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,~~September 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)

Delaware

75-3078675

(State or other jurisdiction of incorporation or organization)

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

120 Corporate Boulevard

Norfolk, Virginia 23502

(Address of principal executive offices)

(888) 772-7326

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

Not Applicable

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

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


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

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

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

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

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

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

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

The number of shares of the registrant's common stock outstanding as of ~~May 1,~~October 31, 2023 w~~as 39,169,763.~~was 39,244,145.

Table of Contents


Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Income Statements	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Equity	6
	Consolidated Statements of Cash Flows	78
	Notes to Consolidated Financial Statements	89
	1. Organization and Business	89

	2. Finance Receivables, net	910
	3. Investments	1115
	4. Goodwill	1216
	5. Leases	1216
	6. Borrowings	1417
	7. Derivatives	18
	~~8. Fair Value~~	19
	~~9. Accumulated Other Comprehensive Loss~~	21
	~~10. Earnings per Share~~8. Fair Value	22
	9. Accumulated Other Comprehensive Loss	24
	10. Earnings per Share	26
	11. Income Taxes	2327
	12. Commitments and Contingencies	2327
	13. Recently Issued Accounting Standards	2428

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2529
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4552
Item 4.	Controls and Procedures	4653

Part II. Other Information

Item 1.	Legal Proceedings	4754
Item 1A.	Risk Factors	4754
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4754
Item 3.	Defaults Upon Senior Securities	4754
Item 4.	Mine Safety Disclosures	4754
Item 5.	Other Information	4754
Item 6.	Exhibits	4754

Signatures		4956

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

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

(Amounts in thousands)


		(unaudited)					(unaudited)
		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Cash and cash equivalents	Cash and cash equivalents	$	116,471	$	83,376	Cash and cash equivalents	$	105,172	$	83,376
Restricted cash and cash equivalents		359,208		1,382

Investments	Investments	77,877		79,948		Investments	74,729		79,948
Finance receivables, net	Finance receivables, net	3,286,497		3,295,008		Finance receivables, net	3,460,804		3,295,008
Income taxes receivable	Income taxes receivable	41,398		31,774		Income taxes receivable	38,695		31,774
Deferred tax assets, net	Deferred tax assets, net	57,551		56,908		Deferred tax assets, net	55,493		56,908
Right-of-use assets	Right-of-use assets	53,187		54,506		Right-of-use assets	47,156		54,506
Property and equipment, net	Property and equipment, net	48,500		51,645		Property and equipment, net	38,562		51,645
Goodwill	Goodwill	420,647		435,921		Goodwill	412,513		435,921
Other assets	Other assets	82,293		85,206		Other assets	96,851		86,588
Total assets	Total assets	$	4,543,629	$	4,175,674	Total assets	$	4,329,975	$	4,175,674
Liabilities and Equity	Liabilities and Equity					Liabilities and Equity
Liabilities:	Liabilities:					Liabilities:
Accounts payable	Accounts payable	$	4,837	$	7,329	Accounts payable	$	6,159	$	7,329
Accrued expenses	Accrued expenses	120,640		111,395		Accrued expenses	106,391		111,395
Income taxes payable	Income taxes payable	19,809		25,693		Income taxes payable	15,946		25,693
Deferred tax liabilities, net	Deferred tax liabilities, net	29,324		42,918		Deferred tax liabilities, net	14,185		42,918
Lease liabilities	Lease liabilities	57,939		59,384		Lease liabilities	51,658		59,384
Interest-bearing deposits	Interest-bearing deposits	108,779		112,992		Interest-bearing deposits	100,505		112,992
Borrowings	Borrowings	2,937,895		2,494,858		Borrowings	2,832,225		2,494,858
Other liabilities	Other liabilities	39,697		34,355		Other liabilities	12,919		34,355

Total liabilities	Total liabilities	3,318,920		2,888,924		Total liabilities	3,139,988		2,888,924

Equity:	Equity:					Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—		—		Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—		—
Common stock, $0.01 par value, 100,000 shares authorized, 39,170 shares issued and outstanding at March 31, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022		392		390
Common stock, $0.01 par value; 100,000 shares authorized, 39,243 shares issued and outstanding at September 30, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022						Common stock, $0.01 par value; 100,000 shares authorized, 39,243 shares issued and outstanding at September 30, 2023; 100,000 shares authorized, 38,980 shares issued and outstanding at December 31, 2022	392		390
Additional paid-in capital	Additional paid-in capital	285		2,172		Additional paid-in capital	4,157		2,172
Retained earnings	Retained earnings	1,514,396		1,573,025		Retained earnings	1,498,330		1,573,025
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(356,730)		(347,926)		Accumulated other comprehensive loss	(387,289)		(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.	1,115,590		1,227,661
Noncontrolling interest	Noncontrolling interest	66,366		59,089		Noncontrolling interest	74,397		59,089
Total equity	Total equity	1,224,709		1,286,750		Total equity	1,189,987		1,286,750
Total liabilities and equity	Total liabilities and equity	$	4,543,629	$	4,175,674	Total liabilities and equity	$	4,329,975	$	4,175,674

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

PRA Group, Inc.

Consolidated Income Statements

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

(unaudited)

(Amounts in thousands, except per share amounts)


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Revenues:	Revenues:						Revenues:
Portfolio income	Portfolio income	$	188,242	$	207,532		Portfolio income	$	189,960	$	185,853	$	562,492	$	587,394
Changes in expected recoveries	Changes in expected recoveries	(36,912)		29,914			Changes in expected recoveries	22,156		48,336		6,380		134,817
Total portfolio revenue	Total portfolio revenue	151,330		237,446			Total portfolio revenue	212,116		234,189		568,872		722,211
Other revenue	Other revenue	4,140		3,159			Other revenue	4,314		10,618		12,264		21,463
Total revenues	Total revenues	155,470		240,605			Total revenues	216,430		244,807		581,136		743,674

Operating expenses:	Operating expenses:						Operating expenses:
Compensation and employee services	Compensation and employee services	82,403		71,096			Compensation and employee services	69,517		70,382		217,708		215,615
Legal collection fees	Legal collection fees	8,838		10,873			Legal collection fees	9,839		8,963		28,228		29,390
Legal collection costs	Legal collection costs	23,945		16,557			Legal collection costs	20,761		23,391		66,228		57,694
Agency fees	Agency fees	17,378		17,388			Agency fees	19,436		15,160		54,491		47,374
Outside fees and services	Outside fees and services	24,944		19,378			Outside fees and services	18,858		24,618		62,064		71,489
Communication	Communication	10,527		12,583			Communication	9,881		9,951		30,525		32,062
Rent and occupancy	Rent and occupancy	4,448		4,987			Rent and occupancy	4,426		4,669		13,193		14,289
Depreciation and amortization	Depreciation and amortization	3,589		3,778			Depreciation and amortization	3,273		3,741		10,344		11,384
Impairment of real estate							Impairment of real estate	5,037		—		5,037		—
Other operating expenses	Other operating expenses	13,042		11,998			Other operating expenses	12,356		13,144		38,355		37,885

Total operating expenses	Total operating expenses	189,114		168,638			Total operating expenses	173,384		174,019		526,173		517,182

(Loss)/income from operations		(33,644)		71,967
Income from operations							Income from operations	43,046		70,788		54,963		226,492
Other income and (expense):	Other income and (expense):						Other income and (expense):

Interest expense, net	Interest expense, net	(38,283)		(31,748)			Interest expense, net	(49,473)		(32,455)		(130,778)		(95,765)
Foreign exchange loss, net		(9)		(532)
Foreign exchange gain, net							Foreign exchange gain, net	564		4		984		791
Other	Other	(650)		(490)			Other	(500)		(83)		(1,380)		(754)
(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 taxes							Income/(loss) before income taxes	(6,363)		38,254		(76,211)		130,764
Income tax expense/(benefit)							Income tax expense/(benefit)	1,788		11,072		(15,317)		29,828
Net income/(loss)							Net income/(loss)	(8,151)		27,182		(60,894)		100,936
Adjustment for net income/(loss) attributable to noncontrolling interests	Adjustment for net income/(loss) attributable to noncontrolling interests	4,726		(5,354)			Adjustment for net income/(loss) attributable to noncontrolling interests	4,111		2,450		13,801		(252)
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.	$	(12,262)	$	24,732	$	(74,695)	$	101,188

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.:
Basic	Basic	$	(1.50)	$	0.98		Basic	$	(0.31)	$	0.63	$	(1.91)	$	2.54
Diluted	Diluted	$	(1.50)	$	0.97		Diluted	$	(0.31)	$	0.63	$	(1.91)	$	2.52
Weighted average number of shares outstanding:	Weighted average number of shares outstanding:						Weighted average number of shares outstanding:
Basic	Basic	39,033		40,777			Basic	39,242		39,018		39,155		39,858
Diluted	Diluted	39,033		41,304			Diluted	39,242		39,170		39,155		40,125

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

PRA Group, Inc.

Consolidated Statements of Comprehensive Income

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

(unaudited)

(Amounts in thousands)

Three Months Ended March 31,
2023 2022
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-sale 128 (160)
Other comprehensive (loss)/income (6,253) 30,690
Total comprehensive (loss)/income (60,156) 65,308
Less comprehensive income attributable to noncontrolling interests 7,276 2,136
Comprehensive (loss)/income attributable to PRA Group, Inc. $ (67,432) $ 63,172


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Net income/(loss)	$	(8,151)	$	27,182	$	(60,894)	$	100,936
Other comprehensive loss, net of tax
Currency translation adjustments	(34,279)		(91,390)		(28,746)		(194,656)
Cash flow hedges	(7,660)		19,590		(6,772)		44,007
Debt securities available-for-sale	(26)		133		22		(269)
Other comprehensive loss	(41,965)		(71,667)		(35,496)		(150,918)
Total comprehensive loss	(50,116)		(44,485)		(96,390)		(49,982)
Less comprehensive income attributable to noncontrolling interests	1,436		9,049		17,668		8,008
Comprehensive loss attributable to PRA Group, Inc.	$	(51,552)	$	(53,534)	$	(114,058)	$	(57,990)

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

PRA Group, Inc.

Consolidated Statements of Changes in Equity

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

(unaudited)

(Amounts in thousands)

Common Stock Additional Paid-In Retained Accumulated Other Comprehensive Noncontrolling Total
Shares Amount Capital Earnings (Loss)/ Income Interest Equity
Balance at December 31, 2022 38,980 $ 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 stock 190 2 (2) — — — —
Share-based compensation expense — — 3,799 — — — 3,799
Employee stock relinquished for payment of taxes — — (5,684) — — — (5,684)
Balance at March 31, 2023 39,170 392 285 1,514,396 (356,730) 66,366 1,224,709


		Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total			Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
		Shares	Amount		Capital		Earnings		(Loss)/ Income		Interest		Equity			Shares	Amount		Capital		Earnings		Income/(Loss)		Interest		Equity
Balance at December 31, 2021		41,008	$	410	$	—	$	1,552,845	$	(266,909)	$	38,491	$	1,324,837
Balance at December 31, 2022															Balance at December 31, 2022	38,980	$	390	$	2,172	$	1,573,025	$	(347,926)	$	59,089	$	1,286,750
Components of comprehensive income, net of tax:	Components of comprehensive income, net of tax:														Components of comprehensive income, net of tax:
Net income		—	—		—		39,972		—		(5,354)		34,618
Net income/(loss)															Net income/(loss)	—	—		—		(58,629)		—		4,726		(53,903)
Currency translation adjustments	Currency translation adjustments	—	—		—		—		4,780		7,490		12,270		Currency translation adjustments	—	—		—		—		(4,101)		2,551		(1,550)
Cash flow hedges	Cash flow hedges	—	—		—		—		18,580		—		18,580		Cash flow hedges	—	—		—		—		(4,831)		—		(4,831)
Debt securities available-for-sale	Debt securities available-for-sale	—	—		—		—		(160)		—		(160)		Debt securities available-for-sale	—	—		—		—		128		—		128

Vesting of restricted stock	Vesting of restricted stock	262	3		(3)		—		—		—		—		Vesting of restricted stock	190	2		(2)		—		—		—		—
Repurchase and cancellation of common stock		(860)	(9)		4,527		(43,972)		—		—		(39,454)
Share-based compensation expense	Share-based compensation expense	—	—		3,891		—		—		—		3,891		Share-based compensation expense	—	—		3,799		—		—		—		3,799

Employee stock relinquished for payment of taxes	Employee stock relinquished for payment of taxes	—	—		(8,415)		—		—		—		(8,415)		Employee stock relinquished for payment of taxes	—	—		(5,684)		—		—		—		(5,684)

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

Balance at March 31, 2023															Balance at March 31, 2023	39,170	$	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 adjustments															Currency translation adjustments	—	—		—		—		3,091		3,992		7,083
Cash flow hedges															Cash flow hedges	—	—		—		—		5,719		—		5,719
Debt securities available-for-sale															Debt securities available-for-sale	—	—		—		—		(80)		—		(80)
Distributions to noncontrolling interest															Distributions to noncontrolling interest	—	—		—		—		—		(1,173)		(1,173)
Vesting of restricted stock															Vesting of restricted stock	72	—		—		—		—		—		—
Share-based compensation expense															Share-based compensation expense	—	—		2,715		—		—		—		2,715
Employee stock relinquished for payment of taxes															Employee stock relinquished for payment of taxes	—	—		(459)		—		—		—		(459)
Balance at June 30, 2023															Balance at June 30, 2023	39,242	$	392	$	2,541	$	1,510,592	$	(348,000)	$	74,149	$	1,239,674
Components of comprehensive income, net of tax:															Components of comprehensive income, net of tax:
Net income/(loss)															Net income/(loss)	—	—		—		(12,262)		—		4,111		(8,151)
Currency translation adjustments															Currency translation adjustments	—	—		—		—		(31,603)		(2,676)		(34,279)
Cash flow hedges															Cash flow hedges	—	—		—		—		(7,660)		—		(7,660)
Debt securities available-for-sale															Debt securities available-for-sale	—	—		—		—		(26)		—		(26)
Distributions to noncontrolling interest															Distributions to noncontrolling interest	—	—		—		—		—		(1,187)		(1,187)
Vesting of restricted stock															Vesting of restricted stock	1	—		—		—		—		—		—
Share-based compensation expense															Share-based compensation expense	—	—		1,629		—		—		—		1,629
Employee stock relinquished for payment of taxes															Employee stock relinquished for payment of taxes	—	—		(13)		—		—		—		(13)
Balance at September 30, 2023															Balance at September 30, 2023	39,243	$	392	$	4,157	$	1,498,330	$	(387,289)	$	74,397	$	1,189,987

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

PRA Group, Inc.

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

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

(unaudited)

(Amounts in thousands)

Three Months Ended March 31,
2023 2022
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 expense 3,799 3,891
Depreciation and amortization 3,589 3,778
Amortization of debt discount and issuance costs 2,441 2,627
Changes in expected recoveries 36,912 (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 expenses 8,695 (26,775)
Other liabilities 2,976 (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 allowance 225,709 278,271
Purchases of investments (60,057) (1,521)
Proceeds from sales and maturities of investments 62,762 775
Net cash provided by investing activities 8,979 126,329
Cash flows from financing activities:
Proceeds from lines of credit 243,431 106,371
Principal payments on lines of credit (199,377) (154,810)
Proceeds from issuance of Senior Notes due 2028 400,000 —
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 activities 425,806 (112,647)
Effect of exchange rate on cash 3,656 910
Net increase/(decrease) in cash and cash equivalents 390,920 (8,152)
Cash and cash equivalents, beginning of period 84,759 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 taxes 10,555 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 Sheets 359,208 1,831
Total cash, cash equivalents and restricted cash and cash equivalents $ 475,679 $ 80,920


	Common Stock			Additional Paid-In		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Earnings		Income/(Loss)		Interest		Equity
Balance at December 31, 2021	41,008	$	410	$	—	$	1,552,845	$	(266,909)	$	38,491	$	1,324,837
Components of comprehensive income, net of tax:
Net income/(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 stock	262	3		(3)		—		—		—		—
Repurchase and cancellation of common stock	(860)	(9)		4,527		(43,972)		—		—		(39,454)
Share-based compensation expense	—			3,891		—		—		—		3,891
Employee stock relinquished for payment of taxes	—	—		(8,415)		—		—		—		(8,415)
Balance at March 31, 2022	40,410	$	404	$	—	$	1,548,845	$	(243,709)	$	40,627	$	1,346,167

Components of comprehensive income, net of tax:
Net income/(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 stock	37	—		—		—		—		—		—
Repurchase and cancellation of common stock	(808)	(8)		(3,835)		(31,092)		—		—		(34,935)
Share-based compensation expense	—	—		3,849		—		—		—		3,849
Employee stock relinquished for payment of taxes	—	—		(14)		—		—		—		(14)
Balance at June 30, 2022	39,639	$	396	$	—	$	1,554,237	$	(347,821)	$	35,555	$	1,242,367
Components of comprehensive income, net of tax:
Net income/(loss)	—	—		—		24,732		—		2,450		27,182
Currency translation adjustments	—	—		—		—		(97,988)		6,598		(91,390)
Cash flow hedges	—	—		—		—		19,590		—		19,590
Debt securities available-for-sale	—	—		—		—		133		—		133
Distributions to noncontrolling interest	—	—		—		—		—		(1,127)		(1,127)
Contributions from noncontrolling interest	—	—		—		—		—		7,744		7,744
Repurchase and cancellation of common stock	(663)	(7)		(3,091)		(21,903)		—		—		(25,001)
Share-based compensation expense	—	—		3,101		—		—		—		3,101
Employee stock relinquished for payment of taxes	—	—		(10)		—		—		—		(10)
Balance at September 30, 2022	38,976	$	389	$	—	$	1,557,066	$	(426,086)	$	51,220	$	1,182,589

