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 March 31,June 30, 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)
Delaware75-3078675
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par value per sharePRAANASDAQ 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 May 1,July 31, 2023 was 39,169,763.39,241,605.



Table of Contents

Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Signatures
2


Part I. Financial Information
Item 1. Financial Statements (Unaudited)
PRA Group, Inc.
Consolidated Balance Sheets
March 31,June 30, 2023 and December 31, 2022
(Amounts in thousands)
(unaudited)(unaudited)
March 31,
2023
December 31,
2022
June 30,
2023
December 31,
2022
AssetsAssetsAssets
Cash and cash equivalentsCash and cash equivalents$116,471 $83,376 Cash and cash equivalents$111,375 $83,376 
Restricted cash and cash equivalents359,208 1,382 
InvestmentsInvestments77,877 79,948 Investments76,169 79,948 
Finance receivables, netFinance receivables, net3,286,497 3,295,008 Finance receivables, net3,424,548 3,295,008 
Income taxes receivableIncome taxes receivable41,398 31,774 Income taxes receivable36,327 31,774 
Deferred tax assets, netDeferred tax assets, net57,551 56,908 Deferred tax assets, net56,758 56,908 
Right-of-use assetsRight-of-use assets53,187 54,506 Right-of-use assets51,135 54,506 
Property and equipment, netProperty and equipment, net48,500 51,645 Property and equipment, net45,874 51,645 
GoodwillGoodwill420,647 435,921 Goodwill414,905 435,921 
Other assetsOther assets82,293 85,206 Other assets103,768 86,588 
Total assetsTotal assets$4,543,629 $4,175,674 Total assets$4,320,859 $4,175,674 
Liabilities and EquityLiabilities and EquityLiabilities and Equity
Liabilities:Liabilities:Liabilities:
Accounts payableAccounts payable$4,837 $7,329 Accounts payable$6,345 $7,329 
Accrued expensesAccrued expenses120,640 111,395 Accrued expenses118,877 111,395 
Income taxes payableIncome taxes payable19,809 25,693 Income taxes payable18,658 25,693 
Deferred tax liabilities, netDeferred tax liabilities, net29,324 42,918 Deferred tax liabilities, net18,463 42,918 
Lease liabilitiesLease liabilities57,939 59,384 Lease liabilities55,723 59,384 
Interest-bearing depositsInterest-bearing deposits108,779 112,992 Interest-bearing deposits99,318 112,992 
BorrowingsBorrowings2,937,895 2,494,858 Borrowings2,739,667 2,494,858 
Other liabilitiesOther liabilities39,697 34,355 Other liabilities24,134 34,355 
Total liabilitiesTotal liabilities3,318,920 2,888,924 Total liabilities3,081,185 2,888,924 
Equity:Equity:Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstandingPreferred 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, 39,170 shares issued and outstanding at March 31, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022392 390 
Common stock, $0.01 par value; 100,000 shares authorized, 39,242 shares issued and outstanding at June 30, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022Common stock, $0.01 par value; 100,000 shares authorized, 39,242 shares issued and outstanding at June 30, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022392 390 
Additional paid-in capitalAdditional paid-in capital285 2,172 Additional paid-in capital2,541 2,172 
Retained earningsRetained earnings1,514,396 1,573,025 Retained earnings1,510,592 1,573,025 
Accumulated other comprehensive lossAccumulated other comprehensive loss(356,730)(347,926)Accumulated other comprehensive loss(348,000)(347,926)
Total stockholders' equity - PRA Group, Inc.Total stockholders' equity - PRA Group, Inc.1,158,343 1,227,661 Total stockholders' equity - PRA Group, Inc.1,165,525 1,227,661 
Noncontrolling interestNoncontrolling interest66,366 59,089 Noncontrolling interest74,149 59,089 
Total equityTotal equity1,224,709 1,286,750 Total equity1,239,674 1,286,750 
Total liabilities and equityTotal liabilities and equity$4,543,629 $4,175,674 Total liabilities and equity$4,320,859 $4,175,674 
The accompanying notes are an integral part of these Consolidated Financial Statements.
3


PRA Group, Inc.
Consolidated Income Statements
For the Three and Six Months Ended March 31,June 30, 2023 and 2022
(unaudited)
(Amounts in thousands, except per share amounts)
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
202320222023202220232022
Revenues:Revenues:Revenues:
Portfolio incomePortfolio income$188,242 $207,532 Portfolio income$184,290 $194,009 $372,532 $401,541 
Changes in expected recoveriesChanges in expected recoveries(36,912)29,914 Changes in expected recoveries21,136 56,567 (15,776)86,481 
Total portfolio revenueTotal portfolio revenue151,330 237,446 Total portfolio revenue205,426 250,576 356,756 488,022 
Other revenueOther revenue4,140 3,159 Other revenue3,810 7,686 7,950 10,845 
Total revenuesTotal revenues155,470 240,605 Total revenues209,236 258,262 364,706 498,867 
Operating expenses:Operating expenses:Operating expenses:
Compensation and employee servicesCompensation and employee services82,403 71,096 Compensation and employee services65,788 74,137 148,191 145,233 
Legal collection feesLegal collection fees8,838 10,873 Legal collection fees9,551 9,554 18,389 20,427 
Legal collection costsLegal collection costs23,945 16,557 Legal collection costs21,522 17,746 45,467 34,303 
Agency feesAgency fees17,378 17,388 Agency fees17,677 14,826 35,055 32,214 
Outside fees and servicesOutside fees and services24,944 19,378 Outside fees and services18,262 27,493 43,206 46,871 
CommunicationCommunication10,527 12,583 Communication10,117 9,528 20,644 22,111 
Rent and occupancyRent and occupancy4,448 4,987 Rent and occupancy4,319 4,633 8,767 9,620 
Depreciation and amortizationDepreciation and amortization3,589 3,778 Depreciation and amortization3,482 3,865 7,071 7,643 
Other operating expensesOther operating expenses13,042 11,998 Other operating expenses12,957 12,743 25,999 24,741 
Total operating expensesTotal operating expenses189,114 168,638 Total operating expenses163,675 174,525 352,789 343,163 
(Loss)/income from operations(33,644)71,967 
Income from operations Income from operations45,561 83,737 11,917 155,704 
Other income and (expense):Other income and (expense):Other income and (expense):
Interest expense, netInterest expense, net(38,283)(31,748)Interest expense, net(43,022)(31,562)(81,305)(63,310)
Foreign exchange loss, net(9)(532)
Foreign exchange gain, netForeign exchange gain, net429 1,319 420 787 
OtherOther(650)(490)Other(230)(181)(880)(671)
(Loss)/income before income taxes(72,586)39,197 
Income tax (benefit)/expense(18,683)4,579 
Net (loss)/income(53,903)34,618 
Income/(loss) before income taxesIncome/(loss) before income taxes2,738 53,313 (69,848)92,510 
Income tax expense/(benefit)Income tax expense/(benefit)1,578 14,177 (17,105)18,756 
Net income/(loss)Net income/(loss)1,160 39,136 (52,743)73,754 
Adjustment for net income/(loss) attributable to noncontrolling interestsAdjustment for net income/(loss) attributable to noncontrolling interests4,726 (5,354)Adjustment for net income/(loss) attributable to noncontrolling interests4,964 2,652 9,690 (2,702)
Net (loss)/income attributable to PRA Group, Inc.$(58,629)$39,972 
Net income/(loss) attributable to PRA Group, Inc.Net income/(loss) attributable to PRA Group, Inc.$(3,804)$36,484 $(62,433)$76,456 
Net (loss)/income per common share attributable to PRA Group, Inc.:
Net income/(loss) per common share attributable to PRA Group, Inc.:Net income/(loss) per common share attributable to PRA Group, Inc.:
BasicBasic$(1.50)$0.98 Basic$(0.10)$0.92 $(1.60)$1.90 
DilutedDiluted$(1.50)$0.97 Diluted$(0.10)$0.91 $(1.60)$1.88 
Weighted average number of shares outstanding:Weighted average number of shares outstanding:Weighted average number of shares outstanding:
BasicBasic39,033 40,777 Basic39,190 39,779 39,111 40,278 
DilutedDiluted39,033 41,304 Diluted39,190 39,900 39,111 40,602 
The accompanying notes are an integral part of these Consolidated Financial Statements.
4


PRA Group, Inc.
Consolidated Statements of Comprehensive Income
For the Three and Six Months Ended March 31,June 30, 2023 and 2022
(unaudited)
(Amounts in thousands)
Three Months Ended March 31,
20232022
Net (loss)/income$(53,903)$34,618 
Other comprehensive (loss)/income, net of tax:
Currency translation adjustments(1,550)12,270 
Cash flow hedges(4,831)18,580 
Debt securities available-for-sale128 (160)
Other comprehensive (loss)/income(6,253)30,690 
Total comprehensive (loss)/income(60,156)65,308 
Less comprehensive income attributable to noncontrolling interests7,276 2,136 
Comprehensive (loss)/income attributable to PRA Group, Inc.$(67,432)$63,172 
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net income/(loss)$1,160 $39,136 $(52,743)$73,754 
Other comprehensive income/(loss), net of tax
Currency translation adjustments7,083 (115,536)5,533 (103,266)
Cash flow hedges5,719 5,837 888 24,417 
Debt securities available-for-sale(80)(242)48 (402)
Other comprehensive income/(loss)12,722 (109,941)6,469 (79,251)
Total comprehensive income/(loss)13,882 (70,805)(46,274)(5,497)
Less comprehensive income/(loss) attributable to noncontrolling interests8,956 (3,177)16,232 (1,041)
Comprehensive income/(loss) attributable to PRA Group, Inc.$4,926 $(67,628)$(62,506)$(4,456)
The accompanying notes are an integral part of these Consolidated Financial Statements.
5


PRA Group, Inc.
Consolidated Statements of Changes in Equity
For the ThreeSix Months Ended March 31,June 30, 2023 and 2022
(unaudited)
(Amounts in thousands)

Common StockAdditional Paid-InRetainedAccumulated Other ComprehensiveNoncontrollingTotal
SharesAmountCapitalEarnings(Loss)/ IncomeInterestEquity
Balance at December 31, 202238,980 $390 $2,172 $1,573,025 $(347,926)$59,089 $1,286,750 
Components of comprehensive income, net of tax:
Net loss— — — (58,629)— 4,726 (53,903)
Currency translation adjustments— — — — (4,101)2,551 (1,550)
Cash flow hedges— — — — (4,831)— (4,831)
Debt securities available-for-sale— — — — 128 — 128 
Vesting of restricted stock190 (2)— — — — 
Share-based compensation expense— — 3,799 — — — 3,799 
Employee stock relinquished for payment of taxes— — (5,684)— — — (5,684)
Balance at March 31, 202339,170 392 285 1,514,396 (356,730)66,366 1,224,709 

Common StockAdditional Paid-InRetainedAccumulated Other ComprehensiveNoncontrollingTotalCommon StockAdditional Paid-InRetainedAccumulated Other ComprehensiveNoncontrollingTotal
SharesAmountCapitalEarnings(Loss)/ IncomeInterestEquitySharesAmountCapitalEarningsIncome/(Loss)InterestEquity
Balance at December 31, 202141,008 $410 $— $1,552,845 $(266,909)$38,491 $1,324,837 
Balance at December 31, 2022Balance at December 31, 202238,980 $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 income/(loss)Net income/(loss)— — — (58,629)— 4,726 (53,903)
Currency translation adjustmentsCurrency translation adjustments— — — — 4,780 7,490 12,270 Currency translation adjustments— — — — (4,101)2,551 (1,550)
Cash flow hedgesCash flow hedges— — — — 18,580 — 18,580 Cash flow hedges— — — — (4,831)— (4,831)
Debt securities available-for-saleDebt securities available-for-sale— — — — (160)— (160)Debt securities available-for-sale— — — — 128 — 128 
Vesting of restricted stockVesting of restricted stock190 (2)— — — — 
Share-based compensation expenseShare-based compensation expense— — 3,799 — — — 3,799 
Employee stock relinquished for payment of taxesEmployee stock relinquished for payment of taxes— — (5,684)— — — (5,684)
Balance at March 31, 2023Balance at March 31, 202339,170 $392 $285 $1,514,396 $(356,730)$66,366 $1,224,709 
Components of comprehensive income, net of tax:Components of comprehensive income, net of tax:
Net income/(loss)Net income/(loss)— — — (3,804)— 4,964 1,160 
Currency translation adjustmentsCurrency translation adjustments— — — — 3,091 3,992 7,083 
Cash flow hedgesCash flow hedges— — — — 5,719 — 5,719 
Debt securities available-for-saleDebt securities available-for-sale— — — — (80)— (80)
Distributions to noncontrolling interestDistributions to noncontrolling interest— — — — — (1,173)(1,173)
Vesting of restricted stockVesting of restricted stock262 (3)— — — — Vesting of restricted stock72 — — — — — — 
Repurchase and cancellation of common stock(860)(9)4,527 (43,972)— — (39,454)
Share-based compensation expenseShare-based compensation expense— — 3,891 — — — 3,891 Share-based compensation expense— — 2,715 — — — 2,715 
Employee stock relinquished for payment of taxesEmployee stock relinquished for payment of taxes— — (8,415)— — — (8,415)Employee stock relinquished for payment of taxes— — (459)— — — (459)
Balance at March 31, 202240,410 404 — 1,548,845 (243,709)40,627 1,346,167 
Balance at June 30, 2023Balance at June 30, 202339,242 $392 $2,541 $1,510,592 $(348,000)$74,149 $1,239,674 

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


6


PRA Group, Inc.
Consolidated Statements of Cash FlowsChanges in Equity
For the ThreeSix Months Ended March 31, 2023 andJune 30, 2022
(unaudited)
(Amounts in thousands)
Three Months Ended March 31,
20232022
Cash flows from operating activities:
Net (loss)/income$(53,903)$34,618 
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense3,799 3,891 
Depreciation and amortization3,589 3,778 
Amortization of debt discount and issuance costs2,441 2,627 
Changes in expected recoveries36,912 (29,914)
Deferred income taxes(12,400)7,203 
Net unrealized foreign currency transactions(15,020)(7,126)
Fair value in earnings for equity securities(3)(60)
Other(59)(253)
Changes in operating assets and liabilities:
Other assets(5,197)738 
Accounts payable(2,495)1,765 
Income taxes payable, net(16,717)(13,290)
Accrued expenses8,695 (26,775)
Other liabilities2,976 (87)
Right of use asset/lease liability(139)141 
Net cash used in operating activities(47,521)(22,744)
Cash flows from investing activities:
Purchases of property and equipment, net(405)(3,744)
Purchases of finance receivables(219,030)(147,452)
Recoveries applied to negative allowance225,709 278,271 
Purchases of investments(60,057)(1,521)
Proceeds from sales and maturities of investments62,762 775 
Net cash provided by investing activities8,979 126,329 
Cash flows from financing activities:
Proceeds from lines of credit243,431 106,371 
Principal payments on lines of credit(199,377)(154,810)
Proceeds from issuance of Senior Notes due 2028400,000 — 
Principal payments on long-term debt(2,500)(2,500)
Repurchases of common stock— (48,702)
Payments of origination cost and fees(5,114)(614)
Tax withholdings related to share-based payments(5,683)(8,415)
Net decrease in interest-bearing deposits(4,951)(3,977)
Net cash provided by/(used in) financing activities425,806 (112,647)
Effect of exchange rate on cash3,656 910 
Net increase/(decrease) in cash and cash equivalents390,920 (8,152)
Cash and cash equivalents, beginning of period84,759 89,072 
Cash and cash equivalents, end of period$475,679 $80,920 
Supplemental disclosure of cash flow information:
Cash paid for interest$25,081 $27,196 
Cash paid for income taxes10,555 10,610 
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets$116,471 $79,089 
Restricted cash and cash equivalents per Consolidated Balance Sheets359,208 1,831 
Total cash, cash equivalents and restricted cash and cash equivalents$475,679 $80,920 

Common StockAdditional Paid-InRetainedAccumulated Other ComprehensiveNoncontrollingTotal
SharesAmountCapitalEarningsIncome/(Loss)InterestEquity
Balance at December 31, 202141,008 $410 $— $1,552,845 $(266,909)$38,491 $1,324,837 
Components of comprehensive income, net of tax:
Net income/(loss)— — — 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 stock262 (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, 202240,410 $404 $— $1,548,845 $(243,709)$40,627 $1,346,167 
Components of comprehensive income, net of tax:
Net income/(loss)— — — 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 stock37 — — — — — — 
 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, 202239,639 $396 $— $1,554,237 $(347,821)$35,555 $1,242,367 
The accompanying notes are an integral part of these Consolidated Financial Statements.



