•

~~Fair Credit Reporting Act ("FCRA"~~

FCPA prohibits U.S. companies and their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in order to obtain an unfair advantage or help obtain or retain business. Although similar to the FCPA, the UK Bribery Act is broader in scope and covers bribes given to or received by any person with improper intent.

•Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), which restructured the regulation and supervision of the financial services industry in the U.S. and created the CFPB. The CFPB has rulemaking, supervisory, and enforcement authority over larger consumer debt collectors. The Dodd-Frank Act, along with the Unfair, Deceptive, or Abusive Acts or Practices ("UDAAP") provisions included therein, and the Federal Trade Commission Act, prohibit unfair, deceptive, and/or abusive acts and practices.

•International data protection and privacy laws, which include relevant country specific legislation in the UK and other European countries where we operate that regulate the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information; the Personal Information Protection and Electronic Documents Act, which aims to protect personal information that is collected, used or disclosed in certain circumstances for purposes of electronic commerce in Canada; and the GDPR, which regulates the processing and free movement of personal data within the EU and transfer of such data outside the EU.

• ~~which obligates credit information providers to verify the accuracy of information provided to credit reporting agencies and investigate consumer disputes concerning the accuracy of such information.~~


•	~~Gramm-Leach-Bliley Act,~~ which requires that certain financial institutions, including collection agencies, develop policies to protect the privacy of consumers' private financial information and provide notices to consumers advising them of their privacy policies.


•	~~Electronic Funds Transfer Act,~~ ~~which regulates electronic fund transfer transactions, including a consumer’s right to stop payments on a pre-approved fund transfer and right to receive certain documentation of the transaction.~~


•	~~Telephone Consumer Protection Act ("TCPA"),~~ ~~which, along with similar state laws, places certain restrictions on users of certain automated dialing equipment and pre-recorded messages that place telephone calls to consumers.~~


•	~~Servicemembers Civil Relief Act("SCRA"),~~ which gives U.S. military service personnel relief from credit obligations they may have incurred prior to entering military service and may also apply in certain circumstances to obligations and liabilities incurred by a servicemember while serving on active duty.


•	~~Health Insurance Portability and Accountability Act,~~ ~~which provides standards to protect the confidentiality of patients' personal healthcare and financial information in the U.S.~~


•	~~U.S. Bankruptcy Code,~~ which prohibits certain contacts with consumers after the filing of bankruptcy petitions and dictates what types of claims will or will not be allowed in a bankruptcy proceeding including how such claims may be discharged.


•	~~Americans with Disabilities Act,~~ which requires that telecommunications companies operating in the U.S. take steps to ensure functionally equivalent services are available for their consumers with disabilities, and requires accommodation of consumers with disabilities, such as the implementation of telecommunications relay services.

•

~~U.S. Foreign Corrupt Practices Act ("FCPA"), United Kingdom Bribery Act ("UK Bribery Act") and Similar Laws.~~ Our operations outside the U.S. are subject to various U.S. and international laws and regulations, such as the FCPA and the UK Bribery Act, which prohibit corrupt payments to governmental officials and certain other individuals. The FCPA prohibits U.S. companies and their agents and employees from providing anything of value to a foreign official for the purposes of influencing any act or decision of these individuals in order to obtain an unfair advantage or help obtain or retain business. Although similar to the FCPA, the UK Bribery Act is broader in scope and covers bribes given to or received by any person with improper intent.

•

~~Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"),~~ which restructured the regulation and supervision of the financial services industry in the U.S. and created the CFPB. The CFPB has rulemaking, supervisory, and enforcement authority over larger consumer debt collectors. The Dodd-Frank Act, along with the Unfair, Deceptive, or Abusive Acts or Practices ("UDAAP") provisions included therein, and the Federal Trade Commission Act, prohibit unfair, deceptive, and/or abusive acts and practices.

•

~~International data protection and privacy laws,~~ which include relevant country specific legislation in the United Kingdom and other European countries where we operate that regulate the processing of information relating to individuals, including the obtaining, holding, use or disclosure of such information; the Personal Information Protection and Electronic Documents Act, which aims to protect personal information that is collected, used or disclosed in certain circumstances for purposes of electronic commerce in Canada; and the EU GDPR, which regulates the processing and free movement of personal data within the EU and transfer of such data outside the EU.


•	Consumer Credit Act 1974 (and its related regulations), Unfair Terms in Consumer Contracts Regulations of 1999 and the Financial Conduct Authority's consumer credit conduct of business rules, which apply to our international operations and govern consumer credit agreements.

In addition, certain of our EU subsidiaries are subject to capital adequacy, liquidity and ~~liquidity requirements.~~other requirements imposed by regulators, such as the Swedish Financial Supervisory Authority.

~~Employees~~Human Capital

As of December 31, ~~2019,~~2020, we employed ~~4,412~~3,820 full-time equivalents ~~globally.~~ globally across 18 countries, with approximately 76%, 23% and less than 1% of our workforce distributed across the Americas, Europe and Australia, respectively. Our employees share a common set of values and commitments that define how we treat each other, how we relate to our customers and the responsibilities we have to shareholders, regulators, clients and others. We refer to this shared set of values as C.A.R.E.S, which stands for Committed, Accountable, Respectful, Ethical and Successful. These values are intended to foster a high performing workforce and sense of belonging by working together to build an equitable and inclusive culture where employees can be themselves, to be their best.

In support of these values we offer comprehensive total rewards programs, competitive pay and bonus structures, health and wellness benefits, retirement plans and an employee assistance program. Additionally, we offer tuition reimbursement assistance and have a robust suite of training and development offerings for employees across the globe, many available in multiple languages.

Management considers our employee relations to be good. While none of our North American employees are represented by a union or covered by a collective bargaining agreement, in Europe we work closely with a number of works councils, and in countries where it is the customary local practice, such as Finland and Spain, we have collective bargaining agreements.

Available Information

We make available on or through our website, www.pragroup.com, certain reports that we file with or furnish to the SEC in accordance with the Securities Exchange Act of 1934, as amended (the "Exchange Act"). These include our Annual Reports on Form 10-K, our Quarterly Reports on Form 10-Q, our Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Filings"). We make this information available on our website free of charge as soon as reasonably practicable after we electronically file the information with, or furnish it to, the SEC. The SEC maintains an Internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC at: www.sec.gov.

The information contained on, or that can be accessed through our website, is not, and shall not be deemed to be a part of this Form 10-K or incorporated into any of our other SEC Filings.

Reports filed with, or furnished to, the SEC are also available free of charge upon request by contacting our corporate office at:

PRA Group, Inc.

Attn: Investor Relations

120 Corporate Boulevard, Suite 100

Norfolk, Virginia 23502

Item 1A. Risk ~~Factors~~.Factors.

~~An investment~~You should carefully read the following discussion of material factors, events and uncertainties when evaluating our business and the forward-looking information contained in this Annual Report on Form 10-K. The events and consequences discussed in these risk factors could materially and adversely affect our ~~Company involves~~business, operating results, liquidity and financial condition. While we believe we have identified and discussed below the material risk ~~including~~factors affecting our business, these risk factors do not identify all the ~~possibility~~risks we face, and there may be additional risks and uncertainties that we do not presently know or that we do not currently believe to be material that may have an adverse effect on our business, performance or financial condition in the ~~value~~future.

Operational and Industry Risks

The continuation of the ~~investment~~COVID-19 pandemic could ~~fall substantially. The following are risks that~~have an adverse effect on our business, results of operations and financial results.

We cannot predict the extent to which the continuing COVID-19 pandemic will impact our business, results of operations and financial results due to numerous evolving factors such as the extent to which vaccines will be available and their effectiveness against mutations of COVID-19. However, the continuation or worsening of the COVID-19 pandemic could ~~materially~~adversely affect our business, results of operations and financial ~~condition, liquidity, cash flows,~~results if:

•the current deterioration in the economic and inflationary environment resulting from the ~~value of,~~pandemic worsens or continues throughout 2021;

•political, legal and ~~return on, an investment~~regulatory actions and policies in response to the pandemic prevent us from performing our collection activities or result in material increases in our ~~Company.~~costs to comply with such laws and regulations;

~~Risks related~~•consumers respond to COVID-19 by failing to pay amounts owed to us as a result of their unemployment or other factors that impact their ability to make payments;

•we are unable to maintain staffing levels necessary to operate our business due to extended lockdowns, governmental actions that result in our business operations ~~and industry~~being deemed non-essential or continued spread of COVID-19 causing employees to be unable or unwilling to work;

•we are unable to collect on existing nonperforming loans or experience material decreases in our cash collections;

•we are unable to purchase nonperforming loans needed to operate our business because credit originators become unable or unwilling to sell their nonperforming loans consistent with historical levels; or

•we suffer a cybersecurity incident as a result of increased vulnerability while a larger number of our employees work remotely.

A deterioration in the economic or inflationary environment in the ~~Americas or Europe~~countries in which we operate could have an adverse effect on our business and results of operations.

Our performance may be adversely affected by economic, political or inflationary conditions in any market in which we operate. These conditions could include regulatory developments, changes in global or domestic economic policy, legislative changes, the sovereign debt crises experienced in several European countries and the uncertainty regarding the EU’s future as a result of the UK's departure from the EU. Deterioration in economic conditions, or a significant rise in inflation could cause personal bankruptcy and insolvency filings to increase, and the ability of consumers to pay their debts could be adversely affected. This may in turn adversely impact our business and financial results. ~~Deteriorating economic conditions could also adversely impact the businesses to which we provide fee-based services, which could reduce our fee income and cash flow.~~

If global credit market conditions and the stability of global banks deteriorate, itthe amount of consumer or commercial lending and financing could ~~negatively impact~~be reduced, thus reducing the ~~generation~~volume of ~~comprehensive receivable buying opportunities~~nonperforming loans available for purchase, which could adversely affect our business, financial results and ability to succeed in international markets. If conditions in major credit markets deteriorate, the amount of consumer or commercial lending and financing could be reduced, thus decreasing the volume of nonperforming loans available for our purchase.

Other factors associated with the economy that could influence our performance include the financial stability of the lenders on our bank loans and credit facilities and our access to capital and credit. The financial turmoil that adversely affected

the banking system and financial markets during the ~~last domestic~~prior global recession beginning in 2007 resulted in the tightening of credit markets. ~~Although there has since been improvement,~~While the banking system and financial markets recovered from the prior recession, a worsening of current conditions, including as a result of the COVID-19 pandemic, could have a negative impact on our business, including ~~a decrease in the value of our financial investments and~~ the insolvency of lending institutions, ~~including~~notably the lenders providing our bank loans and credit facilities, resulting in our difficulty in or inability to obtain credit. These and other economic factors could have an adverse effect on our financial condition and results of operations.

We may not be able to continually replace our nonperforming loans with additional portfolios sufficient to operate efficiently and profitably, and/or we may not be able to purchase nonperforming loans at appropriate prices.

To operate profitably, we must purchase and service a sufficient amount of nonperforming loans to generate revenue that exceeds our expenses. ~~Fixed costs~~Costs such as salaries and other compensation expense constitute a significant portion of our overhead and, if we do not replace the nonperforming loan portfolios we service with additional portfolios, we may have to reduce the number of our collection personnel. We would then, have to rehire collection staff if we subsequently obtain additional portfolios. These practices could lead to negative consequences ~~such as:~~including the following:

•low employee morale;

•fewer experienced employees;

•higher training costs;

•disruptions in our operations;

•loss of efficiency; and

•excess costs associated with unused space in our facilities.

The availability of nonperforming loan portfolios at prices that generate an appropriate return on our investment depends on a number of factors, ~~both within and outside of our control,~~ including the following:

•the continuation of high levels of consumer debt obligations;

•sales of nonperforming loan portfolios by ~~debt owners;~~credit originators; and

•competitive factors affecting potential purchasers and credit ~~grantors~~originators of receivables.

Furthermore, heightened regulation of the credit card and consumer lending industry or changing credit origination strategies may result in decreased availability of credit to consumers, potentially leading to a future reduction in nonperforming loans available for purchase from debt owners. Conversely, lower regulatory barriers with respect to debt buyers could lead to increased participants in the debt collection industry, which could, in turn, impact the supply of nonperforming loans available for purchase.credit originators. We cannot predict how our ability to identify and purchase nonperforming loans and the quality of those nonperforming loans would be affected if there were a shift in lending practices, whether caused by changes in the regulations or accounting practices applicable to ~~debt owners~~credit originators or ~~debt buyers,~~purchasers, a sustained economic downturn or otherwise.

Moreover, there can be no assurance that ~~debt owners~~credit originators will continue to sell their nonperforming loans consistent with ~~recent~~historical levels or at all, or that we will be able to bid competitively for those portfolios. Because of the length of time involved in collecting on acquired portfolios and the variability in the timing of our collections, we may not be able to identify trends and make changes in our purchasing strategies in a timely manner. If we are unable to maintain our business or adapt to changing market needs as well as our current or future competitors, we may experience reduced access to nonperforming loan portfolios at appropriate prices and, therefore, reduced profitability.

Currently, a number of large banks that historically sold nonperforming loans in the U.S., including sellers of bankrupt accounts, are not selling such debt. Should these conditions worsen, it could negatively impact our ability to replace our nonperforming loans with additional portfolios sufficient to operate profitably.

We may not be able to collect sufficient amounts on our nonperforming loans to fund our operations.

Our principal business consists of purchasing and ~~liquidating~~collecting nonperforming loans that consumers or others have failed to pay. The ~~debt owners~~credit originators have typically made numerous attempts to recover on their receivables, often using a combination of in-house recovery efforts and third-party collection agencies. These nonperforming loans are difficult to collect, and we may not collect a sufficient amount to cover our investment and the costs of running our business.

Our collections may decrease if certain types of insolvency proceedings and bankruptcy filings involving liquidations increase.

Various economic trends and potential changes to existing legislation may contribute to an increase in the amount of personal bankruptcy and insolvency filings. Under certain of these filings, a debtor's assets may be sold to repay creditors, but because most of the receivables we collect through our collections operations are unsecured, we typically would not be able to collect on those receivables. Although our insolvency collections business could benefit from an increase in personal bankruptcies and insolvencies, we cannot ensure that our collections operations business would not decline with an increase in personal insolvencies or bankruptcy filings or changes in related regulations or practices. If our actual collection experience

with respect to a nonperforming or insolvent bankrupt receivables portfolio is significantly lower than the total amount we projected when we acquired the portfolio, our financial condition and results of operations could be adversely impacted.

~~Changes in accounting standards~~Goodwill impairment charges could negatively impact our net income and ~~their interpretations could adversely affect our operating results.~~stockholders' equity.