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

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the Nine Months Ended September 30, 2023 and 2022

(unaudited)

(Amounts in thousands)


	Nine Months Ended September 30,
	2023		2022
Cash flows from operating activities:
Net income/(loss)	$	(60,894)	$	100,936
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	8,143		10,841
Depreciation, amortization and impairment	15,381		11,384
Gain on extinguishment of debt	(343)		—


Amortization of debt discount and issuance costs	7,045		7,653
Changes in expected recoveries	(6,380)		(134,817)

Deferred income taxes	(26,276)		8,710
Net unrealized foreign currency transactions	(31,783)		21,356
Fair value in earnings for equity securities	1,094		(175)
Other	(1,318)		159

Changes in operating assets and liabilities:
Other assets	1,111		(2,547)

Accounts payable	(1,123)		3,028
Income taxes payable, net	(18,259)		(155)
Accrued expenses	(4,685)		(7,655)
Other liabilities	385		(22,521)
Right-of-use asset/lease liability	(370)		389

Net cash used in operating activities	(118,272)		(3,414)
Cash flows from investing activities:
Purchases of property and equipment, net	(2,306)		(10,698)

Purchases of finance receivables	(875,373)		(561,901)
Recoveries applied to negative allowance	695,386		765,732
Purchases of investments	(60,058)		(2,292)
Proceeds from sales and maturities of investments	62,762		4,565



Net cash provided by/(used in) investing activities	(179,589)		195,406
Cash flows from financing activities:
Proceeds from lines of credit	695,651		1,343,434
Principal payments on lines of credit	(389,658)		(1,389,371)
Retirement of Convertible Senior Notes due 2023	(345,000)		—

Proceeds from issuance of Senior Notes due 2028	400,000		—
Principal payments on long-term debt	(7,500)		(7,500)
Repurchases of senior notes	(3,657)		—
Repurchases of common stock	—		(111,371)
Payments of origination cost and fees	(5,323)		(7,798)
Tax withholdings related to share-based payments	(6,155)		(8,438)
Distributions paid to noncontrolling interest	(2,360)		(4,621)
Contributions from noncontrolling interest	—		9,343

Net decrease in interest-bearing deposits	(7,747)		(13,732)


Net cash provided by/(used in) financing activities	328,251		(190,054)
Effect of exchange rate on cash	3,270		(31,927)
Net increase/(decrease) in cash and cash equivalents	33,660		(29,989)
Cash and cash equivalents, beginning of period	84,758		89,072
Cash and cash equivalents, end of period	$	118,418	$	59,083
Supplemental disclosure of cash flow information:
Cash paid for interest	$	111,344	$	87,912
Cash paid for income taxes	28,479		21,086
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets	$	105,172	$	57,991
Restricted cash included in Other assets per Consolidated Balance Sheets	13,246		1,092
Total cash, cash equivalents and restricted cash	$	118,418	$	59,083

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

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

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

Basis of presentation: The Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of ~~March 31,~~September 30, 2023, its Consolidated Income Statements and Statements of Comprehensive Income for the three and nine months ended September 30, 2023 and 2022, and its Consolidated Statements of Changes in Equity and Statements of Cash Flows for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 and 2022, have been included. The Company's Consolidated Income Statements for the three and nine months ended ~~March 31,~~September 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’s~~entity'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 ~~conclusion~~conclusions 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.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Revenues and long-lived assets by geographical location: ~~Revenue~~Revenues for the three and nine months ended ~~March 31,~~September 30, 2023 and 2022, and long-lived assets held ~~at March 31,~~as of September 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 the				As of and for the					As of and for the				As of and for the
		Three Months Ended March 31, 2023				Three Months Ended March 31, 2022					Three Months Ended September 30, 2023				Three Months Ended September 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.	$	105,456	$	61,788	$	138,398	$	80,496
United Kingdom	United Kingdom	33,309		11,988		43,954		6,851		United Kingdom	30,978		11,233		37,032		10,762
Brazil	Brazil	19,266		3		(4,478)		—		Brazil	24,749		3		14,293		3
Other (1)	Other (1)	43,748		13,912		49,704		16,834		Other (1)	55,247		12,694		55,084		13,448
Total	Total	$	155,470	$	101,687	$	240,605	$	109,494	Total	$	216,430	$	85,718	$	244,807	$	104,709


	As of and for the				As of and for the
	Nine Months Ended September 30, 2023				Nine Months Ended September 30, 2022
	Revenues (2)		Long-Lived Assets		Revenues (2)		Long-Lived Assets
U.S.	$	258,848	$	61,788	$	426,675	$	80,496
United Kingdom	99,547		11,233		126,866		10,762
Brazil	69,383		3		22,629		3
Other (1)	153,358		12,694		167,504		13,448
Total	$	581,136	$	85,718	$	743,674	$	104,709

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

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

Revenues are attributed to countries based on the location of the related operations. ~~Long-lived assets consist of net property and equipment and right-of-use assets.~~ The Company reports revenues earned from collection activities on nonperforming loans, fee-based services and investments. ~~For additional information on the Company's investments, see~~ ~~Note 3~~.Long-lived assets consist of Property and equipment, net and Right-of-use ("ROU") assets.

2. Finance Receivables, net:

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


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Amortized cost	Amortized cost	$	—	$	—	Amortized cost	$	—	$	—
Negative allowance for expected recoveries	Negative allowance for expected recoveries	3,286,497		3,295,008		Negative allowance for expected recoveries	3,460,804		3,295,008
Balance at end of period	Balance at end of period	$	3,286,497	$	3,295,008	Balance at end of period	$	3,460,804	$	3,295,008

Three Months Ended September 30, 2023 and 2022

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

Three Months Ended March 31, 2023
Core Insolvency Total
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 adjustment 19,835 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
Core Insolvency Total
Balance at beginning of period $ 2,989,932 $ 438,353 $ 3,428,285
Initial negative allowance for expected recoveries - portfolio acquisitions (1)
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 September 30, 2023
	Core		Insolvency		Total
Balance at beginning of period	$	3,086,405	$	338,143	$	3,424,548
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	248,181		63,002		311,183
Foreign currency translation adjustment	(58,878)		(6,786)		(65,664)
Recoveries applied to negative allowance (2)	(189,710)		(41,709)		(231,419)
Changes in expected recoveries (3)	15,894		6,262		22,156
Balance at end of period	$	3,101,892	$	358,912	$	3,460,804

910

PRA Group, Inc.

Notes to Consolidated Financial Statements


	Three Months Ended September 30, 2022
	Core		Insolvency		Total
Balance at beginning of period	$	2,814,761	$	368,871	$	3,183,632
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	160,206		22,898		183,104
Foreign currency translation adjustment	(133,263)		(14,254)		(147,517)
Recoveries applied to negative allowance (2)	(186,112)		(44,083)		(230,195)
Changes in expected recoveries (3)	38,686		9,650		48,336
Balance at end of period	$	2,694,278	$	343,082	$	3,037,360

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

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


		Three Months Ended March 31, 2023							Three Months Ended September 30, 2023
		Core		Insolvency		Total			Core		Insolvency		Total
Face value	Face value	$	1,507,965	$	104,809	$	1,612,774	Face value	$	1,992,448	$	382,363	$	2,374,811
Noncredit discount	Noncredit discount	(150,511)		(8,042)		(158,553)		Noncredit discount	(209,131)		(23,837)		(232,968)
Allowance for credit losses at acquisition	Allowance for credit losses at acquisition	(1,150,132)		(73,864)		(1,223,996)		Allowance for credit losses at acquisition	(1,535,136)		(295,524)		(1,830,660)
Purchase price	Purchase price	$	207,322	$	22,903	$	230,225	Purchase price	$	248,181	$	63,002	$	311,183


		Three Months Ended March 31, 2022							Three Months Ended September 30, 2022
		Core		Insolvency		Total			Core		Insolvency		Total
Face value	Face value	$	948,057	$	97,083	$	1,045,140	Face value	$	1,482,758	$	123,369	$	1,606,127
Noncredit discount	Noncredit discount	(91,600)		(5,852)		(97,452)		Noncredit discount	(126,205)		(7,874)		(134,079)
Allowance for credit losses at acquisition	Allowance for credit losses at acquisition	(727,053)		(73,183)		(800,236)		Allowance for credit losses at acquisition	(1,196,347)		(92,597)		(1,288,944)
Purchase price	Purchase price	$	129,404	$	18,048	$	147,452	Purchase price	$	160,206	$	22,898	$	183,104

The initial negative allowance recorded on portfolio acquisitions for the three months ended ~~March 31,~~September 30, 2023 and 2022 ~~were~~was as follows (amounts in thousands):


		Three Months Ended March 31, 2023							Three Months Ended September 30, 2023
		Core		Insolvency		Total			Core		Insolvency		Total
Allowance for credit losses at acquisition	Allowance for credit losses at acquisition	$	(1,150,132)	$	(73,864)	$	(1,223,996)	Allowance for credit losses at acquisition	$	(1,535,136)	$	(295,524)	$	(1,830,660)
Writeoffs, net	Writeoffs, net	1,150,132		73,864		1,223,996		Writeoffs, net	1,535,136		295,524		1,830,660
Expected recoveries	Expected recoveries	207,322		22,903		230,225		Expected recoveries	248,181		63,002		311,183
Initial negative allowance for expected recoveries	Initial negative allowance for expected recoveries	$	207,322	$	22,903	$	230,225	Initial negative allowance for expected recoveries	$	248,181	$	63,002	$	311,183


		Three Months Ended March 31, 2022							Three Months Ended September 30, 2022
		Core		Insolvency		Total			Core		Insolvency		Total
Allowance for credit losses at acquisition	Allowance for credit losses at acquisition	$	(727,053)	$	(73,183)	$	(800,236)	Allowance for credit losses at acquisition	$	(1,196,347)	$	(92,597)	$	(1,288,944)
Writeoffs, net	Writeoffs, net	727,053		73,183		800,236		Writeoffs, net	1,196,347		92,597		1,288,944
Expected recoveries	Expected recoveries	129,404		18,048		147,452		Expected recoveries	160,206		22,898		183,104
Initial negative allowance for expected recoveries	Initial negative allowance for expected recoveries	$	129,404	$	18,048	$	147,452	Initial negative allowance for expected recoveries	$	160,206	$	22,898	$	183,104

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,~~September 30, 2023 and 2022 were as follows (amounts in thousands):


		Three Months Ended March 31, 2023							Three Months Ended September 30, 2023
		Core		Insolvency		Total			Core		Insolvency		Total
Recoveries (a)	Recoveries (a)	$	364,236	$	49,715	$	413,951	Recoveries (a)	$	369,385	$	51,994	$	421,379
Less - amounts reclassified to portfolio income	Less - amounts reclassified to portfolio income	177,850		10,392		188,242		Less - amounts reclassified to portfolio income	179,675		10,285		189,960
Recoveries applied to negative allowance	Recoveries applied to negative allowance	$	186,386	$	39,323	$	225,709	Recoveries applied to negative allowance	$	189,710	$	41,709	$	231,419


		Three Months Ended March 31, 2022							Three Months Ended September 30, 2022
		Core		Insolvency		Total			Core		Insolvency		Total
Recoveries (a)	Recoveries (a)	$	425,508	$	60,295	$	485,803	Recoveries (a)	$	361,089	$	54,959	$	416,048
Less - amounts reclassified to portfolio income	Less - amounts reclassified to portfolio income	194,355		13,177		207,532		Less - amounts reclassified to portfolio income	174,977		10,876		185,853
Recoveries applied to negative allowance	Recoveries applied to negative allowance	$	231,153	$	47,118	$	278,271	Recoveries applied to negative allowance	$	186,112	$	44,083	$	230,195

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

(3) Changes in expected recoveries

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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


		Three Months Ended March 31, 2023							Three Months Ended September 30, 2023
		Core		Insolvency		Total			Core		Insolvency		Total
Changes in expected future recoveries	Changes in expected future recoveries	$	(41,414)	$	664	$	(40,750)	Changes in expected future recoveries	$	4,234	$	(168)	$	4,066
Recoveries received in excess of forecast	Recoveries received in excess of forecast	286		3,552		3,838		Recoveries received in excess of forecast	11,660		6,430		18,090
Changes in expected recoveries	Changes in expected recoveries	$	(41,128)	$	4,216	$	(36,912)	Changes in expected recoveries	$	15,894	$	6,262	$	22,156


		Three Months Ended March 31, 2022							Three Months Ended September 30, 2022
		Core		Insolvency		Total			Core		Insolvency		Total
Changes in expected future recoveries	Changes in expected future recoveries	$	9,771	$	(3,525)	$	6,246	Changes in expected future recoveries	$	17,851	$	2,361	$	20,212
Recoveries received in excess of forecast	Recoveries received in excess of forecast	15,376		8,292		23,668		Recoveries received in excess of forecast	20,835		7,289		28,124
Changes in expected recoveries	Changes in expected recoveries	$	25,147	$	4,767	$	29,914	Changes in expected recoveries	$	38,686	$	9,650	$	48,336

In order to estimate future cash collections, the Company ~~considered~~considers 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~~considers 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,~~September 30, 2023 were a net ~~negative $36.9~~positive $22.2 million. This includes ~~$3.8~~$18.1 million in recoveries received in excess of forecast (cash collections overperformance) and a ~~$40.8~~$4.1 million ~~negative~~positive adjustment to changes in expected future recoveries. ~~Overperformance decreased by $19.8~~The $18.1 million ~~as a result~~in recoveries received in excess of ~~reduced cash collections primarily~~forecast reflected overperformance in Europe and the ~~U.S. due to a slower tax season. The changes in expected future recoveries reflect the Company's assessment of certain pools~~ ~~resulting 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.~~Americas.

Changes in expected recoveries for the three months ended ~~March 31,~~September 30, 2022 were a net positive ~~$29.9~~$48.3 million. This ~~reflects $23.7~~reflected $28.1 million in recoveries received in excess of forecast reflecting ~~strong~~ cash collections overperformance ~~in Europe~~ and a ~~$6.2~~$20.2 million positive adjustment to changes in expected future recoveries. The changes in expected future recoveries ~~included~~reflected the Company's assessment of certain pools, where continued ~~assumption~~strong performance resulted in an increase to the Company's ERC.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Nine Months Ended September 30, 2023 and 2022

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


	Nine Months Ended September 30, 2023
	Core		Insolvency		Total
Balance at beginning of period	$	2,936,207	$	358,801	$	3,295,008
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	763,776		105,391		869,167
Foreign currency translation adjustment	(15,662)		1,296		(14,366)
Recoveries applied to negative allowance (2)	(574,993)		(120,392)		(695,385)
Changes in expected recoveries (3)	(7,436)		13,816		6,380
Balance at end of period	$	3,101,892	$	358,912	$	3,460,804


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

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

Portfolio acquisitions for the nine months ended September 30, 2023 and 2022 were as follows (amounts in thousands):


	Nine Months Ended September 30, 2023
	Core		Insolvency		Total
Face value	$	5,717,674	$	579,113	$	6,296,787
Noncredit discount	(600,174)		(38,621)		(638,795)
Allowance for credit losses at acquisition	(4,353,724)		(435,101)		(4,788,825)
Purchase price	$	763,776	$	105,391	$	869,167


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

PRA Group, Inc.

Notes to Consolidated Financial Statements

The initial negative allowance recorded on portfolio acquisitions for the nine months ended September 30, 2023 and 2022 was as follows (amounts in thousands):


	Nine Months Ended September 30, 2023
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(4,353,724)	$	(435,101)	$	(4,788,825)
Writeoffs, net	4,353,724		435,101		4,788,825
Expected recoveries	763,776		105,391		869,167
Initial negative allowance for expected recoveries	$	763,776	$	105,391	$	869,167


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

(2) Recoveries applied to negative allowance

Recoveries applied to the negative allowance for the nine months ended September 30, 2023 and 2022 were as follows (amounts in thousands):


	Nine Months Ended September 30, 2023
	Core		Insolvency		Total
Recoveries (a)	$	1,106,799	$	151,078	$	1,257,877
Less - amounts reclassified to portfolio income	531,806		30,686		562,492
Recoveries applied to negative allowance	$	574,993	$	120,392	$	695,385


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

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

(3) Changes in expected recoveries

Changes in expected recoveries for the nine months ended September 30, 2023 and 2022 were as follows (amounts in thousands):


	Nine Months Ended September 30, 2023
	Core		Insolvency		Total
Changes in expected future recoveries	$	(40,919)	$	23	$	(40,896)
Recoveries received in excess of forecast	33,483		13,793		47,276
Changes in expected recoveries	$	(7,436)	$	13,816	$	6,380


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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Changes in expected recoveries for the nine months ended September 30, 2023 were a net positive $6.4 million. This includes $47.3 million in recoveries received in excess of forecast (cash collections overperformance), primarily due to continued strong performance in Europe and South America, and a $40.9 million negative adjustment to changes in expected future recoveries. The changes in expected future recoveries reflected the Company's assessment of certain pools, which resulted in a reduction of expected cash flows due largely to collections performance in the U.S.