7


PRA Group, Inc.
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 2023 and 2022
(unaudited)
(Amounts in thousands)
Six Months Ended June 30,
20232022
Cash flows from operating activities:
Net income/(loss)$(52,743)$73,754 
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense6,514 7,740 
Depreciation and amortization7,071 7,643 
Gain on extinguishment of debt(343)— 
Amortization of debt discount and issuance costs4,825 5,098 
Changes in expected recoveries15,776 (86,481)
Deferred income taxes(24,439)484 
Net unrealized foreign currency transactions(27,907)(22,597)
Fair value in earnings for equity securities593 (148)
Other(1,301)(614)
Changes in operating assets and liabilities:
Other assets(1,306)(490)
Accounts payable(1,016)1,288 
Income taxes payable, net(13,629)(5,941)
Accrued expenses6,650 (16,505)
Other liabilities738 (5,382)
Right-of-use asset/lease liability(322)387 
Net cash provided by/(used in) operating activities(80,839)(41,764)
Cash flows from investing activities:
Purchases of property and equipment, net(1,091)(8,212)
Purchases of finance receivables(559,547)(378,798)
Recoveries applied to negative allowance463,966 535,537 
Purchases of investments(60,057)(2,292)
Proceeds from sales and maturities of investments62,762 775 
Net cash provided by/(used in) investing activities(93,967)147,010 
Cash flows from financing activities:
Proceeds from lines of credit459,432 1,262,320 
Principal payments on lines of credit(274,772)(1,267,470)
Retirement of Convertible Senior Notes due 2023(345,000)— 
Proceeds from issuance of Senior Notes due 2028400,000 — 
Principal payments on long-term debt(5,000)(5,000)
Repurchases of senior notes(3,657)— 
Repurchases of common stock— (86,371)
Payments of origination cost and fees(5,324)(7,727)
Tax withholdings related to share-based payments(6,142)(8,428)
Distributions paid to noncontrolling interest(1,172)(3,493)
Contributions from noncontrolling interest— 1,599 
Net increase/(decrease) in interest-bearing deposits(9,869)4,326 
Net cash provided by/(used in) financing activities208,496 (110,244)
Effect of exchange rate on cash6,216 (14,958)
Net increase/(decrease) in cash and cash equivalents39,906 (19,956)
Cash and cash equivalents, beginning of period84,759 89,072 
Cash and cash equivalents, end of period$124,665 $69,116 
Supplemental disclosure of cash flow information:
Cash paid for interest$51,652 $59,487 
Cash paid for income taxes20,859 24,127 
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets$111,375 $67,974 
Restricted cash included in Other assets per Consolidated Balance Sheets13,290 1,142 
Total cash, cash equivalents and restricted cash$124,665 $69,116 
The accompanying notes are an integral part of these Consolidated Financial Statements.
78

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 March 31,June 30, 2023, its Consolidated Income Statements and Statements of Comprehensive Income for the three and six months ended June 30, 2023 and 2022, and its Consolidated Statements of Changes in Equity and Statements of Cash Flows for the threesix months ended March 31,June 30, 2023 and 2022, have been included. The Company's Consolidated Income Statements for the three and six months ended March 31,June 30, 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, 2022 (the "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 or exercise control, are accounted for in accordance with the equity method of accounting, which requires the Company to recognize its proportionate share of the entity’sentity's net earnings. Income or loss from these investments 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 would cause the Company’s consolidation conclusionconclusions 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,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.
89

PRA Group, Inc.
Notes to Consolidated Financial Statements
Revenues and long-lived assets by geographical location: RevenueRevenues for the three and six months ended March 31,June 30, 2023 and 2022, and long-lived assets held at March 31,June 30, 2023 and 2022, both for the U.S., the Company's country of domicile, and outside of the U.S., were as follows (amounts in thousands):
As of and for theAs of and for theAs of and for theAs of and for the
Three Months Ended March 31, 2023Three Months Ended March 31, 2022Three Months Ended June 30, 2023Three Months Ended June 30, 2022
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
United States$59,147 $75,784 $151,425 $85,809 
U.S.U.S.$94,246 $72,114 $136,852 $82,927 
United KingdomUnited Kingdom33,309 11,988 43,954 6,851 United Kingdom35,261 11,877 45,880 12,105 
BrazilBrazil19,266 (4,478)— Brazil25,369 12,814 
Other (1)
Other (1)
43,748 13,912 49,704 16,834 
Other (1)
54,360 13,015 62,716 15,024 
TotalTotal$155,470 $101,687 $240,605 $109,494 Total$209,236 $97,009 $258,262 $110,059 

As of and for theAs of and for the
Six Months Ended June 30, 2023Six Months Ended June 30, 2022
Revenues (2)
Long-Lived Assets
Revenues (2)
Long-Lived Assets
U.S.$153,393 $72,114 $288,277 $82,927 
United Kingdom68,570 11,877 89,834 12,105 
Brazil44,635 32,080 
Other (1)
98,108 13,015 88,676 15,024 
Total$364,706 $97,009 $498,867 $110,059 
(1) None of the countries included in "Other" comprise greater than 10% of the Company's consolidated revenues or long-lived assets.
(2) Based on the Company’s financial statement information used to produce the Company's general-purpose financial statements, it is impracticable to report further breakdowns of revenues from external customers by product or service.
Revenues are attributed to countries based on the location of the related operations. Long-lived assets consist of net property and equipment and right-of-use ("ROU") assets. The Company reports revenues earned from collection activities on nonperforming loans, fee-based services and investments. For additional information on the Company's investments, see Note 3.
2. Finance Receivables, net:
Finance receivables, net consisted of the following at March 31,June 30, 2023 and December 31, 2022 (amounts in thousands):
March 31, 2023December 31, 2022June 30, 2023December 31, 2022
Amortized costAmortized cost$— $— Amortized cost$— $— 
Negative allowance for expected recoveriesNegative allowance for expected recoveries3,286,497 3,295,008 Negative allowance for expected recoveries3,424,548 3,295,008 
Balance at end of periodBalance at end of period$3,286,497 $3,295,008 Balance at end of period$3,424,548 $3,295,008 
Three Months Ended June 30, 2023 and 2022
Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended March 31,June 30, 2023 and 2022 were as follows (amounts in thousands):
Three Months Ended March 31, 2023
CoreInsolvencyTotal
Balance at beginning of period$2,936,207 $358,801 $3,295,008 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
207,322 22,903 230,225 
Foreign currency translation adjustment19,835 4,050 23,885 
Recoveries applied to negative allowance (2)
(186,386)(39,323)(225,709)
Changes in expected recoveries (3)
(41,128)4,216 (36,912)
Balance at end of period$2,935,850 $350,647 $3,286,497 
Three Months Ended March 31, 2022
CoreInsolvencyTotal
Balance at beginning of period$2,989,932 $438,353 $3,428,285 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
129,404 18,048 147,452 
Foreign currency translation adjustment(11,009)(5,624)(16,633)
Recoveries applied to negative allowance (2)
(231,153)(47,118)(278,271)
Changes in expected recoveries (3)
25,147 4,767 29,914 
Balance at end of period$2,902,321 $408,426 $3,310,747 
(1) Initial negative allowance for expected recoveries - portfolio acquisitions
Three Months Ended June 30, 2023
CoreInsolvencyTotal
Balance at beginning of period$2,935,850 $350,647 $3,286,497 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
308,274 19,485 327,759 
Foreign currency translation adjustment23,380 4,034 27,414 
Recoveries applied to negative allowance (2)
(198,897)(39,361)(238,258)
Changes in expected recoveries (3)
17,798 3,338 21,136 
Balance at end of period$3,086,405 $338,143 $3,424,548 
910

PRA Group, Inc.
Notes to Consolidated Financial Statements
Three Months Ended June 30, 2022
CoreInsolvencyTotal
Balance at beginning of period$2,902,321 $408,426 $3,310,747 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
223,776 7,570 231,346 
Foreign currency translation adjustment(143,630)(14,132)(157,762)
Recoveries applied to negative allowance (2)
(211,028)(46,238)(257,266)
Changes in expected recoveries (3)
43,322 13,245 56,567 
Balance at end of period$2,814,761 $368,871 $3,183,632 
(1) Initial negative allowance for expected recoveries - portfolio acquisitions
Portfolio acquisitions for the three months ended March 31,June 30, 2023 and 2022 were as follows (amounts in thousands):
Three Months Ended March 31, 2023Three Months Ended June 30, 2023
CoreInsolvencyTotalCoreInsolvencyTotal
Face valueFace value$1,507,965 $104,809 $1,612,774 Face value$2,217,262 $91,940 $2,309,202 
Noncredit discountNoncredit discount(150,511)(8,042)(158,553)Noncredit discount(240,532)(6,742)(247,274)
Allowance for credit losses at acquisitionAllowance for credit losses at acquisition(1,150,132)(73,864)(1,223,996)Allowance for credit losses at acquisition(1,668,456)(65,713)(1,734,169)
Purchase pricePurchase price$207,322 $22,903 $230,225 Purchase price$308,274 $19,485 $327,759 
Three Months Ended March 31, 2022Three Months Ended June 30, 2022
CoreInsolvencyTotalCoreInsolvencyTotal
Face valueFace value$948,057 $97,083 $1,045,140 Face value$1,108,890 $36,076 $1,144,966 
Noncredit discountNoncredit discount(91,600)(5,852)(97,452)Noncredit discount(145,332)(3,250)(148,582)
Allowance for credit losses at acquisitionAllowance for credit losses at acquisition(727,053)(73,183)(800,236)Allowance for credit losses at acquisition(739,782)(25,256)(765,038)
Purchase pricePurchase price$129,404 $18,048 $147,452 Purchase price$223,776 $7,570 $231,346 
The initial negative allowance recorded on portfolio acquisitions for the three months ended March 31,June 30, 2023 and 2022 werewas as follows (amounts in thousands):
Three Months Ended March 31, 2023Three Months Ended June 30, 2023
CoreInsolvencyTotalCoreInsolvencyTotal
Allowance for credit losses at acquisitionAllowance for credit losses at acquisition$(1,150,132)$(73,864)$(1,223,996)Allowance for credit losses at acquisition$(1,668,456)$(65,713)$(1,734,169)
Writeoffs, netWriteoffs, net1,150,132 73,864 1,223,996 Writeoffs, net1,668,456 65,713 1,734,169 
Expected recoveriesExpected recoveries207,322 22,903 230,225 Expected recoveries308,274 19,485 327,759 
Initial negative allowance for expected recoveriesInitial negative allowance for expected recoveries$207,322 $22,903 $230,225 Initial negative allowance for expected recoveries$308,274 $19,485 $327,759 
Three Months Ended March 31, 2022Three Months Ended June 30, 2022
CoreInsolvencyTotalCoreInsolvencyTotal
Allowance for credit losses at acquisitionAllowance for credit losses at acquisition$(727,053)$(73,183)$(800,236)Allowance for credit losses at acquisition$(739,782)$(25,256)$(765,038)
Writeoffs, netWriteoffs, net727,053 73,183 800,236 Writeoffs, net739,782 25,256 765,038 
Expected recoveriesExpected recoveries129,404 18,048 147,452 Expected recoveries223,776 7,570 231,346 
Initial negative allowance for expected recoveriesInitial negative allowance for expected recoveries$129,404 $18,048 $147,452 Initial negative allowance for expected recoveries$223,776 $7,570 $231,346 




11

PRA Group, Inc.
Notes to Consolidated Financial Statements
(2) Recoveries applied to negative allowance
Recoveries applied to the negative allowance for the three months ended March 31,June 30, 2023 and 2022 were as follows (amounts in thousands):
Three Months Ended March 31, 2023Three Months Ended June 30, 2023
CoreInsolvencyTotalCoreInsolvencyTotal
Recoveries (a)
Recoveries (a)
$364,236 $49,715 $413,951 
Recoveries (a)
$373,178 $49,370 $422,548 
Less - amounts reclassified to portfolio incomeLess - amounts reclassified to portfolio income177,850 10,392 188,242 Less - amounts reclassified to portfolio income174,281 10,009 184,290 
Recoveries applied to negative allowanceRecoveries applied to negative allowance$186,386 $39,323 $225,709 Recoveries applied to negative allowance$198,897 $39,361 $238,258 
Three Months Ended March 31, 2022Three Months Ended June 30, 2022
CoreInsolvencyTotalCoreInsolvencyTotal
Recoveries (a)
Recoveries (a)
$425,508 $60,295 $485,803 
Recoveries (a)
$393,149 $58,126 $451,275 
Less - amounts reclassified to portfolio incomeLess - amounts reclassified to portfolio income194,355 13,177 207,532 Less - amounts reclassified to portfolio income182,121 11,888 194,009 
Recoveries applied to negative allowanceRecoveries applied to negative allowance$231,153 $47,118 $278,271 Recoveries applied to negative allowance$211,028 $46,238 $257,266 
(a) Recoveries includesinclude cash collections, buybacks and other cash-based adjustments.
(3) Changes in expected recoveries
10

PRA Group, Inc.
Notes to Consolidated Financial Statements
Changes in expected recoveries for the three months ended March 31,June 30, 2023 and 2022 were as follows (amounts in thousands):
Three Months Ended March 31, 2023Three Months Ended June 30, 2023
CoreInsolvencyTotalCoreInsolvencyTotal
Changes in expected future recoveriesChanges in expected future recoveries$(41,414)$664 $(40,750)Changes in expected future recoveries$(3,738)$(474)$(4,212)
Recoveries received in excess of forecastRecoveries received in excess of forecast286 3,552 3,838 Recoveries received in excess of forecast21,536 3,812 25,348 
Changes in expected recoveriesChanges in expected recoveries$(41,128)$4,216 $(36,912)Changes in expected recoveries$17,798 $3,338 $21,136 
Three Months Ended March 31, 2022Three Months Ended June 30, 2022
CoreInsolvencyTotalCoreInsolvencyTotal
Changes in expected future recoveriesChanges in expected future recoveries$9,771 $(3,525)$6,246 Changes in expected future recoveries$15,640 $5,059 $20,699 
Recoveries received in excess of forecastRecoveries received in excess of forecast15,376 8,292 23,668 Recoveries received in excess of forecast27,682 8,186 35,868 
Changes in expected recoveriesChanges in expected recoveries$25,147 $4,767 $29,914 Changes in expected recoveries$43,322 $13,245 $56,567 
In order to estimate future cash collections, the Company considered historical performance and current economic forecasts, as well as expectations for 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 of ERC 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 March 31,June 30, 2023 were a net negative $36.9positive $21.1 million. This includes $3.8$25.3 million in recoveries received in excess of forecast (cash collections overperformance) and a $40.8$4.2 million negative adjustment to changes in expected future recoveries. Overperformance decreased by $19.8The $25.3 million as a resultin recoveries received in excess of reduced cash collections primarily in the U.S.forecast was largely due to a slower tax season. The changesoverperformance generated from larger than expected one-time payments in expected future recoveries reflect the Company's assessment of certain pools resultingEurope and performance on new vintages in a reduction of expected cash flows as a result of slowing collection performance in the U.S. call centers resulting from weak economic conditions.South America.
Changes in expected recoveries for the three months ended March 31,June 30, 2022 were a net positive $29.9$56.6 million. This reflects $23.7includes $35.9 million in recoveries received in excess of forecast, reflecting strong cash collections overperformance in Europe and a $6.2$20.7 million positive 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 cash collections. The Company also made near-term adjustments to expected future collections in certain geographies, bringing them in line with recent performance trends, with corresponding adjustments made later in the forecast period.
12

PRA Group, Inc.
Notes to Consolidated Financial Statements
Six Months Ended June 30, 2023 and 2022
Changes in the negative allowance for expected recoveries by portfolio segment for the six months ended June 30, 2023 and 2022 were as follows (amounts in thousands):
Six Months Ended June 30, 2023
CoreInsolvencyTotal
Balance at beginning of period$2,936,207 $358,801 $3,295,008 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
515,595 42,389 557,984 
Foreign currency translation adjustment43,216 8,082 51,298 
Recoveries applied to negative allowance (2)
(385,283)(78,683)(463,966)
Changes in expected recoveries (3)
(23,330)7,554 (15,776)
Balance at end of period$3,086,405 $338,143 $3,424,548 
Six Months Ended June 30, 2022
CoreInsolvencyTotal
Balance at beginning of period$2,989,932 $438,353 $3,428,285 
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
353,180 25,618 378,798 
Foreign currency translation adjustment(154,639)(19,756)(174,395)
Recoveries applied to negative allowance (2)
(442,181)(93,356)(535,537)
Changes in expected recoveries (3)
68,469 18,012 86,481 
Balance at end of period$2,814,761 $368,871 $3,183,632 
(1) Initial negative allowance for expected recoveries - portfolio acquisitions
Portfolio acquisitions for the six months ended June 30, 2023 and 2022 were as follows (amounts in thousands):
Six Months Ended June 30, 2023
CoreInsolvencyTotal
Face value$3,725,226 $196,750 $3,921,976 
Noncredit discount(391,043)(14,784)(405,827)
Allowance for credit losses at acquisition(2,818,588)(139,577)(2,958,165)
Purchase price$515,595 $42,389 $557,984 
Six Months Ended June 30, 2022
CoreInsolvencyTotal
Face value$2,056,947 $133,159 $2,190,106 
Noncredit discount(236,932)(9,102)(246,034)
Allowance for credit losses at acquisition(1,466,835)(98,439)(1,565,274)
Purchase price$353,180 $25,618 $378,798 





13

PRA Group, Inc.
Notes to Consolidated Financial Statements
The initial negative allowance recorded on portfolio acquisitions for the six months ended June 30, 2023 and 2022 was as follows (amounts in thousands):
Six Months Ended June 30, 2023
CoreInsolvencyTotal
Allowance for credit losses at acquisition$(2,818,588)$(139,577)$(2,958,165)
Writeoffs, net2,818,588 139,577 2,958,165 
Expected recoveries515,595 42,389 557,984 
Initial negative allowance for expected recoveries$515,595 $42,389 $557,984 
Six Months Ended June 30, 2022
CoreInsolvencyTotal
Allowance for credit losses at acquisition$(1,466,835)$(98,439)$(1,565,274)
Writeoffs, net1,466,835 98,439 1,565,274 
Expected recoveries353,180 25,618 378,798 
Initial negative allowance for expected recoveries$353,180 $25,618 $378,798 
(2) Recoveries applied to negative allowance
Recoveries applied to the negative allowance for the six months ended June 30, 2023 and 2022 were as follows (amounts in thousands):
Six Months Ended June 30, 2023
CoreInsolvencyTotal
Recoveries (a)
$737,414 $99,084 $836,498 
Less - amounts reclassified to portfolio income352,131 20,401 372,532 
Recoveries applied to negative allowance$385,283 $78,683 $463,966 
Six Months Ended June 30, 2022
CoreInsolvencyTotal
Recoveries (a)
$818,657 $118,421 $937,078 
Less - amounts reclassified to portfolio income376,476 25,065 401,541 
Recoveries applied to negative allowance$442,181 $93,356 $535,537 
(a) Recoveries include cash collections, buybacks and other cash-based adjustments.
(3) Changes in expected recoveries
Changes in expected recoveries for the six months ended June 30, 2023 and 2022 were as follows (amounts in thousands):
Six Months Ended June 30, 2023
CoreInsolvencyTotal
Changes in expected future recoveries$(45,153)$191 $(44,962)
Recoveries received in excess of forecast21,823 7,363 29,186 
Changes in expected recoveries$(23,330)$7,554 $(15,776)
Six Months Ended June 30, 2022
CoreInsolvencyTotal
Changes in expected future recoveries$25,411 $1,534 $26,945 
Recoveries received in excess of forecast43,058 16,478 59,536 
Changes in expected recoveries$68,469 $18,012 $86,481 
14

