021	2021	435.8		—		—		—		—		—		—		—		—		—		—		85.0		138.0		223.0		2021	435.9		—		—		—		—		—		—		—		—		—		85.0		177.3		40.2		302.5
2022	2022	285.7		—		—		—		—		—		—		—		—		—		—		—		34.8		34.8		2022	406.1		—		—		—		—		—		—		—		—		—		—		67.7		51.6		119.3
2023																														2023	117.2		—		—		—		—		—		—		—		—		—		—		—		3.0		3.0
Subtotal	Subtotal	6,161.3		2,419.5		542.9		656.5		753.0		844.8		837.2		860.8		945.0		1,141.5		1,271.9		1,206.9		740.4		12,220.4		Subtotal	6,399.0		2,962.4		656.5		753.1		844.8		837.1		860.9		945.1		1,141.5		1,271.8		1,207.0		946.0		228.0		12,654.2
Americas Insolvency	Americas Insolvency																													Americas Insolvency
1996-2011		786.8		667.4		336.8		313.7		244.7		128.2		44.6		8.4		4.0		2.1		1.3		0.8		0.4		1,752.4
2012		251.4		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		0.6		0.4		393.3
1996-2012																														1996-2012	1,038.2		1,021.6		417.3		338.8		208.3		105.4		37.7		8.3		3.9		2.3		1.4		1.1		0.2		2,146.3
2013	2013	227.8		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.8		0.4		355.3		2013	227.8		—		52.5		82.6		81.7		63.4		47.8		22.0		2.9		1.3		0.8		0.5		0.1		355.6
2014	2014	148.4		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.6		218.1		2014	148.4		—		—		37.1		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.7		0.1		218.4
2015	2015	63.2		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.5		87.6		2015	63.2		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.6		0.1		87.8
2016	2016	91.4		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		7.4		1.4		117.4		2016	91.4		—		—		—		—		18.9		30.4		25.1		19.9		14.4		7.4		1.8		0.2		118.1
2017	2017	275.3		—		—		—		—		—		—		49.1		97.3		80.9		58.8		44.0		18.1		348.2		2017	275.3		—		—		—		—		—		49.1		97.3		80.9		58.8		44.0		20.8		1.6		352.5
2018	2018	97.9		—		—		—		—		—		—		—		6.7		27.4		30.5		31.6		19.5		115.7		2018	97.9		—		—		—		—		—		—		6.7		27.4		30.5		31.6		24.6		4.4		125.2
2019	2019	123.1		—		—		—		—		—		—		—		—		13.4		31.4		39.1		29.7		113.6		2019	123.1		—		—		—		—		—		—		—		13.5		31.4		39.1		37.8		7.7		129.5
2020	2020	62.1		—		—		—		—		—		—		—		—		—		6.5		16.1		15.3		37.9		2020	62.1		—		—		—		—		—		—		—		—		6.5		16.1		20.4		4.9		47.9
2021	2021	55.2		—		—		—		—		—		—		—		—		—		—		4.5		13.5		18.0		2021	55.2		—		—		—		—		—		—		—		—		—		4.6		17.9		4.3		26.8
2022	2022	24.5		—		—		—		—		—		—		—		—		—		—		—		1.6		1.6		2022	33.4		—		—		—		—		—		—		—		—		—		—		3.2		1.8		5.0
2023																														2023	15.7		—		—		—		—		—		—		—		—		—		—		—		0.3		0.3
Subtotal	Subtotal	2,207.1		667.4		354.2		469.8		458.4		344.3		249.8		222.5		207.8		181.0		155.2		147.3		101.4		3,559.1		Subtotal	2,231.7		1,021.6		469.8		458.5		344.3		249.9		222.5		208.0		181.0		155.3		147.4		129.4		25.7		3,613.4
Total Americas and Australia	Total Americas and Australia	8,368.4		3,086.9		897.1		1,126.3		1,211.4		1,189.1		1,087.0		1,083.3		1,152.8		1,322.5		1,427.1		1,354.2		841.8		15,779.5		Total Americas and Australia	8,630.7		3,984.0		1,126.3		1,211.6		1,189.1		1,087.0		1,083.4		1,153.1		1,322.5		1,427.1		1,354.4		1,075.4		253.7		16,267.6
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		1.2		1.2		0.7		40.2		2012	20.4		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		1.2		0.9		0.1		40.5
2013	2013	20.3		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.7		0.4		24.4		2013	20.3		—		7.1		8.5		2.4		1.3		1.2		1.3		0.9		0.7		0.7		0.5		0.1		24.7
2014 (2)	2014 (2)	773.8		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		149.2		92.9		1,683.5		2014 (2)	773.8		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		149.3		122.2		25.5		1,738.4
2015	2015	411.3		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		32.0		517.0		2015	411.3		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		40.7		8.8		534.5
2016	2016	333.1		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		28.8		373.7		2016	333.1		—		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		36.9		7.5		389.3
2017	2017	252.2		—		—		—		—		—		—		17.9		56.0		44.1		36.1		34.8		19.5		208.4		2017	252.2		—		—		—		—		—		17.9		56.0		44.1		36.1		34.8		25.2		5.3		219.4
2018	2018	341.8		—		—		—		—		—		—		—		24.3		88.7		71.2		69.1		39.9		293.2		2018	341.8		—		—		—		—		—		—		24.3		88.7		71.3		69.1		50.7		10.6		314.7
2019	2019	518.6		—		—		—		—		—		—		—		—		47.9		125.7		121.4		70.0		365.0		2019	518.6		—		—		—		—		—		—		—		48.0		125.7		121.4		89.8		19.1		404.0
2020	2020	324.1		—		—		—		—		—		—		—		—		—		32.4		91.7		53.9		178.0		2020	324.1		—		—		—		—		—		—		—		—		32.3		91.7		69.1		14.6		207.7
2021	2021	412.4		—		—		—		—		—		—		—		—		—		—		48.4		69.5		117.9		2021	412.4		—		—		—		—		—		—		—		—		—		48.5		89.9		19.2		157.6
2022	2022	199.4		—		—		—		—		—		—		—		—		—		—		—		18.1		18.1		2022	359.5		—		—		—		—		—		—		—		—		—		—		33.9		21.2		55.1
2023																														2023	91.9		—		—		—		—		—		—		—		—		—		—		—		2.0		2.0
Subtotal	Subtotal	3,607.4		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		614.6		425.7		3,819.4		Subtotal	3,859.4		11.6		16.1		167.3		343.4		390.6		407.0		443.4		480.2		519.7		614.8		559.8		134.0		4,087.9
Europe Insolvency	Europe Insolvency																													Europe Insolvency
2014 (2)	2014 (2)	10.9		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.3		0.2		16.8		2014 (2)	10.9		—		—		—		4.3		3.9		3.2		2.6		1.6		0.8		0.3		0.2		0.1		17.0
2015	2015	19.0		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.5		26.1		2015	19.0		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.7		0.1		26.4
2016	2016	39.3		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		6.0		2.2		58.6		2016	39.3		—		—		—		—		6.2		12.7		12.9		10.7		8.0		6.0		2.7		0.5		59.7
2017	2017	39.2		—		—		—		—		—		—		1.2		7.9		9.2		9.8		9.4		5.3		42.8		2017	39.2		—		—		—		—		—		1.2		7.9		9.2		9.8		9.4		6.5		1.3		45.3
2018	2018	44.9		—		—		—		—		—		—		—		0.6		8.4		10.3		11.7		7.5		38.5		2018	44.9		—		—		—		—		—		—		0.6		8.4		10.3		11.7		9.8		1.9		42.7
2019	2019	77.2		—		—		—		—		—		—		—		—		5.1		21.1		23.9		15.8		65.9		2019	77.2		—		—		—		—		—		—		—		5.0		21.1		23.9		21.0		4.7		75.7
2020	2020	105.4		—		—		—		—		—		—		—		—		—		6.1		34.6		25.6		66.3		2020	105.4		—		—		—		—		—		—		—		—		6.1		34.7		34.1		8.2		83.1
2021	2021	53.3		—		—		—		—		—		—		—		—		—		—		5.4		10.6		16.0		2021	53.2		—		—		—		—		—		—		—		—		—		5.5		14.4		3.7		23.6
2022	2022	21.5		—		—		—		—		—		—		—		—		—		—		—		2.2		2.2		2022	44.6		—		—		—		—		—		—		—		—		—		—		4.5		3.0		7.5
2023																														2023	7.4		—		—		—		—		—		—		—		—		—		—		—		0.1		0.1
Subtotal	Subtotal	410.7		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		92.9		69.9		333.2		Subtotal	441.1		—		—		—		7.3		14.5		22.1		28.8		38.8		59.0		93.1		93.9		23.6		381.1
Total Europe	Total Europe	4,018.1		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		707.5		495.6		4,152.6		Total Europe	4,300.5		11.6		16.1		167.3		350.7		405.1		429.1		472.2		519.0		578.7		707.9		653.7		157.6		4,469.0
Total PRA Group	Total PRA Group	$	12,386.5	$	3,086.9	$	908.7	$	1,142.4	$	1,378.7	$	1,539.7	$	1,492.1	$	1,512.4	$	1,625.0	$	1,841.4	$	2,005.7	$	2,061.7	$	1,337.4	$	19,932.1	Total PRA Group	$	12,931.2	$	3,995.6	$	1,142.4	$	1,378.9	$	1,539.8	$	1,492.1	$	1,512.5	$	1,625.3	$	1,841.5	$	2,005.8	$	2,062.3	$	1,729.1	$	411.3	$	20,736.6