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

3. Investments:

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


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

Debt securities	Debt securities					Debt securities

Available-for-sale	Available-for-sale	$	65,004	$	66,813	Available-for-sale	$	62,755	$	66,813

Equity securities	Equity securities					Equity securities
Private equity funds	Private equity funds	4,003		4,373		Private equity funds	2,911		4,373
Equity method investments	Equity method investments	8,870		8,762		Equity method investments	9,063		8,762

Total investments	Total investments	$	77,877	$	79,948	Total investments	$	74,729	$	79,948

Debt Securities

Available-for-sale

Government securities: The Company's investments in government instruments, including Norwegian bonds and Swedish treasury ~~securities,~~securities, are classified as available-for-sale and ~~are~~ stated at fair value. ~~As of March 31,~~At September 30, 2023, maturities for these securities ar~~e $61.0~~were $58.8 million due within one year and ~~$4.0~~$3.9 million due within one to ~~five~~two years.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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


		March 31, 2023									September 30, 2023
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value			Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Aggregate Fair Value
Available-for-sale	Available-for-sale									Available-for-sale

Government securities	Government securities	$	65,113	$	111	$	220	$	65,004	Government securities	$	62,969	$	36	$	(250)	$	62,755

											December 31, 2022
											Amortized Cost		Gross Unrealized Gains		Gross Unrealized (Losses)		Aggregate Fair Value

		December 31, 2022
		Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale	Available-for-sale									Available-for-sale

Government securities	Government securities	$	67,049	$	1	$	237	$	66,813	Government securities	$	67,049	$	1	$	(237)	$	66,813

Equity Securities

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

Equity Method Investments

The Company ~~has~~has an 11.7% interest in ~~RCB~~RCB 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.

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~~a quarterly impairment assessment by evaluating whether any triggering events had occurred, ~~as of March 31, 2023,~~ which included considering current market conditions, and ~~concluded~~determined that ~~no such event had occurred~~goodwill was not more likely than not impaired as of ~~March 31,~~September 30, 2023.

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


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Balance at beginning of period	Balance at beginning of period	$	435,921	$	480,263		Balance at beginning of period	$	414,905	$	437,032	$	435,921	$	480,263

Change in foreign currency translation adjustment	Change in foreign currency translation adjustment	(15,274)		3,117			Change in foreign currency translation adjustment	(2,392)		(32,558)		(23,408)		(75,789)

Balance at end of period	Balance at end of period	$	420,647	$	483,380		Balance at end of period	$	412,513	$	404,474	$	412,513	$	404,474

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 1411 years, ~~some~~some of which include options to extend the leases for up to five years, and others include options to terminate the leases within one year. Exercises of lease renewal options are typically at the Company's sole discretion, ~~and are~~with 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 nine months ended ~~March 31,~~September 30, 2023 and 2022, were as follows (amounts in thousands):

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Operating lease expense	Operating lease expense	$	2,911	$	3,232		Operating lease expense	$	2,617	$	2,775	$	8,132	$	9,095
Short-term lease expense	Short-term lease expense	461		904			Short-term lease expense	526		775		1,553		1,874

Sublease income	Sublease income	(138)		(115)			Sublease income	(21)		(118)		(296)		(348)
Total lease expense	Total lease expense	$	3,234	$	4,021		Total lease expense	$	3,122	$	3,432	$	9,389	$	10,621

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


		Three Months Ended March 31,					Nine Months Ended September 30,
		2023		2022			2023		2022
Cash paid for amounts included in the measurement of operating lease liabilities	Cash paid for amounts included in the measurement of operating lease liabilities	$	3,146	$	3,098	Cash paid for amounts included in the measurement of operating lease liabilities	$	8,806	$	8,923

ROU assets obtained in exchange for operating lease obligations(1)	ROU assets obtained in exchange for operating lease obligations(1)	1,078		1,106		ROU assets obtained in exchange for operating lease obligations(1)	2,663		5,910

(1) Includes the impact of new leases as well as remeasurements and modifications to existing leases.

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

Three Months Ended March 31,
2023 2022
Weighted-average remaining lease term (years) 7.8 8.4
Weighted-average discount rate 4.53 % 4.48 %


	Nine Months Ended September 30,
	2023		2022
Weighted-average remaining lease term (years)	7.1		8.2


Weighted-average discount rate	4.65	%	4.48	%

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


	Operating Leases
For the ~~nine~~three months ending December 31, 2023	$	~~7,977~~2,600
For the year ending December 31, 2024	~~10,282~~9,879
For the year ending December 31, 2025	~~10,040~~9,608
For the year ending December 31, 2026	~~8,934~~8,490
For the year ending December 31, 2027	~~6,131~~5,724
Thereafter	~~25,875~~25,391
Total lease payments	~~69,239~~61,692
Less: imputed interest	~~11,300~~ (10,034)
Total present value of lease liabilities	$	~~57,939~~51,658

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

6. Borrowings:

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


		March 31, 2023		December 31, 2022			September 30, 2023		December 31, 2022
Americas revolving credit (1)	Americas revolving credit (1)	$	234,866	$	186,867	Americas revolving credit (1)	$	382,351	$	186,867
UK revolving credit	UK revolving credit	473,712		453,528		UK revolving credit	500,257		453,528
Europe revolving credit	Europe revolving credit	401,438		419,856		Europe revolving credit	473,873		419,856
Term loan	Term loan	447,500		450,000		Term loan	442,500		450,000
Senior Notes		1,050,000		650,000
Convertible Notes		345,000		345,000
Senior notes						Senior notes	1,046,000		650,000
Convertible notes						Convertible notes	—		345,000
		2,952,516		2,505,251			2,844,981		2,505,251
Less: Debt discount and issuance costs	Less: Debt discount and issuance costs	(14,621)		(10,393)		Less: Debt discount and issuance costs	(12,756)		(10,393)
Total	Total	$	2,937,895	$	2,494,858	Total	$	2,832,225	$	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,~~September 30, 2023, ~~and December 31, 2022, the~~no amounts were outstanding ~~balance~~ under the Colombian ~~revolving credit facility~~Revolving Credit Facility ($0.5 million was ~~approximately $0.5 million and $0.5 million, respectively.~~outstanding as of December 31, 2022).

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


2024	2024	$	355,262	2024	$	10,000
2025	2025	10,196		2025	308,000
2026	2026	310,000		2026	1,305,108
2027	2027	1,125,620		2027	—
2028	2028	801,438		2028	871,873
Thereafter	Thereafter	350,000		Thereafter	350,000
Total	Total	$	2,952,516	Total	$	2,844,981

During the nine months ended September 30, 2023, the Company repurchased a total of $4.0 million in aggregate principal amount of the senior notes.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The Company ~~incurred a net loss from operations of $33.6 million for the three months ended March 31, 2023. The Company requested and~~determined 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 certify~~in 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 facilities~~financing arrangements as of ~~March 31,~~September 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 consists of (i) a fully-funded ~~$447.5~~$442.5 million term loan, (ii) a $1.0 billion domestic revolving credit facility, and (iii) a $75.0 million Canadian revolving credit facility. The facility includes an accordion feature for up to $500.0 million in additional commitments (at the option of the lenders) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan sub-limit that would reduce amounts available for ~~borrowing.~~borrowing. With the official discontinuation of the London Interbank Offered Rate ("LIBOR") on 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 the Secured Overnight Financing Rate ("SOFR"). 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,~~SOFR for the applicable term, plus 2.25% ~~per annum,~~plus a 0.10% credit adjustment spread, or 2.00% plus a 0.10% credit adjustment spread 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~~and matures July 30, 2026. As of ~~March 31,~~September 30, 2023, ~~the unused portion of~~total availability under the North American Credit Agreement was ~~$840.6 million. Considering borrowing base restrictions, as~~$692.6 million, which was comprised of ~~March 31, 2023, the amount available~~$70.3 million based on current ERC, and $622.3 million additional availability subject to ~~be drawn was $118.7 million.~~debt covenants, including advance rates.

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

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

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

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

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

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

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) or~~SOFR, Sterling Overnight Index Average ("SONIA") or, in the case of euro borrowings, ~~Euribor~~the Euro Interbank Offered Rate ("Euribor") plus an applicable margin of ~~2.50%~~2.75% per annum plus a 0.10% credit adjustment spread, ofor 2.50% plus a 0.10%~~. If~~ credit adjustment spread if the consolidated senior secured leverage ratio is ~~greater~~less than 1.60 to ~~1.0, the applicable margin will increase to 2.75%.~~1.0. 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,~~September 30, 2023, ~~the unused portion of the UK Credit Agreement was $326.3 million. Considering borrowing base restrictions, as of March 31, 2023, the amount available to be drawn~~total availability under the UK Credit Agreement was ~~$116.2 million.~~$299.7 million, which was comprised of $57.4 million based on current ERC, and $242.3 million additional availability subject to debt covenants, including advance rates.

The UK Credit Agreement is secured by substantially all of the assets of PRA UK, all of the equity interests in PRA UK and certain equity interests of 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:

PRA Group, Inc.

Notes to Consolidated Financial Statements

•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;

•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,~~September 30, 2023, ~~the unused portion of the European Credit Agreement (including the overdraft facility) was $432.6 million. Considering borrowing base restrictions and other covenants~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~as of March 31, 2023, the amount available to be drawn~~total availability under the European Credit Agreement (including the overdraft facility) was ~~$201.9 million.~~$337.9 million, which was comprised of $150.1 million based on current ERC, and $187.8 million additional availability subject to debt covenants, including advance rates.

The European Credit ~~Agreement~~Agreement is secured by a first perfected security interest in all of the equity interests in certain operating subsidiaries of the Borrowers, certain intercompany loans and certain shareholder loans extended by the Company to the Borrowers. Further, the Company guarantees all obligations and liabilities under the European Credit Agreement. 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 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.

PRA Group, Inc.

Notes to Consolidated Financial Statements

In addition, 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 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 ~~existing~~existing and future domestic restricted subsidiaries that guarantee the North American Credit Agreement, subject to certain exceptions. Interest on the 2028 Notes is payable semi-annually, in arrears, on February 1 and August 1 of each year. Substantially all of the net proceeds received from the 2028 Notes were ~~deposited into a newly-formed segregated deposit account, included in Restricted cash and cash equivalents on the Consolidated Balance Sheets, and the Company will use such proceeds~~used to retire ~~all or any portion of~~ the 2023 Notes (as defined below) ~~or to satisfy any other obligations with respect to the 2023 Notes.~~. The Company used the remainder of the net proceeds to repay a portion of its outstanding borrowings under the domestic revolving credit facility under the North America Credit Agreement.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

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

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

In 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 nine months ended September 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-months~~12 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 an~~d 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"), only~~During the ~~conversion spread is included~~nine months ended September 30, 2023, the Company repurchased $2.0 million in ~~the diluted EPS calculation, if dilutive. Under such method, the settlement~~aggregate 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 value~~used 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 the~~net 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 mature~~at their maturity on June 1, ~~2023.~~

~~The balances of the liability component of~~2023 (the "2023 Notes"). Interest expense on the 2023 Notes ~~outstanding as~~was recognized using an effective interest rate of ~~March 31,~~4.00%, and for the three and nine months ended September 30, 2023 and ~~December 31,~~ 2022, ~~were~~was as follows (amounts in thousands):

March 31, 2023 December 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%.~~

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


		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
		2023		2022				2023		2022		2023		2022
Interest expense - stated coupon rate	Interest expense - stated coupon rate	$	3,019	$	3,019		Interest expense - stated coupon rate	$	—	$	3,019	$	5,032	$	9,057

Interest expense - amortization of debt issuance costs	Interest expense - amortization of debt issuance costs	437		420			Interest expense - amortization of debt issuance costs	—		429		748		1,284
Total interest expense - convertible notes	Total interest expense - convertible notes	$	3,456	$	3,439		Total interest expense - convertible notes	$	—	$	3,448	$	5,780	$	10,341

7. Derivatives:

The Company periodically enters into derivative financial ~~instruments,~~instruments; typically interest rate ~~swap agreements,~~swaps, 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 summarize~~table summarizes the fair value of derivative instruments ~~in the Company's Consolidated Balance Sheets~~ as of ~~March 31,~~September 30, 2023 and December 31, 2022 (amounts in thousands):

March 31, 2023 December 31, 2022
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts Other assets $ 31,240 Other assets $ 37,305
Interest rate contracts Other liabilities — Other liabilities —
Derivatives not designated as hedging instruments:
Foreign currency contracts Other assets 115 Other assets 487
Foreign currency contracts Other liabilities 10,066 Other liabilities 19,120

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

September 30, 2023

December 31, 2022

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

32,482

Other assets

37,305

Interest rate contracts

Other liabilities

3,195

Other liabilities

—

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

10,380

Other assets

487

Foreign currency contracts

Other liabilities

206

Other liabilities

19,120

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,~~September 30, 2023 and December 31, 2022, the notional amount of interest rate contracts designated as cash flow hedging instruments was ~~$814.6~~$878.2 million and $719.7 million, respectively. Derivatives designated as cash flow hedging instruments were evaluated and remained highly effective at ~~March 31,~~September 30, 2023 and have remaining terms of three months to five years. The Company estimates that ~~approximatel~~approxi~~y $15.2~~mately $16.6 million of net de~~rivative gain~~derivative gains included in OCI ~~will~~will be reclassified into earnings within the next 12 months.

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 nine months ended ~~March 31,~~September 30, 2023 and 2022 (amounts in thousands):


		Gain/(loss) recognized in OCI, net of tax				Gain/(loss) recognized in OCI, net of tax
		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
Derivatives designated as cash flow hedging instruments	Derivatives designated as cash flow hedging instruments	2023		2022			Derivatives designated as cash flow hedging instruments	2023		2022		2023		2022
Interest rate contracts	Interest rate contracts	$	(629)	$	16,410		Interest rate contracts	$	(2,712)	$	19,983	$	7,430	$	41,106

		Gain/(loss) reclassified from OCI into income						Gain/(loss) reclassified from OCI into income
		Three Months Ended March 31,				Three Months Ended September 30,				Nine Months Ended September 30,
Location of gain or (loss) reclassified from OCI into income		2023		2022
Location of gain/(loss) reclassified from OCI into income							Location of gain/(loss) reclassified from OCI into income	2023		2022		2023		2022
Interest expense, net	Interest expense, net	$	(5,498)	$	(2,734)		Interest expense, net	$	6,498	$	383	$	18,666	$	(3,819)

During the three months ended September 30, 2023, with the discontinuation of LIBOR on June 30, 2023, and transition of the Company's interest rate swaps from LIBOR to SOFR, the Company discontinued the prior elections under ASU 2021-01, "Reference Rate Reform (Topic 848): Overall" ("ASU 2021-01").

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,~~September 30, 2023 and December 31, 2022, the notional amount of foreign currency contracts ~~that were not designated as hedging instruments~~ was ~~$383.3~~$412.0 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 nine months ended ~~March 31,~~September 30, 2023 and 2022 (amounts in thousands):


			Gain/(loss) recognized in income						Gain/(loss) recognized in income
			Three Months Ended March 31,						Three Months Ended September 30,
Derivatives not designated as hedging instruments	Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	2023		2022		Derivatives not designated as hedging instruments	Location of gain/(loss) recognized in income	2023		2022
Foreign currency contracts	Foreign currency contracts	Foreign exchange loss, net	$	(7,697)	$	6,493	Foreign currency contracts	Foreign exchange gain, net	$	8,137	$	33,019
Foreign currency contracts	Foreign currency contracts	Interest expense, net	521		(332)		Foreign currency contracts	Interest expense, net	204		313

								Gain/(loss) recognized in income
								Nine Months Ended September 30,
Derivatives not designated as hedging instruments							Derivatives not designated as hedging instruments	Location of gain/(loss) recognized in income	2023		2022
Foreign currency contracts							Foreign currency contracts	Foreign exchange gain/(loss), net	$	(7,149)	$	72,371
Foreign currency contracts							Foreign currency contracts	Interest expense, net	1,357		(638)

8. Fair Value:

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

~~Those levels of input are summarized~~value, 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 similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Financial Instruments Not ~~Required To Be~~ Carried at Fair Value

In accordance with the disclosure requirements of ASC Topic 825, "Financial Instruments" ("ASC 825"), the table below summarizes fair value estimates for the Company's financial instruments that are not ~~required to be~~ carried at fair value. The total of the fair ~~value calculations~~values 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,~~September 30, 2023 and December 31, 2022 (amounts in thousands):


		March 31, 2023				December 31, 2022					September 30, 2023				December 31, 2022
		Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value			Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:	Financial assets:									Financial assets:
Cash and cash equivalents	Cash and cash equivalents	$	116,471	$	116,471	$	84,758	$	84,758	Cash and cash equivalents	$	105,172	$	105,172	$	83,376	$	83,376
Restricted cash and cash equivalents		359,208		359,208		1,382		1,382

Finance receivables, net	Finance receivables, net	3,286,497		3,128,051		3,295,008		3,167,813		Finance receivables, net	3,460,804		3,005,033		3,295,008		3,167,813
Financial liabilities:	Financial liabilities:									Financial liabilities:
Interest-bearing deposits	Interest-bearing deposits	108,779		108,779		112,992		112,992		Interest-bearing deposits	100,505		100,505		112,992		112,992
Revolving lines of credit	Revolving lines of credit	1,110,016		1,110,016		1,060,251		1,060,251		Revolving lines of credit	1,356,481		1,356,481		1,060,251		1,060,251
Term loan	Term loan	447,500		447,500		450,000		450,000		Term loan	442,500		442,500		450,000		450,000
Senior Notes		1,050,000		992,225		650,000		580,433
Convertible Notes		345,000		344,276		345,000		341,926
Senior notes										Senior notes	1,046,000		923,125		650,000		580,433
Convertible notes										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~~notes and Convertible ~~Notes:~~notes: The fair value estimates for the Senior ~~Notes~~notes and Convertible ~~Notes~~notes incorporate quoted market prices ~~which were~~ obtained from secondary market broker quotes, which were derived from a variety of inputs including client orders, information from their pricing vendors, modeling software and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Financial Instruments ~~Required To Be~~ Carried 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,~~September 30, 2023 and December 31, 2022 (amounts in thousands):


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

Government securities	Government securities	$	65,004	$	—	$	—	$	65,004	Government securities	$	62,755	$	—	$	—	$	62,755

Derivative contracts (recorded in Other assets)	Derivative contracts (recorded in Other assets)	—		31,355		—		31,355		Derivative contracts (recorded in Other assets)	—		42,862		—		42,862
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)	—		3,401		—		3,401

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

Government securities	Government securities	$	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 ~~investment~~investments in government ~~instruments are~~securities is estimated using quoted market prices. Accordingly, the Company uses Level 1 inputs.