PRA Group, Inc.
Notes to Consolidated Financial Statements
Changes in expected recoveries for the six months ended June 30, 2023 were a net negative $15.8 million. This includes $29.2 million in recoveries received in excess of forecast (cash collections overperformance), primarily due to strong performance in Europe and South America, and a $45.0 million negative adjustment to changes in expected future recoveries. The changes in expected future recoveries reflect the Company's assessment of certain pools, which resulted in a reduction of expected cash flows due to collections performance in U.S. call centers resulting from weaker economic conditions.
Changes in expected recoveries for the six months ended June 30, 2022 were a net positive $86.5 million. This includes $59.5 million in recoveries received in excess of forecast (cash collections overperformance) and a $26.9 million positive adjustment to changes in expected future recoveries. The changes in expected future recoveries included the Company's continued assumption that the majority of overperformance was due to acceleration in the timing of cash collections. The Company also made near-term adjustments to expected future collections in certain geographies, bringing them in line with recent performance trends, with corresponding adjustments made later in the forecast period. The change in expected recoveries also included a $20.5 million write down during the first quarter in 2022 on one portfolio in Brazil.
3. Investments:
Investments consisted of the following at March 31,June 30, 2023 and December 31, 2022 (amounts in thousands):
March 31, 2023December 31, 2022June 30, 2023December 31, 2022
Debt securitiesDebt securitiesDebt securities
Available-for-saleAvailable-for-sale$65,004 $66,813 Available-for-sale$62,740 $66,813 
Equity securitiesEquity securitiesEquity securities
Private equity fundsPrivate equity funds4,003 4,373 Private equity funds3,427 4,373 
Equity method investmentsEquity method investments8,870 8,762 Equity method investments10,002 8,762 
Total investmentsTotal investments$77,877 $79,948 Total investments$76,169 $79,948 
Debt Securities
Available-for-sale
Government securities: The Company's investments in government instruments, including bonds and treasury securities,securities, are classified as available-for-sale and are stated at fair value. As of March 31,At June 30, 2023 maturities for these securities are $61.0were $58.9 million due within one year and $4.0$3.9 million duewithin one to fivetwo years.
11

PRA Group, Inc.
Notes to Consolidated Financial Statements
The amortized cost and estimated fair value of investments in debt securities at March 31,June 30, 2023 and December 31, 2022 were as follows (amounts in thousands):
March 31, 2023June 30, 2023
Amortized CostGross Unrealized GainsGross Unrealized LossesAggregate Fair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesAggregate Fair Value
Available-for-saleAvailable-for-saleAvailable-for-sale
Government securitiesGovernment securities$65,113 $111 $220 $65,004 Government securities$62,930 $77 $267 $62,740 
December 31, 2022December 31, 2022
Amortized CostGross Unrealized GainsGross Unrealized LossesAggregate Fair ValueAmortized CostGross Unrealized GainsGross Unrealized LossesAggregate Fair Value
Available-for-saleAvailable-for-saleAvailable-for-sale
Government securitiesGovernment securities$67,049 $$237 $66,813 Government securities$67,049 $$237 $66,813 
Equity Securities
Private equity funds: Investments in private equity funds represent limited partnerships in which the Company has less thanthan a 1% interest.
Equity Method Investments
The Company hashas an 11.7% interest in RCBRCB Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil. This investment is accounted for onunder 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.
15

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, 2022 and concluded that no goodwill impairment was necessary.not impaired. The Company performed its quarterly impairment assessment by evaluating whether any triggering events had occurred, as of March 31, 2023, which included considering current market conditions, and concluded that no such eventevents had occurred as of March 31,June 30, 2023.
The changesChanges in goodwill for the three and six months ended March 31,June 30, 2023 and 2022, were as follows (amounts in thousands):
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
202320222023202220232022
Balance at beginning of periodBalance at beginning of period$435,921 $480,263 Balance at beginning of period$420,647 $483,380 $435,921 $480,263 
Change in foreign currency translation adjustmentChange in foreign currency translation adjustment(15,274)3,117 Change in foreign currency translation adjustment(5,742)(46,348)(21,016)(43,231)
Balance at end of periodBalance at end of period$420,647 $483,380 Balance at end of period$414,905 $437,032 $414,905 $437,032 
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 1413 years, somesome 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 arewith renewal periods included in its right-of-use ("ROU")ROU assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal options. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.
As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.
The components of lease expense for the three and six months ended March 31,June 30, 2023 and 2022, were as follows (amounts in thousands):
12

PRA Group, Inc.
Notes to Consolidated Financial Statements
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
202320222023202220232022
Operating lease expenseOperating lease expense$2,911 $3,232 Operating lease expense$2,604 $3,088 $5,515 $6,320 
Short-term lease expenseShort-term lease expense461 904 Short-term lease expense566 195 1,027 1,099 
Sublease incomeSublease income(138)(115)Sublease income(137)(115)(275)(230)
Total lease expenseTotal lease expense$3,234 $4,021 Total lease expense$3,033 $3,168 $6,267 $7,189 

Supplemental cash flow information and non-cash activity related to leases for the threesix months ended March 31,June 30, 2023 and 2022 were as follows (amounts in thousands):
Three Months Ended March 31,Six Months Ended June 30,
2023202220232022
Cash paid for amounts included in the measurement of operating lease liabilitiesCash paid for amounts included in the measurement of operating lease liabilities$3,146 $3,098 Cash paid for amounts included in the measurement of operating lease liabilities$6,041 $5,952 
ROU assets obtained in exchange for operating lease obligationsROU assets obtained in exchange for operating lease obligations1,078 1,106 ROU assets obtained in exchange for operating lease obligations2,630 5,766 
Lease term and discount rate information related to operating leases were as follows:
Three Months Ended March 31,Six Months Ended June 30,
2023202220232022
Weighted-average remaining lease term (years)Weighted-average remaining lease term (years)7.88.4Weighted-average remaining lease term (years)7.78.4
Weighted-average discount rateWeighted-average discount rate4.53 %4.48 %Weighted-average discount rate4.62 %4.47 %

16

PRA Group, Inc.
Notes to Consolidated Financial Statements
Maturities of lease liabilities at March 31,June 30, 2023 arewere as follows for the following periods (amounts in thousands):
Operating Leases
For the ninesix months ending December 31, 2023$7,9775,259 
For the year ending December 31, 202410,28210,228 
For the year ending December 31, 202510,04010,018 
For the year ending December 31, 20268,9348,917 
For the year ending December 31, 20276,1316,141 
Thereafter25,87526,061 
Total lease payments69,23966,624 
Less: imputed interest11,30010,901 
Total present value of lease liabilities$57,93955,723 
13

PRA Group, Inc.
Notes to Consolidated Financial Statements
6. Borrowings:
The Company's borrowings consisted of the following as of March 31,June 30, 2023 and December 31, 2022 (amounts in thousands):
March 31, 2023December 31, 2022June 30, 2023December 31, 2022
Americas revolving credit (1)
Americas revolving credit (1)
$234,866 $186,867 
Americas revolving credit (1)
$273,397 $186,867 
UK revolving creditUK revolving credit473,712 453,528 UK revolving credit512,791 453,528 
Europe revolving creditEurope revolving credit401,438 419,856 Europe revolving credit476,089 419,856 
Term loanTerm loan447,500 450,000 Term loan445,000 450,000 
Senior Notes1,050,000 650,000 
Convertible Notes345,000 345,000 
Senior notesSenior notes1,046,000 650,000 
Convertible notesConvertible notes— 345,000 
2,952,516 2,505,251 2,753,277 2,505,251 
Less: Debt discount and issuance costsLess: Debt discount and issuance costs(14,621)(10,393)Less: Debt discount and issuance costs(13,610)(10,393)
TotalTotal$2,937,895 $2,494,858 Total$2,739,667 $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"Revolving Credit Facility"). As of March 31,June 30, 2023 and December 31, 2022, the outstanding balance under the Colombian revolving credit facilityRevolving Credit Facility was approximately $0.5$1.3 million and $0.5 million, respectively.
The following principal payments are due on the Company's borrowings as of March 31,June 30, 2023 for the 12-month periods ending March 31,June 30, (amounts in thousands):
20242024$355,262 2024$10,587 
2025202510,196 202510,441 
20262026310,000 2026308,295 
202720271,125,620 20271,199,865 
20282028801,438 2028874,089 
ThereafterThereafter350,000 Thereafter350,000 
TotalTotal$2,952,516 Total$2,753,277 

The Company incurred a net loss from operations of $33.6 million forDuring the three months ended March 31, 2023. June 30, 2023, the Company repurchased a total of $4.0 million in aggregate principal amount of the senior notes.
The Company requested anddetermined that it was granted a one-time prospective waiver by lenders under each of its credit facilities prior to the date the Company was required to report and certifyin 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 credit facilitiesfinancing arrangements as of March 31,June 30, 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
17

PRA Group, Inc.
Notes to Consolidated Financial Statements
consists of (i) a fully-funded $447.5$445.0 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,Secured Overnight Financing Rate ("SOFR"), 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% 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 March 31,June 30, 2023, the unused portion of the North American Credit Agreement was $840.6$802.9 million. Considering borrowing base restrictions, as of March 31,June 30, 2023, the amount available to be drawn was $118.7$109.0 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)
14

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 (other than for the quarter ended March 31, 2023).
In preparation for reference rate reform on London Interbank Offered Rate ("LIBOR") borrowings and its official discontinuation after June 30, 2023, the Company executed an amendment to its North American Credit Agreement to allow for previously outstanding LIBOR borrowings and subsequent borrowings to use SOFR. SOFR is a broad measure of the cost of borrowing cash overnight collateralized by US Treasury securities. The amendment allows the Company the choice of either borrowing at Daily Simple SOFR plus 0.10% credit adjustment spread or Term SOFR plus 0.10% credit adjustment spread. As of June 30, 2023, all of the Company’s previously outstanding LIBOR borrowings under the North American Credit Agreement were converted to Daily Simple SOFR plus 0.10% credit adjustment spread.
United Kingdom ("UK") Revolving Credit Facility
PRA Group Europe Holding I S.a.r.l ("PRA Group Europe"), a wholly owned subsidiary of the Company, 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, accrue interest for the applicable term at the risk-free rate applicable to U.S. dollars (Secured Overnight Financing Rate)SOFR or Sterling Overnight Index Average ("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 March 31,June 30, 2023, the unused portion of the UK Credit Agreement was $326.3$287.2 million. Considering borrowing base restrictions, as of March 31,June 30, 2023, the amount available to be drawn under the UK Credit Agreement was $116.2$56.0 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 cannot exceed 3.50 to 1.0 as of the end of any fiscal quarter;
18

PRA Group, Inc.
Notes to Consolidated Financial Statements
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 (other than for the quarter ended March 31, 2023).
European Revolving Credit Facility
The Company's wholly-owned subsidiary, PRA Group Europe Holding S.a.r.l. ("PRA 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 security agent (the "Agent").
The European Credit Agreement provides borrowings for an aggregate amount of approximately €730.0 million (subject to the borrowing base) 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 2.80% - 3.80% (as determined by the estimated remaining collections ratio ("ERC Ratio") as defined in the European Credit Agreement), bear an unused line fee, currently 1.085% per annum, or 35% of the margin, are subject to a 0% floor, are payable monthly in arrears and 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 Agent, bears a facility line fee of 0.125% per quarter, payable quarterly in arrears and matures November 23, 2027. As of March 31,June 30, 2023, the unused portion of the European Credit Agreement (including the overdraft facility) was $432.6$358.5 million. Considering borrowing base restrictions and other covenants
15

PRA Group, Inc.
Notes to Consolidated Financial Statements
as of March 31,June 30, 2023, the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was $201.9$167.5 million.
The European Credit AgreementAgreement 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. The European Credit Agreement contains event of default and restrictive covenants including the following:
the ERC Ratio cannot exceed 45%;
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;
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 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 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
19

PRA Group, Inc.
Notes to Consolidated Financial Statements
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 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 existingexisting 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 proceedsused 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.
16

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-months12 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.
During the three months ended June 30, 2023, the Company repurchased $2.0 million in aggregate principal amount of the 2028 Notes.
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 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 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.
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-months12 months beginning September 1 of each year to 101.844% for 2023 and then 100% for 2024 and thereafter.
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 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.
As of March 31, 2023, the 2023 Notes are convertible at any time.
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.
1720

PRA Group, Inc.
Notes to Consolidated Financial Statements
In accordance with authoritative guidance related to derivatives and hedging and Earnings Per Share ("EPS"), onlyDuring the conversion spread is includedthree months ended June 30, 2023, the Company repurchased $2.0 million in the diluted EPS calculation, if dilutive. Under such method, the settlementaggregate principal amount of the conversion spread has a dilutive effect when the market conversion criteria is met.2025 Notes.
Convertible Senior Notes due 2023
The Company determined that the fair valueused substantially all 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 thenet proceeds from the issuance of the 2028 Notes to retire the 2023$345.0 million aggregate principal amount of its 3.50% Convertible Senior Notes when they matureat their maturity on June 1, 2023.
The balances of the liability component of the 2023 Notes outstanding as of March 31, 2023 and December 31, 2022, were as follows (amounts in thousands):
March 31, 2023December 31, 2022
Liability component - principal amount$345,000 $345,000 
Unamortized debt issuance costs(311)(748)
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%(the "2023 Notes").
Interest expense related to the 2023 Notes for the three and six months ended March 31,June 30, 2023 and 2022, werewas as follows (amounts in thousands):
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
202320222023202220232022
Interest expense - stated coupon rateInterest expense - stated coupon rate$3,019 $3,019 Interest expense - stated coupon rate$2,013 $3,019 $5,032 $6,038 
Interest expense - amortization of debt issuance costsInterest expense - amortization of debt issuance costs437 420 Interest expense - amortization of debt issuance costs311 435 748 855 
Total interest expense - convertible notesTotal interest expense - convertible notes$3,456 $3,439 Total interest expense - convertible notes$2,324 $3,454 $5,780 $6,893 
7. Derivatives:
The Company periodically enters into derivative financial instruments,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.obligations. 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 summarizetable summarizes the fair value of derivative instruments in the Company's Consolidated Balance Sheets as of March 31,June 30, 2023 and December 31, 2022 (amounts in thousands):
March 31, 2023December 31, 2022
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate contractsOther assets$31,240 Other assets$37,305 
Interest rate contractsOther liabilities— Other liabilities— 
Derivatives not designated as hedging instruments:
Foreign currency contractsOther assets115 Other assets487 
Foreign currency contractsOther liabilities10,066 Other liabilities19,120 


18

PRA Group, Inc.
Notes to Consolidated Financial Statements
June 30, 2023December 31, 2022
Balance Sheet LocationFair ValueBalance Sheet LocationFair Value
Derivatives designated as hedging instruments:
Interest rate contractsOther assets$39,795 Other assets$37,305 
Interest rate contractsOther liabilities540 Other liabilities— 
Derivatives not designated as hedging instruments:
Foreign currency contractsOther assets4,966 Other assets487 
Foreign currency contractsOther liabilities8,576 Other liabilities19,120 
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 March 31,June 30, 2023 and December 31, 2022, the notional amount of interest rate contracts designated as cash flow hedging instruments was $814.6$729.5 million and $719.7 million, respectively. Derivatives designated as cash flow hedging instruments were evaluated and remained highly effective at March 31,June 30, 2023 and have remaining terms of three 6 months to fivethree years. The Company estimates that approximatelapproxiy $15.2mately $18.3 million of net derivativederivative gain included in OCI willwill be reclassified into earnings within the next 12 months.