(1)Non-U.S. amounts are presented using the average exchange rates during the cash collection period.

(2)Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our ~~2021~~2022 Form 10-K).

(3)Includes the nonperforming loan portfolios that were acquired through our business acquisitions.

(4)Non-U.S. amounts are presented at the exchange rate at the end of the year in which the 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.

4235

Estimated Remaining Collections

The following chart shows our ERC of ~~$5,320.2~~$5,674.7 million at ~~September 30, 2022~~ March 31, 2023 by geographical region (amounts in millions).

The following chart shows our ERC by year for the 12 month periods ending ~~September 30~~March 31 in each of the years presented below. The forecast amounts reflect our estimate at ~~September 30, 2022~~March 31, 2023 of how much we expect to collect on our portfolios. These estimates are translated to U.S. dollars at the ~~September 30, 2022~~March 31, 2023 exchange rate.

The following table displays our ERC by year for the 12 month periods ending March 31 in each of the years presented below, by year, by geography as of March 31, 2023 (amounts in thousands).


ERC By Year, By Geography
	Americas and Australia Core		Americas Insolvency		Europe Core		Europe Insolvency		Total
2024	$	767,512	$	87,607	$	491,234	$	78,770	$	1,425,123
2025	546,874		57,569		409,335		58,775		1,072,553
2026	352,465		33,871		341,733		38,142		766,211
2027	236,649		17,083		289,035		22,074		564,841
2028	163,723		7,239		246,997		10,939		428,898
2029	114,426		1,021		212,693		4,571		332,711
2030	80,830		11		180,413		1,242		262,496
2031	58,306		—		151,132		283		209,721
2032	39,433		—		128,611		239		168,283
2033	26,007		—		108,574		200		134,781
Thereafter	3,685		—		304,882		496		309,063
	$	2,389,910	$	204,401	$	2,864,639	$	215,731	$	5,674,681

Seasonality

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. 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. In the first quarter of 2023 and the first half of 2022, this ~~spike~~seasonal trend was not as pronounced. Additionally, 2021 ~~and 2020~~ deviated from usual seasonal patterns due to the impact of the COVID-19 pandemic. ~~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 (amounts in thousands).