Derivative contracts: ~~The estimated fair~~Fair value of ~~the~~ derivative contracts is ~~determined~~estimated 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~~Measured Using Net Asset Value ("NAV")

Private equity funds: This class of investments consists of private equity funds that invest primarily in loans and securities, including single-family residential debt; corporate debt products; and financially-oriented, real-estate-rich and other operating companies in the Americas, Western Europe and Japan. These investments are subject to certain restrictions regarding transfers and withdrawals. The investments cannot be redeemed with the funds. Instead, the nature of the investments in this class is that distributions are received through the liquidation of the underlying assets of the fund. The investments are expected to be returned through distributions as a result of ~~liquidations~~liquidation of the funds' ~~underlying~~underlying assets over one to five years. The fair value of these private equity funds following the application of the NAV practical ~~expedie~~expedient was $2.9 million an~~nt was $4.0 million a~~ndd $4.4 million as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

Impairment of Real Estate

During the three months ended September 30, 2023, the Company determined that it would cease call center operations at one of its owned regional offices in the U.S. As a result, the Company recorded a pre-tax impairment charge of $5.0 million on the associated building and improvements. The impairment was determined by comparing the fair value of the building and improvements to carrying value, as required under ASC Topic 360, "Property, Plant, and Equipment". Fair value was based on an appraisal performed by a third-party valuation specialist, which considered Level 2 inputs in the form of prices paid for comparable properties in the same market.

PRA Group, Inc.

Notes to Consolidated Financial Statements

9. Accumulated Other Comprehensive Loss:

Reclassifications out of accumulated other comprehensive loss for the three and nine months ended ~~March 31,~~September 30, 2023 and 2022, were as follows (amounts in thousands):

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~


	Three Months Ended September 30,
Gains/(losses) on cash flow hedges	2023		2022		Location in the Consolidated Income Statement
Interest rate swaps	$	6,498	$	383	Interest expense, net
Income tax effect of item above	(1,550)		10		Income tax expense/(benefit)
Total gains on cash flow hedges	$	4,948	$	393

	Nine Months Ended September 30,
Gains/(losses) on cash flow hedges	2023		2022		Location in the Consolidated Income Statement
Interest rate swaps	$	18,666	$	(3,819)	Interest expense, net
Income tax effect of item above	(4,464)		918		Income tax expense/(benefit)
Total gains/(losses) on cash flow hedges	$	14,202	$	(2,901)

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


		Three Months Ended March 31, 2023									Three Months Ended September 30, 2023
		Debt Securities		Cash Flow		Currency Translation		Accumulated Other			Debt Securities		Cash Flow		Currency Translation		Accumulated Other
		Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)			Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance at beginning of period	Balance at beginning of period	$	(237)	$	27,804	$	(375,493)	$	(347,926)	Balance at beginning of period	$	(189)	$	28,692	$	(376,503)	$	(348,000)

Other comprehensive gain/(loss) before reclassifications		128		(629)		(4,101)		(4,602)
Other comprehensive loss before reclassifications										Other comprehensive loss before reclassifications	(26)		(2,712)		(31,603)		(34,341)
Reclassifications, net	Reclassifications, net	—		(4,202)		—		(4,202)		Reclassifications, net	—		(4,948)		—		(4,948)
Net current period other comprehensive gain/(loss)		128		(4,831)		(4,101)		(8,804)
Net current period other comprehensive loss										Net current period other comprehensive loss	(26)		(7,660)		(31,603)		(39,289)
Balance at end of period	Balance at end of period	$	(109)	$	22,973	$	(379,594)	$	(356,730)	Balance at end of period	$	(215)	$	21,032	$	(408,106)	$	(387,289)

		Three Months Ended March 31, 2022									Three Months Ended September 30, 2022
		Debt Securities		Cash Flow		Currency Translation		Accumulated Other			Debt Securities		Cash Flow		Currency Translation		Accumulated Other
		Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)			Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance at beginning of period	Balance at beginning of period	$	(221)	$	(5,371)	$	(261,317)	$	(266,909)	Balance at beginning of period	$	(623)	$	19,046	$	(366,244)	$	(347,821)
Other comprehensive (loss)/gain before reclassifications		(160)		16,410		4,780		21,030
Other comprehensive gain/(loss) before reclassifications										Other comprehensive gain/(loss) before reclassifications	133		19,983		(97,988)		(77,872)
Reclassifications, net	Reclassifications, net	—		2,170		—		2,170		Reclassifications, net	—		(393)		—		(393)
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)	133		19,590		(97,988)		(78,265)
Balance at end of period	Balance at end of period	$	(381)	$	13,209	$	(256,537)	$	(243,709)	Balance at end of period	$	(490)	$	38,636	$	(464,232)	$	(426,086)

(1) Net of deferred taxes for ~~unrealized~~unrealized (gains)/losses from cash flow ~~hedg~~eshedges of ~~$(7.6)~~$2.5 million and ~~$(1.2)~~$(3.5) million for the three months ended ~~March 31,~~September 30, 2023 and 2022, respectively.

PRA Group, Inc.

Notes to Consolidated Financial Statements


	Nine Months Ended September 30, 2023
	Debt Securities		Cash Flow		Currency Translation		Accumulated Other
	Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance at beginning of period	$	(237)	$	27,804	$	(375,493)	$	(347,926)
Other comprehensive gain/(loss) before reclassifications	22		7,430		(32,613)		(25,161)
Reclassifications, net	—		(14,202)		—		(14,202)
Net current period other comprehensive gain/(loss)	22		(6,772)		(32,613)		(39,363)
Balance at end of period	$	(215)	$	21,032	$	(408,106)	$	(387,289)

	Nine Months Ended September 30, 2022
	Debt Securities		Cash Flow		Currency Translation		Accumulated Other
	Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance at beginning of period	$	(221)	$	(5,371)	$	(261,317)	$	(266,909)
Other comprehensive gain/(loss) before reclassifications	(269)		41,106		(202,915)		(162,078)
Reclassifications, net	—		2,901		—		2,901
Net current period other comprehensive gain/(loss)	(269)		44,007		(202,915)		(159,177)
Balance at end of period	$	(490)	$	38,636	$	(464,232)	$	(426,086)

(1) Net of deferred taxes for unrealized gains from cash flow hedges of $(7.0) million and $(6.1) million for the nine months ended September 30, 2023 and 2022, respectively.

10. Earnings per Share:

Basic EPS ~~are~~is computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS ~~are~~is computed using the same components as basic EPS, with the denominator adjusted for the dilutive effect of the conversion spread of the Convertible Notes and nonvested share awards, if they are dilutive. There ~~has been~~were no dilutive ~~effect of~~effects 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. WeAs of September 30, 2023, the Company had $67.7 million remaining for share repurchases, which is subject to restrictive covenants contained in our credit facilities and senior note indentures. Considering these covenants, we did not repurchase any common stock during the ~~first quarter~~nine months ended ~~March 31,~~September 30, 2023.

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

Three Months Ended March 31,
2023 2022
Net Loss Attributable to PRA Group, Inc. Weighted
Average
Common Shares EPS Net Income Attributable to PRA Group, Inc. Weighted
Average
Common Shares EPS
Basic EPS $ (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 September 30,
	2023					2022
	Net Loss Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	$	(12,262)	39,242	$	(0.31)	$	24,732	39,018	$	0.63
Dilutive effect of nonvested share awards			—	—				152	—

Diluted EPS	$	(12,262)	39,242	$	(0.31)	$	24,732	39,170	$	0.63

	Nine Months Ended September 30,
	2023					2022
	Net Loss Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	$	(74,695)	39,155	$	(1.91)	$	101,188	39,858	$	2.54
Dilutive effect of nonvested share awards			—	—				267	(0.02)
Diluted EPS	$	(74,695)	39,155	$	(1.91)	$	101,188	40,125	$	2.52

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

11. Income Taxes:

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

~~At March 31,~~As of September 30, 2023, the tax years subject to examination by the major federal, state and international taxing jurisdictions ~~are~~are 2014 ~~and~~and subsequent years.

The Company intends for predominantly all international earnings to be indefinitely reinvested in its international operations; therefore, ~~the~~ recording of deferred tax liabilities for such unremitted earnings is not required. If international earnings were repatriated or deemed repatriated due to intercompany loans, the Company may need to accrue and pay taxes, although foreign tax credits and exemptions may be available to partially reduce ~~U.S.~~or eliminate income and withholding taxes. Any deemed repatriations from additional intercompany loans would be expected to have little or no tax impact. The amount of cash on hand related to international operations with indefinitely reinvested ~~earnin~~gsearnings was ~~$88.4~~$88.8 million andand $75.3 million as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

12. Commitments and Contingencies:

Employment Agreements:

The Company has entered into employment agreements with ~~each~~certain of its current and former U.S. executive ~~officers, which expire on December 31, 2023.~~officers. 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,~~As of September 30, 2023, estimated future compensation under these agreements was ~~approximately $8.8~~ $4.3 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~~$4.3 million ~~tot~~to~~al above.~~tal above.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Forward Flow Agreements:

The Company is party to several forward flow agreements ~~that allow~~ for the purchase of nonperforming loans at ~~pre-e~~pre-established prices. As of ~~stablished prices. The~~September 30, 2023, the maximum ~~remaining~~ amount the Company could be obligated to ~~be purchased~~purchase under forward flow agreements ~~at March 31, 2023,~~ was ~~$622.4~~$538.0 million. This amount is based on sellers' estimates of future flow sales and is dependent on actual delivery compared to these estimates. Accordingly, amounts purchased under these agreements may vary and are often less than the maximum amounts.

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

~~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,~~September 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 September 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~~2022 Form 10-K, except as described in 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. OnCompany's 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 action~~Quarterly 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, and~~were no new material legal proceedings during the ~~interpretation of the statute, including statutory damages.~~

~~Other matters that are not considered routine in nature were disclosed previously in the 2022 Form 10-K.~~three months ended September 30, 2023.

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.

2428

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

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

Forward-Looking Statements:

This Quarterly Report contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Statements other than statements of historical fact are forward-looking statements, including statements regarding overall cash collection trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans, strategies and anticipated events or trends. Our results could differ materially from those expressed or implied by such forward-looking statements, or our ~~forward looking~~forward-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.

2529

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.

2630

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,~~September 30, 2023, employed ~~3,184~~3,134 full-time equivalents. Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol ~~"PRAA."~~"PRAA".

Executive Overview

For the three months ended ~~March 31,~~September 30, 2023, we had:

•Total portfolio purchases of ~~$230.2~~$311.2 million.

•Total cash ~~collection~~scollections of ~~$411.3~~$419.6 million.

•~~Estimated remaining collections of~~ ~~$5.7 billion.~~

•Cash efficiency ratio of ~~54.3%~~58.9%.

•Diluted earnings per share of ~~$(1.50)~~$(0.31).

For the nine months ended September 30, 2023, we had:

•Total portfolio purchases of $869.2 million.

•Total cash collections of $1,250.2 million.

•Cash efficiency ratio of 58.2%.

~~During 2022, excess consumer~~• ~~liquidity, primarily in the U.S., resulted in lower levels~~Diluted earnings per share of ~~charge-offs across most lending institutions.~~ $(1.91).

As ~~a result, this caused a decrease in the supply~~ of ~~portfolios available for purchase in the U.S., resulting in a lower level~~September 30, 2023, we had estimated remaining collections 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.$6.0 billion.

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~~continued weak economic conditions, ~~there may be some~~we have experienced near-term pressure on cash ~~collections.~~collections in certain markets. 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. Volumes and pricing in the U.S. market are improving, and we increased our U.S. investment level for the fourth consecutive quarter. While the European market continues to be competitive, our European business continues to capitalize on stable investment volumes. 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.~~

2731

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 ~~table~~table sets forth our Consolidated Income Statement amounts as a percentage of Total revenues for the periods indicated (dollars in thousands):


		For the Three Months Ended March 31,								For the Three Months Ended September 30,					For the Nine Months Ended September 30,
		2023				2022					2023		2022				2023				2022
Revenues:	Revenues:											Revenues:
Portfolio income	Portfolio income	$	188,242	121.1	%	$	207,532	86.3	%			Portfolio income	$	189,960	87.8	%	$	185,853	75.9	%	$	562,492	96.8	%	$	587,394	79.0	%
Changes in expected recoveries	Changes in expected recoveries	(36,912)		(23.8)		29,914		12.4				Changes in expected recoveries	22,156		10.2		48,336		19.8		6,380		1.1		134,817		18.1
Total portfolio revenue	Total portfolio revenue	151,330		97.3		237,446		98.7				Total portfolio revenue	212,116		98.0		234,189		95.7		568,872		97.9		722,211		97.1

Other revenue	Other revenue	4,140		2.7		3,159		1.3				Other revenue	4,314		2.0		10,618		4.3		12,264		2.1		21,463		2.9
Total revenues	Total revenues	155,470		100.0		240,605		100.0				Total revenues	216,430		100.0		244,807		100.0		581,136		100.0		743,674		100.0

Operating expenses:	Operating expenses:											Operating expenses:
Compensation and employee services	Compensation and employee services	82,403		53.0		71,096		29.5				Compensation and employee services	69,517		32.1		70,382		28.8		217,708		37.5		215,615		29.0
Legal collection fees	Legal collection fees	8,838		5.7		10,873		4.5				Legal collection fees	9,839		4.5		8,963		3.7		28,228		4.9		29,390		4.0
Legal collection costs	Legal collection costs	23,945		15.4		16,557		6.9				Legal collection costs	20,761		9.6		23,391		9.5		66,228		11.4		57,694		7.8
Agency fees	Agency fees	17,378		11.2		17,388		7.2				Agency fees	19,436		9.0		15,160		6.2		54,491		9.4		47,374		6.4
Outside fees and services	Outside fees and services	24,944		16.0		19,378		8.1				Outside fees and services	18,858		8.7		24,618		10.0		62,064		10.7		71,489		9.6
Communication	Communication	10,527		6.8		12,583		5.2				Communication	9,881		4.6		9,951		4.1		30,525		5.3		32,062		4.3
Rent and occupancy	Rent and occupancy	4,448		2.9		4,987		2.1				Rent and occupancy	4,426		2.0		4,669		1.9		13,193		2.3		14,289		1.9
Depreciation and amortization	Depreciation and amortization	3,589		2.3		3,778		1.6				Depreciation and amortization	3,273		1.5		3,741		1.5		10,344		1.8		11,384		1.5
Impairment of real estate												Impairment of real estate	5,037		2.3		—		—		5,037		0.9		—		—
Other operating expenses	Other operating expenses	13,042		8.4		11,998		5.0				Other operating expenses	12,356		5.7		13,144		5.4		38,355		6.6		37,885		5.1

Total operating expenses	Total operating expenses	189,114		121.7		168,638		70.1				Total operating expenses	173,384		80.0		174,019		71.1		526,173		90.8		517,182		69.6

(Loss)/income from operations		(33,644)		(21.7)		71,967		29.9
Income from operations												Income from operations	43,046		20.0		70,788		28.9		54,963		9.2		226,492		30.4
Other income and (expense):	Other income and (expense):											Other income and (expense):

Interest expense, net	Interest expense, net	(38,283)		(24.6)		(31,748)		(13.2)				Interest expense, net	(49,473)		(22.9)		(32,455)		(13.3)		(130,778)		(22.5)		(95,765)		(12.9)
Foreign exchange loss, net		(9)		—		(532)		(0.2)
Foreign exchange gain, net												Foreign exchange gain, net	564		0.3		4		—		984		0.2		791		0.1
Other	Other	(650)		(0.4)		(490)		(0.2)				Other	(500)		(0.2)		(83)		—		(1,380)		(0.2)		(754)		(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 taxes												Income/(loss) before income taxes	(6,363)		(2.8)		38,254		15.6		(76,211)		(13.3)		130,764		17.5
Income tax expense/(benefit)												Income tax expense/(benefit)	1,788		0.8		11,072		4.5		(15,317)		(2.6)		29,828		3.9
Net income/(loss)												Net income/(loss)	(8,151)		(3.6)		27,182		11.1		(60,894)		(10.7)		100,936		13.6
Adjustment for net income/(loss) attributable to noncontrolling interests	Adjustment for net income/(loss) attributable to noncontrolling interests	4,726		3.0		(5,354)		(2.2)				Adjustment for net income/(loss) attributable to noncontrolling interests	4,111		1.9		2,450		1.0		13,801		2.4		(252)		—
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.	$	(12,262)	(5.5)	%	$	24,732	10.1	%	$	(74,695)	(13.1)	%	$	101,188	13.6	%

2832

Three Months Ended ~~March 31,~~September 30, 2023 Compared To Three Months Ended ~~March 31,~~September 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 September 30,
		2023		2022		$ Change		% Change			2023		2022		$ Change		% Change
Americas and Australia Core	Americas and Australia Core	$	227,960	$	270,284	$	(42,324)	(15.7)	%	Americas and Australia Core	$	223,714	$	225,775	$	(2,061)	(0.9)	%
Americas Insolvency	Americas Insolvency	25,751		35,209		(9,458)		(26.9)		Americas Insolvency	27,809		31,911		(4,102)		(12.9)
Europe Core	Europe Core	134,005		151,162		(17,157)		(11.4)		Europe Core	144,402		132,072		12,330		9.3
Europe Insolvency	Europe Insolvency	23,568		24,325		(757)		(3.1)		Europe Insolvency	23,639		22,586		1,053		4.7
Total cash collections	Total cash collections	$	411,284	$	480,980	$	(69,696)	(14.5)	%	Total cash collections	$	419,564	$	412,344	$	7,220	1.8	%

Cash collections adjusted (1)	Cash collections adjusted (1)	$	411,284	$	465,282	$	(53,998)	(11.6)	%	Cash collections adjusted (1)	$	419,564	$	424,119	$	(4,555)	(1.1)	%

(1) Cash collections adjusted refers to 2022 foreign currency cash collections remeasured ~~using~~at 2023 average U.S. dollar exchange rates.