21

PRA Group, Inc.
Notes to Consolidated Financial Statements
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 six months ended March 31,June 30, 2023 and 2022 (amounts in thousands):
Gain/(loss) recognized in OCI, net of taxGain/(loss) recognized in OCI, net of tax
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
Derivatives designated as cash flow hedging instrumentsDerivatives designated as cash flow hedging instruments20232022Derivatives designated as cash flow hedging instruments2023202220232022
Interest rate contractsInterest rate contracts$(629)$16,410 Interest rate contracts$10,771 $4,713 $10,142 $21,123 
Gain/(loss) reclassified from OCI into incomeGain/(loss) reclassified from OCI into income
Three Months Ended March 31,Three Months Ended June 30,Six Months Ended June 30,
Location of gain or (loss) reclassified from OCI into income20232022
Location of gain/(loss) reclassified from OCI into incomeLocation of gain/(loss) reclassified from OCI into income2023202220232022
Interest expense, netInterest expense, net$(5,498)$(2,734)Interest expense, net$6,670 $(1,468)$12,168 $(4,202)
During the three months ended June 30, 2023, the Company elected certain of the optional expedients in accordance with ASU 2021-01, "Reference Rate Reform (Topic 848): Overall" ("ASU 2021-01") to maintain cash flow hedge accounting for interest contracts with a combined notional amount of $300.0 million.
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 March 31,June 30, 2023 and December 31, 2022, the notional amount of foreign currency contracts that were not designated as hedging instruments was $383.3$1,693.0 million and $460.8 million, respectively.
The following table summarizes the effects of derivatives not designated as hedging instruments on the Company's Consolidated Income Statements for the three and six months ended March 31,June 30, 2023 and 2022 (amounts in thousands):
Gain/(loss) recognized in incomeGain/(loss) recognized in income
Three Months Ended March 31,Three Months Ended June 30,
Derivatives not designated as hedging instrumentsDerivatives not designated as hedging instrumentsLocation of gain or (loss) recognized in income20232022Derivatives not designated as hedging instrumentsLocation of gain/(loss) recognized in income20232022
Foreign currency contractsForeign currency contractsForeign exchange loss, net$(7,697)$6,493 Foreign currency contractsForeign exchange gain/(loss), net(7,589)32,859 
Foreign currency contractsForeign currency contractsInterest expense, net521 (332)Foreign currency contractsInterest expense, net631 (619)
Gain/(loss) recognized in income
Six Months Ended June 30,
Derivatives not designated as hedging instrumentsDerivatives not designated as hedging instrumentsLocation of gain/(loss) recognized in income20232022
Foreign currency contractsForeign currency contractsForeign exchange gain/(loss), net$(15,287)$39,352 
Foreign currency contractsForeign currency contractsInterest expense, net1,153 (951)
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 differingdifferent input levels of inputs in the determination of fair values.
Those levels of input are summarizedvalue, 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
22

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.
19

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 calculationsvalues presented does not represent, and should not be construed to represent, the underlying value of the Company.
The carrying amounts in the table below were recorded in the Company's Consolidated Balance Sheets at March 31,June 30, 2023 and December 31, 2022 (amounts in thousands):
March 31, 2023December 31, 2022June 30, 2023December 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 equivalentsCash and cash equivalents$116,471 $116,471 $84,758 $84,758 Cash and cash equivalents$111,375 $111,375 $83,376 $83,376 
Restricted cash and cash equivalents359,208 359,208 1,382 1,382 
Finance receivables, netFinance receivables, net3,286,497 3,128,051 3,295,008 3,167,813 Finance receivables, net3,424,548 3,183,414 3,295,008 3,167,813 
Financial liabilities:Financial liabilities:Financial liabilities:
Interest-bearing depositsInterest-bearing deposits108,779 108,779 112,992 112,992 Interest-bearing deposits99,318 99,318 112,992 112,992 
Revolving lines of creditRevolving lines of credit1,110,016 1,110,016 1,060,251 1,060,251 Revolving lines of credit1,262,277 1,262,277 1,060,251 1,060,251 
Term loanTerm loan447,500 447,500 450,000 450,000 Term loan445,000 445,000 450,000 450,000 
Senior NotesSenior Notes1,050,000 992,225 650,000 580,433 Senior Notes1,046,000 913,620 650,000 580,433 
Convertible NotesConvertible Notes345,000 344,276 345,000 341,926 Convertible Notes— — 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 equivalents: The carrying amount approximates fair value due to the short-term nature of the instruments and the observable quoted prices for identical assets in active markets. Accordingly, the Company uses Level 1 inputs for its fair value 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.estimate.
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 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.


2023

PRA Group, Inc.
Notes to Consolidated Financial Statements
Financial Instruments Required To Be Carried Atat 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 March 31,June 30, 2023 and December 31, 2022 (amounts in thousands):
Fair Value Measurements as of March 31, 2023Fair Value Measurements as of June 30, 2023
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:Assets:Assets:
Government securitiesGovernment securities$65,004 $— $— $65,004 Government securities$62,740 $— $— $62,740 
Derivative contracts (recorded in Other assets)Derivative contracts (recorded in Other assets)— 31,355 — 31,355 Derivative contracts (recorded in Other assets)— 44,761 — 44,761 
Liabilities:Liabilities:Liabilities:
Derivative contracts (recorded in Other liabilities)Derivative contracts (recorded in Other liabilities)— 10,066 — 10,066 Derivative contracts (recorded in Other liabilities)— 9,116 — 9,116 
Fair Value Measurements as of December 31, 2022Fair Value Measurements as of December 31, 2022
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
Assets:Assets:Assets:
Government securitiesGovernment securities$66,813 $— $— $66,813 Government securities$66,813 $— $— $66,813 
Derivative contracts (recorded in Other assets)Derivative contracts (recorded in Other assets)— 37,792 — 37,792 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)— 19,120 — 19,120 Derivative contracts (recorded in Other liabilities)— 19,120 — 19,120 
Government securities: Fair value of the Company's investmentinvestments in government instruments aresecurities is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.
Derivative contracts: The estimated fairFair value of the derivative contracts is determinedestimated 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 liquidationsliquidation of the funds' underlyingunderlying assets over one to five years. The fair value of these private equity funds following the application of the NAV practical expedientexpedient was $4.0$3.4 million and $4.4 million as of March 31,June 30, 2023 and December 31, 2022, respectively.
9. Accumulated Other Comprehensive Loss:
Reclassifications out of accumulated other comprehensive loss for the three and six months ended March 31,June 30, 2023 and 2022, were as follows (amounts in thousands):
Three Months Ended March 31,Three Months Ended June 30,
Gains and losses on cash flow hedges20232022Affected line in the Consolidated Income Statement
Gains/(losses) on cash flow hedgesGains/(losses) on cash flow hedges20232022Location in the Consolidated Income Statement
Interest rate swapsInterest rate swaps$5,498 $2,734 Interest expense, netInterest rate swaps$(6,670)$(1,468)Interest expense, net
Income tax effect of item aboveIncome tax effect of item above(1,296)(564)Income tax (benefit)/expenseIncome tax effect of item above1,618 344 Income tax expense/(benefit)
Total gain on cash flow hedges$4,202 $2,170 Net of tax
Total losses on cash flow hedgesTotal losses on cash flow hedges$(5,052)$(1,124)
Six Months Ended June 30,
Gains/(losses) on cash flow hedgesGains/(losses) on cash flow hedges20232022Location in the Consolidated Income Statement
Interest rate swapsInterest rate swaps$(12,168)$(4,202)Interest expense, net
Income tax effect of item aboveIncome tax effect of item above2,914 908 Income tax expense/(benefit)
Total losses on cash flow hedgesTotal losses on cash flow hedges$(9,254)$(3,294)
2124

PRA Group, Inc.
Notes to Consolidated Financial Statements
The following tables represent the changes in accumulated other comprehensive loss by component, after tax, for the three and six months ended March 31,June 30, 2023 and 2022 (amounts in thousands):
Three Months Ended March 31, 2023Three Months Ended June 30, 2023
Debt SecuritiesCash FlowCurrency TranslationAccumulated OtherDebt SecuritiesCash FlowCurrency TranslationAccumulated Other
Available-for-saleHedgesAdjustments
Comprehensive Loss (1)
Available-for-saleHedgesAdjustments
Comprehensive Loss (1)
Balance at beginning of periodBalance at beginning of period$(237)$27,804 $(375,493)$(347,926)Balance at beginning of period$(109)$22,973 $(379,594)$(356,730)
Other comprehensive gain/(loss) before reclassificationsOther comprehensive gain/(loss) before reclassifications128 (629)(4,101)(4,602)Other comprehensive gain/(loss) before reclassifications(80)10,771 3,091 13,782 
Reclassifications, netReclassifications, net— (4,202)— (4,202)Reclassifications, net— (5,052)— (5,052)
Net current period other comprehensive gain/(loss)Net current period other comprehensive gain/(loss)128 (4,831)(4,101)(8,804)Net current period other comprehensive gain/(loss)(80)5,719 3,091 8,730 
Balance at end of periodBalance at end of period$(109)$22,973 $(379,594)$(356,730)Balance at end of period$(189)$28,692 $(376,503)$(348,000)
Three Months Ended March 31, 2022Three Months Ended June 30, 2022
Debt SecuritiesCash FlowCurrency TranslationAccumulated OtherDebt SecuritiesCash FlowCurrency TranslationAccumulated Other
Available-for-saleHedgesAdjustments
Comprehensive Loss (1)
Available-for-saleHedgesAdjustments
Comprehensive Loss (1)
Balance at beginning of periodBalance at beginning of period$(221)$(5,371)$(261,317)$(266,909)Balance at beginning of period$(381)$13,209 $(256,537)$(243,709)
Other comprehensive (loss)/gain before reclassifications(160)16,410 4,780 21,030 
Other comprehensive gain/(loss) before reclassificationsOther comprehensive gain/(loss) before reclassifications(242)4,713 (109,707)(105,236)
Reclassifications, netReclassifications, net— 2,170 — 2,170 Reclassifications, net— 1,124 — 1,124 
Net current period other comprehensive (loss)/gain(160)18,580 4,780 23,200 
Net current period other comprehensive gain/(loss)Net current period other comprehensive gain/(loss)(242)5,837 (109,707)(104,112)
Balance at end of periodBalance at end of period$(381)$13,209 $(256,537)$(243,709)Balance at end of period$(623)$19,046 $(366,244)$(347,821)
(1) Net of deferred taxes for unrealizedunrealized (gains)/losses from cash flow hedgeshedges of $(7.6)$(1.9) million and $(1.2)$(1.4) million for the three months ended March 31,June 30, 2023 and 2022, respectively.
Six Months Ended June 30, 2023
Debt SecuritiesCash FlowCurrency TranslationAccumulated Other
Available-for-saleHedgesAdjustments
Comprehensive Loss (1)
Balance at beginning of period$(237)$27,804 $(375,493)$(347,926)
Other comprehensive gain/(loss) before reclassifications48 10,142 (1,010)9,180 
Reclassifications, net— (9,254)— (9,254)
Net current period other comprehensive gain/(loss)48 888 (1,010)(74)
Balance at end of period$(189)$28,692 $(376,503)$(348,000)
Six Months Ended June 30, 2022
Debt SecuritiesCash FlowCurrency TranslationAccumulated Other
Available-for-saleHedgesAdjustments
Comprehensive Loss (1)
Balance at beginning of period$(221)$(5,371)$(261,317)$(266,909)
Other comprehensive gain/(loss) before reclassifications(402)21,123 (104,927)(84,206)
Reclassifications, net— 3,294 — 3,294 
Net current period other comprehensive gain/(loss)(402)24,417 (104,927)(80,912)
Balance at end of period$(623)$19,046 $(366,244)$(347,821)
(1) Net of deferred taxes for unrealized (gains)/losses from cash flow hedges of $(9.5) million and $(2.6) million for the six months ended June 30, 2023 and 2022, respectively.
10. Earnings per Share:
Basic EPS areis computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS areis 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
25

PRA Group, Inc.
Notes to Consolidated Financial Statements
dilutive. There has beenwere no dilutive effect ofeffects caused by the Convertible Notes since issuance through March 31,their retirement on June 1, 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 February 25, 2022, the Company's Board of Directors approved a share repurchase program under which the Company is authorized to repurchase up to $150.0 million of its common stock. We did not repurchase any common stock during the first quartersix months ended March 31,June 30, 2023. As of June 30, 2023, the Company had $67.7 million remaining for share repurchases.
The following table provides a reconciliation between the computation of basic EPSEPS and diluted EPS for the three and six months ended March 31,June 30, 2023 and 2022 (amounts in thousands, except per share amounts):
Three Months Ended March 31,
20232022
Net Loss Attributable to PRA Group, Inc.Weighted
Average
Common Shares
EPSNet Income Attributable to PRA Group, Inc.Weighted
Average
Common Shares
EPS
Basic EPS$(58,629)39,033 $(1.50)$39,972 40,777 $0.98 
Dilutive effect of nonvested share awards— — — — 527 (0.01)
Diluted EPS$(58,629)39,033 $(1.50)$39,972 41,304 $0.97 
Three Months Ended June 30,
20232022
Net Loss Attributable to PRA Group, Inc.Weighted
Average
Common Shares
EPSNet Income Attributable to PRA Group, Inc.Weighted
Average
Common Shares
EPS
Basic EPS$(3,804)39,190 $(0.10)$36,484 39,779 $0.92 
Dilutive effect of nonvested share awards— — 121 (0.01)
Diluted EPS$(3,804)39,190 $(0.10)$36,484 39,900 $0.91 
Six Months Ended June 30,
20232022
Net Loss Attributable to PRA Group, Inc.Weighted
Average
Common Shares
EPSNet Income Attributable to PRA Group, Inc.Weighted
Average
Common Shares
EPS
Basic EPS$(62,433)39,111 $(1.60)$76,456 40,278 $1.90 
Dilutive effect of nonvested share awards— — 324 (0.02)
Diluted EPS$(62,433)39,111 $(1.60)$76,456 40,602 $1.88 
There were no options outstanding, antidilutive or otherwise, as of March 31,June 30, 2023 and 2022.
22

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 March 31,June 30, 2023, the tax years subject to examination by the major federal, state and international taxing jurisdictions areare 2014 andand 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 and exemptions may be available to partially reduce U.S. income taxes. The amount of cash on hand related to international operations with indefinitely reinvested earnings was $88.4was $83.2 million anand $75.3 million as of March 31,June 30, 2023 and December 31, 2022, respectively.
12. Commitments and Contingencies:
Employment Agreements:
The Company has entered into employment agreements with eachcertain of its current and former 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 March 31,June 30, 2023, estimated future
26

PRA Group, Inc.
Notes to Consolidated Financial Statements
compensation under these agreements was approximately $8.8 $4.4 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 $8.8$4.4 million tottoal above.tal above.
Forward Flow Agreements:
The Company is party to several forward flow agreements that allow for the purchase of nonperforming loans at pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at March 31,June 30, 2023 was $622.4$557.7 million.
Finance Receivables:
Certain agreements for the purchase of finance receivables portfolios contain provisions that may, in limited circumstances, require the Company to refund a portion or all of the collections subsequently received by the Company on particular accounts. The potential refunds as of the balance sheet date are not considered to be significant.
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,claim, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside
23

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 March 31,June 30, 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.
CFPB Investigation
Portfolio Recovery Associates, LLC ("LLC"),As of June 30, 2023, there were no material developments in any of the legal proceedings disclosed in 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. On2022 Form 10-K, or March 23,31, 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 actionQuarterly Report 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,Form 10-Q, and there remains uncertainty surrounding liability, class certification, andwere no new material legal proceedings during the interpretation of the statute, including statutory damages.

six months ended June 30, 2023.
Other matters that are not considered routine in nature were disclosed previously in the 2022 Form 10-K.
13. Recently Issued Accounting Standards:
Recently issued accounting standards not yet adopted:
The Company does not expect that any recently issued accounting pronouncements will have a material effect on its Consolidated Financial Statements.
2427


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 lookingforward-looking statements could be wrong, as a result of risks, uncertainties and assumptions, including the following:
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;
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, 2022 ("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.
2528


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, 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 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.

2629


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 March 31,June 30, 2023, employed 3,1843,145 full-time equivalents. Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol "PRAA."
Executive Overview
For the three months ended March 31,June 30, 2023, we had:
Total portfolio purchases of $230.2$327.8 million.
Total cash collectionscollections of $411.3$419.3 million.
Estimated remaining collections of $5.7 $5.9 billion.
Cash efficiency ratio of 54.3%61.2%.
Diluted earnings per share of $(1.50)$(0.10).
For the six months ended June 30, 2023, we had:
Total portfolio purchases of $558.0 million.
Total cash collections of $830.6 million.
Estimated remaining collections of $5.9 billion.
Cash efficiency ratio of 57.8%.
During 2022, excess consumer liquidity, primarily in the U.S., resulted in lower levelsDiluted earnings per share of charge-offs across most lending institutions. As a result, this caused a decrease in the supply of portfolios available for purchase in the U.S., resulting in a lower level of portfolio purchases and pricing pressures due to competition. Recent Federal Reserve data indicates that charge-offs of consumer debt are beginning to increase, and we expect to see a greater level of supply and reduced pricing pressure in the U.S. The market in Europe has continued to have a consistent portfolio pipeline across most markets, supported by volumes of aged nonperforming loans. However, unlike the U.S., we have not begun to see an increase in fresh charge-offs.$(1.60).
We believe our cash forecast curves are appropriate given the information we have today.as of the date of this Quarterly Report. However, we continue to operate in an economic environment that includes elevated levels of inflation, rising interest rates, foreign exchange rate fluctuations, and concerns of a global recession. Given the continuing weak economic conditions, there may be some near-term pressure on 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 these items will impact our business, results of operations and financial condition. See Item 1A of our 2022 Form 10-K.