U.S. Generally Accepted Accounting Principles ("GAAP"), as issued and amended by the Financial Accounting Standards Board ("FASB"), is subject to interpretation by the SEC, and various other bodies that promulgate and interpret appropriate

accounting principles. These principles and related implementation guidelines and interpretations can be highly complex and involve subjective estimates. A change in these principles or interpretations couldWe have recorded a significant ~~effect on~~amount of goodwill as a result of our reported financial results. For example, in June 2016 the FASB issued Accounting Standards Codification ("ASC") No. 2016-13, Financial Instruments - Credit Losses (Topic 326): “Measurement of Credit Losses on Financial Instruments” (“ASU 2016-13”), which requires the measurement of expected credit lossesbusiness acquisitions. Goodwill is not amortized, but is tested for ~~financial instruments held~~impairment at the reporting ~~date based on historical experience, current~~unit level. Goodwill is required to be tested for impairment annually and between annual tests if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount, which could lead to the recognition of a goodwill impairment charge. These risks include:

•adverse changes in macroeconomic conditions, and reasonable and supportable forecasts. Furthermore, in November 2019, FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), which amends the ~~Purchase Credit Deteriorated ("PCD") financial asset guidance in ASU 2016-13 to clarify that expected recoveries of amounts previously written off~~business climate, or the market for the entity's products or services;

•significant variances between actual and expected financial results;

•negative or declining cash flows;

•lowered expectations of future results;

•failure to ~~be written off should be included in the valuation account and should not exceed the aggregate~~realize anticipated synergies from acquisitions;

•significant expense increases;

•a more likely-than-not expectation of ~~amounts previously written off and expected to be written off by an entity. ASU 2019-11 clarifies that a negative allowance is recognized when an entity determines, after a full~~selling or ~~partial writeoff of the amortized cost basis, that it will recover~~disposing all, or a portion of, a reporting unit;

•the ~~basis.~~loss of key personnel;

~~ASU 2016-13~~•an adverse action or assessment by a regulator;

•significant increase in discount rates; or

•a sustained decrease in the price per share of our common stock.

Our goodwill impairment testing involves the use of estimates and ~~ASU 2019-11 supersede ASC 310-30, "Loans~~the exercise of judgment, including judgments regarding expected future business performance and ~~Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"), which we currently follow to account for income recognized on~~market conditions. Significant changes in our ~~finance receivables,~~assessment of such factors, including the deterioration of market conditions, could affect our assessment of the fair value of one or more of our reporting units and ~~are effective for the fiscal year beginning January 1, 2020. ASU 2016-13 and ASU 2019-11 represent a significant significant change from existing U.S. GAAP and are expected to~~could result in ~~material changes~~a goodwill impairment charge in a future period.

Our loss contingency accruals may not be adequate to cover actual losses.

We are involved in judicial, regulatory and arbitration proceedings or investigations concerning matters arising from our business activities. We establish accruals for potential liability arising from legal proceedings when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. However, there can be no assurance as to the ~~Company’s accounting~~ultimate outcome. We may still incur legal costs for ~~its finance receivables. Implementation efforts are nearly complete, including finalizing~~a matter even if we have not accrued a liability. In addition, actual losses may be higher than the ~~accounting processes, fulfillment~~amount accrued for a certain matter, or in the aggregate. An unfavorable resolution of additional data needs for new disclosures and reporting requirements, and drafting accounting and internal control policies and procedures. ASU 2016-13 and ASU 2019-11, amendments thereof, and amendments to new and existing accounting standardsa legal proceeding or claim could ~~have an adverse effect on~~adversely impact our business, financial condition, ~~and~~ results of ~~operations.~~operations, or liquidity. For more information, refer to the "Litigation and Regulatory Matters" section of Note 15 to our Consolidated Financial Statements included in Item 8 of this Form 10-K ("Note 15").

International Operations Risks

Our international operations expose us to risks which could harm our business, results of operations and financial condition.

A significant portion of our operations is conducted outside the U.S. This could expose us to adverse economic, industry and political conditions that may have a negative impact on our ability to manage our existing operations or pursue alternative strategic transactions, which could have a negative effect on our business, results of operations and financial condition.

The global nature of our operations expands the risks and uncertainties described elsewhere in this section, including the following:

•changes in local political, economic, social and labor conditions in the markets in which we operate;

•foreign exchange controls on currency conversion and the transfer of funds that might prevent us from repatriating cash earned in countries outside the U.S. in a tax-efficient manner;

•currency exchange rate fluctuations, currency restructurings, inflation or deflation and our ability to manage these fluctuations through a foreign exchange risk management program;

•different employee/employer relationships, laws and regulations, union recognition and the existence of employment tribunals and works councils;

•laws and regulations imposed by international governments, including those governing data security, sharing and transfer;

•potentially adverse tax consequences resulting from changes in tax laws in the jurisdictions in which we operate or challenges to our interpretations and application of complex international tax laws;

•logistical, communications and other challenges caused by distance and cultural and language differences, each making it harder to do business in certain jurisdictions;

~~risks related to crimes, strikes, riots, civil disturbances, terrorist attacks, wars and natural disasters;~~

•volatility of global credit markets and the availability of consumer credit and financing in our international markets;

•uncertainty as to the enforceability of contract ~~and intellectual property~~ rights under local laws;

•the potential of forced nationalization of certain industries, or the impact on creditors' rights, consumer disposable income levels, flexibility and availability of consumer credit and the ability to enforce and collect aged or charged-off debts stemming from international governmental actions, whether through austerity or stimulus measures or initiatives, intended to control or influence macroeconomic factors such as wages, unemployment, national output or consumption, inflation, investment, credit, finance, taxation or other economic drivers;

•the presence of varying levels of business corruption in international markets and the effect of various anti-corruption and other laws on our international operations;

•the impact on our day-to-day operations and our ability to staff our international operations given our changing labor conditions and long-term trends towards higher wages in developed and emerging international markets as well as the potential impact of union organizing efforts;

•potential damage to our reputation due to non-compliance with international and local laws; and

•the complexity and necessity of using non-U.S. representatives, consultants and other third-party vendors.

Any one of these factors could adversely affect our business, results of operations and financial condition.

~~The impact~~Compliance with complex and evolving international and U.S. laws and regulations that apply to our international operations could increase our cost of ~~worldwide tax audits, changes~~doing business in international jurisdictions.

We operate on a global basis with offices and activities in a number of jurisdictions throughout the Americas, Europe and Australia. We face increased exposure to risks inherent in conducting business internationally, including compliance with complex international ~~or domestic tax~~and U.S. laws and regulations that apply to our international operations, which could increase our cost of doing business in international jurisdictions. These laws and regulations include those related to taxation and anti-corruption laws such as the ~~issuance of new tax guidance,~~FCPA and the ~~results~~UK Bribery Act. Given the complexity of ~~operations~~these laws, there is a risk that we may inadvertently breach certain provisions of these laws, such as through the negligent behavior of an employee or our failure to comply with certain formal documentation requirements. Violations of these laws and regulations by us, any of our employees or our third-party vendors, either inadvertently or intentionally, could ~~have an adverse tax effect~~result in fines and penalties, criminal sanctions, restrictions on our ~~financial condition.~~

~~Our tax filings are subject~~operations and ability to ~~audit by domestic~~offer our products and ~~international tax authorities. These audits may result~~services in ~~assessments of additional taxes, adjustments to the timing of taxable income~~one or ~~deductions, or re-allocations of income among tax jurisdictions. Any one~~more countries. Violations of these ~~factors~~laws could also adversely affect our business, ~~results of operations~~brand, international expansion efforts, ability to attract and ~~financial condition.~~

In addition, many countries in the EU and around the world have adopted and/or proposed changes to current tax laws. Further, organizations such as the Organization for Economic Cooperation and Development have published actions that, if adopted by countries where we do business, could increase our tax obligations in those countries. Due to the scale of our U.S. and international business activities, many of these enacted and proposed changes to the taxation of our activities could increase our worldwide effective tax rate potentially harming our financial positionretain employees and results of operations.

While the Tax Act was enacted during December 2017, we still expect to see future regulatory, administrative or legislative guidance. To the extent any future guidance differs from our current interpretation of the law, it could have a material effect on our financial position and results of operations. The Tax Act included a broad range of tax reform provisions affecting businesses, including the elimination of U.S. federal income taxes on dividends from international subsidiaries; requiring a current inclusion in U.S. federal taxable income of certain earnings of controlled international corporations referred to as Global Intangible Low-Taxed Income (“GILTI”); creating the base erosion anti-abuse tax, a new minimum tax; creating a new limitation on deductible interest expense; and increased limitations on the deductibility of executive compensation.

Our future tax expense could be affected by changes in the mix of earnings in countries with differing statutory tax rates, changes in the valuation of deferred tax assets and liabilities, or changes in tax laws or their interpretation. The determination of the provision for income taxes and other tax liabilities regarding our global operations requires significant judgment. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may adversely affect our financial results in the period(s) for which such determination is made.

~~Goodwill or other intangible asset impairment charges could negatively impact our net income and stockholders' equity.~~

We have recorded a significant amount of goodwill as a result of our acquisitions. Goodwill is not amortized, but is tested for impairment at the reporting unit level. Goodwill is required to be tested for impairment annually and between annual tests if events or circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying amount. There are numerous risks that may cause the fair value of a reporting unit to fall below its carrying amount, which could lead to the recognition of goodwill impairment. These risks include, but are not limited to, adverse changes in macroeconomic conditions, the business climate, or the market for the entity's products or services; significant variances between actual and expected financial results; negative or declining cash flows; lowered expectations of future results; failure to realize anticipated synergies from acquisitions; significant expense increases; a more likely-than-not expectation of selling or disposing all or a portion of a reporting unit; the loss of key personnel; an adverse action or assessment by a regulator; or a sustained decrease in the Company's share price.

Our goodwill impairment testing involves the use of estimates and the exercise of judgment, including judgments regarding expected future business performance and market conditions. Significant changes in our assessment of such factors, including the deterioration of market conditions, could affect our assessment of the fair value of one or more of our reporting units and could result in a goodwill impairment charge in a future period.

Other intangible assets, such as client and customer relationships, non-compete agreements and trademarks, are amortized. Risks such as those that could lead to the recognition of goodwill impairment, could also lead to the recognition of other intangible asset impairment.

The UK's exit from the EU could adversely impact our business, results of operations and financial condition.

~~On June 23, 2016, the~~The UK ~~voted to leave~~exited the EU ~~(commonly referred to as "Brexit"). Although Brexit occurred on~~effective January 31, 2020 ("Brexit"). Although the parties have agreed on several terms governing their continuing relationship, matters such as data sharing and financial services remain unresolved. As a result of the recency of the agreement and the failure to reach agreement on significant matters, there remains ~~significant~~ uncertainty about ~~the future relationship between the UK and the EU and the~~Brexit’s impact ~~of the UK's withdrawal from the EU including its affect~~ on ~~business activity, impact on~~taxes, foreign currency, political stability, ~~and~~ economic, regulatory and financial market conditions in the UK, the EU and ~~globally.~~globally, the movement of goods, services, people and capital between the UK and EU.

As of December 31, ~~2019,~~2020, the total estimated remaining collections ("ERC") of our UK portfolios constituted approximately ~~23%~~26% of our consolidated ERC. Our British pound assets are predominantly funded by British pound liabilities. However, British pound net income and retained earnings could be affected when translated ~~back~~ to the U.S. dollar, positively or negatively, by foreign currency exchange volatility in the short term resulting from the uncertainty of Brexit. In the longer term, ~~any~~Brexit could adversely impact ~~from Brexit on~~ our business, results of operations and financial condition ~~will depend~~depending on the ~~final~~ terms negotiated by the UK and the EU ~~including arrangements~~ concerning data sharing, taxes, ~~and~~ financial services ~~regulation.~~

~~Our loss contingency accruals may not be adequate to cover actual losses.~~

~~We are involved in judicial, regulatory,~~regulation and ~~arbitration proceedings or investigations concerning~~other matters ~~arising from our business activities. We believe~~ that we have adopted reasonable compliance policies and procedures and believe we have meritorious defenses in all material litigation pending against us. However, there can be no assurance as to the ultimate outcome. We establish accruals for potential liability arising from legal proceedings when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. We may still incur legal costs for a matter even if we have not accrued a liability. In addition, actual losses may be higher than the amount accrued for a certain matter, or in the aggregate. An unfavorable resolution of a legal proceeding or claim could adversely impact our ~~business, financial condition, results of operations, or liquidity. For more information, refer to the "~~operations.

~~Litigation~~

Legal and Regulatory ~~Matters" section of Note 14 to our Consolidated Financial Statements included in Item 8 of this Form 10-K ("Note 14").~~

~~Class action suits and other litigation could divert our management's attention from operating our business and increase our expenses.~~

Credit grantors, nonperforming loan purchasers and third-party collection agencies and attorneys in the consumer credit industry are frequently subject to putative class action lawsuits and other litigation. Claims include failure to comply with applicable laws and regulations and improper or deceptive origination and servicing practices. An unfavorable outcome in a class action suit or other litigation could adversely affect our results of operations, financial condition, cash flows and liquidity. Even when we prevail or the basis for the litigation is groundless, considerable time, energy and resources may be needed to respond, and such class action lawsuits or other litigation could adversely affect our results of operations, financial condition, cash flows and liquidity.

~~A cyber incident could disrupt our operations, compromise or corrupt our confidential information or damage our reputation, all of which could negatively impact our business and financial results.~~

Our business is highly dependent on our ability to process and monitor a large number of transactions across markets and in multiple currencies. As we expand geographically, maintaining the security of our information technology systems and infrastructure becomes more significant and difficult. As our reliance on technology has increased, so have the risks posed to our systems, some of which are internal and others we have outsourced. The three primary risks we face from a cyber incident are operational disruption, reputational damage and the exposure of private data such as customer information, our employees' personally identifiable information, or proprietary business information such as underwriting and collections methodologies.

Although we take protective steps, including upgrading our systems and networks with intrusion and detection prevention systems, monitoring firewalls to safeguard critical business applications and supervising third party providers that have access to our systems, our computer systems, software and networks may still be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. We have implemented solutions, processes, and procedures to help mitigate these risks, but these measures, as well as our organization's increased awareness of our risk of a cyber incident do not guarantee that our business, reputation or financial results will not be impacted negatively by such an incident. Should such a cyber incident occur, we may be required to expend significant additional resources to notify affected consumers, modify our protective measures or to investigate and remediate vulnerabilities or other exposures. Additionally, we may be subject to fines, penalties, litigation costs and settlements and financial losses that may not be fully covered by our cyber insurance.

~~The underperformance or failure of our information technology infrastructure, networks or telephone systems could result in loss in productivity, loss of competitive advantage and business disruption.~~

We depend on effective information and telephone systems to operate our business. We have also acquired and expect to acquire additional systems as a result of business acquisitions. Significant resources are required to maintain or enhance our existing information and telephone systems and to replace obsolete systems. Although we are continually upgrading, streamlining, and integrating our systems and have invested in strategies to prevent a failure, our systems are susceptible to outages due to natural disasters, power loss, computer viruses, security breaches, hardware or software vulnerabilities, disruptions, and similar events. Failure to adequately implement or maintain effective and efficient information systems with sufficiently advanced technological capabilities, or our failure to efficiently and effectively consolidate our information systems to eliminate redundant or obsolete applications, could cause us to lose our competitive advantage, divert management’s time, result in a loss of productivity or disrupt business operations, which could have a material adverse effect on our business, financial condition and results of operations.

Risks ~~associated with governmental regulation and laws~~

Our ability to collect and enforce our nonperforming loans may be limited under federal, state and international laws, regulations and policies.