Cash collections were ~~$411.3~~$419.6 million for the three months ended ~~March 31,~~September 30, 2023, ~~a decrease~~an increase of ~~$69.7~~$7.3 million,, or ~~14.5%~~1.8%, compared to ~~$481.0~~$412.3 million for the three months ended ~~March 31,~~September 30, 2022. The ~~decrease~~increase was primarily due to higher cash collections of $20.9 million, or 87.8%, in Brazil, and higher cash collections of $13.4 million, or 8.7%, in Europe, both driven by higher levels of purchasing in recent years. These increases were partially offset by lower cash collections of ~~$48.7~~$16.9 million, or ~~30.2%~~14.0%, in U.S. call center and other collections, and ~~$9.5~~lower cash collections of $4.1 million, or ~~26.9%~~12.9%, in Americas Insolvency cash collections, both ~~reflecting~~largely due to lower purchasing levels ~~of portfolio purchasing~~ in recent ~~periods. Additionally,~~years. U.S. legal cash collections decreased ~~$13.5~~$6.1 million, or ~~16.7%~~8.5%, reflecting ~~the impact from the~~ lower ~~volume~~volumes 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. These decreases were partially offset by a $19.8 million increase in cash collections in the Other Americas Core pools.years.

Revenues

Revenue generation for the periods indicated ~~were~~was as follows (amounts in thousands):


		For the Three Months Ended March 31,									For the Three Months Ended September 30,
		2023		2022		$ Change		% Change			2023		2022		$ Change		% Change
Portfolio income	Portfolio income	$	188,242	$	207,532	$	(19,290)	(9.3)	%	Portfolio income	$	189,960	$	185,853	$	4,107	2.2	%
Changes in expected recoveries	Changes in expected recoveries	(36,912)		29,914		(66,826)		(223.4)		Changes in expected recoveries	22,156		48,336		(26,180)		(54.2)

Total portfolio revenue	Total portfolio revenue	151,330		237,446		(86,116)		(36.3)		Total portfolio revenue	212,116		234,189		(22,073)		(9.4)

Other revenue	Other revenue	4,140		3,159		981		31.1		Other revenue	4,314		10,618		(6,304)		(59.4)
Total revenues	Total revenues	$	155,470	$	240,605	$	(85,135)	(35.4)	%	Total revenues	$	216,430	$	244,807	$	(28,377)	(11.6)	%

Total Portfolio Revenue

Total portfolio revenue was ~~$151.3~~$212.1 million for the three months ended ~~March 31,~~September 30, 2023, a decrease of ~~$86.1~~$22.1 million, or ~~36.3%~~9.4%, compared to ~~$237.4~~$234.2 million for the three months ended ~~March 31,~~September 30, 2022. ~~We experienced a softer tax season than we had anticipated with U.S. collections missing our internal forecast~~The 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 half~~lower levels of ~~this adjustment was related~~cash overperformance and an increase to the ~~2021 U.S. Core vintage. This vintage includes the cohort~~ERC 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~~three months ended September 30, 2022, that did not recur during the three months ended September 30, 2023, partially offset by ~~3%. This is a lower margin than we have experienced~~higher revenue from the impact of increased purchasing in ~~recent quarters~~South America and ~~given 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.~~Europe.

Other Revenue

Other revenue was ~~$4.1~~$4.3 million for the three months ended ~~March 31,~~September 30, 2023, ~~an increase~~a decrease of ~~$0.9~~$6.3 million, or 59.4%, compared to ~~$3.2~~$10.6 million for the three months ended ~~March 31,~~September 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~~$173.4 million for the three months ended ~~March 31,~~September 30, 2023, ~~an increase~~a decrease of ~~$20.5~~$0.6 million, or ~~12.2%~~0.4%, compared to ~~$168.6~~$174.0 million for the three months ended ~~March 31,~~September 30, 2022.

2933

~~Compensation and Employee Services~~

~~Compensation and employee services expenses were $82.4 million for the three months ended March 31, 2023~~, an increase of $11.3 million, or 15.9%, compared to $71.1 million for the three months ended March 31, 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 reflecting lower external legal cash collections in the U.S.

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 collection~~These costs were ~~$23.9~~$20.8 million for the three months ended ~~March 31,~~September 30, 2023, ~~an increase~~a decrease of ~~$7.3~~$2.6 million, or ~~44.0%~~11.1%, compared to ~~$16.6~~$23.4 million for the three months ended ~~March 31,~~September 30, 2022. The ~~increase reflects the higher volume~~decrease was primarily due to lower volumes of accounts placed ~~into~~in the legal channel in the ~~U.S during~~U.S. compared to the three months ended ~~March 31, 2023.~~September 30, 2022.

~~Communication~~Agency Fees

~~Communication expenses primarily represent postage and telephone related expenses incurred as a result of our collection efforts. Communications expenses~~Agency fees were $10.5 million for the three months ended March 31, 2023, a decrease of $2.1 million, or 16.7%, compared to $12.6 million for the three months ended March 31, 2022. The decrease mainly reflects a decrease in postage expenses due to lower portfolio purchasing in the U.S in recent periods.

~~Outside Fees and Services~~

~~Outside fees and services expenses were $24.9 million for the three months ended March 31, 2023, an increase of $5.5 million, or 28.4%, compared to~~ $19.4 million for the three months ended ~~March 31, 2022~~.September 30, 2023, an increase of $4.2 million, or 27.6%, compared to $15.2 million for the three months ended September 30, 2022. The increase was primarily due to the increase in cash collections in Brazil.

Outside Fees and Services

Outside fees and services expenses were $18.9 million for the three months ended September 30, 2023, a decrease of $5.7 million, or 23.2%, compared to $24.6 million for the three months ended September 30, 2022. The decrease was primarily due to higher corporate legal fees during the three months ended September 30, 2022.

Impairment of Real Estate

Impairment of real estate was $5.0 million for the three months ended September 30, 2023, due to an ~~accrual~~impairment charge associated with our decision to cease call center operations at one of our owned regional offices in ~~corporate legal costs of $7.6 million related to certain case-specific litigation expenses, slightly offset by decreased costs~~the U.S. No impairment was recorded for ~~other fees and services.~~the three months ended September 30, 2022. The property is being marketed for sale or lease.

Interest Expense, Net

Interest expense, net was ~~$38.3~~$49.5 million for the three months ended ~~March 31,~~September 30, 2023, an increase of ~~$6.6~~$17.0 million, or ~~20.8%~~52.4%, compared to ~~$31.7~~$32.5 million for the three months ended ~~March 31,~~September 30, 2022, primarily reflecting a higher average debt balance and higher interest rates.

Interest expense, net consisted of the following (amounts in thousands):


	For the Three Months Ended September 30,
	2023		2022		$ Change		% Change
Interest on debt obligations and unused line fees	$	31,161	$	17,635	$	13,526	76.7	%
Interest on senior notes	18,433		9,906		8,527		86.1
Coupon interest on convertible notes	—		3,019		(3,019)		(100.0)
Amortization of loan fees and other loan costs	2,220		2,555		(335)		(13.1)
Interest income	(2,341)		(660)		(1,681)		254.7
Interest expense, net	$	49,473	$	32,455	$	17,018	52.4	%

Income Tax Expense/(Benefit)

Income tax expense was $1.8 million for the three months ended September 30, 2023, a decrease of $9.3 million, or 83.8%, compared to $11.1 million for the three months ended September 30, 2022. We recorded income tax expense for the period despite incurring a quarterly pre-tax loss due to changes in our projected mix of income from different taxing jurisdictions. Tax expense was recorded during the period to reflect an estimated annual effective tax benefit rate. The decrease in income tax expense was primarily due to lower income before taxes during 2023 when compared to 2022. During the three months ended September 30, 2023, our effective tax benefit rate was 28.1%, compared to an effective tax rate of 28.9% for the three months ended September 30, 2022. The decrease in our effective tax rate was primarily due to changes in the mix of income from different taxing jurisdictions.

Nine Months Ended September 30, 2023 Compared To Nine Months Ended September 30, 2022

Cash Collections

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


	For the Nine Months Ended September 30,
	2023		2022		$ Change		% Change
Americas and Australia Core	$	672,560	$	740,436	$	(67,876)	(9.2)	%
Americas Insolvency	79,944		101,398		(21,454)		(21.2)
Europe Core	427,731		425,704		2,027		0.5
Europe Insolvency	69,932		69,846		86		0.1
Total cash collections	$	1,250,167	$	1,337,384	$	(87,217)	(6.5)

Cash collections adjusted (1)	$	1,250,167	$	1,331,098	$	(80,931)	(6.1)	%

(1) Cash collections adjusted refers to 2022 foreign currency cash collections remeasured at 2023 U.S. dollar exchange rates.

Cash collections were $1,250.2 million for the nine months ended September 30, 2023, a decrease of $87.2 million, or 6.5%, compared to $1,337.4 million for the nine months ended September 30, 2022. The decrease was primarily due to a decline of $98.7 million, or 23.5%, in U.S. call center and other cash collections, and lower cash collections of $21.4 million, or 21.2%, in Americas Insolvency collections, both largely due to lower purchasing levels in recent years. U.S. legal cash collections decreased $28.5 million, or 12.6%, reflecting lower volumes of accounts placed in the legal channel due to lower purchasing levels in recent years. These decreases were partially offset by higher cash collections in South America of $59.6 million, or 83.6%, due mainly to higher recent purchases.

Revenues

Revenue generation for the periods indicated was as follows (amounts in thousands):


	For the Nine Months Ended September 30,
	2023		2022		$ Change		% Change
Portfolio income	$	562,492	$	587,394	$	(24,902)	(4.2)	%
Changes in expected recoveries	6,380		134,817		(128,437)		(95.3)
Total portfolio revenue	568,872		722,211		(153,339)		(21.2)
Other revenue	12,264		21,463		(9,199)		(42.9)
Total revenues	$	581,136	$	743,674	$	(162,538)	(21.9)	%

Total Portfolio Revenue

Total portfolio revenue was $568.9 million for the nine months ended September 30, 2023, a decrease of $153.3 million, or 21.2%, compared to $722.2 million for the nine months ended September 30, 2022. The decrease was largely driven by lower purchasing, lower levels of cash overperformance and an increase to the ERC of certain pools during the nine months ended September 30, 2022, that did not recur during the nine months ended September 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 ERC. This resulted in a negative $25.6 million net present value adjustment for our U.S. Core portfolio, with more than half of this adjustment related to the 2021 U.S. Core vintage.

Other revenue

Other revenue was $12.3 million for the nine months ended September 30, 2023, a decrease of $9.2 million, or 42.9%, compared to $21.5 million for the nine months ended September 30, 2022. The decrease was primarily due to the timing of settlements in CCB.

Operating Expenses

Operating expenses were $526.2 million for the nine months ended September 30, 2023, an increase of $9.0 million, or 1.7%, compared to $517.2 million for the nine months ended September 30, 2022.

Compensation and Employee Services

Compensation and employee services expenses were $217.7 million for the nine months ended September 30, 2023, an increase of $2.1 million, or 1.0%, compared to $215.6 million for the nine months ended September 30, 2022. The increase mainly reflects higher severance expenses of $8.6 million, partially offset by decreases in temporary labor and healthcare and other benefit expenses.

Legal Collection Costs

Legal collection costs were $66.2 million for the nine months ended September 30, 2023, an increase of $8.5 million, or 14.7%, compared to $57.7 million for the nine months ended September 30, 2022. The increase primarily reflects higher volumes of accounts placed in the legal channel in the U.S.

Agency Fees

Agency fees were $54.5 million for the nine months ended September 30, 2023, an increase of $7.1 million, or 15.0%, compared to $47.4 million for the nine months ended September 30, 2022. The increase was primarily due to the increase in cash collections in Brazil.

Outside Fees and Services

Outside fees and services expenses were $62.1 million for the nine months ended September 30, 2023, a decrease of $9.4 million, or 13.1%, compared to $71.5 million for the nine months ended September 30, 2022. The decrease reflects lower corporate legal costs and consulting fees.

Impairment of Real Estate

Impairment of real estate was $5.0 million for the nine months ended September 30, 2023, due to an impairment charge associated with our decision to cease call center operations at one of our owned regional offices in the U.S. No impairment was recorded for the nine months ended September 30, 2022. The property is being marketed for sale or lease.

Interest Expense, Net

Interest expense, net was $130.8 million for the nine months ended September 30, 2023, an increase of $35.0 million, or 36.6%, compared to $95.8 million for the nine months ended September 30, 2022, primarily reflecting a higher average debt balance and increased interest rates. Interest income increased ~~$3.5~~$9.3 million ~~as a result of~~primarily due to the cash we received and invested from the issuance of our Senior Notes due 2028 ~~Notes (as defined below)~~("2028 Notes"), in the first quarter of 2023, substantially all of the net proceeds of which ~~will be~~we used to retire our Convertible Senior Notes due 2023 ~~Convertible Notes (as defined below), which mature~~("2023 Notes") in the second quarter of 2023, in addition to higher interest rates earned on ~~June 1, 2023.~~our bank account balances.

Interest expense, net consisted of the ~~following:~~

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


	For the Nine Months Ended September 30,
	2023		2022		$ Change		% Change
Interest on debt obligations and unused line fees	$	78,139	$	51,150	$	26,989	52.8	%
Interest on senior notes	51,672		29,719		21,953		73.9
Coupon interest on convertible notes	5,031		9,057		(4,026)		(44.5)
Amortization of loan fees and other loan costs	7,045		7,653		(608)		(7.9)
Interest income	(11,109)		(1,814)		(9,295)		512.4
Interest expense, net	$	130,778	$	95,765	$	35,013	36.6	%

Income Tax Expense/(Benefit)~~/Expense~~

Income tax ~~(benefit)/expense~~benefit was $15.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2023, ~~was~~ a ~~net tax benefit~~decrease of ~~$18.7~~$45.1 million, or 151.2%, compared to income tax expense of ~~$4.6~~$29.8 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. ~~During~~The decrease in income tax expense was primarily due to lower income before taxes during the ~~three~~nine months ended ~~March 31,~~September 30, 2023, our effective tax rate was 25.7%, compared to 11.7% for the three months ended March 31, 2022. The income tax benefit was driven by the consolidated net loss before income taxes of $72.6 million incurred during the first quart~~er of 2023. The~~which

3036

~~increase~~decreased $207.0 million, or 158.3%. During the nine months ended September 30, 2023, our effective tax benefit rate was 20.1%, compared to an effective tax rate of 22.8% for the nine months ended September 30, 2022. The decrease in our effective tax rate was mainly due to ~~a change in~~the timing of discrete items and changes in the mix of income from different taxing jurisdictions.

3137

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~~year following purchase, we typically do not ~~increase~~adjust 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.~~adjust ERC and TEC. 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.