2730


Results of Operations
The results of operations include the financial results of the Company and all of our subsidiaries.subsidiaries. Certain prior year amounts have been reclassified for consistency with the current year presentation. The following tabletable 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 March 31,For the Three Months Ended June 30,For the Six Months Ended June 30,
202320222023202220232022
Revenues:Revenues:Revenues:
Portfolio incomePortfolio income$188,242 121.1 %$207,532 86.3 %Portfolio income$184,290 88.1 %$194,009 75.1 %$372,532 102.1 %$401,541 80.5 %
Changes in expected recoveriesChanges in expected recoveries(36,912)(23.8)29,914 12.4 Changes in expected recoveries21,136 10.1 56,567 21.9 (15,776)(4.3)86,481 17.3 
Total portfolio revenueTotal portfolio revenue151,330 97.3 237,446 98.7 Total portfolio revenue205,426 98.2 250,576 97.0 356,756 97.8 488,022 97.8 
Other revenueOther revenue4,140 2.7 3,159 1.3 Other revenue3,810 1.8 7,686 3.0 7,950 2.2 10,845 2.2 
Total revenuesTotal revenues155,470 100.0 240,605 100.0 Total revenues209,236 100.0 258,262 100.0 364,706 100.0 498,867 100.0 
Operating expenses:Operating expenses:Operating expenses:
Compensation and employee servicesCompensation and employee services82,403 53.0 71,096 29.5 Compensation and employee services65,788 31.4 74,137 28.7 148,191 40.6 145,233 29.1 
Legal collection feesLegal collection fees8,838 5.7 10,873 4.5 Legal collection fees9,551 4.6 9,554 3.7 18,389 5.0 20,427 4.1 
Legal collection costsLegal collection costs23,945 15.4 16,557 6.9 Legal collection costs21,522 10.3 17,746 6.9 45,467 12.5 34,303 6.9 
Agency feesAgency fees17,378 11.2 17,388 7.2 Agency fees17,677 8.4 14,826 5.8 35,055 9.6 32,214 6.5 
Outside fees and servicesOutside fees and services24,944 16.0 19,378 8.1 Outside fees and services18,262 8.7 27,493 10.6 43,206 11.9 46,871 9.4 
CommunicationCommunication10,527 6.8 12,583 5.2 Communication10,117 4.8 9,528 3.7 20,644 5.7 22,111 4.4 
Rent and occupancyRent and occupancy4,448 2.9 4,987 2.1 Rent and occupancy4,319 2.1 4,633 1.8 8,767 2.4 9,620 1.9 
Depreciation and amortizationDepreciation and amortization3,589 2.3 3,778 1.6 Depreciation and amortization3,482 1.7 3,865 1.5 7,071 1.9 7,643 1.5 
Other operating expensesOther operating expenses13,042 8.4 11,998 5.0 Other operating expenses12,957 6.2 12,743 4.9 25,999 7.1 24,741 5.0 
Total operating expensesTotal operating expenses189,114 121.7 168,638 70.1 Total operating expenses163,675 78.2 174,525 67.6 352,789 96.7 343,163 68.8 
(Loss)/income from operations(33,644)(21.7)71,967 29.9 
Income from operations Income from operations45,561 21.8 83,737 32.4 11,917 3.3 155,704 31.2 
Other income and (expense):Other income and (expense):Other income and (expense):
Interest expense, netInterest expense, net(38,283)(24.6)(31,748)(13.2)Interest expense, net(43,022)(20.6)(31,562)(12.2)(81,305)(22.3)(63,310)(12.8)
Foreign exchange loss, net(9)— (532)(0.2)
Foreign exchange gain, netForeign exchange gain, net429 0.2 1,319 0.5 420 0.1 787 0.2 
OtherOther(650)(0.4)(490)(0.2)Other(230)(0.1)(181)(0.1)(880)(0.3)(671)(0.1)
(Loss)/income before income taxes(72,586)(46.7)39,197 16.3 
Income tax (benefit)/expense(18,683)(12.0)4,579 1.9 
Net (loss)/income(53,903)(34.7)34,618 14.4 
Income/(loss) before income taxesIncome/(loss) before income taxes2,738 1.3 53,313 20.6 (69,848)(19.2)92,510 18.5 
Income tax expense/(benefit)Income tax expense/(benefit)1,578 0.8 14,177 5.5 (17,105)(4.7)18,756 3.7 
Net income/(loss)Net income/(loss)1,160 0.5 39,136 15.1 (52,743)(14.5)73,754 14.8 
Adjustment for net income/(loss) attributable to noncontrolling interestsAdjustment for net income/(loss) attributable to noncontrolling interests4,726 3.0 (5,354)(2.2)Adjustment for net income/(loss) attributable to noncontrolling interests4,964 2.4 2,652 1.0 9,690 2.7 (2,702)(0.5)
Net (loss)/income attributable to PRA Group, Inc.$(58,629)(37.7)%$39,972 16.6 %
Net income/(loss) attributable to PRA Group, Inc.Net income/(loss) attributable to PRA Group, Inc.$(3,804)(1.9)%$36,484 14.1 %$(62,433)(17.2)%$76,456 15.3 %
2831


Three Months Ended March 31,June 30, 2023 Compared To Three Months Ended March 31,June 30, 2022
Cash Collections
Cash collections for the periods indicated were as follows (amounts in thousands):
For the Three Months Ended March 31,For the Three Months Ended June 30,
20232022 $ Change % Change20232022 $ Change % Change
Americas and Australia CoreAmericas and Australia Core$227,960 $270,284 $(42,324)(15.7)%Americas and Australia Core$220,886 $244,377 $(23,491)(9.6)%
Americas InsolvencyAmericas Insolvency25,751 35,209 (9,458)(26.9)Americas Insolvency26,384 34,278 (7,894)(23.0)
Europe CoreEurope Core134,005 151,162 (17,157)(11.4)Europe Core149,324 142,470 6,854 4.8 
Europe InsolvencyEurope Insolvency23,568 24,325 (757)(3.1)Europe Insolvency22,725 22,935 (210)(0.9)
Total cash collectionsTotal cash collections$411,284 $480,980 $(69,696)(14.5)%Total cash collections$419,319 $444,060 $(24,741)(5.6)%
Cash collections adjusted (1)
Cash collections adjusted (1)
$411,284 $465,282 $(53,998)(11.6)%
Cash collections adjusted (1)
$419,319 $441,697 $(22,378)(5.1)%
(1) Cash collections adjusted refers to 2022 cash collections remeasured using 2023 exchange rates.
Cash collections were $411.3$419.3 million for the three months ended March 31,June 30, 2023, a decrease of $69.7$24.7 million,, or 14.5%5.6%, compared to $481.0$444.0 million for the three months ended March 31,June 30, 2022. The decrease was primarily due to lower cash collections of $48.7$33.1 million, or 30.2%23.9%, in U.S. call center and other collections, and $9.5lower cash collections of $7.9 million, or 26.9%23.0%, in Americas Insolvency collections, both reflecting lower recent purchasing levels of portfolio purchasing in recent periods. Additionally,years. U.S. legal cash collections decreased $13.5$8.9 million, or 16.7%12.0%, reflecting the impact from the lower volume of accounts placed in the legal channel due to lower purchasing levels in recent periods. Europe cash collections decreased by $17.9 million, or 10.2% largely due to a strengthening U.S. dollar.years. These decreases were partially offset by a $19.8an increase in Europe cash collections of $6.6 million, or 4.0%, and an increase of $18.5 million, or 58.6%, in cash collections in the Other Americas Core pools.pools, both driven by higher recent purchases.
Revenues
Revenue generation for the periods indicated werewas as follows (amounts in thousands):
For the Three Months Ended March 31,For the Three Months Ended June 30,
20232022 $ Change% Change20232022 $ Change% Change
Portfolio incomePortfolio income$188,242 $207,532 $(19,290)(9.3)%Portfolio income$184,290 $194,009 $(9,719)(5.0)%
Changes in expected recoveriesChanges in expected recoveries(36,912)29,914 (66,826)(223.4)Changes in expected recoveries21,136 56,567 (35,431)(62.6)
Total portfolio revenueTotal portfolio revenue151,330 237,446 (86,116)(36.3)Total portfolio revenue205,426 250,576 (45,150)(18.0)
Other revenueOther revenue4,140 3,159 981 31.1 Other revenue3,810 7,686 (3,876)(50.4)
Total revenuesTotal revenues$155,470 $240,605 $(85,135)(35.4)%Total revenues$209,236 $258,262 $(49,026)(19.0)%
Total Portfolio Revenue
Total portfolio revenue was $151.3$205.4 million for the three months ended March 31,June 30, 2023, a decrease of $86.1$45.2 million, or 36.3%18.0%, compared to $237.4$250.6 million for the three months ended March 31,June 30, 2022. We experienced a softer tax season than we had anticipated with U.S. collections missing our internal forecastThe decrease was largely driven 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 halflower purchasing, lower levels of this adjustment was relatedcash overperformance and an increase to the 2021 U.S. Core vintage. This vintage includes the cohortERC 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 expectationscertain older pools during the quarter by 3%. This is a lower margin than we have experienced in recent quarters and giventhree months ended June 30, 2022, that did not recur during the uncertain economic conditions globally, we made minimal adjustments to the future looking ERC resulting in a negative $1.9 million net present value adjustment.three months ended June 30, 2023.
Other Revenue
Other revenue was $4.1$3.8 million for the three months ended March 31,June 30, 2023, an increasea decrease of $0.9$3.9 million compared to $3.2$7.7 million for the three months ended March 31, 2022.June 30, 2022. The decrease was primarily due to the timing of settlements in our claims processing company, Claims Compensation Bureau, LLC ("CCB").
Operating Expenses
Total operating expenses were $189.1$163.7 million for the three months ended March 31,June 30, 2023, an increasea decrease of $20.5$10.8 million, or 12.2%6.2%, compared to $168.6$174.5 million for the three months ended March 31,June 30, 2022.
2932


Compensation and Employee Services
Compensation and employee services expenses were $82.4$65.8 million for the three months ended March 31,June 30, 2023,, an increase a decrease of $11.3$8.3 million, or 15.9%11.2%, compared to $71.1$74.1 million for the three months ended March 31,June 30, 2022. The increase was primarily attributable to severance expenses of $7.5 million. Total full-time equivalents decreased to 3,184 as of March 31, 2023, from 3,444 as of 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 $8.8 million for the three months ended March 31, 2023, a decrease of $2.1 million, or 19.3%, compared to $10.9 million for the three months ended March 31, 2022, primarily reflectingmainly reflects lower external legal cash collections in the U.S.compensation accruals and lower healthcare expense.
Legal Collection Costs
Legal collection costs consist primarily consist of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account. Legal collectionThese costs were $23.9$21.5 million for the three months ended March 31,June 30, 2023, an increase of $7.3$3.8 million, or 44.0%21.5%, compared to $16.6$17.7 million for the three months ended March 31, 2022.June 30, 2022. The increase reflects the higher volume of accounts placed intoin the legal channel in the U.S during the three months ended March 31, 2023.U.S.
CommunicationAgency Fees
Communication expenses primarily represent postage and telephone related expenses incurred as a result of our collection efforts. Communications expensesAgency fees were $10.5$17.7 million for the three months ended March 31,June 30, 2023, a decreasean increase of $2.1$2.9 million, or 16.7%19.6%, compared to $12.6$14.8 million for the three months ended March 31,June 30, 2022. The decrease mainly reflects a decrease in postage expensesincrease is primarily due to lower portfolio purchasingthe increase in the U.Scash collections in recent periods.South America.
Outside Fees and Services
Outside fees and services expenses were $24.9$18.3 million for the three months ended March 31,June 30, 2023, an increasea decrease of $5.5$9.2 million, or 28.4%33.5%, compared to $19.4$27.5 million for the three months ended March 31, 2022.June 30, 2022. The increasedecrease was primarily due to an accrual inhigher corporate legal costs of $7.6 million related to certain case-specific litigation expenses, slightly offset by decreased costs for other fees and services.during the three months ended June 30, 2022.
Interest Expense, Net
Interest expense, net was $38.3$43.0 million for the three months ended March 31,June 30, 2023, an increase of $6.6$11.4 million, or 20.8%36.3%, compared to $31.7$31.6 million for the three months ended March 31,June 30, 2022, primarily reflecting a higher average debt balance and increased interest rates. Interest income increased $3.5$4.1 million primarily as a result of the cash we received and invested from the issuance of our Senior Notes due 2028 ("2028 Notes"). We used substantially all of the net proceeds from our 2028 Notes (as defined below), which will be used to retire our Convertible Senior Notes due 2023 Convertible Notes (as defined below)(the "2023 Notes"), which maturematured on June 1, 2023.
Interest expense, net consisted of the following:
For the Three Months Ended March 31,
20232022 $ Change% Change
Interest on debt obligations and unused line fees$21,824 $16,795 $5,029 29.9 %
Interest on senior notes15,073 9,907 5,166 52.1 
Coupon interest on convertible notes3,019 3,019 — — 
Amortization of loan fees and other loan costs2,441 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 %
following (amounts in thousands):
For the Three Months Ended June 30,
20232022 $ Change% Change
Interest on debt obligations and unused line fees$25,154 $16,720 $8,434 50.4 %
Interest on senior notes18,165 9,906 8,259 83.4 
Coupon interest on convertible notes2,013 3,019 (1,006)(33.3)
Amortization of loan fees and other loan costs2,384 2,471 (87)(3.5)
Interest income(4,694)(554)(4,140)747.3 
Interest expense, net$43,022 $31,562 $11,460 36.3 %
Income Tax Expense/(Benefit)/Expense
Income tax (benefit)/expense was $1.6 million for the three months ended March 31,June 30 2023, a decrease of $12.6 million, or 88.9%, compared to $14.2 million for the three months ended June 30, 2022. During the three months ended June 30, 2023, our effective tax rate was 57.6%, compared to 26.6% for the three months ended June 30, 2022. The decrease in income tax expense was primarily due to lower income before taxes during the three months ended June 30, 2023, which decreased by $50.6 million, or 94.9%. The increase in our effective tax rate was primarily due to the timing of discrete items.
33


Six Months Ended June 30, 2023 Compared To Six Months Ended June 30, 2022
Cash Collections
Cash collections for the periods indicated were as follows (amounts in thousands):
For the Six Months Ended June 30,
20232022$ Change% Change
Americas and Australia Core$448,846 $514,661 $(65,815)(12.8)%
Americas Insolvency52,135 69,487 (17,352)(25.0)
Europe Core283,329 293,632 (10,303)(3.5)
Europe Insolvency46,293 47,260 (967)(2.0)
Total cash collections$830,603 $925,040 $(94,437)(10.2)
Cash collections adjusted (1)
$830,603 $906,980 $(76,377)(8.4)%
(1) Cash collections adjusted refers to 2022 cash collections remeasured using 2023 exchange rates.
Cash collections were $830.6 million for the six months ended June 30, 2023, a decrease of $94.4 million, or 10.2%, compared to $925.0 million for the six months ended June 30, 2022. The decrease was largely due to a decline of $81.8 million, or 27.3%, in cash collections in U.S. call center and other collections, and lower cash collections of $17.4 million, or 25.0%, in Americas Insolvency collections, both reflecting lower purchasing levels. U.S. legal cash collections decreased $22.4 million, or 14.4%, reflecting the impact from the lower volume of accounts in the legal channel due to lower purchasing levels in recent periods. Europe collections decreased $11.3 million, or 3.3%, due to the strengthening of the U.S. dollar, partially offset by higher levels of portfolio purchases in recent years. These decreases were partially offset by an increase in cash collections in the Other Americas Core pools of $38.4 million, or 63.7%, due mainly to recent purchases.
Revenues
Revenue generation for the periods indicated was as follows (amounts in thousands):
For the Six Months Ended June 30,
20232022$ Change% Change
Portfolio income$372,532 $401,541 $(29,009)(7.2)%
Changes in expected recoveries(15,776)86,481 (102,257)(118.2)
Total portfolio revenue356,756 488,022 (131,266)(26.9)
Other revenue7,950 10,845 (2,895)(26.7)
Total revenues$364,706 $498,867 $(134,161)(26.9)%
Total Portfolio Revenue
Total portfolio revenue was $356.8 million for the six months ended June 30, 2023, a decrease of $131.2 million, or 26.9%, compared to $488.0 million for the six months ended June 30, 2022. The decrease was largely driven by lower purchasing, lower levels of cash overperformance and an increase to the ERC of certain older pools during the six months ended June 30, 2022, that did not recur during the six months ended June 30, 2023. Additionally, and primarily impacting the first quarter of 2023, we experienced a softer tax season than we had anticipated, with U.S. collections lower than our expectations, which then prompted a reduction in forward-looking ERC. This resulted in a negative $31.1 million net present value adjustment for our U.S. Core portfolio, with nearly half of this adjustment 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, to be the drivers of the underperformance. In total, Europe overperformed our expectations by 7.0% during the six months ended June 30, 2023. This is a lower margin than we experienced in prior quarters, and given the uncertain economic conditions globally, we made fewer adjustments to the forward-looking ERC than in the prior year.
Other revenue
Other revenue was $8.0 million for the six months ended June 30, 2023, a decrease of $2.8 million compared to $10.8 million for the six months ended June 30, 2022. The decrease was primarily due to the timing of settlements in CCB.
34