Cash Collections by Geography and Type	Cash Collections by Geography and Type																	Cash Collections by Geography and Type
		2022						2021								2020			2023	2022								2021
		Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4						Q1		Q4		Q3			Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	Americas and Australia Core	$	225,775	$	244,377	$	270,284	$	257,705	$	276,691	$	324,845	$	347,638	$	286,524				Americas and Australia Core	$	227,960	$	205,619	$	225,775		$	244,377	$	270,284	$	257,705	$	276,691	$	324,845
Americas Insolvency	Americas Insolvency	31,911		34,278		35,209		36,851		37,464		37,768		35,253		36,048					Americas Insolvency	25,751		27,971		31,911			34,278		35,209		36,851		37,464		37,768
Europe Core	Europe Core	132,072		142,470		151,162		155,853		151,625		157,637		149,486		141,471					Europe Core	134,005		134,016		132,072			142,470		151,162		155,853		151,625		157,637
Europe Insolvency	Europe Insolvency	22,586		22,935		24,325		23,262		22,574		23,579		23,510		17,830					Europe Insolvency	23,568		24,051		22,586			22,935		24,325		23,262		22,574		23,579
Total Cash Collections	Total Cash Collections	$	412,344	$	444,060	$	480,980	$	473,671	$	488,354	$	543,829	$	555,887	$	481,873				Total Cash Collections	$	411,284	$	391,657	$	412,344		$	444,060	$	480,980	$	473,671	$	488,354	$	543,829

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


Cash Collections by Source - Core Portfolios Only	Cash Collections by Source - Core Portfolios Only																	Cash Collections by Source - Core Portfolios Only
		2022						2021								2020			2023	2022								2021
		Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4						Q1		Q4		Q3			Q2		Q1		Q4		Q3		Q2
Call Center and Other Collections	Call Center and Other Collections	$	235,832	$	260,764	$	291,266	$	283,606	$	298,717	$	338,022	$	355,043	$	296,865				Call Center and Other Collections	$	236,415	$	216,182	$	235,832		$	260,764	$	291,266	$	283,606	$	298,717	$	338,022
External Legal Collections	External Legal Collections	49,243		50,996		55,179		55,760		54,445		61,836		65,613		58,481					External Legal Collections	54,934		48,925		49,243			50,996		55,179		55,760		54,445		61,836
Internal Legal Collections	Internal Legal Collections	72,772		75,087		75,001		74,192		75,154		82,624		76,468		72,649					Internal Legal Collections	70,616		74,528		72,772			75,087		75,001		74,192		75,154		82,624
Total Core Cash Collections	Total Core Cash Collections	$	357,847	$	386,847	$	421,446	$	413,558	$	428,316	$	482,482	$	497,124	$	427,995				Total Core Cash Collections	$	361,965	$	339,635	$	357,847		$	386,847	$	421,446	$	413,558	$	428,316	$	482,482

Collections Productivity (U.S. Portfolio)

The following ~~tables~~table displays a collections productivity 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)
		2022		2021		2020		2019		2018			2023		2022		2021		2020		2019
First Quarter	First Quarter	$	261	$	279	$	172	$	139	$	121	First Quarter	$	207	$	261	$	279	$	172	$	139
Second Quarter	Second Quarter	226		270		263		139		101		Second Quarter	—		226		270		263		139
Third Quarter	Third Quarter	210		242		246		124		107		Third Quarter	—		210		242		246		124
Fourth Quarter	Fourth Quarter	—		232		204		128		104		Fourth Quarter	—		186		232		204		128

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

Cash Efficiency Ratio

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


Cash Efficiency Ratio (1)	Cash Efficiency Ratio (1)						Cash Efficiency Ratio (1)
		2022	2021	2020	2019	2018		2023	2022	2021	2020	2019
First Quarter	First Quarter	65.1%	68.0%	61.5%	59.2%	60.7%	First Quarter	54.3%	65.1%	68.0%	61.5%	59.2%
Second Quarter	Second Quarter	61.3	66.8	68.7	60.4	60.1	Second Quarter	—	61.3	66.8	68.7	60.4
Third Quarter	Third Quarter	58.4	62.4	65.6	60.2	55.7	Third Quarter	—	58.4	62.4	65.6	60.2
Fourth Quarter	Fourth Quarter	—	63.5	61.9	59.7	55.0	Fourth Quarter	—	58.6	63.5	61.9	59.7
Full Year	Full Year	—	65.3	64.5	59.9	58.0	Full Year	—	61.0	65.3	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 ~~2012.~~2013. It also includes the acquisition date nonperforming loan portfolios that were acquired through our business acquisitions. The ~~2022 totals represent~~2023 total represents portfolio acquisitions through the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 while the prior year totals are for the full year.

* 2014 includes portfolios acquired in ~~connections~~connection with the acquisition of Aktiv Kapital AS in 2014 (as described in our ~~2021~~2022 Form 10-K).