~~The businesses conducted by our operating subsidiaries~~Our operations are subject to licensing and regulation by governmental and regulatory bodies in the many jurisdictions in which we operate. ~~Federal~~U.S. federal and state laws, and the laws and regulations of the international countries in which we operate, may limit our ability to collect on and enforce our rights with respect to our nonperforming loans regardless of any act or omission on our part. Some laws and regulations applicable to credit issuers may preclude us from collecting on nonperforming loans we acquire if the credit issuer previously failed to comply with applicable laws in generating or servicing those receivables. Collection laws and regulations also directly apply to our business. Such laws and regulations are extensive and subject to change. A variety of state, federal and international laws and regulations govern the collection, use, retention, transmission, sharing and security of consumer data. Consumer protection and privacy protection laws, changes in the ways that existing rules or laws are interpreted or enforced and any procedures that may be implemented as a result of regulatory consent orders may adversely affect our ability to collect on our nonperforming loans and ~~may harm~~adversely affect our business. Our failure to comply with laws or regulations applicable to us could limit our ability to collect on our receivables, which could reduce our profitability and ~~harm~~adversely affect our business.

Failure to comply with government regulation of the collections industry could result in penalties, fines, litigation, damage to our reputation or the suspension or termination of our ability to conduct our business.

The collections industry throughout the markets in which we operate is governed by various laws and regulations, many of which require us to be a licensed debt collector. Our industry is also at times investigated by regulators and offices of state attorneys general, and subpoenas and other requests or demands for information may be issued by governmental authorities who are investigating debt collection activities. These investigations may result in enforcement actions, fines and penalties, or the assertion of private claims and lawsuits. If any such investigations result in findings that we or our vendors have failed to comply with applicable laws and regulations, we could be subject to penalties, litigation losses and expenses, damage to our reputation, or the suspension or termination of, or required modification to, our ability to conduct collections, which would adversely affect our business, results of operations and financial condition.

In a number of jurisdictions, we must maintain licenses to purchase or own debt, and/or to perform debt recovery services and must satisfy related bonding requirements. Our failure to comply with existing licensing requirements, changing interpretations of existing requirements, or adoption of new licensing requirements, could restrict our ability to collect in certain jurisdictions, subject us to increased regulation, increase our costs or adversely affect our ability to purchase, own and/or collect our receivables.

Some laws, among other things, also may limit the interest rate and the fees that a credit ~~grantor~~originator may impose on our consumers, limit the time in which we may file legal actions to enforce consumer accounts and require specific account information for certain collection activities. In addition, local requirements and court rulings in various jurisdictions ~~also~~ may affect our ability to collect.

Regulations and statutes applicable to our industry further provide that, in some cases, consumers cannot be held liable for, or their liability may be limited with respect to, charges to their ~~debt~~debit or credit card accounts that resulted from unauthorized use of their credit. These laws, among others, may limit our ability to recover amounts owing with respect to the receivables, whether or not we committed any wrongful act or omission in connection with the account.

If we fail to comply with any applicable laws and regulations discussed above, such failure could result in penalties, litigation losses and expenses, damage to our reputation, or otherwise impact our ability to conduct collections efforts, which could adversely affect our business, results of operations and financial condition.

Investigations, reviews or enforcement actions by governmental authorities may result in changes to our business practices; negatively impact our receivables portfolio acquisition volume; make collection of receivables more difficult; or expose us to the risk of fines, penalties, restitution payments and litigation.

Our debt collection activities and business practices are subject to review from time to time by various governmental authorities and regulators, including the CFPB, which may commence investigations, reviews or enforcement actions ~~or reviews~~ targeted at businesses in the financial services industry. These investigations or reviews may involve ~~governmental authority consideration of~~ individual consumer complaints or ~~could involve a broader review of~~ our debt collection policies and ~~practices.~~practices generally. Such investigations or reviews could lead to assertions by governmental authorities that we are not complying with applicable laws or regulations. In such circumstances, authorities may request or seek to impose a range of remedies that could involve potential compensatory or punitive damage claims, fines, restitution payments, sanctions or injunctive relief, that if agreed to or granted, could require us to make payments or incur other

expenditures that could have an adverse effect on our financial position. The CFPB has the authority to obtain cease and desist orders (which can include orders for restitution or rescission of contracts, as well as other kinds of affirmative relief), recover costs, and impose monetary penalties (ranging from $5,000 per day to over $1 million per day, depending on the nature and gravity of the violation). In addition, where a company has violated Title X of the Dodd-Frank Act or CFPB regulations implemented thereunder, the Dodd-Frank Act empowers state attorneys general and other state regulators to bring civil actions to remedy violations under state law. ~~Government~~Governmental authorities could also request or seek to require us to cease certain ~~of our~~ practices or institute new practices. Negative publicity relating to investigations or proceedings brought by governmental authorities could have an adverse impact on our reputation, harm our ability to conduct business with industry participants, and result in financial institutions reducing or eliminating sales of receivables portfolios to us which would harm our business and negatively impact our results of operations. Moreover, changing or modifying our internal policies or procedures, responding to governmental inquiries and investigations and defending lawsuits or other proceedings could require significant efforts on the part of management and result in increased costs to our business. In addition, such efforts could divert management's full attention from our business operations. All of these factors could have an adverse effect on our business, results of operations and financial condition.

The CFPB has issued civil investigative demands to many companies that it regulates and periodically examines practices regarding the collection of consumer debt. OnAs previously reported in our Current Report on Form 8-K filed on September 9, 2015, Portfolio Associates, LLC ("PRA"), our wholly owned subsidiary, entered into a consent order with the CFPB effective September 9, 2015 settling a previously disclosed investigation of certain debt collection practices of PRA (the "Consent Order"). Among other things, the Consent Order required PRA to: (i) vacate 837 judgments obtained after the applicable statute of limitations, refund $860,607 in payments received on account of such judgments and waive the remaining $3.4 million in judgment balances; (ii) refund $18.2 million in Litigation Department Calls Restitution, as defined in the Consent Order; and (iii) pay an $8.0 million civil money penalty to the CFPB. Although we have implemented the requirements of the Consent Order, there can be no assurance that additional litigation or new industry regulations currently under consideration by the CFPB would not have an adverse effect on our business, results of operations and financial condition. In ~~addition,~~fact, the CFPB ~~monitors our compliance with~~has recently made civil investigative demands and advised the Company of the CFPB’s belief that we may have violated certain provisions of the Consent Order and ~~could make a determination that we have failed~~applicable law. Refer to ~~adhere~~Note 15 to our ~~obligations. Such a determination could result~~Consolidated Financial Statements included in ~~additional inquiries, penalties or liabilities, which could have an adverse effect on our business, results~~Item 8 of ~~operations, and financial condition.~~

~~Compliance with complex and evolving international and U.S. laws and regulations that apply to our international operations could increase our cost of doing business in international jurisdictions.~~

We operate on a global basis with offices and activities in a number of jurisdictions throughout the Americas and Europe. We face increased exposure to risks inherent in conducting business internationally, including compliance with complex international and U.S. laws and regulations that apply to our international operations, which could increase our cost of doing business in international jurisdictions. These laws and regulations include those related to taxation and anti-corruption laws such as the FCPA, the UK Bribery Act and other local laws prohibiting corrupt payments to governmental officials. Given the complexity of these laws, there is a risk that we may inadvertently breach certain provisions of these laws, such as through the negligent behavior of an employee or our failure to comply with certain formal documentation requirements. Violations of these laws and regulations by us, any of our employees or our third-party vendors, either inadvertently or intentionally, could result in fines and penalties, criminal sanctions, restrictions on our operations and limits on our ability to offer our products and services in one orthis Form 10-K for more ~~countries. Violations of these laws could also adversely affect our business, brand, international expansion efforts, ability to attract and retain employees and results of operations.~~information.

The regulation of data privacy in the U.S and globally could have an adverse effect on our business, results of operations and financial condition by increasing our compliance costs.

The regulation of data privacy, including interpretations and determinations by regulatory authorities in the U.S. and in the countries in which we operate, continues to evolve. It is not possible to predict the effect of such rigorous data protection regulations over time. For example, ~~the EU and UK adopted the~~ GDPR ~~which~~ impacts our European ~~operations. On May 25, 2018 the GDPR~~

~~updated data privacy compliance obligations, which~~operations and required us to adapt our business practices accordingly. Financial penalties for noncompliance with the GDPR can be significant. It is also the case that the U.S. federal government and states within the U.S. have enacted or are considering legislation to enact data privacy protections. Data privacy regulations could result in increased costs of conducting business to maintain compliance with such regulations. Although we take significant steps to protect the security of our data and the personal data of our customers, we may be required to expend significant resources to comply with regulations if third parties improperly obtain and use such data.

~~Risks associated with indebtedness~~Changes in tax provisions or exposures to additional tax liabilities could have an adverse tax effect on our financial condition.

We ~~utilize bank~~record reserves for uncertain tax positions based on our assessment of the probability of successfully sustaining tax filing positions. Management exercises significant judgment when assessing the probability of successfully sustaining tax filing positions, in determining whether a tax liability should be recorded and, if so, estimating that amount. Our tax filings are subject to audit by domestic and international tax authorities. If our tax filing positions are successfully challenged, payments could be required that are in excess of reserved amounts or we may be required to reduce the carrying amount of our net deferred tax asset, either of which could be significant to our financial condition or results of operations. Although we believe our estimates are reasonable, the ultimate tax outcome may differ from the amounts recorded in our financial statements and may adversely or beneficially affect our financial results in the period(s) for which such determination is made.

Financial and Liquidity Risks

We expect to use leverage in executing our business strategy, which may adversely affect the return on our assets.

We may incur a substantial amount of debt in the future. Our existing indebtedness is recourse to us, and we anticipate that future indebtedness will likewise be recourse. As of December 31, 2020, we had total consolidated indebtedness of approximately $2.7 billion, all of which, except for $345.0 million outstanding principal amount of our 3.50% Convertible Notes due 2023 (the "2023 Notes") and $300.0 million outstanding principal amount of our 7.375% Senior Notes due 2025 (the "2025 Notes"), was secured indebtedness. In addition, as of December 31, 2020, we had total committed revolving borrowing capacity of $843.2 million available under our credit facilities, all of which if borrowed would be secured indebtedness. Considering borrowing base restrictions and other covenants, the amount available to be borrowed under our credit facilities would have been $408.0 million. Our management team will consider a number of factors when evaluating our level of

indebtedness and when making decisions regarding the incurrence of any new indebtedness, including the purchase price of assets to be acquired with debt financing, the estimated market value of our assets and the ability of particular assets and the Company as a whole, to generate cash flow to cover the expected debt service.

Incurring a substantial amount of debt could have important consequences for our business, including:

•making it more difficult for us to satisfy our obligations with respect to our debt, to our trade or other creditors;

•increasing our vulnerability to adverse economic or industry conditions;

•limiting our ability to obtain additional financing to fund capital expenditures and acquisitions, particularly when the availability of financing in the capital markets is constrained;

•requiring a substantial portion of our cash flows from operations and reducing our ability to use our cash flows to fund working capital, capital expenditures, acquisitions and general corporate requirements;

•increasing the amount of interest expense because most of the indebtedness under our credit facilities bear interest at floating rates, which, if interest rates increase, will result in higher interest expense;

•limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; and

•placing us at a competitive disadvantage to less leveraged competitors.

We cannot assure you that our business will generate sufficient cash flow from operations or that future borrowings will be available to us through capital markets financings, under credit facilities or otherwise, in an amount sufficient to enable us to repay our indebtedness, repurchase our 2023 Notes upon a fundamental change or settle conversions in cash, repurchase our 2025 Notes upon a change of control or fund our other liquidity needs. We may need to refinance all or a portion of our indebtedness, at or before its scheduled maturity. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all. In addition, we may incur additional indebtedness in order to finance our operations or to repay existing indebtedness. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking additional debt or equity or reducing or delaying capital expenditures, strategic acquisitions, investments and alliances. We cannot assure you that any such actions, if necessary, could be effected on commercially reasonable terms or at all, or on terms that would be advantageous to our stockholders or on terms that would not require us to breach the terms and conditions of our existing or future debt agreements. Our ability to access additional future borrowings could be negatively impacted as a result of the impact of the COVID-19 pandemic on the global debt and capital markets.

We may not be able to generate sufficient cash flow to meet our debt service obligations.

Our ability to generate sufficient cash flow from operations to make scheduled payments on our debt obligations will depend on our current and future financial performance, which is subject to general economic, financial, competitive, legislative, regulatory and other factors that are beyond our control. In the future, we may fail to generate sufficient cash flow from the collection of nonperforming loans to meet our cash requirements. Further, our capital requirements may vary materially from those currently planned if, for example, our revenues do not reach expected levels, we have to incur unforeseen expenses, we invest in acquisitions or make other investments that we believe will benefit our competitive position. If we do not generate sufficient cash flow from operations to satisfy our debt obligations, including interest payments and the payment of principal at maturity, we may have to undertake alternative financing plans, such as refinancing or restructuring our debt, selling assets or seeking to raise additional capital. We cannot provide assurance that any refinancing would be possible, that any assets could be sold, or, if sold, of the timeliness and amount of proceeds realized from those sales, that additional financing could be obtained on acceptable terms, if at all, or that additional financing would be permitted under the terms of our various debt instruments then in effect. Furthermore, our ability to refinance would depend upon the condition of the finance and credit markets. Our inability to generate sufficient cash flow to satisfy our debt obligations, or to refinance our obligations on commercially reasonable terms or on a timely basis, would materially affect our business, financial condition or results of operations and may delay or prevent the expansion of our business.

The agreements governing our indebtedness include provisions that may restrict our financial and business operations.

Our credit facilities and ~~convertible notes to finance~~the indentures that govern our ~~business activities, which could negatively impact~~2023 Notes and our ~~liquidity and business operations if we are unable to retain, renegotiate, expand or replace our bank loans and credit facilities or raise the necessary funds to repurchase our convertible notes.~~

As described in Note 6 to our Consolidated Financial Statements included in Item 8 of this Form 10-K, our sources of liquidity include a North American credit facility, a European multicurrency revolving credit facility and convertible senior notes. The credit facilities2025 Notes contain financial and other restrictive covenants, including restrictions on how we operate our business and our ability to pay dividends to our stockholders. These restrictions may interfere with our ability to engage in other necessary or desirable business activities, which could materially affect our business, financial condition or results of operations.

Failure to satisfy any one of these covenants could result in negative consequences, including the following:

•acceleration of outstanding indebtedness;

•exercise by our lenders of rights with respect to the collateral pledged under certain of our outstanding indebtedness;

•our inability to continue to purchase nonperforming loans needed to operate our business; or

•our inability to secure alternative financing on favorable terms, if at all.

If we are unable to retain, renegotiate, expand or replace our credit facilities, including as a result of failure to satisfy the restrictive covenants contained in them, our liquidity and business operations could be impacted negatively.

As referenced above, we have indebtedness in the form of Convertible Senior Notes due 2020 and 2023 (collectively the "Notes") and may not have the ability to raise the funds necessary to repurchase the Notes upon a fundamental change or to settle conversions in cash. Our ability to make scheduled payments of the principal of, to pay interest on, or to refinance our indebtedness, including the Notes, or to make cash payments in connection with any conversion of the Notes depends on our future performance, which could be negatively impacted by economic, financial, competitive and other factors beyond our control. Our ability to refinance our indebtedness will depend on the capital markets and our financial condition at that time. We may not be able to engage in any of these activities or engage in these activities on desirable terms, which could result in a default on our debt obligations. In addition, in the event the conditional conversion features of the Notes are triggered, holders of the Notes are entitled to convert the Notes into shares of our common stock at any time during specified periods at their option, subject to the terms of the indenture governing the Notes. Upon conversion, unless we elect to deliver solely shares of our common stock to settle such conversion (other than paying cash in lieu of delivering any fractional shares of our common stock), we will be required to make cash payments in respect of the Notes. However, we may not have enough available cash or be able to obtain financing at the time we are required to repurchase Notes surrendered to settle conversions in cash, and our ability to repurchase the Notes or pay cash upon conversion may be limited by law. Any issuance of shares of our common stock upon conversion of the Notes would dilute the ownership interest of our stockholders.