Operating Expenses
Operating expenses were $352.8 million for the six months ended June 30, 2023, an increase of $9.6 million, or 2.8%, compared to $343.2 million for the six months ended June 30, 2022.
Compensation and Employee Services
Compensation and employee services expenses were $148.2 million for the six months ended June 30, 2023, an increase of $3.0 million, or 2.1%, compared to $145.2 million for the six months ended June 30, 2022. The increase mainly reflects higher severance expenses of $7.5 million, partially offset by lower compensation accruals and a decrease in temporary labor and healthcare expenses.
Legal Collection Fees
Legal collection fees were $18.4 million for the six months ended June 30, 2023, a decrease of $2.0 million, or 9.8%, compared to $20.4 million for the six months ended June 30, 2022. The impact from lower external legal cash collections in the U.S. was partially offset by higher costs in South America driven by higher cash collections.
Legal Collection Costs
Legal collection costs were $45.5 million for the six months ended June 30, 2023, an increase of $11.2 million, or 32.7%, compared to $34.3 million for the six months ended June 30, 2022. The increase reflects the higher volume of accounts in the legal channel.
Agency Fees
Agency fees were $35.1 million for the six months ended June 30, 2023, an increase of $2.9 million, or 9.0%, compared to $32.2 million for the six months ended June 30, 2022. The increase is primarily due to the increase in cash collections in South America.
Outside Fees and Services
Outside fees and services expenses were $43.2 million for the six months ended June 30, 2023, a decrease of $3.7 million, or 7.9%, compared to $46.9 million for the six months ended June 30, 2022. The decrease reflects lower corporate legal costs and lower consulting fees.
Interest Expense, Net
Interest expense, net was $81.3 million for the six months ended June 30, 2023, an increase of $18.0 million, or 28.4%, compared to $63.3 million for the six months ended June 30, 2022, primarily reflecting a higher average debt balance and increased interest rates. Interest income increased $7.6 million primarily due to the cash we received and invested from the issuance of our 2028 Notes, substantially all of the net proceeds of which we used to retire our 2023 Notes.
Interest expense, net consisted of the following (amounts in thousands):
For the Six Months Ended June 30,
20232022$ Change% Change
Interest on debt obligations and unused line fees$46,978 $33,515 $13,463 40.2 %
Interest on senior notes33,238 19,813 13,425 67.8 
Coupon interest on convertible notes5,032 6,038 (1,006)(16.7)
Amortization of loan fees and other loan costs4,825 5,098 (273)(5.4)
Interest income(8,768)(1,154)(7,614)659.8 
Interest expense, net$81,305 $63,310 $17,995 28.4 %
Income Tax Expense/(Benefit)
Income tax benefit was $17.1 million for the six months ended June 30, 2023, a decrease of $18.7$35.9 million, or 191.0%, compared to income tax expense of $4.6$18.8 million for the threesix months ended March 31,June 30, 2022. During the threesix months ended March 31,June 30, 2023, our effective tax rate was 25.7%24.5%, compared to 11.7%20.3% for the threesix months ended March 31,June 30, 2022. The decrease in income tax benefitexpense was driven by the consolidated net lossprimarily due to lower income before income taxes of $72.6 million incurred during the first quarter of 2023.six months ended June 30, 2023, which decreased $162.3 million, or 175.5%. The
30


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.items.
3135


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 segregated into geographical regions based upon where the account was acquired. Ultimately, accounts are 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 acquisition are represented in the Insolvency tables below. All other acquisitions of portfolios of accounts are included in our Core 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 as originally segregated regardless of any future changes in operational status.Specifically, if a Core account files for bankruptcy or insolvency protection after acquisition, we adjust our collection practices to comply with any respective bankruptcy or insolvency rules or policies; however, the account remains in the Core pool. In the event an insolvency account is dismissed from its bankruptcy or insolvency status whether voluntarily or involuntarily, we are typically free to pursue alternative collection activities; however, the account remains in the 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, costs to collect, expected returns and changes in operational efficiency. For example, increased pricing due to elevated levels of competition or supply constraints negatively impacts purchase price multiples as we pay more to buy similar portfolios of nonperforming loans.
Further, there is a direct relationship between the price we pay for a portfolio, the purchase price multiple and the effective interest rate of the pool. When we pay more for a portfolio, the purchase price multiple and effective interest rates are generally lower. The opposite tends to occur when we pay less for a portfolio. Certain types of accounts have lower collection costs, and we generally pay more for these types of accounts, resulting in a lower purchase price multiple, while realizing similar net income margins when compared with other portfolio purchases. Within a given portfolio type, to the extent that lower purchase price multiples are the result of more competitive pricing, 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, portfolios are aggregated into annual 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, 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 years following purchase, we typically do not increaseadjust our purchase price multiples. Following the initial years, as we gain collection experience and confidence with a pool of accounts, we may begin to increase our purchase price multiples. Over time, our TEC has often increased as pools have aged resulting in the ratio of TEC to purchase price for any given year of buying to gradually 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 of 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.

3236


Purchase Price Multiples
as of March 31, 2023
Amounts in thousands
Purchase Price Multiples
as of June 30, 2023
Amounts in thousands
Purchase Price Multiples
as of June 30, 2023
Amounts in thousands
Purchase PeriodPurchase 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 CoreAmericas and Australia CoreAmericas and Australia Core
1996-20121996-2012$1,541,896 $4,797,375 $36,563 311%238%1996-2012$1,541,896 $4,801,032 $35,742 311%238%
20132013390,826 905,829 14,434 232%211%2013390,826 908,961 15,139 233%211%
20142014404,117 872,324 23,500 216%204%2014404,117 875,120 23,495 217%204%
20152015443,114 899,293 45,410 203%205%2015443,114 898,649 41,331 203%205%
20162016455,767 1,075,915 81,221 236%201%2016455,767 1,075,028 75,099 236%201%
20172017532,851 1,200,467 135,622 225%193%2017532,851 1,196,768 121,179 225%193%
20182018653,975 1,464,662 199,190 224%202%2018653,975 1,463,790 175,567 224%202%
20192019581,476 1,294,091 256,184 223%206%2019581,476 1,292,608 228,655 222%206%
20202020435,668 947,844 299,252 218%213%2020435,668 947,717 266,397 218%213%
20212021435,846 781,115 486,989 179%191%2021435,846 779,861 454,830 179%191%
20222022406,082 721,791 610,010 178%179%2022406,082 717,643 565,409 177%179%
20232023117,160 204,528 201,535 175%2023290,363 543,178 521,588 187%
SubtotalSubtotal6,398,778 15,165,234 2,389,910 Subtotal6,571,981 15,500,355 2,524,431 
Americas InsolvencyAmericas InsolvencyAmericas Insolvency
1996-20121996-20121,038,223 2,146,434 203 207%165%1996-20121,038,223 2,146,538 141 207%165%
20132013227,834 355,606 103 156%133%2013227,834 355,648 71 156%133%
20142014148,420 218,685 280 147%124%2014148,420 218,724 198 147%124%
2015201563,170 87,919 201 139%125%201563,170 87,934 144 139%125%
2016201691,442 117,460 433 128%123%201691,442 117,589 300 129%123%
20172017275,257 355,158 2,686 129%125%2017275,257 356,042 2,196 129%125%
2018201897,879 137,184 11,869 140%127%201897,879 136,240 7,243 139%127%
20192019123,077 168,061 38,651 137%128%2019123,077 168,530 31,391 137%128%
2020202062,130 89,842 41,929 145%136%202062,130 90,253 37,232 145%136%
2021202155,187 72,875 46,009 132%136%202155,187 73,503 41,973 133%136%
2022202233,442 46,205 41,226 138%139%202233,442 46,367 39,066 139%
2023202315,701 21,079 20,811 134%202327,890 37,711 36,646 135%
SubtotalSubtotal2,231,762 3,816,508 204,401 Subtotal2,243,951 3,835,079 196,601 
Total Americas and AustraliaTotal Americas and Australia8,630,540 18,981,742 2,594,311 Total Americas and Australia8,815,932 19,335,434 2,721,032 
Europe CoreEurope CoreEurope Core
2012201220,409 43,973 — 215%187%201220,409 44,201 — 217%187%
2013201320,334 27,039 133%119%201320,334 27,152 134%119%
2014 (1)
2014 (1)
773,811 2,365,846 385,266 306%208%
2014 (1)
773,811 2,376,921 364,157 307%208%
20152015411,340 727,491 146,999 177%160%2015411,340 728,356 141,410 177%160%
20162016333,090 567,548 179,801 170%167%2016333,090 569,221 174,415 171%167%
20172017252,174 358,180 115,098 142%144%2017252,174 358,126 111,139 142%144%
20182018341,775 540,907 215,509 158%148%2018341,775 542,585 211,437 159%148%
20192019518,610 805,423 366,897 155%152%2019518,610 811,906 359,355 157%152%
20202020324,119 557,152 292,626 172%2020324,119 557,541 280,147 172%
20212021412,411 698,282 472,516 169%170%2021412,411 696,596 453,152 169%170%
20222022359,447 580,548 534,007 162%2022359,447 579,891 512,047 161%162%
2023202391,945 157,933 155,919 172%2023229,639 380,036 367,155 165%
SubtotalSubtotal3,859,465 7,430,322 2,864,639 Subtotal3,997,159 7,672,532 2,974,415 
Europe InsolvencyEurope InsolvencyEurope Insolvency
2014 (1)
2014 (1)
10,876 18,669 — 172%129%
2014 (1)
10,876 18,759 — 172%129%
2015201518,973 29,000 70 153%139%201518,973 29,137 29 154%139%
2016201639,338 57,076 1,156 145%130%201639,338 57,203 879 145%130%
2017201739,235 51,169 3,700 130%128%201739,235 51,448 2,859 131%128%
2018201844,908 52,454 9,681 117%123%201844,908 52,496 7,939 117%123%
2019201977,218 110,875 31,642 144%130%201977,218 111,099 27,995 144%130%
20202020105,440 156,589 62,485 149%129%2020105,440 156,603 56,480 149%129%
2021202153,230 71,526 42,227 134%202153,230 71,526 39,592 134%
2022202244,604 61,034 54,759 137%202244,604 60,962 52,786 137%
202320237,352 10,087 10,011 137%202314,903 20,194 19,764 136%
SubtotalSubtotal441,174 618,479 215,731 Subtotal448,725 629,427 208,323 
Total EuropeTotal Europe4,300,639 8,048,801 3,080,370 Total Europe4,445,884 8,301,959 3,182,738 
Total PRA GroupTotal PRA Group$12,931,179 $27,030,543 $5,674,681 Total PRA Group$13,261,816 $27,637,393 $5,903,770 
(1)    Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 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 March 31,June 30, 2023 exchange rate.
(6)The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.


3337



Portfolio Financial Information
Year-to-date as of March 31, 2023
Amounts in thousands
Portfolio Financial Information
Year-to-date as of June 30, 2023
Amounts in thousands
Portfolio Financial Information
Year-to-date as of June 30, 2023
Amounts in thousands
Purchase PeriodPurchase 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)
Purchase Period
Cash
Collections
(2)
Portfolio Income (2)
Changes in Expected Recoveries (2)
Total Portfolio Revenue (2)
Net Finance Receivables as of June 30, 2023 (3)
Americas and Australia CoreAmericas and Australia CoreAmericas and Australia Core
1996-20121996-2012$4,930 $3,132 $345 $3,477 $8,799 1996-2012$9,407 $5,726 $2,165 $7,891 $8,736 
201320132,590 1,119 429 1,548 6,395 20135,018 2,074 1,691 3,765 6,184 
201420143,117 1,429 161 1,590 8,983 20146,072 2,647 1,592 4,239 8,721 
201520153,789 2,453 (1,852)601 18,065 20157,298 4,546 (1,742)2,804 16,768 
201620166,740 4,712 (3,078)1,634 26,353 201612,881 8,924 (2,923)6,001 24,568 
2017201713,064 7,622 (5,636)1,986 57,300 201724,012 14,002 (7,329)6,673 50,764 
2018201827,614 11,442 (1,040)10,402 108,717 201851,716 21,384 1,099 22,483 96,987 
2019201933,145 14,841 (2,958)11,883 138,869 201962,005 27,748 (3,330)24,418 123,803 
2020202038,142 16,845 (6,426)10,419 167,501 202071,291 31,280 (6,902)24,378 148,339 
2021202140,213 23,087 (22,356)731 260,663 202176,537 43,081 (28,614)14,467 240,168 
2022202251,622 26,692 937 27,629 360,224 2022101,232 51,627 959 52,586 339,760 
202320232,994 1,811 378 2,189 116,249 202321,377 12,774 3,748 16,522 285,203 
SubtotalSubtotal227,960 115,185 (41,096)74,089 1,278,118 Subtotal448,846 225,813 (39,586)186,227 1,350,001 
Americas InsolvencyAmericas InsolvencyAmericas Insolvency
1996-20121996-2012234 83 153 236 — 1996-2012400 145 258 403 — 
2013201367 39 28 67 — 2013142 71 71 142 — 
20142014123 66 12 78 — 2014245 148 51 199 — 
20152015106 40 29 69 102 2015178 69 44 113 74 
20162016190 47 56 348 2016451 82 138 220 249 
201720171,605 181 (123)58 2,424 20172,978 291 680 971 1,963 
201820184,401 455 (133)322 11,128 20188,083 780 (1,051)(271)6,851 
201920197,705 1,036 57 1,093 35,596 201915,448 1,902 531 2,433 29,200 
202020204,919 1,226 145 1,371 35,750 202010,026 2,334 561 2,895 32,162 
202120214,339 1,309 (20)1,289 37,812 20219,004 2,508 614 3,122 34,969 
202220221,794 1,018 (27)991 31,722 20224,115 1,997 270 2,267 30,625 
20232023268 215 (31)184 15,614 20231,065 795 300 1,095 27,709 
SubtotalSubtotal25,751 5,715 99 5,814 170,496 Subtotal52,135 11,122 2,467 13,589 163,802 
Total Americas and AustraliaTotal Americas and Australia253,711 120,900 (40,997)79,903 1,448,614 Total Americas and Australia500,981 236,935 (37,119)199,816 1,513,803 
Europe CoreEurope CoreEurope Core
20122012191 — 191 191 — 2012365 — 365 365 — 
2013201395 — 95 95 — 2013181 — 181 181 — 
2014 (1)
2014 (1)
25,462 18,404 109 18,513 107,836 
2014 (1)
55,192 35,710 7,687 43,397 102,679 
201520158,748 4,274 (408)3,866 80,755 201517,749 8,435 275 8,710 77,966 
201620167,515 4,040 (807)3,233 105,983 201615,146 7,950 (274)7,676 102,601 
201720175,322 1,963 (558)1,405 79,388 201710,432 3,863 (734)3,129 76,915 
2018201810,568 3,930 (123)3,807 142,505 201821,311 7,788 1,290 9,078 140,472 
2019201919,118 6,210 4,178 10,388 250,616 201938,976 12,329 9,440 21,769 246,350 
2020202014,641 5,794 (994)4,800 179,990 202029,367 11,374 (96)11,278 172,695 
2021202119,176 8,685 (2,405)6,280 284,941 202137,411 17,015 (4,298)12,717 273,361 
2022202221,193 8,965 (124)8,841 334,594 202244,445 17,762 (207)17,555 320,550 
202320231,976 397 816 1,213 91,123 202312,754 4,091 2,628 6,719 222,815 
SubtotalSubtotal134,005 62,662 (30)62,632 1,657,731 Subtotal283,329 126,317 16,257 142,574 1,736,404 
Europe InsolvencyEurope InsolvencyEurope Insolvency
2014 (1)
2014 (1)
49 — 49 49 — 
2014 (1)
128 — 128 128 — 
2015201598 12 41 53 61 2015256 18 157 175 26 
20162016454 83 86 169 864 2016875 149 214 363 651 
201720171,295 90 237 327 3,436 20172,461 162 491 653 2,663 
201820181,942 216 (122)94 8,864 20183,909 397 (82)315 7,290 
201920194,714 736 330 1,066 27,828 20199,275 1,401 543 1,944 24,764 
202020208,233 1,307 3,089 4,396 55,042 202015,653 2,559 3,104 5,663 50,125 
202120213,745 976 156 1,132 34,889 20217,343 1,907 187 2,094 33,095 
202220222,963 1,201 131 1,332 41,786 20225,969 2,386 143 2,529 40,826 
2023202375 59 118 177 7,382 2023424 301 201 502 14,901 
SubtotalSubtotal23,568 4,680 4,115 8,795 180,152 Subtotal46,293 9,280 5,086 14,366 174,341 
Total EuropeTotal Europe157,573 67,342 4,085 71,427 1,837,883 Total Europe329,622 135,597 21,343 156,940 1,910,745 
Total PRA GroupTotal PRA Group$411,284 $188,242 $(36,912)$151,330 $3,286,497 Total PRA Group$830,603 $372,532 $(15,776)$356,756 $3,424,548 
(1)    Includes finance receivables portfolios that were acquired through the acquisition of Aktiv Kapital AS in 2014 (as described in our 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 March 31,June 30, 2023 exchange rate.