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


Portfolio Acquisitions by Geography and Type	Portfolio Acquisitions by Geography and Type																	Portfolio Acquisitions by Geography and Type
		2022						2021								2020			2023	2022										2021
		Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4						Q1		Q4		Q3		Q2			Q1		Q4		Q3		Q2
Americas and Australia Core	Americas and Australia Core	$	100,780	$	99,962	$	90,639	$	90,263	$	162,451	$	98,901	$	88,912	$	67,460				Americas and Australia Core	$	116,867	$	118,581	$	100,780	$	99,962		$	90,639	$	90,263	$	162,451	$	98,901
Americas Insolvency	Americas Insolvency	8,988		6,369		9,118		21,183		9,878		14,642		9,486		12,504					Americas Insolvency	15,701		8,967		8,988		6,369			9,118		21,183		9,878		14,642
Europe Core	Europe Core	59,426		123,814		38,764		60,430		212,194		106,134		44,095		137,647					Europe Core	90,454		140,011		59,426		123,814			38,764		60,430		212,194		106,134
Europe Insolvency	Europe Insolvency	13,910		1,202		8,929		29,820		7,424		—		16,468		72,171					Europe Insolvency	7,203		20,535		13,910		1,202			8,929		29,820		7,424		—
Total Portfolio Acquisitions	Total Portfolio Acquisitions	$	183,104	$	231,347	$	147,450	$	201,696	$	391,947	$	219,677	$	158,961	$	289,782				Total Portfolio Acquisitions	$	230,225	$	288,094	$	183,104	$	231,347		$	147,450	$	201,696	$	391,947	$	219,677

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 5960 million customer accounts in the U.S. (amounts in thousands).


U.S Portfolio Acquisitions by Major Asset Type	U.S Portfolio Acquisitions by Major Asset Type																			U.S Portfolio Acquisitions by Major Asset Type
		2022												2021								2023	2022
		Q3				Q2				Q1				Q4				Q3						Q1		Q4				Q3				Q2				Q1
Major Credit Cards	Major Credit Cards	$	10,236	15.8	%	$	20,673	26.7	%	$	18,160	23.0	%	$	50,017	51.4	%	$	46,888	48.9	%				Major Credit Cards	$	13,234	12.1	%	$	10,242	11.7	%	$	10,236	15.8	%	$	20,673	26.7	%	$	18,160	23.0	%
Private Label Credit Cards	Private Label Credit Cards	44,727		68.8		52,368		67.4		46,195		58.6		28,293		29.1		42,249		44.1					Private Label Credit Cards	66,652		60.9		60,380		69.0		44,727		68.8		52,368		67.4		46,195		58.6
Consumer Finance	Consumer Finance	9,396		14.4		2,062		2.7		13,968		17.7		4,617		4.8		6,081		6.3					Consumer Finance	28,051		25.6		16,366		18.7		9,396		14.4		2,062		2.7		13,968		17.7
Auto Related	Auto Related	630		1.0		2,443		3.2		514		0.7		14,319		14.7		668		0.7					Auto Related	1,481		1.4		515		0.6		630		1.0		2,443		3.2		514		0.7
Total	Total	$	64,989	100.0	%	$	77,546	100.0	%	$	78,837	100.0	%	$	97,246	100.0	%	$	95,886	100.0	%				Total	$	109,418	100.0	%	$	87,503	100.0	%	$	64,989	100.0	%	$	77,546	100.0	%	$	78,837	100.0	%


U.S. Portfolio Acquisitions by Delinquency Category	U.S. Portfolio Acquisitions by Delinquency Category																					U.S. Portfolio Acquisitions by Delinquency Category
		2022												2021											2023					2022
		Q3				Q2				Q1				Q4				Q3					Q1						Q4					Q3					Q2					Q1
Fresh (1)	Fresh (1)	$	30,510	54.5	%	$	28,235	39.7	%	$	29,077	41.7	%	$	17,096	22.5	%	$	21,511	25.0	%			Fresh (1)	$	70,053	74.8	%		$	55,117	70.2	%		$	30,510	54.5	%		$	28,235	39.7	%		$	29,077	41.7	%
Primary (2)	Primary (2)	587		1.0		369		0.5		11,445		16.4		557		0.7		560		0.7				Primary (2)	3,863		4.1			511		0.7			587		1.0			369		0.5			11,445		16.4
Secondary (3)	Secondary (3)	19,886		35.5		28,148		39.5		26,748		38.4		54,915		72.2		62,382		72.5				Secondary (3)	17,789		19.0			21,620		27.5			19,886		35.5			28,148		39.5			26,748		38.4
Other (4)	Other (4)	5,018		9.0		14,425		20.3		2,449		3.5		3,495		4.6		1,555		1.8				Other (4)	2,012		2.1			1,288		1.6			5,018		9.0			14,425		20.3			2,449		3.5
Total Core	Total Core	56,001		100.0	%	71,177		100.0	%	69,719		100.0	%	76,063		100.0	%	86,008		100.0	%			Total Core	93,717		100.0	%		78,536		100.0	%		56,001		100.0	%		71,177		100.0	%		69,719		100.0	%
Insolvency	Insolvency	8,988				6,369				9,118				21,183				9,878						Insolvency	15,701					8,967					8,988					6,369					9,118
Total	Total	$	64,989			$	77,546			$	78,837			$	97,246			$	95,886					Total	$	109,418				$	87,503				$	64,989				$	77,546				$	78,837

(1)Fresh accounts are typically past due 120 to 270 days, charged-off by the credit originator and sold prior to any post-charge-off collection activity.

(2)Primary accounts are typically 240 to 450 days past due, charged-off and have been previously placed with one contingent fee servicer.

(3)Secondary accounts are typically 360 to 630 days past due, charged-off and have been previously placed with two contingent fee servicers.

(4)Other accounts are 480 days or more past due, charged-off and have previously been worked by three or more contingent fee servicers.