3238


Purchase Price Multiples as of March 31, 2023 Amounts in thousands
Purchase Price Multiples as of September 30, 2023 Amounts in thousands										Purchase Price Multiples as of September 30, 2023 Amounts in thousands
Purchase Period	Purchase Period	Purchase Price (2)(3)		Total Estimated Collections (4)		Estimated Remaining Collections (5)		Current Purchase Price Multiple	Original Purchase Price Multiple (6)	Purchase Period	Purchase Price (2)(3)		Total Estimated Collections (4)		Estimated Remaining Collections (5)		Current Purchase Price Multiple	Original Purchase Price Multiple (6)
Americas and Australia Core	Americas and Australia Core									Americas and Australia Core
1996-2012	1996-2012	$	1,541,896	$	4,797,375	$	36,563	311%	238%	1996-2012	$	1,541,896	$	4,803,591	$	34,002	312%	238%
2013	2013	390,826		905,829		14,434		232%	211%	2013	390,826		912,127		15,613		233%	211%
2014	2014	404,117		872,324		23,500		216%	204%	2014	404,117		878,252		23,547		217%	204%
2015	2015	443,114		899,293		45,410		203%	205%	2015	443,114		898,799		37,991		203%	205%
2016	2016	455,767		1,075,915		81,221		236%	201%	2016	455,767		1,075,382		68,523		236%	201%
2017	2017	532,851		1,200,467		135,622		225%	193%	2017	532,851		1,196,883		110,646		225%	193%
2018	2018	653,975		1,464,662		199,190		224%	202%	2018	653,975		1,463,965		153,173		224%	202%
2019	2019	581,476		1,294,091		256,184		223%	206%	2019	581,476		1,291,978		200,551		222%	206%
2020	2020	435,668		947,844		299,252		218%	213%	2020	435,668		947,163		236,196		217%	213%
2021	2021	435,846		781,115		486,989		179%	191%	2021	435,846		774,075		412,428		178%	191%
2022	2022	406,082		721,791		610,010		178%	179%	2022	406,082		709,920		502,071		175%	179%
2023	2023	117,160		204,528		201,535		175%		2023	475,470		902,639		846,139		190%
Subtotal	Subtotal	6,398,778		15,165,234		2,389,910				Subtotal	6,757,088		15,854,774		2,640,880
Americas Insolvency	Americas Insolvency									Americas Insolvency
1996-2012	1996-2012	1,038,223		2,146,434		203		207%	165%	1996-2012	1,038,223		2,146,670		96		207%	165%
2013	2013	227,834		355,606		103		156%	133%	2013	227,834		355,733		45		156%	133%
2014	2014	148,420		218,685		280		147%	124%	2014	148,420		218,770		139		147%	124%
2015	2015	63,170		87,919		201		139%	125%	2015	63,170		87,980		103		139%	125%
2016	2016	91,442		117,460		433		128%	123%	2016	91,442		117,770		270		129%	123%
2017	2017	275,257		355,158		2,686		129%	125%	2017	275,257		356,365		1,423		129%	125%
2018	2018	97,879		137,184		11,869		140%	127%	2018	97,879		136,160		4,288		139%	127%
2019	2019	123,077		168,061		38,651		137%	128%	2019	123,077		168,922		24,524		137%	128%
2020	2020	62,130		89,842		41,929		145%	136%	2020	62,130		90,853		32,652		146%	136%
2021	2021	55,187		72,875		46,009		132%	136%	2021	55,187		73,780		37,820		134%	136%
2022	2022	33,442		46,205		41,226		138%	139%	2022	33,442		46,734		36,834		140%	139%
2023	2023	15,701		21,079		20,811		134%		2023	71,953		100,452		95,705		140%
Subtotal	Subtotal	2,231,762		3,816,508		204,401				Subtotal	2,288,014		3,900,189		233,899
Total Americas and Australia	Total Americas and Australia	8,630,540		18,981,742		2,594,311				Total Americas and Australia	9,045,102		19,754,963		2,874,779
Europe Core	Europe Core									Europe Core
2012	2012	20,409		43,973		—		215%	187%	2012	20,409		44,413		—		218%	187%
2013	2013	20,334		27,039		1		133%	119%	2013	20,334		27,260		1		134%	119%
2014 (1)	2014 (1)	773,811		2,365,846		385,266		306%	208%	2014 (1)	773,811		2,408,574		354,169		311%	208%
2015	2015	411,340		727,491		146,999		177%	160%	2015	411,340		743,660		141,522		181%	160%
2016	2016	333,090		567,548		179,801		170%	167%	2016	333,090		573,894		167,256		172%	167%
2017	2017	252,174		358,180		115,098		142%	144%	2017	252,174		362,855		107,001		144%
2018	2018	341,775		540,907		215,509		158%	148%	2018	341,775		547,194		197,447		160%	148%
2019	2019	518,610		805,423		366,897		155%	152%	2019	518,610		822,604		338,588		159%	152%
2020	2020	324,119		557,152		292,626		172%		2020	324,119		558,705		259,639		172%
2021	2021	412,411		698,282		472,516		169%	170%	2021	412,411		694,192		423,855		168%	170%
2022	2022	359,447		580,548		534,007		162%		2022	359,447		580,738		477,450		162%
2023	2023	91,945		157,933		155,919		172%		2023	281,356		457,931		429,428		163%
Subtotal	Subtotal	3,859,465		7,430,322		2,864,639				Subtotal	4,048,876		7,822,020		2,896,356
Europe Insolvency	Europe Insolvency									Europe Insolvency
2014 (1)	2014 (1)	10,876		18,669		—		172%	129%	2014 (1)	10,876		18,809		—		173%	129%
2015	2015	18,973		29,000		70		153%	139%	2015	18,973		29,255		53		154%	139%
2016	2016	39,338		57,076		1,156		145%	130%	2016	39,338		57,698		1,123		147%	130%
2017	2017	39,235		51,169		3,700		130%	128%	2017	39,235		51,677		2,172		132%	128%
2018	2018	44,908		52,454		9,681		117%	123%	2018	44,908		52,473		5,713		117%	123%
2019	2019	77,218		110,875		31,642		144%	130%	2019	77,218		112,312		23,758		145%	130%
2020	2020	105,440		156,589		62,485		149%	129%	2020	105,440		156,926		47,485		149%	129%
2021	2021	53,230		71,526		42,227		134%		2021	53,230		71,526		34,563		134%
2022	2022	44,604		61,034		54,759		137%		2022	44,604		60,714		47,585		136%	137%
2023	2023	7,352		10,087		10,011		137%		2023	32,217		43,946		42,049		136%
Subtotal	Subtotal	441,174		618,479		215,731				Subtotal	466,039		655,336		204,501
Total Europe	Total Europe	4,300,639		8,048,801		3,080,370				Total Europe	4,514,915		8,477,356		3,100,857
Total PRA Group	Total PRA Group	$	12,931,179	$	27,030,543	$	5,674,681			Total PRA Group	$	13,560,017	$	28,232,319	$	5,975,636

(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,~~September 30, 2023 exchange rate.

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

3339


Portfolio Financial Information Year-to-date as of March 31, 2023 Amounts in thousands
Portfolio Financial Information Year-to-date as of September 30, 2023 Amounts in thousands												Portfolio Financial Information Year-to-date as of September 30, 2023 Amounts in thousands
Purchase Period	Purchase Period	Cash Collections (2)		Portfolio Income (2)		Changes in Expected Recoveries (2)		Total Portfolio Revenue (2)		Net Finance Receivables as of March 31, 2023 (3)		Purchase Period	Cash Collections (2)		Portfolio Income (2)		Changes in Expected Recoveries (2)		Total Portfolio Revenue (2)		Net Finance Receivables as of September 30, 2023 (3)
Americas and Australia Core	Americas and Australia Core											Americas and Australia Core
1996-2012	1996-2012	$	4,930	$	3,132	$	345	$	3,477	$	8,799	1996-2012	$	13,706	$	8,270	$	3,589	$	11,859	$	8,404
2013	2013	2,590		1,119		429		1,548		6,395		2013	7,709		3,013		3,849		6,862		6,588
2014	2014	3,117		1,429		161		1,590		8,983		2014	8,933		3,839		3,743		7,583		9,136
2015	2015	3,789		2,453		(1,852)		601		18,065		2015	10,697		6,477		(1,262)		5,216		15,758
2016	2016	6,740		4,712		(3,078)		1,634		26,353		2016	18,926		12,877		(2,309)		10,568		22,995
2017	2017	13,064		7,622		(5,636)		1,986		57,300		2017	34,496		19,670		(6,655)		13,014		46,567
2018	2018	27,614		11,442		(1,040)		10,402		108,717		2018	73,748		30,229		5,437		35,666		87,935
2019	2019	33,145		14,841		(2,958)		11,883		138,869		2019	87,979		39,193		(1,760)		37,433		109,991
2020	2020	38,142		16,845		(6,426)		10,419		167,501		2020	100,608		44,087		(4,707)		39,380		133,793
2021	2021	40,213		23,087		(22,356)		731		260,663		2021	108,659		61,425		(36,553)		24,872		216,634
2022	2022	51,622		26,692		937		27,629		360,224		2022	150,050		74,546		(3,079)		71,467		306,568
2023	2023	2,994		1,811		378		2,189		116,249		2023	57,049		37,347		5,898		43,243		461,243
Subtotal	Subtotal	227,960		115,185		(41,096)		74,089		1,278,118		Subtotal	672,560		340,973		(33,809)		307,163		1,425,612
Americas Insolvency	Americas Insolvency											Americas Insolvency
1996-2012	1996-2012	234		83		153		236		—		1996-2012	576		189		390		579		—
2013	2013	67		39		28		67		—		2013	252		97		156		253		—
2014	2014	123		66		12		78		—		2014	349		207		96		304		—
2015	2015	106		40		29		69		102		2015	266		90		91		182		54
2016	2016	190		47		9		56		348		2016	662		105		312		418		236
2017	2017	1,605		181		(123)		58		2,424		2017	4,075		380		1,004		1,385		1,279
2018	2018	4,401		455		(133)		322		11,128		2018	10,958		975		(1,130)		(155)		4,091
2019	2019	7,705		1,036		57		1,093		35,596		2019	22,692		2,604		924		3,529		23,037
2020	2020	4,919		1,226		145		1,371		35,750		2020	15,206		3,326		1,162		4,488		28,574
2021	2021	4,339		1,309		(20)		1,289		37,812		2021	13,433		3,602		906		4,508		31,907
2022	2022	1,794		1,018		(27)		991		31,722		2022	6,715		2,936		645		3,581		29,333
2023	2023	268		215		(31)		184		15,614		2023	4,760		2,250		2,348		4,596		71,081
Subtotal	Subtotal	25,751		5,715		99		5,814		170,496		Subtotal	79,944		16,761		6,904		23,668		189,592
Total Americas and Australia	Total Americas and Australia	253,711		120,900		(40,997)		79,903		1,448,614		Total Americas and Australia	752,504		357,734		(26,905)		330,831		1,615,204
Europe Core	Europe Core											Europe Core
2012	2012	191		—		191		191		—		2012	531		—		531		531		—
2013	2013	95		—		95		95		—		2013	264		—		264		264		—
2014 (1)	2014 (1)	25,462		18,404		109		18,513		107,836		2014 (1)	81,467		52,042		14,172		66,214		97,030
2015	2015	8,748		4,274		(408)		3,866		80,755		2015	25,924		12,437		(502)		11,936		70,420
2016	2016	7,515		4,040		(807)		3,233		105,983		2016	22,350		11,777		(1,094)		10,682		96,465
2017	2017	5,322		1,963		(558)		1,405		79,388		2017	15,398		5,698		707		6,405		73,062
2018	2018	10,568		3,930		(123)		3,807		142,505		2018	31,748		11,528		3,374		14,902		130,556
2019	2019	19,118		6,210		4,178		10,388		250,616		2019	57,349		18,293		13,923		32,216		229,949
2020	2020	14,641		5,794		(994)		4,800		179,990		2020	43,153		16,725		1,067		17,793		160,547
2021	2021	19,176		8,685		(2,405)		6,280		284,941		2021	55,633		25,087		(6,041)		19,045		255,955
2022	2022	21,193		8,965		(124)		8,841		334,594		2022	64,593		26,164		(230)		25,934		299,256
2023	2023	1,976		397		816		1,213		91,123		2023	29,321		11,082		202		11,284		263,039
Subtotal	Subtotal	134,005		62,662		(30)		62,632		1,657,731		Subtotal	427,731		190,833		26,373		217,206		1,676,279
Europe Insolvency	Europe Insolvency											Europe Insolvency
2014 (1)	2014 (1)	49		—		49		49		—		2014 (1)	172		—		172		172		—
2015	2015	98		12		41		53		61		2015	331		21		250		270		45
2016	2016	454		83		86		169		864		2016	1,105		201		362		563		604
2017	2017	1,295		90		237		327		3,436		2017	3,279		216		648		865		1,986
2018	2018	1,942		216		(122)		94		8,864		2018	5,905		544		(130)		414		5,195
2019	2019	4,714		736		330		1,066		27,828		2019	13,786		1,983		1,309		3,292		20,822
2020	2020	8,233		1,307		3,089		4,396		55,042		2020	23,164		3,681		3,414		7,095		42,445
2021	2021	3,745		976		156		1,132		34,889		2021	11,068		2,777		302		3,078		29,247
2022	2022	2,963		1,201		131		1,332		41,786		2022	9,171		3,529		(40)		3,489		37,199
2023	2023	75		59		118		177		7,382		2023	1,951		973		625		1,597		31,778
Subtotal	Subtotal	23,568		4,680		4,115		8,795		180,152		Subtotal	69,932		13,925		6,912		20,835		169,321
Total Europe	Total Europe	157,573		67,342		4,085		71,427		1,837,883		Total Europe	497,663		204,758		33,285		238,041		1,845,600
Total PRA Group	Total PRA Group	$	411,284	$	188,242	$	(36,912)	$	151,330	$	3,286,497	Total PRA Group	$	1,250,167	$	562,492	$	6,380	$	568,872	$	3,460,804

(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,~~September 30, 2023 exchange rate.