3438


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 June 30, 2023
Amounts in millions
Cash Collections by Year, By Year of Purchase (1)
Year-to-date as of June 30, 2023
Amounts in millions
Cash CollectionsCash Collections
Purchase PeriodPurchase Period
Purchase Price (3)(4)
1996-201220132014201520162017201820192020202120222023TotalPurchase Period
Purchase Price (3)(4)
1996-201220132014201520162017201820192020202120222023Total
Americas and Australia CoreAmericas and Australia CoreAmericas and Australia Core
1996-20121996-2012$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 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 $9.4 $4,758.1 
20132013390.8 — 101.6 247.9 194.0 120.8 78.9 56.5 36.9 23.2 16.7 12.5 2.6 891.6 2013390.8 — 101.6 247.9 194.0 120.8 78.9 56.5 36.9 23.2 16.7 12.5 5.0 894.0 
20142014404.1 — — 92.7 253.5 170.3 114.2 82.2 55.3 31.9 22.3 15.0 3.1 840.5 2014404.1 — — 92.7 253.5 170.3 114.2 82.2 55.3 31.9 22.3 15.0 6.1 843.5 
20152015443.1 — — — 117.0 228.4 185.9 126.6 83.6 57.2 34.9 19.5 3.8 856.9 2015443.1 — — — 117.0 228.4 185.9 126.6 83.6 57.2 34.9 19.5 7.3 860.4 
20162016455.8 — — — — 138.7 256.5 194.6 140.6 105.9 74.2 38.4 6.7 955.6 2016455.8 — — — — 138.7 256.5 194.6 140.6 105.9 74.2 38.4 12.9 961.8 
20172017532.9 — — — — — 107.3 278.7 256.5 192.5 130.0 76.3 13.1 1,054.4 2017532.9 — — — — — 107.3 278.7 256.5 192.5 130.0 76.3 24.0 1,065.3 
20182018654.0 — — — — — — 122.7 361.9 337.7 239.9 146.1 27.6 1,235.9 2018654.0 — — — — — — 122.7 361.9 337.7 239.9 146.1 51.7 1,260.0 
20192019581.5 — — — — — — — 143.8 349.0 289.8 177.7 33.1 993.4 2019581.5 — — — — — — — 143.8 349.0 289.8 177.7 62.0 1,022.3 
20202020435.7 — — — — — — — — 132.9 284.3 192.0 38.1 647.3 2020435.7 — — — — — — — — 132.9 284.3 192.0 71.3 680.5 
20212021435.9 — — — — — — — — — 85.0 177.3 40.2 302.5 2021435.9 — — — — — — — — — 85.0 177.3 76.5 338.8 
20222022406.1 — — — — — — — — — — 67.7 51.6 119.3 2022406.1 — — — — — — — — — — 67.7 101.2 168.9 
20232023117.2 — — — — — — — — — — — 3.0 3.0 2023290.4 — — — — — — — — — — — 21.4 21.4 
SubtotalSubtotal6,399.0 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 Subtotal6,572.2 2,962.4 656.5 753.1 844.8 837.1 860.9 945.1 1,141.5 1,271.8 1,207.0 946.0 448.8 12,875.0 
Americas InsolvencyAmericas InsolvencyAmericas Insolvency
1996-20121996-20121,038.2 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 1996-20121,038.2 1,021.6 417.3 338.8 208.3 105.4 37.7 8.3 3.9 2.3 1.4 1.1 0.4 2,146.5 
20132013227.8 — 52.5 82.6 81.7 63.4 47.8 22.0 2.9 1.3 0.8 0.5 0.1 355.6 2013227.8 — 52.5 82.6 81.7 63.4 47.8 22.0 2.9 1.3 0.8 0.5 0.1 355.6 
20142014148.4 — — 37.1 50.9 44.3 37.4 28.8 15.8 2.2 1.1 0.7 0.1 218.4 2014148.4 — — 37.1 50.9 44.3 37.4 28.8 15.8 2.2 1.1 0.7 0.2 218.5 
2015201563.2 — — — 3.4 17.9 20.1 19.8 16.7 7.9 1.3 0.6 0.1 87.8 201563.2 — — — 3.4 17.9 20.1 19.8 16.7 7.9 1.3 0.6 0.2 87.9 
2016201691.4 — — — — 18.9 30.4 25.1 19.9 14.4 7.4 1.8 0.2 118.1 201691.4 — — — — 18.9 30.4 25.1 19.9 14.4 7.4 1.8 0.5 118.4 
20172017275.3 — — — — — 49.1 97.3 80.9 58.8 44.0 20.8 1.6 352.5 2017275.3 — — — — — 49.1 97.3 80.9 58.8 44.0 20.8 3.0 353.9 
2018201897.9 — — — — — — 6.7 27.4 30.5 31.6 24.6 4.4 125.2 201897.9 — — — — — — 6.7 27.4 30.5 31.6 24.6 8.1 128.9 
20192019123.1 — — — — — — — 13.5 31.4 39.1 37.8 7.7 129.5 2019123.1 — — — — — — — 13.5 31.4 39.1 37.8 15.4 137.2 
2020202062.1 — — — — — — — — 6.5 16.1 20.4 4.9 47.9 202062.1 — — — — — — — — 6.5 16.1 20.4 10.0 53.0 
2021202155.2 — — — — — — — — — 4.6 17.9 4.3 26.8 202155.2 — — — — — — — — — 4.6 17.9 9.0 31.5 
2022202233.4 — — — — — — — — — — 3.2 1.8 5.0 202233.4 — — — — — — — — — — 3.2 4.1 7.3 
2023202315.7 — — — — — — — — — — — 0.3 0.3 202327.9 — — — — — — — — — — — 1.1 1.1 
SubtotalSubtotal2,231.7 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 Subtotal2,243.9 1,021.6 469.8 458.5 344.3 249.9 222.5 208.0 181.0 155.3 147.4 129.4 52.1 3,639.8 
Total Americas and AustraliaTotal Americas and Australia8,630.7 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 Total Americas and Australia8,816.1 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 1,075.4 500.9 16,514.8 
Europe CoreEurope CoreEurope Core
2012201220.4 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 201220.4 11.6 9.0 5.6 3.2 2.2 2.0 2.0 1.5 1.2 1.2 0.9 0.4 40.8 
2013201320.3 — 7.1 8.5 2.4 1.3 1.2 1.3 0.9 0.7 0.7 0.5 0.1 24.7 201320.3 — 7.1 8.5 2.4 1.3 1.2 1.3 0.9 0.7 0.7 0.5 0.2 24.8 
2014 (2)
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 
2014 (2)
773.8 — — 153.2 292.0 246.4 220.8 206.3 172.9 149.8 149.3 122.2 55.2 1,768.1 
20152015411.3 — — — 45.8 100.3 86.2 80.9 66.1 54.3 51.4 40.7 8.8 534.5 2015411.3 — — — 45.8 100.3 86.2 80.9 66.1 54.3 51.4 40.7 17.7 543.4 
20162016333.1 — — — — 40.4 78.9 72.6 58.0 48.3 46.7 36.9 7.5 389.3 2016333.1 — — — — 40.4 78.9 72.6 58.0 48.3 46.7 36.9 15.1 396.9 
20172017252.2 — — — — — 17.9 56.0 44.1 36.1 34.8 25.2 5.3 219.4 2017252.2 — — — — — 17.9 56.0 44.1 36.1 34.8 25.2 10.4 224.5 
20182018341.8 — — — — — — 24.3 88.7 71.3 69.1 50.7 10.6 314.7 2018341.8 — — — — — — 24.3 88.7 71.3 69.1 50.7 21.3 325.4 
20192019518.6 — — — — — — — 48.0 125.7 121.4 89.8 19.1 404.0 2019518.6 — — — — — — — 48.0 125.7 121.4 89.8 39.0 423.9 
20202020324.1 — — — — — — — — 32.3 91.7 69.1 14.6 207.7 2020324.1 — — — — — — — — 32.3 91.7 69.1 29.4 222.5 
20212021412.4 — — — — — — — — — 48.5 89.9 19.2 157.6 2021412.4 — — — — — — — — — 48.5 89.9 37.4 175.8 
20222022359.5 — — — — — — — — — — 33.9 21.2 55.1 2022359.5 — — — — — — — — — — 33.9 44.4 78.3 
2023202391.9 — — — — — — — — — — — 2.0 2.0 2023229.6 — — — — — — — — — — — 12.8 12.8 
SubtotalSubtotal3,859.4 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 Subtotal3,997.1 11.6 16.1 167.3 343.4 390.6 407.0 443.4 480.2 519.7 614.8 559.8 283.3 4,237.2 
Europe InsolvencyEurope InsolvencyEurope Insolvency
2014 (2)
2014 (2)
10.9 — — — 4.3 3.9 3.2 2.6 1.6 0.8 0.3 0.2 0.1 17.0 
2014 (2)
10.9 — — — 4.3 3.9 3.2 2.6 1.6 0.8 0.3 0.2 0.1 17.0 
2015201519.0 — — — 3.0 4.4 5.0 4.8 3.9 2.9 1.6 0.7 0.1 26.4 201519.0 — — — 3.0 4.4 5.0 4.8 3.9 2.9 1.6 0.7 0.3 26.6 
2016201639.3 — — — — 6.2 12.7 12.9 10.7 8.0 6.0 2.7 0.5 59.7 201639.3 — — — — 6.2 12.7 12.9 10.7 8.0 6.0 2.7 0.9 60.1 
2017201739.2 — — — — — 1.2 7.9 9.2 9.8 9.4 6.5 1.3 45.3 201739.2 — — — — — 1.2 7.9 9.2 9.8 9.4 6.5 2.5 46.5 
2018201844.9 — — — — — — 0.6 8.4 10.3 11.7 9.8 1.9 42.7 201844.9 — — — — — — 0.6 8.4 10.3 11.7 9.8 3.9 44.7 
2019201977.2 — — — — — — — 5.0 21.1 23.9 21.0 4.7 75.7 201977.2 — — — — — — — 5.0 21.1 23.9 21.0 9.3 80.3 
20202020105.4 — — — — — — — — 6.1 34.7 34.1 8.2 83.1 2020105.4 — — — — — — — — 6.1 34.7 34.1 15.7 90.6 
2021202153.2 — — — — — — — — — 5.5 14.4 3.7 23.6 202153.2 — — — — — — — — — 5.5 14.4 7.3 27.2 
2022202244.6 — — — — — — — — — — 4.5 3.0 7.5 202244.6 — — — — — — — — — — 4.5 6.0 10.5 
202320237.4 — — — — — — — — — — — 0.1 0.1 202314.9 — — — — — — — — — — — 0.4 0.4 
SubtotalSubtotal441.1 — — — 7.3 14.5 22.1 28.8 38.8 59.0 93.1 93.9 23.6 381.1 Subtotal448.6 — — — 7.3 14.5 22.1 28.8 38.8 59.0 93.1 93.9 46.4 403.9 
Total EuropeTotal Europe4,300.5 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 Europe4,445.7 11.6 16.1 167.3 350.7 405.1 429.1 472.2 519.0 578.7 707.9 653.7 329.7 4,641.1 
Total PRA GroupTotal 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 Total PRA Group$13,261.8 $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 $830.6 $21,155.9 
(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 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.

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Estimated Remaining Collections
The following chart shows our ERC of $5,674.7$5,903.8 million at March 31,June 30, 2023 by geographical region (amounts in millions).
54485708
The following chart shows our ERC by year for the 12 month periods ending March 31June 30 in each of the years presented below. The forecast amounts reflect our estimate at March 31,June 30, 2023 of how much we expect to collect on our portfolios. These estimates are translated to U.S. dollars at the March 31,June 30, 2023 exchange rate.
57385998





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The following table displays our ERC by year for the 12 month periods ending March 31June 30 in each of the years presented below, by year, by geography as of March 31,June 30, 2023 (amounts in thousands).
ERC By Year, By GeographyERC By Year, By GeographyERC By Year, By Geography
Americas and Australia CoreAmericas InsolvencyEurope CoreEurope InsolvencyTotalAmericas and Australia CoreAmericas InsolvencyEurope CoreEurope InsolvencyTotal
20242024$767,512 $87,607 $491,234 $78,770 $1,425,123 2024$792,577 $82,834 $510,595 $77,190 $1,463,196 
20252025546,874 57,569 409,335 58,775 1,072,553 2025580,633 54,370 424,304 56,380 1,115,687 
20262026352,465 33,871 341,733 38,142 766,211 2026378,940 32,775 353,408 36,217 801,340 
20272027236,649 17,083 289,035 22,074 564,841 2027253,996 17,552 299,477 21,052 592,077 
20282028163,723 7,239 246,997 10,939 428,898 2028175,542 7,915 256,456 10,704 450,617 
20292029114,426 1,021 212,693 4,571 332,711 2029122,563 1,138 220,835 4,527 349,063 
2030203080,830 11 180,413 1,242 262,496 203086,576 17 186,025 1,108 273,726 
2031203158,306 — 151,132 283 209,721 203161,573 — 157,052 272 218,897 
2032203239,433 — 128,611 239 168,283 203241,917 — 133,970 229 176,116 
2033203326,007 — 108,574 200 134,781 203327,147 — 111,893 191 139,231 
ThereafterThereafter3,685 — 304,882 496 309,063 Thereafter2,967 — 320,400 453 323,820 
$2,389,910 $204,401 $2,864,639 $215,731 $5,674,681 $2,524,431 $196,601 $2,974,415 $208,323 $5,903,770 
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 seasonal trend was not as pronounced. Additionally, 2021 deviated from usual seasonal patterns due to the impact of the COVID-19 pandemic.
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 TypeCash Collections by Geography and TypeCash Collections by Geography and Type
202320222021202320222021
Q1Q4Q3Q2Q1Q4Q3Q2Q2Q1Q4Q3Q2Q1Q4Q3
Americas and Australia CoreAmericas and Australia Core$227,960 $205,619 $225,775 $244,377 $270,284 $257,705 $276,691 $324,845 Americas and Australia Core$220,886 $227,960 $205,619 $225,775 $244,377 $270,284 $257,705 $276,691 
Americas InsolvencyAmericas Insolvency25,751 27,971 31,911 34,278 35,209 36,851 37,464 37,768 Americas Insolvency26,384 25,751 27,971 31,911 34,278 35,209 36,851 37,464 
Europe CoreEurope Core134,005 134,016 132,072 142,470 151,162 155,853 151,625 157,637 Europe Core149,324 134,005 134,016 132,072 142,470 151,162 155,853 151,625 
Europe InsolvencyEurope Insolvency23,568 24,051 22,586 22,935 24,325 23,262 22,574 23,579 Europe Insolvency22,725 23,568 24,051 22,586 22,935 24,325 23,262 22,574 
Total Cash CollectionsTotal Cash Collections$411,284 $391,657 $412,344 $444,060 $480,980 $473,671 $488,354 $543,829 Total Cash Collections$419,319 $411,284 $391,657 $412,344 $444,060 $480,980 $473,671 $488,354 
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
202320222021202320222021
Q1Q4Q3Q2Q1Q4Q3Q2Q2Q1Q4Q3Q2Q1Q4Q3
Call Center and Other CollectionsCall Center and Other Collections$236,415 $216,182 $235,832 $260,764 $291,266 $283,606 $298,717 $338,022 Call Center and Other Collections$231,183 $236,415 $216,182 $235,832 $260,764 $291,266 $283,606 $298,717 
External Legal CollectionsExternal Legal Collections54,934 48,925 49,243 50,996 55,179 55,760 54,445 61,836 External Legal Collections53,439 54,934 48,925 49,243 50,996 55,179 55,760 54,445 
Internal Legal CollectionsInternal Legal Collections70,616 74,528 72,772 75,087 75,001 74,192 75,154 82,624 Internal Legal Collections85,588 70,616 74,528 72,772 75,087 75,001 74,192 75,154 
Total Core Cash CollectionsTotal Core Cash Collections$361,965 $339,635 $357,847 $386,847 $421,446 $413,558 $428,316 $482,482 Total Core Cash Collections$370,210 $361,965 $339,635 $357,847 $386,847 $421,446 $413,558 $428,316 

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Collections Productivity (U.S. Portfolio)
The following 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)
2023202220212020201920232022202120202019
First QuarterFirst Quarter$207 $261 $279 $172 $139 First Quarter$207 $261 $279 $172 $139 
Second QuarterSecond Quarter— 226 270 263 139 Second Quarter199 226 270 263 139 
Third QuarterThird Quarter— 210 242 246 124 Third Quarter— 210 242 246 124 
Fourth QuarterFourth Quarter— 186 232 204 128 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)
2023202220212020201920232022202120202019
First QuarterFirst Quarter54.3%65.1%68.0%61.5%59.2%First Quarter54.3%65.1%68.0%61.5%59.2%
Second QuarterSecond Quarter61.366.868.760.4Second Quarter61.261.366.868.760.4
Third QuarterThird Quarter58.462.465.660.2Third Quarter58.462.465.660.2
Fourth QuarterFourth Quarter58.663.561.959.7Fourth Quarter58.663.561.959.7
Full YearFull Year61.065.364.559.9Full Year61.065.364.559.9
(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 2013. It also includes the acquisition date of nonperforming loan portfolios that were acquired through our business acquisitions. The 2023 total represents portfolio acquisitions through the threesix months ended March 31,June 30, 2023 while the prior year totals are for the full year.
73067801
*    2014 includes portfolios acquired in connection with the acquisition of Aktiv Kapital AS in 2014 (as described in our 2022 Form 10-K).
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The following table displays our quarterly portfolio acquisitions for the periods indicated (amounts in thousands).
Portfolio Acquisitions by Geography and TypePortfolio Acquisitions by Geography and TypePortfolio Acquisitions by Geography and Type
202320222021202320222021
Q1Q4Q3Q2Q1Q4Q3Q2Q2Q1Q4Q3Q2Q1Q4Q3
Americas and Australia CoreAmericas and Australia Core$116,867 $118,581 $100,780 $99,962 $90,639 $90,263 $162,451 $98,901 Americas and Australia Core$171,440 $116,867 $118,581 $100,780 $99,962 $90,639 $90,263 $162,451 
Americas InsolvencyAmericas Insolvency15,701 8,967 8,988 6,369 9,118 21,183 9,878 14,642 Americas Insolvency12,189 15,701 8,967 8,988 6,369 9,118 21,183 9,878 
Europe CoreEurope Core90,454 140,011 59,426 123,814 38,764 60,430 212,194 106,134 Europe Core136,834 90,454 140,011 59,426 123,814 38,764 60,430 212,194 
Europe InsolvencyEurope Insolvency7,203 20,535 13,910 1,202 8,929 29,820 7,424 — Europe Insolvency7,296 7,203 20,535 13,910 1,202 8,929 29,820 7,424 
Total Portfolio AcquisitionsTotal Portfolio Acquisitions$230,225 $288,094 $183,104 $231,347 $147,450 $201,696 $391,947 $219,677 Total Portfolio Acquisitions$327,759 $230,225 $288,094 $183,104 $231,347 $147,450 $201,696 $391,947 
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 60nearly 61 million customer accounts in the U.S. (amounts in thousands).
U.S Portfolio Acquisitions by Major Asset TypeU.S Portfolio Acquisitions by Major Asset TypeU.S Portfolio Acquisitions by Major Asset Type
2023202220232022
Q1Q4Q3Q2Q1Q2Q1Q4Q3Q2
Major Credit CardsMajor Credit Cards$13,234 12.1 %$10,242 11.7 %$10,236 15.8 %$20,673 26.7 %$18,160 23.0 %Major Credit Cards$41,605 28.5 %$13,234 12.1 %$10,242 11.7 %$10,236 15.8 %$20,673 26.7 %
Private Label Credit CardsPrivate Label Credit Cards66,652 60.9 60,380 69.0 44,727 68.8 52,368 67.4 46,195 58.6 Private Label Credit Cards76,306 52.4 66,652 60.9 60,380 69.0 44,727 68.8 52,368 67.4 
Consumer FinanceConsumer Finance28,051 25.6 16,366 18.7 9,396 14.4 2,062 2.7 13,968 17.7 Consumer Finance26,809 18.4 28,051 25.6 16,366 18.7 9,396 14.4 2,062 2.7 
Auto RelatedAuto Related1,481 1.4 515 0.6 630 1.0 2,443 3.2 514 0.7 Auto Related1,012 0.7 1,481 1.4 515 0.6 630 1.0 2,443 3.2 
TotalTotal$109,418 100.0 %$87,503 100.0 %$64,989 100.0 %$77,546 100.0 %$78,837 100.0 %Total$145,732 100.0 %$109,418 100.0 %$87,503 100.0 %$64,989 100.0 %$77,546 100.0 %