Non-GAAP Financial Measures

We report our financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, our 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. Our 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 ~~September 30, 2022~~March 31, 2023 and for the year ended December 31, ~~2021~~2022 (amounts in thousands):


Reconciliation of Non-GAAP Financial Measures	Reconciliation of Non-GAAP Financial Measures					Reconciliation of Non-GAAP Financial Measures
		LTM		For the Year Ended			LTM		For the Year Ended
		September 30, 2022		December 31, 2021			March 31, 2023		December 31, 2022
Net income attributable to PRA Group, Inc.	Net income attributable to PRA Group, Inc.	$	135,464	$	183,158	Net income attributable to PRA Group, Inc.	$	18,546	$	117,147
Adjustments:	Adjustments:					Adjustments:
Income tax expense	Income tax expense	42,775		54,817		Income tax expense	13,525		36,787
Foreign exchange losses		145		809
Foreign exchange gains						Foreign exchange gains	(1,508)		(985)
Interest expense, net	Interest expense, net	127,921		124,143		Interest expense, net	137,212		130,677
Other expense (1)	Other expense (1)	766		(282)		Other expense (1)	1,485		1,325
Depreciation and amortization	Depreciation and amortization	15,120		15,256		Depreciation and amortization	15,054		15,243
Adjustment for net income attributable to noncontrolling interests	Adjustment for net income attributable to noncontrolling interests	1,870		12,351		Adjustment for net income attributable to noncontrolling interests	10,931		851

Recoveries applied to negative allowance less Changes in expected recoveries	Recoveries applied to negative allowance less Changes in expected recoveries	842,467		988,050		Recoveries applied to negative allowance less Changes in expected recoveries	820,206		805,942
Adjusted EBITDA	Adjusted EBITDA	$	1,166,528	$	1,378,302	Adjusted EBITDA	$	1,015,451	$	1,106,987

(1) Other ~~expense/(income)~~expense reflects non-operating related activity.

Additionally, we evaluate our business using certain ratios that use Adjusted EBITDA, including Debt to Adjusted EBITDA, which is calculated by dividing borrowings by Adjusted EBITDA. The following table reflects our ratios of Debt to Adjusted EBITDA for the LTM as of ~~September 30, 2022~~March 31, 2023 and for the year ended December 31, ~~2021~~2022 (amounts in thousands):


Debt to Adjusted EBITDA	Debt to Adjusted EBITDA							Debt to Adjusted EBITDA
		LTM			For the Year Ended				LTM			LTM			For the Year Ended
		September 30, 2022			December 31, 2021				March 31, 2023			March 31, 2023(1)			December 31, 2022
Borrowings	Borrowings	$	2,379,614		$	2,608,714		Borrowings	$	2,937,895		$	2,592,895		$	2,494,858
Adjusted EBITDA	Adjusted EBITDA	$	1,166,528		$	1,378,302		Adjusted EBITDA	1,015,451			1,015,451			1,106,987
Debt to Adjusted EBITDA	Debt to Adjusted EBITDA	2.04		x	1.89		x	Debt to Adjusted EBITDA	2.89		x	2.55		x	2.25		x

(1) For the LTM as of March 31, 2023, as adjusted, assuming repayment of our 2023 Notes on March 31, 2023.

Liquidity and Capital Resources

We actively manage our liquidity to help provide access to sufficient funding to meet our business needs and financial obligations.

Sources of Liquidity

Cash and cash equivalents. As of ~~September 30, 2022,~~March 31, 2023, cash and cash equivalents ~~totaled $58.0 million. Of the cash and cash equivalents balance as~~totaled $116.5 million, of ~~September 30, 2022, $51.9~~which $88.4 million consisted of cash on hand related to international operations with indefinitely reinvested ~~earnings.~~earnings. See the "Undistributed Earnings of International Subsidiaries" section below for more information.

Restricted cash and cash equivalents.

At March 31, 2023, we had total restricted cash and cash equivalents of $359.2 million, which we will use to retire all or a portion of our $345.0 million aggregate principal amount of 3.50% Convertible Senior Notes due June 1, 2023 ("2023 Convertible Senior Notes"), or to satisfy any other obligations with respect to such notes, and to pay redress to customers as required by the settlement with the CFPB. For more information on the CFPB settlement, see

Note 12

to our Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report.

Borrowings. At ~~September 30, 2022,~~March 31, 2023, we had the following borrowings outstanding and availability under our credit facilities (amounts in thousands):


		Outstanding		Available without Restrictions		Available with Restrictions (1)			Outstanding		Available without Restrictions		Available with Restrictions (1)
Americas revolving credit (2)	Americas revolving credit (2)	$	281,075	$	794,801	$	117,305	Americas revolving credit (2)	$	234,866	$	840,593	$	118,692
UK revolving credit	UK revolving credit	427,050		372,950		76,744		UK revolving credit	473,712		326,288		116,249
European revolving credit	European revolving credit	235,343		554,656		260,569		European revolving credit	401,438		432,588		201,866
Term loan	Term loan	452,500		—		—		Term loan	447,500		—		—
Senior Notes	Senior Notes	650,000		—		—		Senior Notes	1,050,000		—		—
Convertible Notes	Convertible Notes	345,000		—		—		Convertible Notes	345,000		—		—
Less: Debt discounts and issuance costs	Less: Debt discounts and issuance costs	(11,354)		—		—		Less: Debt discounts and issuance costs	(14,621)		—		—
Total	Total	$	2,379,614	$	1,722,407	$	454,618	Total	$	2,937,895	$	1,599,469	$	436,807

(1) Available borrowings after calculation of current borrowing base and debt covenants as of ~~September 30, 2022.~~March 31, 2023.

(2) Includes North American revolving credit facility and Colombian revolving ~~credit.~~credit facility.