We may be restricted from paying cash upon conversion of the Notes, repurchasing the Notes for cash when required and repaying the Notes at maturity or upon acceleration following an event of default under the Notes unless we repay all amounts outstanding under, and terminate, our North American Credit Agreement. Additionally, our future indebtedness may contain limitations on our ability to pay cash upon conversion of the Notes and on our ability to repurchase the Notes.

The terms of our North American Credit Agreement prohibit us from paying cash upon conversion of the Notes, repurchasing the Notes for cash when required upon the occurrence of a fundamental change and repaying the Notes at maturity or upon acceleration following an event of default under the indenture governing the Notes if a default or an event of default exists on the date of such required payment, repurchase or repayment, as applicable, or certain other conditions are not met, including pro forma compliance with the financial covenants and having “Sufficient Liquidity” (described below). As a result, we will be restricted from making such payments unless the default or event of default under our North American Credit Agreement is cured or waived, such conditions are met and/or we repay all amounts then outstanding under, and terminate, our North American Credit Agreement.

In addition, under our North American Credit Agreement our ability to settle conversions of the Notes in cash requires that immediately prior to any such conversion, our cash and cash equivalents (including our availability under our domestic and multi-currency revolving facilities under our North American Credit Agreement) be at least 115% of the sum of the principal amount of the Notes to be paid in cash (“Sufficient Liquidity”). The terms of any additional indebtedness incurred as permitted by our North American Credit Agreement may contain similar or more onerous restrictions than the foregoing.

Our failure to repurchase Notes, to pay, when due, cash upon conversion of the Notes or repay the Notes at maturity or upon acceleration following an event of default under the indenture governing the Notes would constitute a default under the indenture governing the Notes. A default under the indenture may constitute a default under our North American Credit Agreement.

~~Changes in interest rates could increase our interest expense and reduce our net income.~~

Our revolving credit facilities bear interest at variable rates. Increases in interest rates could increase our interest expense which would, in turn, lower our earnings. From time to time, we may enter into hedging transactions to mitigate our interest rate risk on all or a portion of our debt. Hedging strategies rely on assumptions and projections. If these assumptions and projections prove to be incorrect or our hedges do not adequately mitigate the impact of changes in interest rates, we may experience volatility in our earnings that could adversely affect our results of operations and financial condition.

~~Default by or failure of one or more of our counterparty financial institutions could cause us to incur significant losses.~~

As part of our risk management activities, we enter into transactions involving derivative financial instruments, including, among others, forward contracts and interest rate swap contracts, with various financial institutions. In addition, we have significant amounts of cash and cash equivalents on deposit or in accounts with banks or other financial institutions in the U.S. and abroad. As a result, we are exposed to the risk of default by, or failure of, counterparty financial institutions. The risk of counterparty default or failure may be heightened during economic downturns and periods of uncertainty in the financial markets. If one of our counterparties were to become insolvent or file for bankruptcy, our ability to recover losses incurred as a result of default or to retrieve our assets that are deposited or held in accounts with such counterparty may be limited by the counterparty's liquidity or the applicable laws governing the insolvency or bankruptcy proceedings.

Uncertainty about the future of the LIBOR may adversely affect our business.

It is possible that beginning in 2022 LIBOR iswill be discontinued as a reference rate used for over $110 trillion of financial contracts on a global basis. We incorporate LIBOR in both our bank loan and derivative hedging agreements. Due to reforms coming out of the 2008 financial crisis, LIBOR is scheduled to sunset at the end of 2021 and be replaced by an Alternative Reference Rate ("ARR"). A number of regulatory institutions are involved in coordinating this transition including the Financial Conduct Authority in the UK, the U.S. Federal Reserve, the SEC, and the FASB. Key industry-wide issues regarding the transition are still unresolved; these include the fact that a term structure (1 month, 3 month, 6 month, etc.) for the ARR has not yet been developed and a way to ensure neither borrowers nor lenders gain an unfair advantage has yet to be finalized.rate. It is unknown whether any proposed alternative reference rates will attain market acceptance as replacements ~~for LIBOR~~ or whether the outstanding issues related to them will be satisfactorily resolved. The availability of our borrowings and the operation of our derivative hedging agreements could be adversely impacted if LIBOR is discontinued and an agreement cannot be reached on an appropriate replacement benchmark rate between us and our lenders and counterparties.

Cybersecurity and Technology Risks

A cybersecurity incident could disrupt our operations, compromise or corrupt our confidential information or damage our reputation, all of which could negatively impact our business and financial results.

Our business is highly dependent on our ability to process and monitor a large number of transactions across markets and in multiple currencies. As we expand geographically, maintaining the security of our information technology systems and infrastructure becomes more significant and challenging. The three primary risks we face from a cybersecurity incident are operational disruption, the exposure of private data including, customer information, our employees' personally identifiable information, or proprietary business information such as underwriting and collections methodologies and reputational damage. As our reliance on technology has increased, so have the risks posed to our systems, some of which are internal, some hosted in the cloud and others we have outsourced.

Although we take preventive steps, including patching our systems and infrastructure, monitoring and blocking malicious traffic with intrusion and detection prevention systems, monitoring firewalls to safeguard critical business applications, conducting regular external and internal security penetrations testing and supervising third party providers that have access to our systems, our computer systems, software and network, may still be vulnerable to unauthorized access, computer viruses or other malicious code, and other events that could have a security impact. To date, interruptions of our systems and infrastructure have been infrequent and have not had a material impact on operations. However, these measures, as well as our organization's increased awareness of our risk of a cybersecurity incident, do not guarantee that our business, reputation or financial results will not be impacted in a material adverse manner by such an incident. Should such a cybersecurity incident occur, we may be required to expend significant additional resources to notify affected consumers, modify our protective measures or to investigate and remediate vulnerabilities or other exposures. Additionally, we may be subject to fines, penalties, litigation costs and settlements and financial losses that may not be fully covered by our cybersecurity insurance.

The underperformance or failure of our information technology infrastructure, networks or communication systems could result in loss in productivity, loss of competitive advantage and business disruption.

We depend on effective information and communication systems to operate our business. We have also acquired and expect to acquire additional systems as a result ~~while~~of business acquisitions. Significant resources are required to maintain or enhance our existing information and telephone systems and to replace obsolete systems. Although we ~~do not expect the impact~~periodically upgrade, streamline, and integrate our systems and have invested in strategies to prevent a failure, our systems are susceptible to outages due to natural disasters, power loss, computer viruses, security breaches, hardware or software vulnerabilities, disruptions, and similar events. Failure to adequately implement or maintain effective and efficient information systems with sufficiently advanced technological capabilities, or our failure to efficiently and effectively consolidate our information systems to eliminate redundant or obsolete applications, could cause us to lose our competitive advantage, divert management’s time, result in a loss of productivity or disrupt business operations, which could have a ~~significant~~material adverse effect on our ~~cost~~business, financial condition and results of ~~capital, financial results, and cash flows, the final impact cannot yet be determined.~~operations.

Item 1B. Unresolved Staff Comments.

None.

Item 2. Properties.

Our corporate headquarters and primary domestic operations facilities are located in Norfolk, Virginia. In addition, at December 31, ~~2019,~~2020, we had operational centers in the Americas ~~(13~~(12 leased and 3three owned), Europe ~~(12~~(11 leased) and Australia (1(one leased).

Item 3. Legal Proceedings.

We and our subsidiaries are from time to time subject to a variety of routine legal and regulatory claims, inquiries and proceedings, most of which are incidental to the ordinary course of our business. We initiate lawsuits against customers and are 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 us in which they allege that we have 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 us.

~~Refer~~Refer to Note 1415 to our Consolidated Financial Statements included in Item 8 of this Form 10-K for information regarding legal proceedings in which we are involved.

Item 4. Mine Safety Disclosures.

Not applicable.

PART II

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.

Common Stock

Our common stock is traded on Nasdaq Global Select Market under the symbol "PRAA." Based on information provided by our transfer agent and registrar, as of February ~~14, 2020,~~15, 2021, there were 46 holders of record.

Stock Performance

The following graph and subsequent table compare from December 31, ~~2014~~2015 to December 31, ~~2019,~~2020, the cumulative stockholder returns assuming an initial investment of $100 in our common stock (PRAA), the stocks comprising the Nasdaq Financial 100 (IXF) and the stocks comprising the Nasdaq Global Market Composite Index (NQGM) at the beginning of the period. Any dividends paid during the five-year period are assumed to be reinvested.


	Ticker	2014		2015		2016		2017		2018		2019			Ticker	2015		2016		2017		2018		2019		2020
PRA Group, Inc.	PRAA	$	100	$	60	$	68	$	57	$	42	$	63	PRA Group, Inc.	PRAA	$	100	$	113	$	96	$	70	$	105	$	114
Nasdaq Financial 100	IXF	$	100	$	106	$	135	$	155	$	142	$	184	Nasdaq Financial 100	IXF	$	100	$	126	$	146	$	134	$	173	$	179
Nasdaq Global Market Composite Index	NQGM	$	100	$	100	$	96	$	120	$	112	$	155	Nasdaq Global Market Composite Index	NQGM	$	100	$	96	$	120	$	112	$	155	$	255

The comparisons of stock performance shown above are not intended to forecast or be indicative of possible future performance of our common stock. We do not make or endorse any predictions as to our future stock performance.

Dividend Policy

Our board of directors sets our dividend policy. We do not currently pay regular dividends on our common stock and did not pay dividends in the three years ended December 31, ~~2019;~~2020; however, our board of directors may determine in the future to declare or pay dividends on our common stock. ~~Under~~Our credit facilities and the ~~terms of Northern American Credit Agreement, cash~~indentures that govern our 2023 Notes and our 2025 Notes contain financial and other restrictive covenants, including restrictions on how we operate our business and our ability to pay dividends ~~may not exceed $20 million in any fiscal year without the consent of~~to our ~~lenders.~~stockholders. Any future determination as to the declaration and payment of dividends will be at the discretion of our ~~board~~Board of ~~directors~~Directors and will depend on conditions then existing, ~~conditions,~~ including our results of operations, financial condition, contractual restrictions, capital requirements, business prospects and other factors that our ~~board~~Board of ~~directors~~Directors may consider relevant.

Recent Sales of Unregistered Securities

None.

Securities Authorized for Issuance Under Equity Compensation Plans

For information regarding securities authorized for issuance under equity compensation plans see Note 1112 to our Consolidated Financial Statements included in Item 8 of this Form 10-K.

Share Repurchase Programs

None.

Item 6. Selected Financial Data.

The following selected financial data should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in Item 7 of this Form 10-K and our Consolidated Financial Statements and the related notes thereto included in Item 8 of this Form 10-K. Certain prior year amounts have been reclassified for consistency with the current period presentation.None.

Consolidated Income Statements, Operating and Other Financial Data
$ in thousands, except per share amounts
Years Ended December 31,
Income Statement Data: 2019 2018 2017 2016 2015
Revenues:
Income recognized on finance receivables $ 998,361
$ 891,899
$ 795,435
$ 845,142
$ 894,491
Fee income 15,769
14,916
24,916
77,381
64,383
Other revenue 2,951
1,441
7,855
8,080
12,513
Total revenues 1,017,081
908,256
828,206
930,603
971,387

Net allowance charges (24,025 ) (33,425 ) (11,898 ) (98,479 ) (29,369 )

Operating expenses:
Compensation and employee services 310,441
319,400
273,033
258,846
268,345
Legal collection fees 55,261
42,941
43,351
47,717
53,393
Legal collection costs 134,156
104,988
76,047
84,485
76,063
Agency fees 55,812
33,854
35,530
44,922
32,188
Outside fees and services 63,513
61,492
62,792
63,098
65,155
Communication 44,057
43,224
33,132
33,771
33,113
Rent and occupancy 17,854
16,906
14,823
15,710
14,714
Depreciation and amortization 17,464
19,322
19,763
24,359
19,874
Other operating expenses 46,811
47,444
44,103
39,466
68,829
Total operating expenses 745,369
689,571
602,574
612,374
631,674
Income from operations 247,687
185,260
213,734
219,750
310,344
Other income and (expense):
Gain on sale of subsidiaries —
26,575
48,474
—
—
Interest expense, net (141,918 ) (121,078 ) (98,041 ) (80,864 ) (60,336 )
Foreign exchange gain/(loss) 11,954
(944 ) (1,104 ) 2,564
7,514
Other (364 ) (316 ) (2,790 ) (5,823 ) —
Income before income taxes 117,359
89,497
160,273
135,627
257,522
Income tax expense/(benefit) 19,680
13,763
(10,852 ) 43,577
89,391
Net income 97,679
75,734
171,125
92,050
168,131
Adjustment for net income attributable to noncontrolling interests 11,521
10,171
6,810
5,795
205
Net income attributable to PRA Group, Inc. $ 86,158
$ 65,563
$ 164,315
$ 86,255
$ 167,926
Net income per share attributable to PRA Group, Inc.:
Basic $1.90 $1.45 $3.60 $1.86 $3.49
Diluted $1.89 $1.44 $3.59 $1.86 $3.47
Weighted average number of shares outstanding:
Basic 45,387
45,280
45,671
46,316
48,128
Diluted 45,577
45,413
45,823
46,388
48,405
Operating and Other Financial Data:
Cash receipts $ 1,857,040
$ 1,640,121
$ 1,537,521
$ 1,569,367
$ 1,603,878
Cash Efficiency Ratio ⁽¹⁾
59.9 % 58.0 % 60.8 % 61.0 % 60.6 %
Acquisitions of finance receivables, at cost ⁽²⁾
$ 1,289,327
$ 1,117,997
$ 1,108,959
$ 947,331
$ 963,811
Full-time equivalents at period end 4,412
5,377
5,154
4,019
3,799


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


~~(2)~~	~~Represents cash paid for finance receivables through the ordinary course of business as well as the acquisition date finance receivable portfolios that were acquired through our business acquisitions.~~

Key Balance Sheet Data
Amounts in thousands
As of December 31,
2019 2018 2017 2016 2015
Cash and cash equivalents $ 119,774
$ 98,695
$ 120,516
$ 94,287
$ 71,372
Finance receivables, net 3,514,165
3,084,777
2,776,199
2,309,513
2,202,113
Total assets 4,423,891
3,909,559
3,700,972
3,165,157
2,990,567
Borrowings 2,808,425
2,473,656
2,170,182
1,784,101
1,717,129
Total equity 1,227,013
1,123,969
1,140,717
918,321
839,747

Quarterly Income Statement Data
Amounts in thousands, except per share amounts
Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
Revenues:
Income recognized on finance receivables $ 262,835
$ 247,471
$ 249,219
$ 238,836
$ 231,029
$ 223,228
$ 219,018
$ 218,624
Fee income 4,297
2,391
2,707
6,374
4,686
2,561
2,342
5,327
Other revenue 2,001
152
131
667
1,027
99
158
157
Total revenues 269,133
250,014
252,057
245,877
236,742
225,888
221,518
224,108