U.S. Portfolio Acquisitions by Delinquency CategoryU.S. Portfolio Acquisitions by Delinquency CategoryU.S. Portfolio Acquisitions by Delinquency Category
2023202220232022
Q1Q4Q3Q2Q1Q2Q1Q4Q3Q2
Fresh (1)
Fresh (1)
$70,053 74.8 %$55,117 70.2 %$30,510 54.5 %$28,235 39.7 %$29,077 41.7 %
Fresh (1)
$89,767 67.2 %$70,053 74.8 %$55,117 70.2 %$30,510 54.5 %$28,235 39.7 %
Primary (2)
Primary (2)
3,863 4.1 511 0.7 587 1.0 369 0.5 11,445 16.4 
Primary (2)
5,378 4.0 3,863 4.1 511 0.7 587 1.0 369 0.5 
Secondary (3)
Secondary (3)
17,789 19.0 21,620 27.5 19,886 35.5 28,148 39.5 26,748 38.4 
Secondary (3)
25,800 19.3 17,789 19.0 21,620 27.5 19,886 35.5 28,148 39.5 
Other (4)
Other (4)
2,012 2.1 1,288 1.6 5,018 9.0 14,425 20.3 2,449 3.5 
Other (4)
12,598 9.5 2,012 2.1 1,288 1.6 5,018 9.0 14,425 20.3 
Total CoreTotal Core93,717 100.0 %78,536 100.0 %56,001 100.0 %71,177 100.0 %69,719 100.0 %Total Core133,543 100.0 %93,717 100.0 %78,536 100.0 %56,001 100.0 %71,177 100.0 %
InsolvencyInsolvency15,701 8,967 8,988 6,369 9,118 Insolvency12,189 15,701 8,967 8,988 6,369 
TotalTotal$109,418 $87,503 $64,989 $77,546 $78,837 Total$145,732 $109,418 $87,503 $64,989 $77,546 
(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
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similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. In addition, our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures presented by other companies.
Adjusted EBITDA is calculated starting with our GAAP financial measure, net income attributable to PRA Group, Inc., and is adjusted for:
income tax expense (or less income tax benefit);
foreign exchange loss (or less foreign exchange gain);
interest expense, net (or less interest income, net);
other expense (or less other income);
depreciation and amortization;
net income attributable to noncontrolling interests; and
recoveries applied to negative allowance less changes in expected recoveries.
The following table is a reconciliation of net income as reported in accordance with GAAP to Adjusted EBITDA for the last 12 months ("LTM") as of March 31,June 30, 2023 and for the year ended December 31, 2022 (amounts in thousands):
Reconciliation of Non-GAAP Financial MeasuresReconciliation of Non-GAAP Financial MeasuresReconciliation of Non-GAAP Financial Measures
LTMFor the Year EndedLTMFor the Year Ended
March 31, 2023December 31, 2022June 30, 2023December 31, 2022
Net income attributable to PRA Group, Inc.$18,546 $117,147 
Net income/(loss) attributable to PRA Group, Inc.Net income/(loss) attributable to PRA Group, Inc.$(21,740)$117,147 
Adjustments:Adjustments:Adjustments:
Income tax expenseIncome tax expense13,525 36,787 Income tax expense926 36,787 
Foreign exchange gainsForeign exchange gains(1,508)(985)Foreign exchange gains(618)(985)
Interest expense, netInterest expense, net137,212 130,677 Interest expense, net148,672 130,677 
Other expense (1)
Other expense (1)
1,485 1,325 
Other expense (1)
1,534 1,325 
Depreciation and amortizationDepreciation and amortization15,054 15,243 Depreciation and amortization14,671 15,243 
Adjustment for net income attributable to noncontrolling interestsAdjustment for net income attributable to noncontrolling interests10,931 851 Adjustment for net income attributable to noncontrolling interests13,243 851 
Recoveries applied to negative allowance less Changes in expected recoveriesRecoveries applied to negative allowance less Changes in expected recoveries820,206 805,942 Recoveries applied to negative allowance less Changes in expected recoveries836,629 805,942 
Adjusted EBITDAAdjusted EBITDA$1,015,451 $1,106,987 Adjusted EBITDA$993,317 $1,106,987 
(1) Other 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 March 31,June 30, 2023 and for the year ended December 31, 2022 (amounts in thousands):
Debt to Adjusted EBITDADebt to Adjusted EBITDADebt to Adjusted EBITDA
LTMLTMFor the Year EndedLTMFor the Year Ended
March 31, 2023
March 31, 2023(1)
December 31, 2022June 30, 2023December 31, 2022
BorrowingsBorrowings$2,937,895 $2,592,895 $2,494,858 Borrowings$2,739,667 $2,494,858 
Adjusted EBITDAAdjusted EBITDA1,015,451 1,015,451 1,106,987 Adjusted EBITDA993,317 1,106,987 
Debt to Adjusted EBITDADebt to Adjusted EBITDA2.89x2.55x2.25xDebt to Adjusted EBITDA2.76x2.25x
(1) For the LTM as of March 31, 2023, as adjusted, assuming repayment of our 2023 Notes on March 31, 2023.



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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 March 31,June 30, 2023, cash and cash equivalents totaled $116.5totaled $111.4 million, of which $88.4$83.2 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 March 31,June 30, 2023, we had the following borrowings outstanding and availability under our credit facilities (amounts in thousands):
OutstandingAvailable without Restrictions
Available with Restrictions (1)
OutstandingAvailable without Restrictions
Available with Restrictions (1)
Americas revolving credit (2)
Americas revolving credit (2)
$234,866 $840,593 $118,692 
Americas revolving credit (2)
$273,397 $802,926 $109,047 
UK revolving creditUK revolving credit473,712 326,288 116,249 UK revolving credit512,791 287,209 55,951 
European revolving creditEuropean revolving credit401,438 432,588 201,866 European revolving credit476,089 358,469 167,493 
Term loanTerm loan447,500 — — Term loan445,000 — — 
Senior NotesSenior Notes1,050,000 — — Senior Notes1,046,000 — — 
Convertible Notes345,000 — — 
Less: Debt discounts and issuance costsLess: Debt discounts and issuance costs(14,621)— — Less: Debt discounts and issuance costs(13,610)— — 
TotalTotal$2,937,895 $1,599,469 $436,807 Total$2,739,667 $1,448,604 $332,491 
(1) Available borrowings after calculation of current borrowing base and debt covenants as of March 31,June 30, 2023.
(2) Includes North American revolving credit facility and Colombian revolving credit facility.
On February 6,June 1, 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 millionused substantially all of the net proceeds received 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 proceeds2028 Notes to retire all or any portion of ourthe 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 ourthe outstanding borrowings under the domestic revolving credit facility under our North American revolving credit facility.America Credit Agreement.
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 (approximat(the equivalent of approximately ely $115.8 mil$110.8 million as lion as of March 31,June 30, 2023). Interest-bearing deposits as of March 31,June 30, 2023 were $108.8$99.3 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.operations. For example, we invested $850.0 million in portfolio acquisitions in 2022. The portfolios acquired in 2022 generated $109.4 million of cash collections, representing only 6.3% of 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 March 31,June 30, 2023, we have forward flow commitments in place for the purchase of nonperforming loans with a maximum purchase price of $622.4$557.7 million, of which $576.3$535.0 million is due within the next 12 months. The $622.4$557.7 million is comprised of $344.6$398.4 million for the Americas and Australia and $277.8$159.3 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.
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Borrowings. Of our $2.9$2.7 billion borborrrowingsowings at March 31,June 30, 2023, estimated interest, unused fees and principal payments for the next 12 months are approximately $516.8$192.6 million, of wohicf whichh, $355.3, $10.6 million relatesrelates to principal, primarily reflecting the term loan under our Convertible Senior Notes due 2023.North American Credit Agreement. Beyond 12 months our principal payment obligations relatedrelated to debt maturities occur between one and sevensix years.
Many of our financing arrangements include restrictive covenants with which we must comply including a covenantcomply. As of June 30, 2023, we determined that requires us to maintain positive consolidated income from operations during any fiscal quarter. We incurred a net loss from operations of $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 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 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 1, Item 1 of this Quarterly Report.these covenants.
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
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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 March 31,June 30, 2023, we did not repurchase any shares of our common stock. As of March 31,June 30, 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 ourOur leases have remaining lease terms of one to 14thirteen years. As of March 31,June 30, 2023, we had $57.9$55.7 million in lease liabilities, of which apprapproximoximately $10.5ately $10.4 million maturesmatures within the next 12 months. For more information, see Note 5 to our Consolidated Financial Statements included in Part I, ItemItem 1 of this Quarterly Report.
Derivatives. Derivative financial instruments are entered into to reduce our exposure to fluctuations in interest rates on variable rate debt and foreign currency exchange rates. As of March 31,June 30, 2023, we had $10.1had $9.1 million of derivativederivative liabilities, all of which mature within the next 12 months. For more information, see Note 7 to our Consolidated Financial Statements includedincluded in Part I, Item 81 of this Quarterly Report.
We believe that funds generated from operations and from cash collections on nonperforming loan portfolios, together with existing cash, available borrowings under our revolving credit facilities and access to the capital markets will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases during the next 12 months and beyond. We may seek to access the debt or equity capital markets as we deem appropriate, market conditions permitting. Business acquisitions or higher than expected levels of portfolio purchasing could require additional financing from other sources.
Cash FlowsFlow Analysis
The following table summarizes our cash flow activity for the threesix months ended March 31,June 30, 2023 compared to the threesix months ended March 31,June 30, 2022 (amounts in thousands):
Three Months Ended March 31,Six Months Ended June 30,
20232022$ Change20232022$ Change
Net cash provided by (used in):
Net cash provided by/(used in):Net cash provided by/(used in):
Operating activitiesOperating activities$(47,521)$(22,744)$(24,777)Operating activities$(80,839)$(41,764)$(39,075)
Investing activitiesInvesting activities8,979 126,329 (117,350)Investing activities(93,967)147,010 (240,977)
Financing activitiesFinancing activities425,806 (112,647)538,453 Financing activities208,496 (110,244)318,740 
Effect of exchange rate on cashEffect of exchange rate on cash3,656 910 2,746 Effect of exchange rate on cash6,216 (14,958)21,174 
Net increase/(decrease) in cash and cash equivalentsNet increase/(decrease) in cash and cash equivalents$390,920 $(8,152)$399,072 Net increase/(decrease) in cash and cash equivalents$39,906 $(19,956)$59,862 
Operating Activities
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Cash Net cash provided by/(used inin) operating activities mainly reflects cash collections recognized as revenue and cash paid for operating expenses, interest and income taxes. To calculate net cash provided by/(used inin) operating activities, net income/(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 $47.5$80.8 million for the threesix months ended March 31,June 30, 2023 increased $24.8$39.1 million from net cash used in operating activities of $22.7$41.8 million for the threesix months ended March 31,June 30, 2022. The change was mainly driven by lower cash collections recognized as portfolio income and the impact of foreign exchange.
Investing Activities
Cash provided by investing activities mainly reflectsis primarily driven by recoveries applied to our negative allowance. Cash used in investing activities mainly reflectsprimarily relates to acquisitions of nonperforming loans and net investment activity.
Net cash provided byby/(used in) investing activities decreased $117.4$241.0 million during the threesix months ended March 31,June 30, 2023, primarily driven by an increase of $71.6$180.7 million in purchases of finance receivables, an increase of $58.5$57.8 million in purchases
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of investments and a decrease of $52.6$71.6 million in recoveries applied to negative allowance. These items were partially offset by an increase of $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 provided byby/(used in) financing activities increased $538.5$318.7 million during the threesix months ended March 31,June 30, 2023, primarily driven by the proceeds from the issuance of our 2028 Notes of $400.0 million, a $92.4$179.5 million changeincrease from net payments on our lines of credit in the prior year quarter to net draws on our lines of credit in the current year quarter and a decrease in our purchases of common stock of $48.7$86.4 million. These items were partially offset by the retirement of our 2023 Notes of $345.0 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 earningsearnings was $88.4$83.2 million andand $75.3 million as of March 31,June 30, 2023 and December 31, 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 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) 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.
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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 cash 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 collections). We then project ERC and then apply a discounted cash flow methodology to our ERC. Adjustments to ERC may include adjustments reflecting recent collection trends, our view of current and future economic conditions, changes in collection assumptions or other timing related adjustments that could impact TEC. In the first quarter of 2023, we assessed certain pools, where lower levels of performance occurred due to a softer tax season than anticipated in the U.S. coupled with a more normalized collection environment globally. The reduced performance levels in the first quarter resulted in write downs to our ERC primarily in the U.S. Core portfolio.
Significant changes in 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 estimated cash forecasts for performance experienced in the current period result in an adjustment to revenue at an amount less than the impact of the overperformanceperformance in the period due to the effects of discounting. Additionally, cash collection forecast increases will generally result in more revenue being recognized and cash collection forecast decreases will generally result in less revenue being recognized over the life of the pool. As
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Valuation of Goodwill
In accordance with FASB ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), we continueevaluate goodwill for impairment annually and more frequently if indicators of potential impairment exist. Goodwill is reviewed for potential impairment at the reporting unit level.
Goodwill is evaluated for impairment either under the qualitative assessment option or using a quantitative forecast approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in the last valuation, changes in the business environment and changes of the reporting unit or its composition. If upon evaluation of the qualitative factors, we determine it is more likely than not that the fair value of a reporting unit is less than its carrying amount, then we are required to perform against expectations, performancedetermine the reporting unit’s fair value and record as an impairment loss the amount the carrying value exceeds fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit.
We determine the fair value of a reporting unit by applying the approaches prescribed under ASC Topic 820 "Fair Value Measurements and Disclosures": the income approach and the market approach. Depending on the availability of public data and suitable comparables, we may vary, which could result in additional adjustmentsor may not use the market approach or we may emphasize the results from the approach differently. Under the income approach, we estimate the fair value of a reporting unit based on the present value of estimated future cash flows and a residual terminal value. Cash flow projections are based on management's estimates of revenue growth rates, operating margins, necessary working capital and capital expenditure requirements, taking into consideration industry and market conditions. The discount rate used is based on the weighted-average cost of capital adjusted for the relevant risk associated with business-specific characteristics and the uncertainty related to ourthe reporting unit's ability to execute on the projected cash flow forecastsflows. Under the market approach, we estimate fair value based on prices and other relevant market transactions involving comparable publicly-traded companies with a corresponding adjustmentoperating and investment characteristics similar to total portfolio revenue.the reporting unit.
Income Taxes
We are subject to income taxes throughout the U.S. and in numerous internationalinternational 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 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 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 $1.6$1.7 billion as of March 31,June 30, 2023. Based on our debt structure at March 31,June 30, 2023, assuming a 50 basisbasis point decrease in interest rates, for example, interest expense over the following 12 months would decrease by an estimated $4.3$5.4 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated $4.3$5.4 million.
To reduce the exposure to changes in the market rate of interest and to be in compliancecomply 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 March 31,June 30, 2023, we are 68%62% hedged on a notional 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)/income. All derivatives to which we havehave applied hedge accounting were evaluated and remained highly effective at March 31,June 30, 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 March 31,June 30, 2023, we generated $96.3erated $115.0 million of revenrevenues 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 March 31,June 30, 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 March 31,June 30, 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 March 31,June 30, 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 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.
We did not repurchase any common stock during the quarter ended March 31,June 30, 2023.
We do not currently pay regular dividends on our common stock and did not pay dividends during the three months ended June 30, 2023; however, our Board of Directors may determine in the future to declare or pay dividends on our common stock.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
None.None of the Company's directors or officers adopted or terminated a Rule 10b5-1 trading arrangement or non-rule 10b5-1 trading arrangement during the three months ended June 30, 2023.
Item 6. Exhibits
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101.INSXBRL 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.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkable Document
101.LABXBRL Taxonomy Extension Label Linkable Document
101.PREXBRL Taxonomy Extension Presentation Linkable Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document
104Cover 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.



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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
PRA Group, Inc.
(Registrant)
May 8,August 7, 2023By:/s/ Vikram A. Atal
Vikram A. Atal
President and Chief Executive Officer
(Principal Executive Officer)
May 8,August 7, 2023By:/s/ Peter M. Graham
Peter M. Graham
Executive Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)

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