On February 6, 2023, we completed the private offering of $400.0 million in aggregate principal amount of our 8.375% Senior Notes due February 1, 2028 ("2028 Notes"). We deposited $345.0 million of the net proceeds from the offering into a newly-formed segregated deposit account, included in Restricted cash and cash equivalents on our Consolidated Balance Sheets, and will use such proceeds to retire all or any portion of our 2023 Convertible Notes or to satisfy any other obligations with respect to our 2023 Convertible Notes. We used the remainder of the net proceeds from the offering to repay a portion of our outstanding borrowings under our North American revolving credit facility.

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 $107.7 million~~(approximately $115.8 million as of ~~September 30, 2022)~~March 31, 2023). Interest-bearing deposits as of ~~September 30, 2022 were $88.2~~March 31, 2023 were $108.8 million.

Furthermore, we have the ability to slow the purchase of nonperforming loans if necessary, and use the net cash flow generated from our cash collections from our portfolio of existing nonperforming loans to temporarily service our debt and fund existing operations. For example, we invested ~~$972.3~~$850.0 million in portfolio acquisitions in ~~2021.~~2022. The portfolios acquired in ~~2021~~2022 generated ~~$143.3~~$109.4 million of cash collections, representing only ~~7.0%~~6.3% of ~~2021~~2022 cash collections.

Uses of Liquidity and Material Cash Requirements

Forward Flows. Contractual obligations over the next year are primarily related to portfolio purchase commitments. As of ~~September 30, 2022,~~March 31, 2023, we have forward flow commitments in place for the purchase of nonperforming loans with a maximum purchase ~~price~~price of ~~$1,034.6~~$622.4 million, of which ~~$927.9~~$576.3 million is due within the next 12 months. The ~~$1,034.6~~$622.4 million is comprised of ~~$427.4~~$344.6 million for the Americas and Australia and ~~$607.2~~$277.8 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.

Borrowings. Of our ~~$2.4~~$2.9 billion ~~borrowings~~borrowings at ~~September 30, 2022,~~March 31, 2023, estimated interest, unused fees and principal payments for the next 12 months are ~~approximately $474.7~~approximately $516.8 million, of ~~which,~~which, $355.3 million ~~relates~~relates to principal, primarily reflecting our Convertible Senior Notes due 2023. Beyond 12 months our principal payment obligations related to debt maturities occur ~~between~~between one and seven years.

Many of our financing arrangements include restrictive covenants with which we must ~~comply. As~~comply including a covenant that requires us to maintain positive consolidated income from operations during any fiscal quarter. We incurred a net loss from operations of ~~September 30, 2022,~~$33.6 million for the three months ended March 31, 2023. We requested and were granted a one-time prospective waiver by lenders under each of our credit facilities prior to the date we ~~determined that~~were required to report and certify compliance with the covenant requiring us to maintain positive consolidated income from operations. The effect of granting the waiver prior to certification date for such compliance resulted in us maintaining compliance with the applicable financial covenants of our credit facilities as of March 31, 2023. Following the receipt of the covenant waiver on May 5, 2023, we were in compliance with ~~these covenants.~~the remaining applicable financial covenants of our financing arrangements as of March 31, 2023. For more information, see Note 6 to our Consolidated Financial Statements included in Part I,1, Item 1 of this Quarterly Report.

Share Repurchases. On February 25, 2022, we completed our $230.0 million share repurchase program. Also on February 25, 2022, our Board of Directors approved a new share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. Repurchases may be made from time-to-time in open market transactions, through privately negotiated transactions, in block transactions, through purchases made in accordance with trading plans adopted under Rule 10b5-1 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") or other methods, subject to market and/or other conditions and applicable regulatory requirements. The new share repurchase program has no stated expiration date and does not obligate us to repurchase any specified amount of shares, remains subject to the discretion of our Board of Directors and, subject to compliance with applicable laws, may be modified, suspended or discontinued at any time. During the three months ended ~~September 30, 2022,~~March 31, 2023, we ~~repurchased 663,005~~did not repurchase any shares of our common ~~stock for approximately $25.0 million. During the nine months ended September 30, 2022 we repurchased 2,331,364 shares of our common stock for approximately $99.4 million.~~stock. As of ~~September 30, 2022,~~March 31, 2023, we had $67.7 million remaining for share repurchases under the new program. For more information, see Item 2 included in Part II of this Quarterly Report.

Leases. The majority of our leases have remaining lease terms of one to 1514 years. As of ~~September 30, 2022,~~March 31, 2023, we had ~~$57.4~~$57.9 million in lease liabilities, of which ~~approximatel~~appr~~y $10.0~~oximately $10.5 million matu~~matures~~res within the next 12 months. For more information, see Note 5 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

~~Employment Agreements~~Derivatives. ~~We have~~Derivative financial instruments are entered into ~~employment agreements with certain executive officers for approximately $8.5~~to reduce our exposure to fluctuations in interest rates on variable rate debt and foreign currency exchange rates. As of March 31, 2023, we had $10.1 million of derivative liabilities, all of which ~~$6.8 million is payable if executed~~mature within the next 12 months. ~~Our U.S. executive officer~~

~~agreements mature in December 2023, while executive officer agreements entered into outside of the U.S. are pursuant to local country regulations and typically do not have expiration dates.~~ For more information, see Note 12 7 to our Consolidated Financial Statements included in ~~Part I,~~ Item 18 of this Quarterly Report.

We believe that funds generated from operations and from cash collections on nonperforming loan portfolios, together with existing cash, available borrowings under our revolving credit 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 and beyond. We may seek to access the debt or equity capital markets as we deem appropriate, market conditions permitting. Business acquisitions or higher than expected levels of portfolio purchasing could require additional financing from other sources.