Net allowance charges (12,598 ) (4,136 ) (1,196 ) (6,095 ) (21,381 ) (8,285 ) (2,834 ) (925 )

Operating expenses:
Compensation and employee services 75,671
75,317
79,808
79,645
79,123
78,350
80,690
81,237
Legal collection fees 13,822
14,083
14,297
13,059
11,501
10,428
10,343
10,669
Legal collection costs 34,411
31,395
33,121
35,229
33,281
30,769
18,695
22,243
Agency fees 15,979
12,788
13,013
14,032
9,088
8,350
8,138
8,278
Outside fees and services 15,239
16,733
16,293
15,248
17,068
15,701
14,565
14,158
Communication 9,722
10,310
10,824
13,201
10,645
10,240
10,782
11,557
Rent and occupancy 4,586
4,414
4,491
4,363
4,319
4,270
4,003
4,314
Depreciation and amortization 4,123
4,046
4,723
4,572
5,092
4,776
4,525
4,929
Other operating expenses 12,198
12,102
10,926
11,585
13,030
10,602
11,628
12,184
Total operating expenses 185,751
181,188
187,496
190,934
183,147
173,486
163,369
169,569
Income from operations 70,784
64,690
63,365
48,848
32,214
44,117
55,315
53,614
Other income and (expense):
Gain on sale of subsidiaries —
—
—
—
26,575
—
—
—
Interest expense, net (36,046 ) (35,864 ) (36,027 ) (33,981 ) (33,549 ) (30,624 ) (31,124 ) (25,781 )
Foreign exchange gain/(loss) 595
5,406
(311 ) 6,264
(4,553 ) 626
1,690
1,293
Other (241 ) (19 ) 248
(352 ) (381 ) 222
(400 ) 243
Income before income taxes 35,092
34,213
27,275
20,779
20,306
14,341
25,481
29,369
Income tax expense 4,073
6,665
5,075
3,867
1,980
1,789
3,857
6,137
Net income 31,019
27,548
22,200
16,912
18,326
12,552
21,624
23,232
Adjustment for net income attributable to noncontrolling interests 3,678
2,577
3,581
1,685
3,384
2,625
2,036
2,126
Net income attributable to PRA Group, Inc. $ 27,341
$ 24,971
$ 18,619
$ 15,227
$ 14,942
$ 9,927
$ 19,588
$ 21,106
Net income per share attributable to PRA Group, Inc.:
Basic $ 0.60
$ 0.55
$ 0.41
$ 0.34
$ 0.33
$ 0.22
$ 0.43
$ 0.47
Diluted $ 0.60
$ 0.55
$ 0.41
$ 0.34
$ 0.33
$ 0.22
$ 0.43
$ 0.47
Weighted average number of shares outstanding:
Basic 45,413
45,410
45,387
45,338
45,304
45,302
45,283
45,231
Diluted 45,748
45,645
45,495
45,419
45,394
45,440
45,449
45,370

Quarterly Balance Sheet Data
Amounts in thousands
Dec 31, 2019 Sep 30, 2019 Jun 30, 2019 Mar 31, 2019 Dec 31, 2018 Sep 30, 2018 Jun 30, 2018 Mar 31, 2018
Assets
Cash and cash equivalents $ 119,774
$ 90,000
$ 105,496
$ 102,102
$ 98,695
$ 114,176
$ 71,570
$ 101,418
Investments 56,176
55,204
85,911
85,082
45,173
21,750
80,541
87,764
Finance receivables, net 3,514,165
3,238,813
3,230,949
3,177,229
3,084,777
2,823,622
2,734,673
2,771,408
Other receivables, net 10,606
15,808
13,770
18,082
46,157
9,067
14,688
14,308
Income taxes receivable 17,918
23,479
11,323
15,472
16,809
8,912
12,163
10,271
Deferred tax asset, net 63,225
60,697
66,401
61,619
61,453
63,724
60,944
59,377
Property and equipment, net 56,501
56,847
51,484
54,463
54,136
55,010
53,364
53,788
Right-of-use assets 68,972
70,723
72,817
70,550
—
—
—
—
Goodwill 480,794
465,572
489,293
480,518
464,116
519,045
519,811
544,293
Intangible assets, net 4,497
4,757
5,219
5,247
5,522
17,369
18,914
22,523
Other assets 31,263
36,380
32,751
35,970
32,721
27,296
31,650
37,639
Total assets $ 4,423,891
$ 4,118,280
$ 4,165,414
$ 4,106,334
$ 3,909,559
$ 3,659,971
$ 3,598,318
$ 3,702,789
Liabilities and Equity
Liabilities:
Accounts payable $ 4,258
$ 3,469
$ 3,279
$ 5,682
$ 6,110
$ 3,773
$ 5,090
$ 2,330
Accrued expenses 88,925
84,753
74,950
77,838
79,396
81,445
78,852
85,137
Income taxes payable 4,046
624
372
389
15,080
13,408
466
23,872
Deferred tax liability, net 85,390
95,441
100,742
108,367
114,979
120,990
140,224
146,410
Lease liabilities 73,377
74,428
76,750
74,308
—
—
—
Interest-bearing deposits 106,246
112,024
107,840
95,314
82,666
79,282
82,613
90,769
Borrowings 2,808,425
2,567,086
2,618,382
2,586,409
2,473,656
2,194,687
2,133,997
2,150,873
Other liabilities 26,211
29,607
27,307
25,789
7,370
8,474
8,061
15,146
Total liabilities 3,196,878
2,967,432
3,009,622
2,974,096
2,779,257
2,502,059
2,449,303
2,514,537
Redeemable noncontrolling interest —
4,535
4,935
6,199
6,333
6,955
8,322
9,697
Equity:
Common stock 454
454
454
454
453
453
453
453
Additional paid-in capital 67,321
64,631
61,705
59,091
60,303
58,713
56,410
54,271
Retained earnings 1,362,631
1,335,290
1,310,319
1,291,700
1,276,473
1,261,531
1,251,604
1,232,016
Accumulated other comprehensive loss (261,018 ) (305,956 ) (252,124 ) (248,521 ) (242,109 ) (213,078 ) (209,167 ) (155,687 )
Total stockholders' equity - PRA Group, Inc. 1,169,388
1,094,419
1,120,354
1,102,724
1,095,120
1,107,619
1,099,300
1,131,053
Noncontrolling interests 57,625
51,894
30,503
23,315
28,849
43,338
41,393
47,502
Total equity 1,227,013
1,146,313
1,150,857
1,126,039
1,123,969
1,150,957
1,140,693
1,178,555
Total liabilities and equity $ 4,423,891
$ 4,118,280
$ 4,165,414
$ 4,106,334
$ 3,909,559
$ 3,659,971
$ 3,598,318
$ 3,702,789

Item 7. Management's Discussion and Analysis of Financial Condition and Results of ~~Operations~~.Operations.

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.

~~Certain prior~~COVID-19

The COVID-19 outbreak, which was first reported in December 2019 and declared a global pandemic by the World Health Organization in March 2020, has impacted all countries in which we operate. In an effort to address the spread of COVID-19, the countries in which we operate have restricted travel, closed country borders, banned gatherings of unrelated individuals, quarantined and isolated infected individuals, closed schools and non-essential businesses and established criteria that must be met before businesses reopen. The global spread of COVID-19 has disrupted normal business operations and resulted in significant unemployment, recessionary economic trends and overall volatility, uncertainty and economic disruption.

To date, we have continued to operate our business considering governmental, legal and regulatory actions in response to the COVID-19 pandemic. We are able to monitor on a daily basis the impacts of COVID-19 on our business, operations and financial results and to take steps to mitigate adverse effects wherever possible. These include communicating with regulators and government officials concerning legislation and regulations, enabling employees to work remotely and implementing social distancing in the workplaces that remain open.

Specific impacts on our business, results of operations and financial condition during the year ~~amounts~~ended December 31, 2020 included:

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

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

•a decrease in legal collection costs during the second quarter of 2020, as a result of the following, both of which have returned to normal levels to varying degrees over the remainder of 2020;

–a decrease in the volume of U.S. accounts sent through the legal channel, due to our decision to temporarily pause transitioning U.S. accounts into a legal eligible status; and

–a decrease in the volume of European accounts sent through the legal channel due to the closure of courts in many of the European countries in which we operate;

•a decrease in certain expenses such as communication expenses due to mailing decisions made as a result of the COVID-19 pandemic and interruptions in postal mailings and deliveries; and

•a decrease in portfolio purchases due to deferrals by sellers and lower levels of bankruptcy filings and charge-offs.

Funds generated from operations, cash collections on finance receivables, existing cash, available borrowings under our revolving credit facilities (including recent modifications to the terms of those facilities) and the addition of our senior notes, have been ~~reclassified for consistency~~sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and portfolio purchases during the pandemic. We continue to monitor the need to expand our access to credit to fund the aforementioned business activities.

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

Frequently Used Terms

We may use the following terminology throughout this ~~document:~~Form 10-K:

•"Amortization rate" refers to cash collections applied to principal on finance receivables as a percentage of total cash ~~collections.~~collections (prior to the adoption of Accounting Standards Update ("ASU") ASU 2016-13, "Financial Instruments-Credit Losses" and ASU 2019-19, "Codification Improvements to Topic 326, Financial Instrument Credit Losses, collectively referred to as "ASC 326").

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

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

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

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

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

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

•"Insolvency" accounts or portfolios refer to accounts or portfolios of receivables that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts. These accounts include ~~Individual Voluntary Arrangements ("IVAs"),~~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, classified as an asset on the balance sheet.

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

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

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

•"Principal amortization" refers to cash collections applied to principal on finance ~~receivables.~~receivables prior to the adoption of ASC 326.

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

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

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

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

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

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

Unless otherwise specified, references to 2020, 2019 ~~2018~~ and ~~2017~~2018 are for the years ended December 31, 2020, December 31, 2019 and December 31, 2018, ~~and December 31, 2017,~~ respectively.

Results of Operations

The results of operations include the financial results of the Company and all of our subsidiaries. As of January 1, 2020 we adopted ASC 326 on a prospective basis. Prior period amounts were accounted for under ASC Topic 310-30 "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"). For further information refer to Note 2 to our Consolidated Financial Statements included in Part II, Item 8 of this Form 10-K. The following table sets forth ~~consolidated income statement~~Consolidated Income Statement amounts as a percentage of total revenues for the periods indicated (dollars in thousands):


	2020				2019				2018
Revenues:
Portfolio income	$	984,036	92.4	%	$	—	—	%	$	—	—	%
Changes in expected recoveries	69,297		6.5		—		—		—		—
Income recognized on finance receivables	—		—		998,361		98.2		891,899		98.2
Fee income	9,748		0.9		15,769		1.5		14,916		1.6
Other revenue	2,333		0.2		2,951		0.3		1,441		0.2
Total revenues	1,065,414		100.0		1,017,081		100.0		908,256		100.0

Net allowance charges	—		—		(24,025)		(2.4)		(33,425)		(3.7)

Operating expenses:
Compensation and employee services	295,150		27.7		310,441		30.5		319,400		35.2
Legal collection fees	53,758		5.1		55,261		5.4		42,941		4.7
Legal collection costs	101,635		9.5		134,156		13.2		104,988		11.6
Agency fees	56,418		5.3		55,812		5.5		33,854		3.7
Outside fees and services	84,087		7.9		63,513		6.2		61,492		6.8
Communication	40,801		3.8		44,057		4.3		43,224		4.8
Rent and occupancy	17,973		1.7		17,854		1.8		16,906		1.9
Depreciation and amortization	18,465		1.7		17,464		1.7		19,322		2.1
Other operating expenses	47,426		4.5		46,811		4.6		47,444		5.1

Total operating expenses	715,713		67.2		745,369		73.2		689,571		75.9

Income from operations	349,701		32.8		247,687		24.4		185,260		20.4
Other income and (expense):
Gain on sale of subsidiaries	—		—		—		—		26,575		2.9
Interest expense, net	(141,712)		(13.2)		(141,918)		(14.0)		(121,078)		(13.3)
Foreign exchange gain/(loss)	2,005		0.2		11,954		1.2		(944)		(0.1)
Other	(1,049)		(0.2)		(364)		(0.1)		(316)		(0.1)
Income before income taxes	208,945		19.6		117,359		11.5		89,497		9.8
Income tax expense	41,203		3.9		19,680		1.9		13,763		1.5
Net income	167,742		15.7		97,679		9.6		75,734		8.3
Adjustment for net income attributable to noncontrolling interests	18,403		1.7		11,521		1.1		10,171		1.1
Net income attributable to PRA Group, Inc.	$	149,339	14.0	%	$	86,158	8.5	%	$	65,563	7.2	%

2019 2018 2017
Revenues:
Income recognized on finance receivables $ 998,361
98.2 % $ 891,899
98.2 % $ 795,435
96.0 %
Fee income 15,769
1.5
14,916
1.6
24,916
3.0
Other revenue 2,951
0.3
1,441
0.2
7,855
0.9
Total revenues 1,017,081
100.0
908,256
100.0
828,206
100.0

Net allowance charges (24,025 ) (2.4 ) (33,425 ) (3.7 ) (11,898 ) (1.4 )

Operating expenses:
Compensation and employee services 310,441
30.5
319,400
35.2
273,033
33.0
Legal collection fees 55,261
5.4
42,941
4.7
43,351
5.2
Legal collection costs 134,156
13.2
104,988
11.6
76,047
9.2
Agency fees 55,812
5.5
33,854
3.7
35,530
4.3
Outside fees and services 63,513
6.2
61,492
6.8
62,792
7.6
Communication 44,057
4.3
43,224
4.8
33,132
4.0
Rent and occupancy 17,854
1.8
16,906
1.9
14,823
1.8
Depreciation and amortization 17,464
1.7
19,322
2.1
19,763
2.4
Other operating expenses 46,811
4.6
47,444
5.1
44,103
5.3
Total operating expenses 745,369
73.2
689,571
75.9
602,574
72.8
Income from operations 247,687
24.4
185,260
20.4
213,734
25.8
Other income and (expense):
Gain on sale of subsidiaries —
—
26,575
2.9
48,474
5.9
Interest expense, net (141,918 ) (14.0 ) (121,078 ) (13.3 ) (98,041 ) (11.8 )
Foreign exchange gain/(loss) 11,954
1.2
(944 ) (0.1 ) (1,104 ) (0.1 )
Other (364 ) (0.1 ) (316 ) (0.1 ) (2,790 ) (0.3 )
Income before income taxes 117,359
11.5
89,497
9.8
160,273
19.4
Income tax expense/(benefit) 19,680
1.9
13,763
1.5
(10,852 ) (1.3 )
Net income 97,679
9.6
75,734
8.3
171,125
20.7
Adjustment for net income attributable to noncontrolling interests 11,521
1.1
10,171
1.1
6,810
0.8
Net income attributable to PRA Group, Inc. $ 86,158
8.5 % $ 65,563
7.2 % $ 164,315
19.9 %

Year ended December 31, 2020 compared with year ended December 31, 2019

Cash Collections

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


														2020		2019		Change
	Year Ended December 31,						Variances
(Amounts in millions)	2019		2018		2017		2019 vs. 2018			2018 vs. 2017
Americas Core	$	1,141.5	$	945.2	$	860.9	$	196.3		$	84.3		Americas Core	$	1,271.9	$	1,141.5	$	130.4
Americas Insolvency	180.9		207.8		222.5		(26.9		)	(14.7		)	Americas Insolvency	155.3		180.9		(25.6)
Europe Core	480.1		443.4		407.0		36.7			36.4			Europe Core	519.7		480.1		39.6
Europe Insolvency	38.8		28.8		22.2		10.0			6.6			Europe Insolvency	58.9		38.8		20.1
Total cash collections	$	1,841.3	$	1,625.2	$	1,512.6	$	216.1		$	112.6		Total cash collections	$	2,005.8	$	1,841.3	$	164.5

Cash collections adjusted ⁽¹⁾	$	1,841.3	$	1,595.5	$	1,518.7	$	245.8		$	76.8		Cash collections adjusted (1)	$	2,005.8	$	1,823.1	$	182.7
Cash collections on fully amortized pools	47.1		54.0		57.6		(6.9		)	(3.6		)
Cash collections on pools on cost recovery	13.5		35.8		37.7		(22.3		)	(1.9		)
Net finance receivables on cost recovery at year-end	33.7		48.0		166.6		(14.3		)	(118.6		)

(1) Cash collections adjusted refers to ~~2018~~2019 cash collections ~~remeasured~~translated using ~~2019 exchange rates and 2017 cash collections remeasured using 2018~~2020 exchange rates.