3440


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 September 30, 2023 Amounts in millions																														Cash Collections by Year, By Year of Purchase (1) Year-to-date as of September 30, 2023 Amounts in millions
				Cash Collections																													Cash Collections
Purchase Period	Purchase Period	Purchase Price (3)(4)		1996-2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		Total		Purchase Period	Purchase Price (3)(4)		1996-2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		2022		2023		Total
Americas and Australia Core	Americas and Australia Core																													Americas and Australia Core
1996-2012	1996-2012	$	1,541.9	$	2,962.4	$	554.9	$	412.5	$	280.3	$	178.9	$	118.1	$	83.8	$	62.9	$	41.5	$	29.9	$	23.5	$	5.1	$	4,753.8	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	$	13.7	$	4,762.4
2013	2013	390.8		—		101.6		247.9		194.0		120.8		78.9		56.5		36.9		23.2		16.7		12.5		2.6		891.6		2013	390.8		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		16.7		12.5		7.7		896.5
2014	2014	404.1		—		—		92.7		253.5		170.3		114.2		82.2		55.3		31.9		22.3		15.0		3.1		840.5		2014	404.1		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		22.3		15.0		8.9		846.2
2015	2015	443.1		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		19.5		3.8		856.9		2015	443.1		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		34.9		19.5		10.7		863.8
2016	2016	455.8		—		—		—		—		138.7		256.5		194.6		140.6		105.9		74.2		38.4		6.7		955.6		2016	455.8		—		—		—		—		138.7		256.5		194.6		140.6		105.9		74.2		38.4		18.9		967.8
2017	2017	532.9		—		—		—		—		—		107.3		278.7		256.5		192.5		130.0		76.3		13.1		1,054.4		2017	532.9		—		—		—		—		—		107.3		278.7		256.5		192.5		130.0		76.3		34.5		1,075.8
2018	2018	654.0		—		—		—		—		—		—		122.7		361.9		337.7		239.9		146.1		27.6		1,235.9		2018	654.0		—		—		—		—		—		—		122.7		361.9		337.7		239.9		146.1		73.7		1,282.0
2019	2019	581.5		—		—		—		—		—		—		—		143.8		349.0		289.8		177.7		33.1		993.4		2019	581.5		—		—		—		—		—		—		—		143.8		349.0		289.8		177.7		88.0		1,048.3
2020	2020	435.7		—		—		—		—		—		—		—		—		132.9		284.3		192.0		38.1		647.3		2020	435.7		—		—		—		—		—		—		—		—		132.9		284.3		192.0		100.6		709.8
2021	2021	435.9		—		—		—		—		—		—		—		—		—		85.0		177.3		40.2		302.5		2021	435.8		—		—		—		—		—		—		—		—		—		85.0		177.3		108.7		371.0
2022	2022	406.1		—		—		—		—		—		—		—		—		—		—		67.7		51.6		119.3		2022	406.2		—		—		—		—		—		—		—		—		—		—		67.7		150.0		217.7
2023	2023	117.2		—		—		—		—		—		—		—		—		—		—		—		3.0		3.0		2023	475.5		—		—		—		—		—		—		—		—		—		—		—		56.9		56.9
Subtotal	Subtotal	6,399.0		2,962.4		656.5		753.1		844.8		837.1		860.9		945.1		1,141.5		1,271.8		1,207.0		946.0		228.0		12,654.2		Subtotal	6,757.3		2,962.4		656.5		753.0		844.7		837.1		860.9		945.0		1,141.5		1,271.8		1,207.0		946.0		672.3		13,098.2
Americas Insolvency	Americas Insolvency																													Americas Insolvency
1996-2012	1996-2012	1,038.2		1,021.6		417.3		338.8		208.3		105.4		37.7		8.3		3.9		2.3		1.4		1.1		0.2		2,146.3		1996-2012	1,038.2		1,021.6		417.3		338.8		208.3		105.3		37.7		8.3		3.9		2.3		1.4		1.1		0.6		2,146.6
2013	2013	227.8		—		52.5		82.6		81.7		63.4		47.8		22.0		2.9		1.3		0.8		0.5		0.1		355.6		2013	227.8		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.8		0.5		0.3		355.7
2014	2014	148.4		—		—		37.1		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.7		0.1		218.4		2014	148.4		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		1.1		0.7		0.3		218.5
2015	2015	63.2		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.6		0.1		87.8		2015	63.2		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		1.3		0.6		0.3		88.0
2016	2016	91.4		—		—		—		—		18.9		30.4		25.1		19.9		14.4		7.4		1.8		0.2		118.1		2016	91.4		—		—		—		—		18.9		30.4		25.0		19.9		14.4		7.4		1.8		0.7		118.5
2017	2017	275.3		—		—		—		—		—		49.1		97.3		80.9		58.8		44.0		20.8		1.6		352.5		2017	275.3		—		—		—		—		—		49.1		97.3		80.9		58.8		44.0		20.8		4.1		355.0
2018	2018	97.9		—		—		—		—		—		—		6.7		27.4		30.5		31.6		24.6		4.4		125.2		2018	97.9		—		—		—		—		—		—		6.7		27.4		30.5		31.6		24.6		11.0		131.8
2019	2019	123.1		—		—		—		—		—		—		—		13.5		31.4		39.1		37.8		7.7		129.5		2019	123.1		—		—		—		—		—		—		—		13.4		31.4		39.1		37.8		22.7		144.4
2020	2020	62.1		—		—		—		—		—		—		—		—		6.5		16.1		20.4		4.9		47.9		2020	62.1		—		—		—		—		—		—		—		—		6.5		16.1		20.4		15.2		58.2
2021	2021	55.2		—		—		—		—		—		—		—		—		—		4.6		17.9		4.3		26.8		2021	55.2		—		—		—		—		—		—		—		—		—		4.6		17.9		13.4		35.9
2022	2022	33.4		—		—		—		—		—		—		—		—		—		—		3.2		1.8		5.0		2022	33.4		—		—		—		—		—		—		—		—		—		—		3.2		6.7		9.9
2023	2023	15.7		—		—		—		—		—		—		—		—		—		—		—		0.3		0.3		2023	72.0		—		—		—		—		—		—		—		—		—		—		—		4.8		4.8
Subtotal	Subtotal	2,231.7		1,021.6		469.8		458.5		344.3		249.9		222.5		208.0		181.0		155.3		147.4		129.4		25.7		3,613.4		Subtotal	2,288.0		1,021.6		469.8		458.4		344.3		249.8		222.5		207.8		180.9		155.3		147.4		129.4		80.1		3,667.3
Total Americas and Australia	Total Americas and Australia	8,630.7		3,984.0		1,126.3		1,211.6		1,189.1		1,087.0		1,083.4		1,153.1		1,322.5		1,427.1		1,354.4		1,075.4		253.7		16,267.6		Total Americas and Australia	9,045.3		3,984.0		1,126.3		1,211.4		1,189.0		1,086.9		1,083.4		1,152.8		1,322.4		1,427.1		1,354.4		1,075.4		752.4		16,765.5
Europe Core	Europe Core																													Europe Core
2012	2012	20.4		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		1.2		0.9		0.1		40.5		2012	20.4		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.4		1.2		1.2		0.9		0.5		40.8
2013	2013	20.3		—		7.1		8.5		2.4		1.3		1.2		1.3		0.9		0.7		0.7		0.5		0.1		24.7		2013	20.3		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.7		0.5		0.3		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		149.2		122.2		81.5		1,794.3
2015	2015	411.3		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		40.7		8.8		534.5		2015	411.3		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		51.4		40.7		25.9		551.6
2016	2016	333.1		—		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		36.9		7.5		389.3		2016	333.1		—		—		—		—		40.4		78.9		72.6		58.0		48.3		46.7		36.9		22.4		404.2
2017	2017	252.2		—		—		—		—		—		17.9		56.0		44.1		36.1		34.8		25.2		5.3		219.4		2017	252.2		—		—		—		—		—		17.9		56.0		44.1		36.1		34.8		25.2		15.4		229.5
2018	2018	341.8		—		—		—		—		—		—		24.3		88.7		71.3		69.1		50.7		10.6		314.7		2018	341.8		—		—		—		—		—		—		24.3		88.7		71.3		69.1		50.7		31.7		335.8
2019	2019	518.6		—		—		—		—		—		—		—		48.0		125.7		121.4		89.8		19.1		404.0		2019	518.6		—		—		—		—		—		—		—		48.0		125.7		121.4		89.8		57.3		442.2
2020	2020	324.1		—		—		—		—		—		—		—		—		32.3		91.7		69.1		14.6		207.7		2020	324.1		—		—		—		—		—		—		—		—		32.3		91.7		69.0		43.2		236.2
2021	2021	412.4		—		—		—		—		—		—		—		—		—		48.5		89.9		19.2		157.6		2021	412.4		—		—		—		—		—		—		—		—		—		48.5		89.9		55.6		194.0
2022	2022	359.5		—		—		—		—		—		—		—		—		—		—		33.9		21.2		55.1		2022	359.4		—		—		—		—		—		—		—		—		—		—		33.9		64.6		98.5
2023	2023	91.9		—		—		—		—		—		—		—		—		—		—		—		2.0		2.0		2023	281.4		—		—		—		—		—		—		—		—		—		—		—		29.3		29.3
Subtotal	Subtotal	3,859.4		11.6		16.1		167.3		343.4		390.6		407.0		443.4		480.2		519.7		614.8		559.8		134.0		4,087.9		Subtotal	4,048.8		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		614.7		559.7		427.7		4,381.2
Europe Insolvency	Europe Insolvency																													Europe 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		1.5		0.8		0.3		0.2		0.2		17.0
2015	2015	19.0		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.7		0.1		26.4		2015	19.0		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		1.6		0.6		0.3		26.5
2016	2016	39.3		—		—		—		—		6.2		12.7		12.9		10.7		8.0		6.0		2.7		0.5		59.7		2016	39.3		—		—		—		—		6.2		12.7		12.9		10.7		7.9		6.0		2.7		1.1		60.2
2017	2017	39.2		—		—		—		—		—		1.2		7.9		9.2		9.8		9.4		6.5		1.3		45.3		2017	39.2		—		—		—		—		—		1.2		7.9		9.2		9.8		9.4		6.5		3.3		47.3
2018	2018	44.9		—		—		—		—		—		—		0.6		8.4		10.3		11.7		9.8		1.9		42.7		2018	44.9		—		—		—		—		—		—		0.6		8.4		10.3		11.7		9.8		5.9		46.7
2019	2019	77.2		—		—		—		—		—		—		—		5.0		21.1		23.9		21.0		4.7		75.7		2019	77.2		—		—		—		—		—		—		—		5.0		21.1		23.9		21.0		13.8		84.8
2020	2020	105.4		—		—		—		—		—		—		—		—		6.1		34.7		34.1		8.2		83.1		2020	105.4		—		—		—		—		—		—		—		—		6.0		34.6		34.1		23.2		97.9
2021	2021	53.2		—		—		—		—		—		—		—		—		—		5.5		14.4		3.7		23.6		2021	53.2		—		—		—		—		—		—		—		—		—		5.5		14.4		11.1		31.0
2022	2022	44.6		—		—		—		—		—		—		—		—		—		—		4.5		3.0		7.5		2022	44.6		—		—		—		—		—		—		—		—		—		—		4.5		9.2		13.7
2023	2023	7.4		—		—		—		—		—		—		—		—		—		—		—		0.1		0.1		2023	32.2		—		—		—		—		—		—		—		—		—		—		—		2.0		2.0
Subtotal	Subtotal	441.1		—		—		—		7.3		14.5		22.1		28.8		38.8		59.0		93.1		93.9		23.6		381.1		Subtotal	465.9		—		—		—		7.3		14.5		22.1		28.8		38.7		58.8		93.0		93.8		70.1		427.1
Total Europe	Total Europe	4,300.5		11.6		16.1		167.3		350.7		405.1		429.1		472.2		519.0		578.7		707.9		653.7		157.6		4,469.0		Total Europe	4,514.7		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.8		578.5		707.7		653.5		497.8		4,808.3
Total PRA Group	Total PRA Group	$	12,931.2	$	3,995.6	$	1,142.4	$	1,378.9	$	1,539.8	$	1,492.1	$	1,512.5	$	1,625.3	$	1,841.5	$	2,005.8	$	2,062.3	$	1,729.1	$	411.3	$	20,736.6	Total PRA Group	$	13,560.0	$	3,995.6	$	1,142.4	$	1,378.7	$	1,539.6	$	1,492.0	$	1,512.5	$	1,625.0	$	1,841.2	$	2,005.6	$	2,062.1	$	1,728.9	$	1,250.2	$	21,573.8

(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.

3541

Estimated Remaining Collections

The following chart shows our ERC of ~~of $5,674.7~~$5,975.6 million at ~~March 31,~~September 30, 2023 by geographical region (amounts in millions).

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

3642

The following table displays our ERC by year for the 12 month periods ending ~~March 31~~September 30, in each of the years presented below, by year, by geography as of ~~March 31,~~September 30, 2023 (amounts in thousands).:


ERC By Year, By Geography	ERC By Year, By Geography											ERC By Year, By Geography
		Americas and Australia Core		Americas Insolvency		Europe Core		Europe Insolvency		Total			Americas and Australia Core		Americas Insolvency		Europe Core		Europe Insolvency		Total
2024	2024	$	767,512	$	87,607	$	491,234	$	78,770	$	1,425,123	2024	$	822,339	$	91,387	$	486,862	$	73,933	$	1,474,521
2025	2025	546,874		57,569		409,335		58,775		1,072,553		2025	619,564		63,982		403,236		54,610		1,141,392
2026	2026	352,465		33,871		341,733		38,142		766,211		2026	395,861		41,450		336,278		35,663		809,252
2027	2027	236,649		17,083		289,035		22,074		564,841		2027	267,561		24,358		285,499		21,302		598,720
2028	2028	163,723		7,239		246,997		10,939		428,898		2028	184,126		11,178		244,246		11,145		450,695
2029	2029	114,426		1,021		212,693		4,571		332,711		2029	127,526		1,520		210,481		4,575		344,102
2030	2030	80,830		11		180,413		1,242		262,496		2030	90,123		24		181,901		1,295		273,343
2031	2031	58,306		—		151,132		283		209,721		2031	62,898		—		158,164		560		221,622
2032	2032	39,433		—		128,611		239		168,283		2032	43,285		—		137,967		477		181,729
2033	2033	26,007		—		108,574		200		134,781		2033	25,882		—		119,267		399		145,548
Thereafter	Thereafter	3,685		—		304,882		496		309,063		Thereafter	1,715		—		332,455		542		334,712
		$	2,389,910	$	204,401	$	2,864,639	$	215,731	$	5,674,681		$	2,640,880	$	233,899	$	2,896,356	$	204,501	$	5,975,636

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 Type	Cash Collections by Geography and Type																	Cash Collections by Geography and Type
		2023		2022								2021							2023				2022									2021
		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2					Q3			Q2		Q1		Q4		Q3			Q2		Q1		Q4
Americas and Australia Core	Americas and Australia Core	$	227,960	$	205,619	$	225,775	$	244,377	$	270,284	$	257,705	$	276,691	$	324,845			Americas and Australia Core	$	223,714		$	220,886	$	227,960	$	205,619	$	225,775		$	244,377	$	270,284	$	257,705
Americas Insolvency	Americas Insolvency	25,751		27,971		31,911		34,278		35,209		36,851		37,464		37,768				Americas Insolvency	27,809			26,384		25,751		27,971		31,911			34,278		35,209		36,851
Europe Core	Europe Core	134,005		134,016		132,072		142,470		151,162		155,853		151,625		157,637				Europe Core	144,402			149,324		134,005		134,016		132,072			142,470		151,162		155,853
Europe Insolvency	Europe Insolvency	23,568		24,051		22,586		22,935		24,325		23,262		22,574		23,579				Europe Insolvency	23,639			22,725		23,568		24,051		22,586			22,935		24,325		23,262
Total Cash Collections	Total Cash Collections	$	411,284	$	391,657	$	412,344	$	444,060	$	480,980	$	473,671	$	488,354	$	543,829			Total Cash Collections	$	419,564		$	419,319	$	411,284	$	391,657	$	412,344		$	444,060	$	480,980	$	473,671

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
		2023		2022								2021							2023				2022									2021
		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2					Q3			Q2		Q1		Q4		Q3			Q2		Q1		Q4
Call Center and Other Collections	Call 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	$	232,054		$	231,183	$	236,415	$	216,182	$	235,832		$	260,764	$	291,266	$	283,606
External Legal Collections	External Legal Collections	54,934		48,925		49,243		50,996		55,179		55,760		54,445		61,836				External Legal Collections	53,792			53,439		54,934		48,925		49,243			50,996		55,179		55,760
Internal Legal Collections	Internal Legal Collections	70,616		74,528		72,772		75,087		75,001		74,192		75,154		82,624				Internal Legal Collections	82,270			85,588		70,616		74,528		72,772			75,087		75,001		74,192
Total Core Cash Collections	Total Core Cash Collections	$	361,965	$	339,635	$	357,847	$	386,847	$	421,446	$	413,558	$	428,316	$	482,482			Total Core Cash Collections	$	368,116		$	370,210	$	361,965	$	339,635	$	357,847		$	386,847	$	421,446	$	413,558

3743

Collections Productivity (U.S. Portfolio)

The following table displays a collections productivity measure for our U.S. Portfolios for the periods ~~indicated.~~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)
		2023		2022		2021		2020		2019			2023		2022		2021		2020		2019
First Quarter	First Quarter	$	207	$	261	$	279	$	172	$	139	First Quarter	$	207	$	261	$	279	$	172	$	139
Second Quarter	Second Quarter	—		226		270		263		139		Second Quarter	199		226		270		263		139
Third Quarter	Third Quarter	—		210		242		246		124		Third Quarter	200		210		242		246		124
Fourth Quarter	Fourth 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.~~indicated:


Cash Efficiency Ratio (1)	Cash Efficiency Ratio (1)						Cash Efficiency Ratio (1)
		2023	2022	2021	2020	2019		2023	2022	2021	2020	2019
First Quarter	First Quarter	54.3%	65.1%	68.0%	61.5%	59.2%	First Quarter	54.3%	65.1%	68.0%	61.5%	59.2%
Second Quarter	Second Quarter	—	61.3	66.8	68.7	60.4	Second Quarter	61.2	61.3	66.8	68.7	60.4
Third Quarter	Third Quarter	—	58.4	62.4	65.6	60.2	Third Quarter	58.9	58.4	62.4	65.6	60.2
Fourth Quarter	Fourth Quarter	—	58.6	63.5	61.9	59.7	Fourth Quarter	—	58.6	63.5	61.9	59.7
Full Year	Full Year	—	61.0	65.3	64.5	59.9	Full Year	—	61.0	65.3	64.5	59.9

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

Portfolio Acquisitions

The following graph shows the purchase price of our portfolios by year since 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 ~~three~~nine months ended ~~March 31,~~September 30, 2023, while the prior year totals are for the full year.

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

3844

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


Portfolio Acquisitions by Geography and Type	Portfolio Acquisitions by Geography and Type																		Portfolio Acquisitions by Geography and Type
		2023		2022								2021												2023										2022												2021
		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2													Q3			Q2				Q1			Q4			Q3		Q2			Q1		Q4
Americas and Australia Core		$	116,867	$	118,581	$	100,780	$	99,962	$	90,639	$	90,263	$	162,451	$	98,901
Americas & Australia Core																		Americas & Australia Core		$	187,554	$	171,440		$	116,867		$	118,581		$	100,780			$	99,962		$	90,639		$	90,263
Americas Insolvency	Americas Insolvency	15,701		8,967		8,988		6,369		9,118		21,183		9,878		14,642											Americas Insolvency		44,279			12,189				15,701			8,967			8,988		6,369			9,118		21,183
Europe Core	Europe Core	90,454		140,011		59,426		123,814		38,764		60,430		212,194		106,134											Europe Core		60,628			136,834				90,454			140,011			59,426		123,814			38,764		60,430
Europe Insolvency	Europe Insolvency	7,203		20,535		13,910		1,202		8,929		29,820		7,424		—											Europe Insolvency		18,722			7,296				7,203			20,535			13,910		1,202			8,929		29,820
Total Portfolio Acquisitions	Total Portfolio Acquisitions	$	230,225	$	288,094	$	183,104	$	231,347	$	147,450	$	201,696	$	391,947	$	219,677										Total Portfolio Acquisitions		$	311,183		$	327,759			$	230,225		$	288,094		$	183,104	$	231,347		$	147,450	$	201,696

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 62 million ccustomer accounts i~~ustomer accounts in~~n the U.S. (amounts in thousands).