Cash Flows Analysis

The following table summarizes our cash flow activity for the ~~nine~~three months ended ~~September 30, 2022~~March 31, 2023 compared to the ~~nine~~three months ended ~~September 30, 2021~~March 31, 2022 (amounts in thousands):


		Nine Months Ended September 30,						Three Months Ended March 31,
		2022		2021		$ Change				2023		2022		$ Change
Net cash provided by (used in):	Net cash provided by (used in):								Net cash provided by (used in):
Operating activities	Operating activities	$	(3,414)	$	38,283	$	(41,697)		Operating activities	$	(47,521)	$	(22,744)	$	(24,777)
Investing activities	Investing activities	195,406		123,831		71,575			Investing activities	8,979		126,329		(117,350)
Financing activities	Financing activities	(190,054)		(216,662)		26,608			Financing activities	425,806		(112,647)		538,453
Effect of exchange rate on cash	Effect of exchange rate on cash	(31,927)		(5,202)		(26,725)			Effect of exchange rate on cash	3,656		910		2,746
Net decrease in cash and cash equivalents		$	(29,989)	$	(59,750)	$	29,761
Net increase/(decrease) in cash and cash equivalents									Net increase/(decrease) in cash and cash equivalents	$	390,920	$	(8,152)	$	399,072

Operating Activities

Cash ~~(used in) provided by~~used in operating activities mainly reflects cash collections recognized as revenue and cash paid for operating expenses, interest and income taxes. ~~Net~~ To calculate cash used in operating activities, net (loss)/income was 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 used in operating activities of ~~$3.4~~$47.5 million for the ~~nine~~three months ended ~~September 30, 2022, decreased $41.7~~March 31, 2023 increased $24.8 million from net cash ~~provided by~~used in operating activities of ~~$38.3~~$22.7 million for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022. The change was mainly driven by lower cash collections recognized as portfolio income ~~lower income taxes,~~ and the impact of foreign exchange.

Investing Activities

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

Net cash provided by investing activities ~~increased $71.6~~decreased $117.4 million during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, primarily driven by ~~a decrease~~an increase of ~~$208.5~~$71.6 million in purchases of finance receivables, ~~and a decrease~~an increase of ~~$72.2~~$58.5 million in purchases of investments ~~reflecting the prior year purchase of additional government securities. These decreases were partially offset by~~and a decrease of ~~$168.3~~$52.6 million in recoveries applied to negative ~~allowance and a decrease~~allowance. These items were partially offset by an increase of ~~$37.5~~$62.0 million in proceeds from sales and maturities of investments.

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.

Net cash ~~used in~~provided by financing activities ~~decreased $26.6~~increased $538.5 million during the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, primarily driven by the proceeds from the issuance of our 2028 Notes of $400.0 million, a ~~decrease of $436.1~~$92.4 million inchange from net payments on our lines of ~~credit. This~~credit in the prior year quarter to net draws on our lines of credit in the current year quarter and a decrease ~~was partially offset by a reduction~~ in our ~~proceeds from senior notes of $350 million, increased~~ purchases of common stock of ~~$37.5 million, and a decrease in interest bearing deposits of $22.6~~$48.7 million.

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 ~~$51.9~~$88.4 million and ~~$61.9~~$75.3 million as of ~~September 30, 2022~~March 31, 2023 and December 31, ~~2021,~~2022, respectively. Refer to Note 11 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.

Recent Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our Consolidated Financial Statements see Note 13 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Critical Accounting Estimates

Our Consolidated Financial Statements have been prepared in accordance with GAAP. Some of our significant accounting policies require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets and liabilities. For a discussion of our significant accounting policies, refer to Note 1 to our Consolidated Financial Statements included in Item 8 of our ~~2021~~2022 Form 10-K.

We consider accounting estimates to be critical if (1) the accounting estimates made involve a significant level of estimation uncertainty and (2) ~~has~~have had or are reasonably likely to have a material impact on our financial condition or results of operations. 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.

We have determined that the following accounting policies involve critical estimates:

Revenue Recognition - Finance Receivables

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 amount and timing of ~~future~~ cash ~~flows and economic lives of~~collections we expect to receive from our pools of accounts. We review individual pools for trends, actual performance versus projections and curve shape (a graphical depiction of the amount and timing of cash ~~flows)~~collections). We then ~~re-forecast future cash flows by applying~~project ERC and then apply a discounted cash flow methodology to our ERC.

~~During 2021, we made assumptions that the majority of cash collections overperformance was due~~ Adjustments to ~~acceleration of future collections rather than an increase to total expected collections. Therefore, we adjusted the next three to six month forecast to reflect~~ERC may include adjustments reflecting recent collection trends, ~~from actual results with corresponding reductions to~~our view of current and future economic conditions, changes in collection assumptions or other timing related adjustments that could impact TEC. In the ~~collection forecast later in the forecast period. During 2022, this assumption has remained relatively consistent, particularly with our more recent pools. Beginning in the second~~first quarter of ~~2022 and continuing into the third quarter,~~2023, we assessed certain pools, where ~~continued strong~~lower levels of performance ~~and collection trends~~occurred due to a softer tax season than anticipated in the U.S. coupled with a more normalized collection environment ~~has~~globally. The reduced performance levels in the first quarter resulted in ~~an increase~~write downs to our ~~forecasted ERC.~~ERC primarily in the U.S. Core portfolio.

Significant changes in ~~such~~our cash flow 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. Generally, adjustments to ~~reduce~~ estimated cash forecasts for ~~overperformance~~performance experienced in the current period result in ~~a negative~~an adjustment to revenue at an amount less than the impact of the overperformance due to the effects of discounting. Additionally, cash ~~flow~~collection forecast increases will generally result in more revenue being ~~recognized.~~recognized and cash collection forecast decreases will generally result in less revenue being recognized over the life of the pool. As we continue to perform against expectations, performance may vary, which could result in additional adjustments to our cash flow forecasts with a corresponding adjustment to total portfolio revenue.