Cash collections were $2,005.8 million in 2020, an increase of $164.5 million, or 8.9%, compared to $1,841.3 million in ~~2019, an increase of $216.1 million or 13.3%, compared to $1,625.2 million in 2018.~~2019. The increase was largely due to our U.S. ~~legal collections increasing $91.1 million, or 30.6%, due primarily to the increase in the number of accounts placed in the legal channel, and our U.S.~~ call center and other collections, including a higher level of collections through our digital platforms, increasing ~~$48.6~~$144.4 million, or ~~8.5%~~23.3%, primarily due ~~primarily~~ to ~~higher Americas Core portfolio purchasing in 2018. Additionally, as~~what we believe to be various economic circumstances that have provided U.S. consumers with additional discretionary funds and a result of increased portfolio purchasing in South America and the acquisition of a business in Canada in the first quarter of 2019, Americas Core outside the U.S. cash collections increased $56.6 million or 73.8%. Furthermore, our Europe Core cash collections increased $36.7 million or 8.3%, due primarilywillingness to ~~increased portfolio purchasing, the consolidation of a Polish fund in the third quarter of 2018, and operational improvements. These increases were~~voluntarily resolve their debts. This was partially offset by a ~~decline of $26.9~~$14.6 million, or ~~13.0%~~3.8%, decrease in U.S. legal collections due to a shift in collections from the legal channel to the call centers and digital platforms. Additionally, Europe cash collections increased $59.7 million, or 11.5%, reflecting the impact of record 2019 purchases as well as strong 2020 purchases. Furthermore, Americas Insolvency cash collections ~~caused~~decreased by $25.6 million, or 14.2%, mainly by reflectinginvestment ~~volumes in the U.S.~~levels not offsetting the runoff of ~~our~~ older portfolios.

Cash collections were $1,625.2 million in 2018, an increase of $112.6 million or 7.4%, compared to $1,512.6 million in 2017. The increase was largely due to U.S. call center collections increasing 15.7%, due primarily to record U.S. Core portfolio purchasing in 2018 and 2017, and U.S. legal collections increasing 8.0%. Additionally, Europe Core and Europe Insolvency cash collections increased 8.9% and 29.7%, respectively. The increase in Europe Core cash collections was primarily the result of increased portfolio purchasing in the fourth quarter of 2017 and 2018. These increases were partially offset by a 6.6% decline in Americas Insolvency cash collections caused mainly by a decline in portfolio buying in 2018 and the continued runoff of our older portfolios.

Revenues

~~Total revenues were $1,017.1 million in 2019, $908.3 million in 2018, and $828.2 million in 2017.~~

~~A summary of how our revenues were generated during~~Revenue for the years indicated iswere as follows (amounts in thousands):


	2020		2019
Portfolio income	$	984,036	$	—
Changes in expected recoveries	69,297		—
Income recognized on finance receivables	—		998,361
Fee income	9,748		15,769
Other revenue	2,333		2,951
Total revenues	$	1,065,414	$	1,017,081

2019 2018 2017
Cash collections $ 1,841,271
$ 1,625,205
$ 1,512,605
Principal amortization (842,910 ) (733,306 ) (717,170 )
Income recognized on finance receivables 998,361
891,899
795,435
Fee income 15,769
14,916
24,916
Other revenue 2,951
1,441
7,855
Total revenues $ 1,017,081
$ 908,256
$ 828,206

~~Income Recognized on Finance Receivables~~

~~Income recognized on finance receivables was $998.4~~Total revenues were $1,065.4 million in ~~2019,~~2020, an increase of ~~$106.5~~$48.3 million, or ~~11.9%~~4.7%, compared to ~~$891.9~~$1,017.1 million in ~~2018.~~2019. The increase ~~was~~is largely due to record portfolio purchases in 2019 and significant cash collections overperformance primarily the result of the impact of recent Americas and Europe Core purchasing, sustained over-performance and related yield increases on pools broadly across all geographies, recent increased portfolio purchasing in South America, and the acquisition of a business in Canada in the ~~first quarter~~last three quarters of ~~2019.~~

~~Income recognized on finance receivables was $891.9 million~~2020 recorded as a component of Changes in ~~2018, an increase of $96.5 million or 12.1% compared to $795.4 million in 2017. The increase was primarily the result of~~expected recoveries. This overperformance ~~on select Americas Core and Europe Core portfolios which resulted in several yield increases on certain pools and the impact of record Americas Core purchasing in 2017 and 2018. This~~ was partially offset by ~~a decline in~~adjustments to our ~~Americas Insolvency revenue caused mainly by a decline in Americas Insolvency portfolio purchasing in 2018 and~~ERCs to reflect our assumption that the ~~continued runoff of our older portfolios.~~

~~Fee Income~~

~~Fee income was $15.8 million in 2019, $14.9 million in 2018, and $24.9 million in 2017. The decrease of $10.0 million or 40.2% in 2018~~overperformance was primarily due to acceleration in the ~~sale~~timing of ~~our government services businesses and the sale of PRA Location Services, LLC ("PLS") in 2017.~~

~~Other Revenue~~

~~Other revenue was $3.0 million in 2019,~~cash collections rather than an increase to total expected collections. We believe this to be an appropriate assumption as we have continued to generate unprecedented cash collections, primarily in the Americas call centers and digital platforms, with two consecutive record cash collections quarters following the record first quarter of $1.6 million or 114.3% compared to $1.4 million in 2018, primarily reflecting the variability of our CCB business. Other revenue was $1.4 million in 2018, a decrease of $6.5 million or 82.3% compared to $7.9 million in 2017, primarily2020, deviating from typical seasonal patterns. We have assumed that these collections are accelerated due to economic circumstances providing consumers with additional discretionary funds and a ~~decrease~~willingness to voluntarily repay their debts. If we observe sustained performance over time supporting an increase in our total expected collections, there would be additional revenue ~~earned on our investments.~~in the future. Additionally, we made forecast adjustments deemed appropriate given the current environment.

Net Allowance Charges

~~Net~~In 2019, under ASC 310-30, net allowance charges ~~are~~were recorded for significant decreases in expected cash flows or a change in timing of cash flows which would otherwise require a reduction in the stated yield on a pool of accounts. ~~In 2019, we~~Effective January 1, 2020, under ASC 326, changes to expected cash flows are recorded net allowance charges of $24.0 million consisting of $24.5 million on our Americas Core portfolios, primarily on vintages purchased between 2013-2015 and $0.6 million on our European portfolios partially offset by net allowance reversals of $1.1 million on our Americas Insolvency portfolios. In 2018, we recorded net allowance charges of $33.4 million consisting of $31.0 million on our Americas Core portfolios, primarily on vintages impacted most by the Consent Order and purchased between 2013-2015, $0.4 million on our Americas Insolvency portfolios, and $2.0 million on our European portfolios. In 2017, we recorded net allowance charges of $11.9 million consisting of $7.4 million on our Americas Core portfolios, $1.5 million on our Americas Insolvency portfolios, and $3.0 million on our European portfolios. in changes in expected recoveries within revenues.

Operating Expenses

Total operating expenses were $715.7 million in 2020, a decrease of $29.7 million, or 4.0%, compared to $745.4 million in ~~2019, $689.6 million in 2018, and $602.6 million in 2017.~~2019.

Compensation and Employee Services

Compensation and employee service expenses were $295.2 million in 2020, a decrease of $15.2 million, or 4.9%, compared to $310.4 million in ~~2019, a decrease of $9.0 million or 2.8% compared to $319.4 million in 2018.~~2019. The decrease ~~in compensation expense~~ was primarily attributable to a reduction in the U.S. call center workforce ~~as we balance the volume between the legal collection channel and call centers and realize the impact of recent investments in technology.~~due to efficiencies. Total full-time equivalents decreased ~~17.9%~~13.4% to3,820 as of December 31, 2020 from 4,412 as of December 31, ~~2019 from 5,377 as of December 31, 2018. Additionally, this category~~2019. The decrease was ~~impacted by the result of the sale of RCB operating platform in December 2018, which shifted certain expenses from fixed to variable and are now recorded as agency fees.~~

Compensation and employee service expenses were $319.4 million in 2018, an increase of $46.4 million or 17.0% compared to $273.0 million in 2017. Compensation expense increased primarily as a result of larger average staff sizes due mainly to the expansion of our domestic collector workforce, partiallyslightly offset by a ~~decrease resulting from the sale of our government services businesses~~$3.7 million, or 34.2%, increase in share-based compensation expense due to improved actual performance compared to targets and ~~PLS in 2017. Total full-time equivalents increased 4.3% to 5,377 as of December 31, 2018 from 5,154 as of December 31, 2017.~~a lower forfeiture rate.

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 $53.8 million in 2020, a decrease of $1.5 million, or 2.7%, compared to $55.3 million in 2019 ~~$42.9 million in 2018, and $43.4 million in 2017. The increase of $12.4 million or 28.9% in 2019 was~~ primarily due to a ~~44.5% increase~~slight decrease in external legal cash collections in the U.S.

Legal Collection Costs

Legal collection costs primarily consist of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account. Legal collection costs were $101.6 million in 2020, a decrease of $32.6 million, or 24.3%, compared to $134.2 million in ~~2019, an increase of $29.2 million or 27.8%, compared to $105.0 million in 2018.~~2019. The ~~increase~~decrease was primarily due to ~~additional court costs related to the expansion of the~~a reduced number of accounts placed into the U.S. legal channel as a result of a shift in collections from the legal channel ~~in the U.S. This expansion was the result of a change in the nature of the accounts purchased, the regulatory environment and consumer behavior.~~

Legal collection costs were $105.0 million in 2018, an increase of $29.0 million or 38.2%, compared to $76.0 million in 2017. The increase was primarily due to additional court costs related to the ~~expansion of the number of accounts brought into the legal channel in the U.S. This expansion was the result of a change in the nature of the accounts purchased, the regulatory environment~~call centers and ~~consumer behavior.~~digital platforms.

Agency Fees

Agency fees primarily represent third-party collection fees. Agency fees were $56.4 million in 2020 compared to $55.8 million in 2019, an increase of $21.9 million or 64.6% compared to $33.9 million in 2018. The increase was primarily due to the sale of the RCB operating platform, which shifted certain expenses from fixed to variable and are now recorded as agency fees, the acquisition of a business in Ca~~nada in the first quarter of 2019, and higher volumes of servicing activity in areas where we utilize third-party collection agencies.~~

Agency fees were $33.9 million in 2018, a decrease of $1.6 million or 4.5% compared to $35.5 million in 2017. The decrease was primarily due to the impact of the sale of PLS partially offset by an increase in third-party collection fees incurred by our international operations.2019.

Outside Fees and Services

Outside fees and services expenses were $84.1 million in 2020, an increase of $20.6 million, or 32.4%, compared to $63.5 million in ~~2019, an increase of $2.0 million or 3.3% compared to $61.5 million in 2018.~~ 2019.The increase was primarily the result of higher consulting fees, corporate legal expenses and higher fees ~~related to~~associated with processing an increased number of debit card transactions ~~mostly offset by a decrease in litigation expenses.~~

~~Outside fees and services expenses were $61.5 million in 2018, a decrease of $1.3 million or 2.1% compared~~due to ~~$62.8 million in 2017. The decrease was primarily~~ the ~~result of a decline in corporate legal expenses, due largely to legal costs not associated with normal operations incurred during 2017. This was partially offset by an~~ increase in ~~payment processing and debit card transactions and increased consulting fees.~~cash collections.

Communication

Communication expenses primarily represent postage and telephone related expenses incurred as a result of our collection efforts. Communication expenses were $40.8 million in 2020, a decrease of $3.3 million, or 7.5%, compared to $44.1 million in ~~2019, $43.2 million in 2018, and $33.1 million in 2017.~~2019. The $10.1 million increase in 2018 was driven primarily by higher letter and call volume associated with record portfolio purchasing of Americas Core portfolios in 2017 and 2018 and additional U.S. collectors operating during 2018.

~~Rent and Occupancy~~

~~Rent and occupancy expenses were $17.9 million in 2019, $16.9 million in 2018, and $14.8 million in 2017. The $2.1 million increase in 2018 was primarily~~decrease mainly reflects lower postage costs due to mailing decisions made during the ~~opening of two new call centers in the U.S. in the fourth quarter of 2017 as well as the expansion of our European facilities.~~

~~Depreciation~~COVID-19 pandemic and, ~~Amortization~~

~~Depreciation and amortization expense was $17.5 million in 2019, $19.3 million in 2018, and $19.8 million in 2017. The $1.8 million or 9.3% decrease in 2019 was primarily due~~ to ~~the sale of the RCB operating platform which shifted certain~~a lesser extent, telephone expenses ~~from fixed to variable partially offset by the addition of certain capital software projects.~~

~~Other Operating Expenses~~

Other operating expenses were $46.8 million in 2019, $47.4 million in 2018, and $44.1 million in 2017. The $3.3 million increase in 2018 was primarily due to an increase in corporate technology and software related expenses partially offset by a decrease as a result of ~~the sale of our government services businesses~~improvements in data and ~~the sale of PLS~~analytics that drove efficiencies. These decreases were slightly offset by an increase in ~~2017.~~

~~Gain on Sale of Subsidiaries~~

We did not have any sales of subsidiaries during 2019. In 2018, we sold 79% of our interest in RCB's servicing platform which resulted in a gain of $26.6 million. In 2017, we sold our government services businesses and PLS which resulted in a combined gain of $48.5 million.digital spending.

Interest Expense, Net

Interest expense, net was $141.7 million in 2020 compared to $141.9 million in 2019 ~~an increase of $20.8 million or 17.2% compared to $121.1 million in 2018. The increase was primarily due to higher~~as slightly lower overall levels of ~~average~~outstanding borrowings ~~to fund increased portfolio acquisitions paired with slightly higher~~and lower variable interest rates ~~and~~were offset by the ~~impact~~addition of ~~changes in the fair value of our derivatives.~~

~~Interest expense, net was $121.1 million in 2018, an increase of $23.1 million or 23.6% compared to $98.0 million in 2017. The increase was primarily due to~~senior notes at higher ~~levels of average borrowings outstanding and higher average~~fixed interest rates.