U.S Portfolio Acquisitions by Major Asset Type	U.S Portfolio Acquisitions by Major Asset Type																			U.S Portfolio Acquisitions by Major Asset Type
		2023				2022																2023			2022
		Q1				Q4				Q3				Q2				Q1					Q3		Q2				Q1				Q4				Q3
Major Credit Cards	Major 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	$	57,045	33.2	%	$	41,605	28.5	%	$	13,234	12.1	%	$	10,242	11.7	%	$	10,236	15.8	%
Private Label Credit Cards	Private Label Credit Cards	66,652		60.9		60,380		69.0		44,727		68.8		52,368		67.4		46,195		58.6				Private Label Credit Cards	87,057		50.7		76,306		52.4		66,652		60.9		60,380		69.0		44,727		68.8
Consumer Finance	Consumer Finance	28,051		25.6		16,366		18.7		9,396		14.4		2,062		2.7		13,968		17.7				Consumer Finance	17,616		10.3		26,809		18.4		28,051		25.6		16,366		18.7		9,396		14.4
Auto Related	Auto Related	1,481		1.4		515		0.6		630		1.0		2,443		3.2		514		0.7				Auto Related	9,947		5.8		1,012		0.7		1,481		1.4		515		0.6		630		1.0
Total	Total	$	109,418	100.0	%	$	87,503	100.0	%	$	64,989	100.0	%	$	77,546	100.0	%	$	78,837	100.0	%			Total	$	171,665	100.0	%	$	145,732	100.0	%	$	109,418	100.0	%	$	87,503	100.0	%	$	64,989	100.0	%


U.S. Portfolio Acquisitions by Delinquency Category	U.S. Portfolio Acquisitions by Delinquency Category																					U.S. Portfolio Acquisitions by Delinquency Category
		2023				2022																			2023															2022
		Q1				Q4				Q3				Q2				Q1					Q3						Q2					Q1					Q4					Q3
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)	$	103,432	66.0	%		$	89,767	67.2	%		$	70,053	74.8	%		$	55,117	70.2	%		$	30,510	54.5	%
Primary (2)	Primary (2)	3,863		4.1		511		0.7		587		1.0		369		0.5		11,445		16.4				Primary (2)	3,405		2.2			5,378		4.0			3,863		4.1			511		0.7			587		1.0
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)	40,294		25.7			25,800		19.3			17,789		19.0			21,620		27.5			19,886		35.5
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)	9,615		6.1			12,598		9.5			2,012		2.1			1,288		1.6			5,018		9.0
Total Core	Total Core	93,717		100.0	%	78,536		100.0	%	56,001		100.0	%	71,177		100.0	%	69,719		100.0	%			Total Core	156,746		100.0	%		133,543		100.0	%		93,717		100.0	%		78,536		100.0	%		56,001		100.0	%
Insolvency	Insolvency	15,701				8,967				8,988				6,369				9,118						Insolvency	14,919					12,189					15,701					8,967					8,988
Total	Total	$	109,418			$	87,503			$	64,989			$	77,546			$	78,837					Total	$	171,665				$	145,732				$	109,418				$	87,503				$	64,989

(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

3945

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;

•impairment of real estate;

•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,~~September 30, 2023 and for the year ended December 31, 2022 (amounts in thousands):


Reconciliation of Non-GAAP Financial Measures	Reconciliation of Non-GAAP Financial Measures					Reconciliation of Non-GAAP Financial Measures
		LTM		For the Year Ended			LTM		For the Year Ended
		March 31, 2023		December 31, 2022			September 30, 2023		December 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.	$	(58,736)	$	117,147
Adjustments:	Adjustments:					Adjustments:
Income tax expense	Income tax expense	13,525		36,787		Income tax expense	(8,358)		36,787
Foreign exchange gains	Foreign exchange gains	(1,508)		(985)		Foreign exchange gains	(1,178)		(985)
Interest expense, net	Interest expense, net	137,212		130,677		Interest expense, net	165,690		130,677
Other expense (1)	Other expense (1)	1,485		1,325		Other expense (1)	1,951		1,325
Depreciation and amortization	Depreciation and amortization	15,054		15,243		Depreciation and amortization	14,203		15,243
Impairment of real estate						Impairment of real estate	5,037		—
Adjustment for net income attributable to noncontrolling interests	Adjustment for net income attributable to noncontrolling interests	10,931		851		Adjustment for net income attributable to noncontrolling interests	14,904		851

Recoveries applied to negative allowance less Changes in expected recoveries	Recoveries applied to negative allowance less Changes in expected recoveries	820,206		805,942		Recoveries applied to negative allowance less Changes in expected recoveries	864,032		805,942
Adjusted EBITDA	Adjusted EBITDA	$	1,015,451	$	1,106,987	Adjusted EBITDA	$	997,545	$	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,~~September 30, 2023 and for the year ended December 31, 2022 (amounts in thousands):

Debt to Adjusted EBITDA
LTM LTM For the Year Ended
March 31, 2023
March 31, 2023(1)
December 31, 2022
Borrowings $ 2,937,895 $ 2,592,895 $ 2,494,858
Adjusted EBITDA 1,015,451 1,015,451 1,106,987
Debt to Adjusted EBITDA 2.89 x 2.55 x 2.25 x

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


Debt to Adjusted EBITDA
	LTM			For the Year Ended
	September 30, 2023			December 31, 2022
Borrowings	$	2,832,225		$	2,494,858
Adjusted EBITDA	997,545			1,106,987
Debt to Adjusted EBITDA	2.84		x	2.25		x

4046

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,~~September 30, 2023, cash and cash equivalents ~~totaled $116.5~~totaled $105.2 million, of which ~~$88.4~~$88.8 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,~~September 30, 2023, we had the following ~~borrowings~~committed amounts, amounts outstanding and availability under our credit facilities (amounts in thousands):


													Availability
		Outstanding		Available without Restrictions		Available with Restrictions (1)			Committed Amount		Amount Outstanding		Availability Based on Current ERC (1)		Additional Availability (3)		Total Availability
Americas revolving credit (2)	Americas revolving credit (2)	$	234,866	$	840,593	$	118,692	Americas revolving credit (2)	$	1,075,000	$	382,351	$	70,319	$	622,330	$	692,649
UK revolving credit	UK revolving credit	473,712		326,288		116,249		UK revolving credit	800,000		500,257		57,380		242,363		299,743
European revolving credit	European revolving credit	401,438		432,588		201,866		European revolving credit	811,815		473,873		150,127		187,815		337,942
Term loan	Term loan	447,500		—		—		Term loan	442,500		442,500		—		—		—
Senior Notes		1,050,000		—		—
Convertible Notes		345,000		—		—
Senior notes								Senior notes	1,046,000		1,046,000		—		—		—

Less: Debt discounts and issuance costs	Less: Debt discounts and issuance costs	(14,621)		—		—		Less: Debt discounts and issuance costs	—		(12,756)		—		—		—
Total	Total	$	2,937,895	$	1,599,469	$	436,807	Total	$	4,175,315	$	2,832,225	$	277,826	$	1,052,508	$	1,330,334

(1) Available borrowings after calculation of current borrowing base, ~~and debt covenants as of March 31, 2023.~~which may be used for general corporate purposes, including portfolio purchases.

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

(3) Subject to debt covenants, including advance rates ranging from 35-55% of applicable ERC.

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 million~~used 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 proceeds~~2028 Notes to retire ~~all or any portion of our~~the 2023 ~~Convertible Notes or to satisfy any other obligations with respect to our 2023 Convertible~~ Notes. We used the remainder of the net proceeds ~~from the offering~~ to repay a portion of ~~our~~the 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 $109.8 million~~ely $115.8 mil~~ as ~~lion as~~ of ~~March 31,~~September 30, 2023). Interest-bearing deposits as of ~~March 31,~~September 30, 2023 were ~~$108.8 million.~~$100.5 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,~~September 30, 2023, we have forward flow commitments in place for the purchase of nonperforming loans with a maximum purchase price of ~~$622.4~~$538.0 million, ~~of which $576.3 million is due within the next 12 months. The $622.4 million is~~ comprised of ~~$344.6~~$356.4 million for the Americas and Australia and ~~$277.8~~$181.6 million for Europe. WeThese amounts are based on sellers' estimates of future forward flow sales and are dependent on actual delivery compared to these estimates. Accordingly, amounts purchased under these agreements may vary and are often less than the maximum amounts. We may also enter into new or renewed forward flow commitments ~~and~~and/or close on spot purchase transactions in addition to the ~~aforementioned~~current forward flow agreements.

Borrowings. Of our ~~$2.9~~$2.8 billion ~~borrowings~~ in borrowings at ~~March 31,~~September 30, 2023, estimated interest, unused fees and principal payments for the next 12 months are ~~approximately $516.8~~ $193.8 million, of wwhich, $10.0 million rel~~hic~~ates ~~h, $355.3 million relate~~s to principal ~~primarily reflecting~~on the term loan under our ~~Convertible Senior Notes due 2023.~~North American Credit Agreement. Beyond 12 months, our principal payment obligations ~~related~~related to debt maturities occur between one and ~~seven~~six years.

Many of our financing arrangements include ~~restrictive~~ covenants ~~with~~with which we must ~~comply including a covenant~~comply. As of September 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~~ these covenants.

~~Note 6~~
~~to our Consolidated Financial Statements included in Part 1, Item 1 of this Quarterly Report.~~

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

Leases. ~~The majority of our~~Our leases have remaining lease terms of one to 1411 years. As of ~~March 31,~~September 30, 2023, we had ~~$57.9~~$51.7 million in lease liabilities, of which ~~appr~~approxim~~oximately $10.5~~ately $10.0 million ~~matures~~ matures within the next 12 months. For more information, see Note 5 to our Consolidated Financial Statements included in Part I, ~~Item~~Item 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,~~September 30, 2023, we ~~had $10.1~~had $3.4 million of ~~derivative~~derivative liabilities, all of which mature within the next 12 months. For more information, see Note 7 to our Consolidated Financial Statements ~~included~~included 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 ~~Flows~~Flow Analysis

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


		Three Months Ended March 31,						Nine Months Ended September 30,
		2023		2022		$ Change				2023		2022		$ Change
Net cash provided by (used in):
Net cash provided by/(used in):									Net cash provided by/(used in):
Operating activities	Operating activities	$	(47,521)	$	(22,744)	$	(24,777)		Operating activities	$	(118,272)	$	(3,414)	$	(114,858)
Investing activities	Investing activities	8,979		126,329		(117,350)			Investing activities	(179,589)		195,406		(374,995)
Financing activities	Financing activities	425,806		(112,647)		538,453			Financing activities	328,251		(190,054)		518,305
Effect of exchange rate on cash	Effect of exchange rate on cash	3,656		910		2,746			Effect of exchange rate on cash	3,270		(31,927)		35,197
Net increase/(decrease) in cash and cash equivalents	Net increase/(decrease) in cash and cash equivalents	$	390,920	$	(8,152)	$	399,072		Net increase/(decrease) in cash and cash equivalents	$	33,660	$	(29,989)	$	63,649

Operating Activities

~~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~~$118.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 increased ~~$24.8~~$114.9 million from net cash used in operating activities of ~~$22.7~~$3.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The ~~change~~increase was ~~mainly~~primarily driven by the impact of unrealized foreign currency transactions; higher cash paid for operating expenses, interest and taxes; and lower cash collections recognized as ~~portfolio income and the impact of foreign exchange.~~income.

Investing Activities

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

Net cash provided byby/(used in) investing activities decreased ~~$117.4~~$375.0 million ~~during~~for the ~~three~~nine months ended ~~March 31,~~September 30, 2023, primarily driven by an increase of ~~$71.6~~$313.5 million in purchases of finance receivables, an increase of ~~$58.5~~$57.8 million in purchases of investments and a decrease of ~~$52.6~~$70.3 million in recoveries applied to the negative allowance. These items were partially offset by an increase of ~~$62.0~~$58.2 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~~$518.3 million during the ~~three~~nine months ended ~~March 31,~~September 30, 2023, primarily driven by ~~the~~ proceeds from the issuance of our 2028 Notes of $400.0 million, a ~~$92.4~~$351.9 million ~~change~~increase 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~~$111.4 million. These items were partially offset by the retirement of our 2023 Notes in the amount 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 or deemed repatriated due to intercompany loans, 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. Changes in intercompany loan balances are expected to have little or no tax impact. The amount of cash on hand related to international operations with indefinitely reinvested ~~earnings~~earnings was ~~$88.4~~$88.8 million ~~and~~and $75.3 million as of ~~March 31,~~September 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.

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 ~~overperformance~~performance 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.

Valuation of Goodwill

In accordance with FASB ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), we evaluate 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 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 determine the reporting unit’s fair value and record as an impairment loss the amount the carrying value exceeds fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit.

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

As of September 30, 2023, we ~~continue to~~had goodwill of $412.5 million, consisting primarily of $385.6 million in our Debt Buying and Collection ("DBC") reporting unit.

We performed our most recent annual review, using a qualitative assessment, as of October 1, 2022, and concluded that goodwill was not impaired. At that time, we estimated that our DBC reporting unit's fair value exceeded its carrying value by a substantial margin. As of September 30, 2023, our quarterly impairment assessment did not identify the occurrence of any triggering events, and we determined our goodwill was not more-likely-than-not impaired. The Company will perform ~~against expectations, performance may vary, which could result in additional adjustments~~a quantitative goodwill impairment test of the reporting unit as of October 1, 2023, our next annual testing date.

While we concluded goodwill was not more-likely-than-not impaired as of September 30, 2023, we did identify a heightened risk for future impairment of the goodwill allocated to our ~~cash flow forecasts with a corresponding adjustment~~DBC reporting unit, considering macroeconomic conditions, higher interest rates and their impact on discount rates, recent financial performance, and the recent decline in our stock price. Should these factors worsen, they could adversely impact the fair value of the reporting unit, and we may have to ~~total portfolio revenue.~~record impairment charges in future periods.

Income Taxes

We are subject to income taxes throughout the U.S. and in numerous international jurisdictions. These tax laws are complex and are subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and non-U.S. income tax expense, we make judgments about the application of these inherently complex laws.

We record a tax provision for the anticipated tax consequences of the reported results of operations. The provision for income taxes is estimated using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and

liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled.

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

If all or part of the deferred tax assets are determined not to be realizable in the future, we would establish a valuation allowance and charge to earnings the impact in the period such a determination is made. If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a positive adjustment to earnings. The establishment or release of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the use of loss carryforwards or other deferred tax assets in future periods. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position. For further information regarding our uncertain tax positions, refer to Note 13 to our Consolidated Financial Statements included in Item 8 of our 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~~$1.8 billion as of ~~March 31,~~September 30, 2023. Based on our debt structure at ~~March 31,~~September 30, 2023, assuming a 50 b~~asis~~basis point decrease in interest rates, ~~for example,~~ interest expense over the following 12 months would decrease by an estimated ~~$4.3 million.~~$5.1 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated ~~$4.3 million.~~$5.1 million.

To reduce the exposure to changes in the market rate of interest and to ~~be in compliance~~comply with the terms of our European ~~and our UK~~ revolving credit ~~facilities,~~facility, we have entered into interest rate derivative contracts for a portion of our borrowings under our floating rate financing arrangements. AsConsidering these contracts in addition to our fixed rate borrowings, as of ~~March 31,~~September 30, 2023, we ~~are 68%~~were 66% hedged on a notional basis. We apply hedge accounting to ~~certain~~all 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,~~September 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,~~September 30, 2023, we gen~~erated $96.3~~erated $111.0 million of ~~reven~~revenues from operations outside the U.S. and used 12 functional currencies, excluding the U.S. dollar. Weakness in one particular currency might be offset by strength in other currencies over time.

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

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

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

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

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. We conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that, as of ~~March 31,~~September 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,~~September 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,~~September 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,~~September 30, 2023.

We do not currently pay regular dividends on our common stock and did not pay dividends during the three months ended September 30, 2023; however, our Board of Directors may determine in the future to declare or pay dividends on our common stock. Our credit facilities and the indentures governing our senior notes contain financial and other restrictive covenants, including how we operate our business and our ability to pay dividends to our stockholders and repurchase 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 September 30, 2023.

Item 6. Exhibits


3.1			Fifth Amended and Restated Certificate of Incorporation of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K filed June 17, 2020 (File No. 000-50058)).
3.2			Amended and Restated By-Laws of PRA Group, Inc. (Incorporated by reference to Exhibit 3.2 of the Current Report on Form 8-K filed June 17, 2020 (File No. 000-50058)).
4.1			Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Registration Statement on Form S-1 filed October 15, 2002 (Registration No. 333-99225)).
4.2			Form of Warrant (Incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the Registration Statement on Form S-1 filed October 30, 2002 (Registration No. 333-99225)).
4.3			Indenture, dated May 26, 2017 between PRA Group, Inc. and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K filed May 26, 2017 (File No. 000-50058)).
4.4			First Supplemental Indenture, dated as of March 31, 2021 between PRA Group, Inc. and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.4 of the Quarterly Report on Form 10-Q filed August 05, 2021 (File No. 000-50058)).
4.5			Indenture, dated as of August 27, 2020 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Bank as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 1, 2020 (File No. 000-50058)).
4.6			Indenture, dated as of September 22, 2021 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Banks, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 24, 2021 (File No. 000-50058)).
4.7			Indenture, dated as of February 6, 2023, among PRA Group, Inc., the domestic subsidiaries of PRA Group, Inc., party thereto and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed February 6, 2023 (File No. 000-50058)).
4.8			Description of the Registrant's Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit 4.3 of the Annual Report on Form 10-K filed February 26, 2021 (File No. 000-50058)).


10.1*			~~Executed Offer~~Separation and Transition Services Agreement dated as of ~~Employment, dated March 24,~~July 31, 2023, bybetween Registrant and ~~between Vikram A. Atal and PRA Group, Inc. (filed herewith).~~
10.2*			~~Form of Performance Stock Unit Agreement (filed herewith).~~Laura B. White.
31.1			Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).


31.2			Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
32.1			Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).
101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH			XBRL Taxonomy Extension Schema Document
101.CAL			XBRL Taxonomy Extension Calculation Linkable Document
101.LAB			XBRL Taxonomy Extension Label Linkable Document
101.PRE			XBRL Taxonomy Extension Presentation Linkable Document
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document
104			Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

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

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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,~~November 6, 2023	By:	/s/ Vikram A. Atal
		Vikram A. Atal
		President and Chief Executive Officer
		(Principal Executive Officer)




~~May 8,~~November 6, 2023	By:	/s/ ~~Peter M. Graham~~Rakesh Sehgal
		~~Peter M. Graham~~Rakesh Sehgal
		Executive Vice President and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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	March 31, 2023		December 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


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