Income Taxes

We are subject to income taxes throughout the U.S. and in 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 non-U.S. income tax expense, we make judgments about the application of these inherently complex laws.

We record a tax provision for the anticipated tax consequences of the reported results of operations. The provision for income taxes is 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 carryforwards. 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 are expected to be realized or settled.

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 benefits related to uncertain tax positions in the application of the complex tax laws. While actual results could vary, we believe we have adequate tax accruals with respect to the ultimate outcome of such unresolved tax matters. We record interest and penalties related to unresolved tax matters as a component of income tax expense when the more likely than not standards are met.

If all or part of the deferred tax assets are determined not to be realizable in the future, we would establish a valuation allowance and 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. 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. For further information regarding our uncertain tax positions, refer to Note 13 to our Consolidated Financial Statements included in Item 8 of our ~~2021~~2022 Form 10-K.

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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~~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 $1.4~~approximately $1.6 billion as ~~of September 30, 2022.~~of March 31, 2023. Based on our debt structure at ~~September 30, 2022,~~March 31, 2023, assuming a 50 ~~basis~~basis point decrease in interest rates, for example, interest expense over the following 12 months would decrease by an estimated ~~$3.9~~$4.3 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated ~~$3.9~~$4.3 million.

To reduce the exposure to changes in the market rate of interest and to be in compliance with the terms of our European and our UK revolving credit facilities, we have entered into interest rate derivative contracts for a portion of our borrowings under our floating rate financing arrangements. As of ~~September 30, 2022,~~March 31, 2023, we are ~~69%~~68% hedged on a notional ~~basis to our international currency exposure and nearly 100% hedged to our U.S. dollar exposure.~~basis. 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 (Loss)~~comprehensive (loss)/~~Income.~~income. All derivatives to which we ~~have~~have applied hedge accounting were evaluated and remained highly effective at ~~September 30, 2022.~~March 31, 2023. 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 and zero interest rate floors on revolving loans under our North America, UK and European credit facilities.

Currency Exchange Risk

We operate internationally and enter into transactions denominated in various foreign currencies. During the three months ended ~~September 30, 2022,~~March 31, 2023, we ~~generated $106.4~~generated $96.3 million of ~~revenues~~revenues from operations outside the U.S. and used 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 such that portfolio ownership and collections generally occur within the same entity. Our UK and European credit facilities are multi-currency facilities, 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 ~~September 30, 2022,~~March 31, 2023, 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 ~~September 30, 2022~~March 31, 2023 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 ~~September 30, 2022,~~March 31, 2023, refer to Note 12 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 ~~2021~~2022 Form 10-K.

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

Share Repurchase Programs

On February 25, 2022, we completed our $230.0 million share repurchase program. Also on February 25, 2022, our Board of Directors approved a new share repurchase program under which we are authorized to repurchase up to $150.0 million of our outstanding common stock. For more information, see Part I, Item 2 "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" in this Quarterly Report.

~~The following table provides information about our~~We did not repurchase any common stock ~~purchased~~ during the ~~third~~ quarter ~~of 2022.~~

Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Programs
Maximum Remaining Purchase Price for Share Repurchases Under the Program (1)
Period
July 1, 2022 to July 31, 2022 663,005 $ 37.71 663,005 $ 67,742
August 1, 2022 to August 31, 2022 — — — 67,742
September 1, 2022 to September 30, 2022 — — — $ 67,742
Total 663,005 $ 37.71 663,005
~~(1) Dollars in thousands.~~ended March 31, 2023.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.

Item 6. Exhibits


3.1			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 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 of the Current Report on Form 8-K filed 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)).
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)).
4.3			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 filed May 26, 2017 (File No. 000-50058)).
4.4			First Supplemental Indenture, dated as of March 31, 2021 between PRA Group, Inc. and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.4 of the Quarterly Report on Form 10-Q filed August 05, 2021 (File No. 000-50058)).
4.5			Indenture, dated as of August 27, 2020 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Bank as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 1, 2020 (File No. 000-50058)).
4.6			Indenture, dated as of September 22, 2021 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Banks, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 24, 2021 (File No. 000-50058)).

4.7

Indenture, dated as of February 6, 2023, among PRA Group, Inc., the domestic subsidiaries of PRA Group, Inc., party thereto and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed February 6, 2023 (File No. 000-50058)).


~~4.7~~4.8			Description of the Registrant's Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit 4.3 of the Annual Report on Form 10-K filed February 26, 2021 (File No. 000-50058)).




10.1*			Executed Offer of Employment, dated March 24, 2023 by and between Vikram A. Atal and PRA Group, Inc. (filed herewith).
10.2*			Form of Performance Stock Unit Agreement (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)

* Denotes management contract or compensatory plan or arrangement in which directors or executive officers are eligible to participate.

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)

~~November 3, 2022~~May 8, 2023	By:	/s/ ~~Kevin P. Stevenson~~Vikram A. Atal
		~~Kevin P. Stevenson~~Vikram A. Atal
		President and Chief Executive Officer
		(Principal Executive Officer)




~~November 3, 2022~~May 8, 2023	By:	/s/ Peter M. Graham
		Peter M. Graham
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Programs	Maximum Remaining Purchase Price for Share Repurchases Under the Program (1)
Period
July 1, 2022 to July 31, 2022	663,005	$	37.71	663,005	$	67,742
August 1, 2022 to August 31, 2022	—	—		—	67,742
September 1, 2022 to September 30, 2022	—	—		—	$	67,742
Total	663,005	$	37.71	663,005