Interest expense, net consisted of the following in ~~2019, 2018~~2020 and ~~2017~~2019 (amounts in thousands):


	2020		2019		Change
Interest on debt obligations and unused line fees	$	96,979	$	100,477	$	(3,498)
Interest on senior notes	7,621		—		7,621
Coupon interest on convertible debt	17,064		20,700		(3,636)
Amortization of convertible debt discount	10,811		12,398		(1,587)
Amortization of loan fees and other loan costs	10,252		10,589		(337)
Interest income	(1,015)		(2,246)		1,231
Interest expense, net	$	141,712	$	141,918	$	(206)

Twelve Months Ended December 31, Variances
2019 2018 2017 2019 vs. 2018 2018 vs. 2017
Stated interest on debt obligations and unused line fees $ 94,841
$ 83,983
$ 71,656
$ 10,858
$ 12,327
Coupon interest on convertible debt 20,700
20,700
15,870
—
4,830
Amortization of convertible debt discount 12,398
11,725
8,583
673
3,142
Amortization of loan fees and other loan costs 10,589
10,332
9,569
257
763
Change in fair value on derivatives 5,636
(2,532 ) (2,025 ) 8,168
(507 )
Interest income (2,246 ) (3,130 ) (5,612 ) 884
2,482
Interest expense, net $ 141,918
$ 121,078
$ 98,041
$ 20,840
$ 23,037

Net Foreign Currency Transaction Gains/(Losses)

Net foreign currency transaction ~~gains/(losses)~~gains were $2.0 million in 2020 compared to $12.0 million ~~$(0.9) million,~~in 2019. The decrease was primarily related to lower foreign currency gains in Europe and ~~$(1.1) million~~U.S. dollar linked investments held in ~~2019, 2018, and 2017, respectively.~~Brazil. In any given period, we may incur foreign currency transaction losses or gains from transactions in currencies other than the functional currency. ~~The $12.9 million increase in 2019 was primarily related to gains on U.S. Dollar linked investments held in Brazil and foreign currency gains in Europe.~~

~~Other Expense~~

Other expense was $0.4 million in 2019, $0.3 million in 2018, and $2.8 million in 2017. In 2017, we incurred an other-than-temporary impairment charge of $1.7 million on one of our investments in private equity funds. Additionally, during 2017 we incurred a $1.0 million expense related to a performance guarantee on a Polish investment fund.

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

Income tax ~~expense/(benefit)~~expense was $41.2 million in 2020, an increase of $21.5 million, or 109.1%, compared to $19.7 million ~~$13.8 million, and $(10.9) million~~ in ~~2019, 2018 and 2017, respectively.~~2019. The increase ~~from 2018 to 2019~~ was primarily ~~driven~~due to higher income before income taxes which increased $91.5 million, or 77.9% and some discrete items. The increase was partially offset by ~~GILTI, which is included~~changes in foreign tax rates, return to provision adjustments and the ~~tax impact on international~~mix of earnings ~~disclosed in Note 13. The change from 2017 to 2018 was primarily attributable to a $73.8 million after-tax benefit recorded in 2017 as a result of the revaluation of~~among jurisdictions. In 2020 our ~~net deferred tax liability per the Tax Act.~~

~~The~~ effective tax rate ~~increased from 15.4% in 2018~~was 19.7% compared to 16.8% in 2019.

Year Ended December 31, 2019 ~~primarily due to the GILTI taxes in the US. The effective tax rate for 2018 increased and the 2017 effective tax rate decreased~~ compared to ~~their respective prior years due~~year ended December 31, 2018

Refer to ~~the revaluation~~"Item 7 - Management’s Discussion and Analysis of ~~the deferred tax liability per the Tax Act. Our effective tax rate will vary from period~~Financial Condition and Results of Operations" of our 2019 Form 10-K for a discussion of our fiscal 2019 results compared to ~~period due to these types of items.~~

fiscal 2018.

Supplemental Performance Data

Finance Receivables Portfolio Performance

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

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

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

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

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

Revenue recognition under ASC ~~310-30~~310-10 and ASC 326 is driven by estimates of the amount and timing of ~~collections as well as the timing of those~~ collections. We record new portfolio acquisitions ~~based on our best estimate of~~at the ~~cash flows expected at acquisition,~~purchase price which reflects the ~~uncertainties inherent in~~amount we expect to collect discounted at an effective interest rate. As portfolios are purchased during the ~~acquisition of nonperforming loans~~year, the annual pool is aggregated and the ~~results~~blended effective interest rate will change to reflect new purchasing and new cash flow estimates until the end of ~~our underwriting process.~~the year. At that time, the effective interest rate is fixed at the amount we expect to collect discounted at the rate to equate purchase price to the recovery estimate. During the first year of purchase, we typically do not reforecast the portfolios' initial recovery estimate. Subsequent to the initial ~~booking,~~year, as we gain collection experience and confidence with a pool of accounts, we regularly update ERC. As a result, our estimate of total collections has often increased as pools have aged. These processes have tended to cause the ratio of ERC to purchase price for any given year of ~~buying~~purchasing to gradually increase over time. Thus, all factors being equal in terms of pricing, one would typically tend to see a higher collection to purchase price ratio from a pool of accounts that was six years from acquisition than a pool that was just two years from acquisition.

We hold a beneficial interest in certain pools of finance receivables in Europe. Revenue recognition is under ASC Topic 310-20, "Receivables - Nonrefundable Fees and Other Costs" where we compute a life-to-date yield on a retrospective basis and apply it to the ERC of the portfolio. Revenue on these pools is included in income recognized on finance receivables. In addition, these portfolios are included in the tables below as they perform economically similar to finance receivables accounted for under ASC 310-30.

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

Purchase Price Multiples as of December 31, 2019 Amounts in thousands

Purchase Price Multiples as of December 31, 2020 Amounts in thousands													Purchase Price Multiples as of December 31, 2020 Amounts in thousands
Purchase Period	Purchase Price ⁽¹⁾⁽²⁾		Net Finance Receivables⁽³⁾		ERC-Historical Period Exchange Rates ⁽⁴⁾		Total Estimated Collections ⁽⁵⁾		ERC-Current Period Exchange Rates ⁽⁶⁾		Current Estimated Purchase Price Multiple	Original Estimated Purchase Price Multiple ⁽⁷⁾	Purchase Period	Purchase Price (1)(2)		Total Estimated Collections (3)		Estimated Remaining Collections (4)		Current Estimated Purchase Price Multiple	Original Estimated Purchase Price Multiple (5)
Americas Core													Americas Core
1996-2009	$	930,026	$	9,279	$	42,102	$	2,885,906	$	42,102	310%	238%
2010	148,193		3,485		28,669		535,684		28,669		361%	247%
1996-2010													1996-2010	$	1,078,219	$	3,398,610	$	28,969	315%	240%
2011	209,602		7,707		48,551		739,158		48,551		353%	245%	2011	209,602		720,510		19,048		344%	245%
2012	254,076		16,011		60,711		680,352		60,711		268%	226%	2012	254,076		653,102		21,655		257%	226%
2013	390,826		33,648		94,733		931,194		94,733		238%	211%	2013	390,826		896,381		36,759		229%	211%
2014	405,169		55,033		152,639		929,179		150,012		229%	204%	2014	404,117		866,597		58,983		214%	204%
2015	443,779		93,385		226,865		965,671		226,755		218%	205%	2015	443,114		927,497		132,263		209%	205%
2016	453,158		139,380		354,399		1,081,376		349,699		239%	201%	2016	455,767		1,092,218		230,039		240%	201%
2017	533,442		242,129		521,715		1,167,831		519,181		219%	193%	2017	532,851		1,210,475		367,123		227%	193%
2018	655,548		460,797		852,246		1,338,876		848,727		204%	202%	2018	653,975		1,362,777		521,466		208%	202%
2019	578,281		533,933		1,048,207		1,191,940		1,053,332		206%		2019	581,476		1,240,122		717,793		213%	206%
2020													2020	435,668		929,706		796,502		213%
Subtotal	5,002,100		1,594,787		3,430,837		12,447,167		3,422,472				Subtotal	5,439,691		13,297,995		2,930,600
Americas Insolvency	Americas Insolvency												Americas Insolvency
1996-2009	397,453		—		917		835,958		917		210%	178%
2010	208,942		—		1,181		546,872		1,181		262%	184%
1996-2010													1996-2010	606,395		1,382,682		1,105		228%	180%
2011	180,432		—		973		370,103		973		205%	155%	2011	180,432		370,180		567		205%	155%
2012	251,395		—		953		392,377		953		156%	136%	2012	251,395		392,605		256		156%	136%
2013	227,834		—		2,143		354,923		2,143		156%	133%	2013	227,834		354,923		832		156%	133%
2014	148,689		756		3,598		218,044		3,578		147%	124%	2014	148,420		218,485		2,045		147%	124%
2015	63,170		5,783		9,917		87,773		9,917		139%	125%	2015	63,170		87,254		1,489		138%	125%
2016	92,264		17,433		22,491		116,896		22,501		127%	123%	2016	91,442		116,918		9,209		128%	123%
2017	275,257		95,421		121,498		348,811		121,498		127%	125%	2017	275,257		348,732		62,593		127%	125%
2018	97,879		74,459		93,120		127,257		93,120		130%	127%	2018	97,879		130,683		66,033		134%	127%
2019	123,039		114,892		144,228		157,675		144,279		128%		2019	123,077		160,804		116,037		131%	128%
2020													2020	62,130		84,622		78,098		136%
Subtotal	2,066,354		308,744		401,019		3,556,689		401,060				Subtotal	2,127,431		3,647,888		338,264
Total Americas	7,068,454		1,903,531		3,831,856		16,003,856		3,823,532				Total Americas	7,567,122		16,945,883		3,268,864
Europe Core													Europe Core
2012	20,409		—		875		40,542		709		199%	187%	2012	20,409		41,210		—		202%	187%
2013	20,334		—		431		24,995		343		123%	119%	2013	20,334		25,448		—		125%	119%
2014	796,762		188,892		823,116		2,278,261		704,192		286%	208%	2014	773,811		2,229,255		630,934		288%	208%
2015	419,909		161,210		345,214		748,127		314,643		178%	160%	2015	411,340		734,276		274,714		179%	160%
2016	348,270		190,927		333,375		578,421		332,857		166%	167%	2016	333,090		556,493		295,560		167%
2017	246,752		157,850		232,858		351,216		229,035		142%	144%	2017	252,174		353,557		194,165		140%	144%
2018 ⁽⁸⁾	345,256		269,292		407,945		522,374		413,728		151%	148%
2018													2018	341,775		524,117		361,355		153%	148%
2019	512,702		488,468		730,704		779,136		739,345		152%		2019	518,610		778,422		630,040		150%	152%
2020													2020	324,119		557,289		523,089		172%
Subtotal	2,710,394		1,456,639		2,874,518		5,323,072		2,734,852				Subtotal	2,995,662		5,800,067		2,909,857
Europe Insolvency	Europe Insolvency												Europe Insolvency
2014	10,876		306		1,061		18,155		941		167%	129%	2014	10,876		18,223		213		168%	129%
2015	19,226		3,083		5,970		29,294		5,262		152%	139%	2015	18,973		29,023		2,512		153%	139%
2016	41,858		12,507		18,160		60,651		18,272		145%	130%	2016	39,338		56,801		10,424		144%	130%
2017	38,409		24,417		28,931		47,604		28,707		124%	128%	2017	39,235		49,142		20,019		125%	128%
2018	45,586		39,424		46,969		56,199		47,240		123%		2018	44,908		52,955		36,032		118%	123%
2019	75,588		74,258		93,518		98,439		95,509		130%		2019	77,218		101,891		77,854		132%	130%
2020													2020	105,440		135,890		129,591		129%
Subtotal	231,543		153,995		194,609		310,342		195,931				Subtotal	335,988		443,925		276,645
Total Europe	2,941,937		1,610,634		3,069,127		5,633,414		2,930,783				Total Europe	3,331,650		6,243,992		3,186,502
Total PRA Group	$	10,010,391	$	3,514,165	$	6,900,983	$	21,637,270	$	6,754,315			Total PRA Group	$	10,898,772	$	23,189,875	$	6,455,366

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors

PRA Group, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of PRA Group, Inc. and subsidiaries (the Company) as of December 31, ~~2019~~2020 and ~~2018,~~2019, the related consolidated income statements, statements of comprehensive income, changes in equity, and cash flows for each of the years in the three-year period ended December 31, ~~2019,~~2020, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, ~~2019~~2020 and ~~2018,~~2019, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, ~~2019,~~2020, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, ~~2019,~~2020, based on criteria established in Internal Control -– Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated ~~March 2, 2020~~February 26, 2021 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Notes 1 and 42 to the consolidated financial statements, the Company has changed its method of accounting for expected credit losses for financial instruments as of January 1, 2020, due to the adoption of Accounting Standard Codification (ASC) Topic 326, Financial Instruments Credit Losses.

As discussed in Note 1 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019, due to the adoption of ~~Accounting Standards Codification (ASC)~~the ASC Topic 842, ~~Leases.~~Leases.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which ~~they relate.~~it relates.

Assessment of ~~income recognized~~the estimate of expected recoveries on ~~finance receivables and the valuation allowance and net allowance charges~~

purchased credit deteriorated assets

As discussed in Notes 1 and 23 to the consolidated financial statements, the Company’s ~~finance receivables balance~~estimate of expected recoveries on purchased credit deteriorated assets as of December 31, ~~2019~~2020 was $3.5 billion, presented as finance receivables, net in the consolidated balance sheets, and the ~~related valuation allowance was $281.3 million. Income recognized on finance receivables~~resulting changes in expected recoveries for the year ended December 31, ~~2019 was $998.4 million and net allowances charges for the year ended December 31, 2019~~2020 were ~~$24.0~~$69.3 million. The Company accounts for the estimate of expected recoveries and resulting changes in

expected recoveries under the guidance of ASC Topic 326-20, Financial Instruments - Credit Losses - Measured at Amortized Cost. The Company develops its ~~investment~~estimate of expected recoveries by applying a discounted cash flow methodology to its estimated remaining collections (“ERC”). Subsequent changes (favorable and unfavorable) in expected cash flows are recognized within changes in expected recoveries by adjusting the present value of increases or decreases in ERC at a constant effective interest rate. Factors that may contribute to the changes in expected cash flows include both external and internal factors such as trends in collections performance and operational activities. When the Company has an expectation of collecting cash flows at the portfolio level, a negative allowance is established for expected recoveries at an amount not to exceed the amount paid for the financial portfolios. The negative allowance is recorded as an asset and presented as finance receivables, ~~and recognizes revenue under ASC 310-30,~~ ~~Loans and Debt Securities Acquired with Deteriorated Credit Quality, which involves the use of estimates and the exercise of judgment~~net on the ~~part of the Company. These estimates include projections of the amount and timing of future cash flows and economic lives of the pools of finance receivables.~~

Significant changes in such estimates could result in increased revenue through yield increases which are recognized prospectively or increased allowance charges resulting from decreased cash flow estimates which are recognized immediately. As actual cash flow results are recorded, the Company reviews each pool for trends, actual performance versus projections and curve shape (a graphical depiction of the timing of cash flows).Company's consolidated balance sheets. The Company ~~then re-forecasts future cash flows.~~pools accounts with similar risk characteristics that are acquired in the same year.

We identified the assessment of ~~income recognized~~the estimate of expected recoveries on ~~finance receivables and the valuation allowance and net allowance charges~~purchased credit deteriorated assets as a critical audit ~~matter because it involved significant measurement uncertainty that required~~matter. A high degree of audit effort, including specialized skills and knowledge, and complex auditor judgment was involved in the assessment of the expected recoveries due to significant measurement uncertainty. Specifically, the assessment encompassed the evaluation of the methodology used to estimate recoveries, including the inputs and ~~specialized knowledge~~significant assumptions related to estimating the expected recoveries. Such inputs and ~~experience.~~significant assumptions include historical trends and actual performance versus projections and certain qualitative factors. In addition, auditor judgment was required to evaluate the sufficiency of audit evidence obtained. The future cash flows and economic lives of each pool have sensitivity such that minor changes could have had a significant impact on the total income recognized on finance receivables, and the valuation allowance and net allowance charges. Additionally, there was a high level of subjectivity in performing procedures related to the estimation of future cash flows and the economic lives used to determine (1) income recognized on finance receivables, including the yield rate, and (2) the valuation allowance and net allowance charges.

The following are the primary procedures we performed to address this critical audit ~~matter included~~matter. We evaluated the ~~following. We~~design and tested the operating effectiveness of certain internal controls ~~over~~related to the Company's process to develop (1) ~~develop estimates~~the methodology and estimate of ~~future cash flows~~expected recoveries, including controls over the inputs and ~~determine the economic lives used to recognize income~~significant assumptions, and (2) ~~determine~~ the ~~valuation allowance~~performance monitoring of the expected recoveries and ~~net allowance charges.~~incorporation of qualitative factors into the estimate of expected recoveries. We evaluated the Company’s process to develop the estimates by testing certain sources of data, factors, and ~~assumptions. This included considering~~assumptions that the Company used, and considered the relevance and reliability of such data, factors and assumptions including historical trends, operational factors related to the collections process, and actual performance versus projections. We compared the Company's historical cash collection estimates to actual results to assess the Company's ability to accurately forecast.assumptions. In addition, we involved credit risk professionals with specialized industry knowledge and experience who assisted ~~in:~~


–	performing sensitivity analyses utilizing different assumptions of the future cash flows to assess the magnitude of the impact on the Company's income recognition on finance receivables, the valuation allowance and net allowance charges and economic lives;


–	~~assessing the Company's estimates of future cash flows of a selection of pools of finance receivables, by comparing to historical trends and evaluating relevant metrics.~~

in evaluating the methodology for compliance with U.S. generally accepted accounting principles and assessing the Company's estimates of expected recoveries, including the inputs and significant assumptions, for a selection of pools of finance receivables by comparing to historical trends. We ~~evaluated the collective results of the procedures performed to assess~~also assessed the sufficiency of the audit evidence obtained related to the Company’s ~~income recognized on finance receivables~~expected recoveries by evaluating the cumulative results of the audit procedures and potential bias in the ~~valuation allowance and net allowance charges.~~accounting estimate.

/s/ KPMG

We have served as the Company’s auditor since 2007.

Norfolk, Virginia

~~March 2, 2020~~February 26, 2021

PRA Group, Inc.

Consolidated Balance Sheets

December 31, ~~2019~~2020 and ~~2018~~2019

(Amounts in thousands, except per share amounts)


	2019			2018				2020		2019
Assets							Assets
Cash and cash equivalents	$	119,774		$	98,695		Cash and cash equivalents	$	108,613	$	119,774
Restricted cash							Restricted cash	12,434		4,033
Investments	56,176			45,173			Investments	55,759		56,176
Finance receivables, net	3,514,165			3,084,777			Finance receivables, net	3,514,788		3,514,165
Other receivables, net	10,606			46,157			Other receivables, net	13,194		10,606
Income taxes receivable	17,918			16,809			Income taxes receivable	21,928		17,918
Deferred tax asset, net	63,225			61,453
Deferred tax assets, net							Deferred tax assets, net	83,205		63,225
Right-of-use assets	68,972			—			Right-of-use assets	52,951		68,972
Property and equipment, net	56,501			54,136			Property and equipment, net	58,356		56,501
Goodwill	480,794			464,116			Goodwill	492,989		480,794
Intangible assets, net	4,497			5,522

Other assets	31,263			32,721			Other assets	38,844		31,727

Total assets	$	4,423,891		$	3,909,559		Total assets	$	4,453,061	$	4,423,891
Liabilities and Equity							Liabilities and Equity
Liabilities:							Liabilities:
Accounts payable	$	4,258		$	6,110		Accounts payable	$	5,294	$	4,258
Accrued expenses	88,925			79,396			Accrued expenses	97,320		88,925
Income taxes payable	4,046			15,080			Income taxes payable	29,692		4,046
Deferred tax liability, net	85,390			114,979
Deferred tax liabilities, net							Deferred tax liabilities, net	40,867		85,390
Lease liabilities	73,377			—			Lease liabilities	57,348		73,377
Interest-bearing deposits	106,246			82,666			Interest-bearing deposits	132,739		106,246
Borrowings	2,808,425			2,473,656			Borrowings	2,661,289		2,808,425
Other liabilities	26,211			7,370			Other liabilities	54,986		26,211

Total liabilities	3,196,878			2,779,257			Total liabilities	3,079,535		3,196,878
Redeemable noncontrolling interest	—			6,333

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	0		0
Common stock, $0.01 par value, 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019; 100,000 shares authorized, 45,304 shares issued and outstanding at December 31, 2018	454			453
Common stock, $0.01 par value, 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020; 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019							Common stock, $0.01 par value, 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020; 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019	456		454
Additional paid-in capital	67,321			60,303			Additional paid-in capital	75,282		67,321
Retained earnings	1,362,631			1,276,473			Retained earnings	1,511,970		1,362,631
Accumulated other comprehensive loss	(261,018		)	(242,109		)	Accumulated other comprehensive loss	(245,791)		(261,018)
Total stockholders' equity - PRA Group, Inc.	1,169,388			1,095,120			Total stockholders' equity - PRA Group, Inc.	1,341,917		1,169,388
Noncontrolling interests	57,625			28,849			Noncontrolling interests	31,609		57,625
Total equity	1,227,013			1,123,969			Total equity	1,373,526		1,227,013
Total liabilities and equity	$	4,423,891		$	3,909,559		Total liabilities and equity	$	4,453,061	$	4,423,891

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

PRA Group, Inc.

Consolidated Income Statements

For the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018

(Amounts in thousands, except per share amounts)


	2019			2018			2017				2020		2019		2018
Revenues:										Revenues:
Portfolio income										Portfolio income	$	984,036	$	0	$	0
Changes in expected recoveries										Changes in expected recoveries	69,297		0		0
Income recognized on finance receivables	$	998,361		$	891,899		$	795,435		Income recognized on finance receivables	0		998,361		891,899
Fee income	15,769			14,916			24,916			Fee income	9,748		15,769		14,916
Other revenue	2,951			1,441			7,855			Other revenue	2,333		2,951		1,441
Total revenues	1,017,081			908,256			828,206			Total revenues	1,065,414		1,017,081		908,256

Net allowance charges	(24,025		)	(33,425		)	(11,898		)	Net allowance charges	0		(24,025)		(33,425)

Operating expenses:										Operating expenses:
Compensation and employee services	310,441			319,400			273,033			Compensation and employee services	295,150		310,441		319,400
Legal collection fees	55,261			42,941			43,351			Legal collection fees	53,758		55,261		42,941
Legal collection costs	134,156			104,988			76,047			Legal collection costs	101,635		134,156		104,988
Agency fees	55,812			33,854			35,530			Agency fees	56,418		55,812		33,854
Outside fees and services	63,513			61,492			62,792			Outside fees and services	84,087		63,513		61,492
Communication	44,057			43,224			33,132			Communication	40,801		44,057		43,224
Rent and occupancy	17,854			16,906			14,823			Rent and occupancy	17,973		17,854		16,906
Depreciation and amortization	17,464			19,322			19,763			Depreciation and amortization	18,465		17,464		19,322
Other operating expenses	46,811			47,444			44,103			Other operating expenses	47,426		46,811		47,444

Total operating expenses	745,369			689,571			602,574			Total operating expenses	715,713		745,369		689,571

Income from operations	247,687			185,260			213,734			Income from operations	349,701		247,687		185,260

Other income and (expense):										Other income and (expense):
Gain on sale of subsidiaries	—			26,575			48,474			Gain on sale of subsidiaries	0		0		26,575
Interest expense, net	(141,918		)	(121,078		)	(98,041		)	Interest expense, net	(141,712)		(141,918)		(121,078)
Foreign exchange gain/(loss)	11,954			(944		)	(1,104		)	Foreign exchange gain/(loss)	2,005		11,954		(944)
Other	(364		)	(316		)	(2,790		)	Other	(1,049)		(364)		(316)
Income before income taxes	117,359			89,497			160,273			Income before income taxes	208,945		117,359		89,497
Income tax expense/(benefit)	19,680			13,763			(10,852		)
Income tax expense										Income tax expense	41,203		19,680		13,763
Net income	97,679			75,734			171,125			Net income	167,742		97,679		75,734
Adjustment for net income attributable to noncontrolling interests	11,521			10,171			6,810			Adjustment for net income attributable to noncontrolling interests	18,403		11,521		10,171
Net income attributable to PRA Group, Inc.	$	86,158		$	65,563		$	164,315		Net income attributable to PRA Group, Inc.	$	149,339	$	86,158	$	65,563

Net income per share attributable to PRA Group, Inc.:										Net income per share attributable to PRA Group, Inc.:
Basic	$	1.90		$	1.45		$	3.60		Basic	$	3.28	$	1.90	$	1.45
Diluted	$	1.89		$	1.44		$	3.59		Diluted	$	3.26	$	1.89	$	1.44
Weighted average number of shares outstanding:										Weighted average number of shares outstanding:
Basic	45,387			45,280			45,671			Basic	45,540		45,387		45,280
Diluted	45,577			45,413			45,823			Diluted	45,860		45,577		45,413

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

Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018

(Amounts in thousands)


	2019			2018			2017			2020		2019		2018
Net income	$	97,679		$	75,734		$	171,125	Net income	$	167,742	$	97,679	$	75,734

Other comprehensive (loss)/income, net of tax:									Other comprehensive (loss)/income, net of tax:
Currency translation adjustments	(6,359		)	(63,505		)	67,858		Currency translation adjustments	20,056		(6,359)		(63,505)
Cash flow hedges	(13,132		)	44			—		Cash flow hedges	(20,261)		(13,132)		44
Debt securities available-for-sale	39			(83		)	—		Debt securities available-for-sale	171		39		(83)
Other comprehensive (loss)/income	(19,452		)	(63,544		)	67,858
Other comprehensive loss									Other comprehensive loss	(34)		(19,452)		(63,544)
Total comprehensive income	78,227			12,190			238,983		Total comprehensive income	167,708		78,227		12,190
Less comprehensive income attributable to noncontrolling interests	10,978			10,129			1,332		Less comprehensive income attributable to noncontrolling interests	3,141		10,978		10,129
Comprehensive income attributable to PRA Group, Inc.	$	67,249		$	2,061		$	237,651	Comprehensive income attributable to PRA Group, Inc.	$	164,567	$	67,249	$	2,061

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

Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018

(Amounts in thousands)


																								Common Stock				Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)			Noncontrolling Interests			Total Equity
	Common Stock					Additional Paid-in Capital			Retained Earnings			Accumulated Other Comprehensive (Loss)				Noncontrolling Interests				Total Equity				Shares		Amount
	Shares		Amount

Balance at December 31, 2016	46,356		$	464		$	66,414		$	1,050,525			$	(251,944	)				$			52,862		$	918,321
Components of comprehensive income, net of tax:
Net income	—		—			—			164,315			—				6,587				170,902
Currency translation adjustment	—		—			—			—			73,337				(7,202		)		66,135
Distributions to noncontrolling interest	—		—			—			—			—				(2,085		)		(2,085		)
Vesting of restricted stock	145		1			(1		)	—			—				—				—
Repurchase and cancellation of common stock	(1,312	)	(13		)	(44,896		)	—			—				—				(44,909		)
Share-based compensation expense	—		—			8,678			—			—				—				8,678
Excess income tax benefit from share-based compensation	—		—			(3,022		)	—			—				—				(3,022		)
Employee stock relinquished for payment of taxes	—		—			44,910			—			—				—				44,910
Component of convertible debt	—		—			(18,213		)	—			—				—				(18,213		)
Balance at December 31, 2017	45,189		$	452		$	53,870		$	1,214,840		$	(178,607	)		$	50,162			$	1,140,717		Balance at December 31, 2017	45,189		$	452		$	53,870		$	1,214,840		$	(178,607)		$	50,162		$	1,140,717
Cumulative effect of change in accounting principle - equity securities ⁽¹⁾	—		—			—			(3,930		)	—				—				(3,930		)	Cumulative effect of change in accounting principle - equity securities (1)	—		—		—			(3,930)			—			—			(3,930)
Balance at January 1, 2018	45,189		$	452		$	53,870		$	1,210,910		$	(178,607	)		$	50,162			$	1,136,787		Balance at January 1, 2018	45,189		$	452	$	53,870		$	1,210,910		$	(178,607)		$	50,162		$	1,136,787
Components of comprehensive income, net of tax:																							Components of comprehensive income, net of tax:
Net income	—		—			—			65,563			—				10,171				75,734			Net income	—		—		—			65,563			—			10,171			75,734
Currency translation adjustment	—		—			—			—			(63,463		)		(42		)		(63,505		)	Currency translation adjustment	—		—		—			—			(63,463)			(42)			(63,505)

Cash flow hedges	—		—			—			—			44				—				44			Cash flow hedges	—		—		—			—			44			—			44
Debt securities available-for-sale	—		—			—			—			(83		)		—				(83		)	Debt securities available-for-sale	—		—		—			—			(83)			—			(83)
Distributions to noncontrolling interest	—		—			—			—			—				(33,271		)		(33,271		)	Distributions to noncontrolling interest	—		—		—			—			—			(33,271)			(33,271)
Vesting of restricted stock	115		1			(1		)	—			—				—				—			Vesting of restricted stock	115		1		(1)			—			—			—			0
Share-based compensation expense	—		—			8,521			—			—				—				8,521			Share-based compensation expense	—		—		8,521			—			—			—			8,521
Employee stock relinquished for payment of taxes	—		—			(2,087		)	—			—				—				(2,087		)	Employee stock relinquished for payment of taxes	—		—		(2,087)			—			—			—			(2,087)
Purchase of noncontrolling interest	—		—			—			—			—				1,829				1,829			Purchase of noncontrolling interest	—		—		—			—			—			1,829			1,829

Balance at December 31, 2018	45,304		$	453		$	60,303		$	1,276,473		$	(242,109	)		$	28,849			$	1,123,969		Balance at December 31, 2018	45,304		$	453	$	60,303		$	1,276,473		$	(242,109)		$	28,849		$	1,123,969
Components of comprehensive income, net of tax:																							Components of comprehensive income, net of tax:
Net income																							Net income	—		—		—			86,158			—			11,521			97,679
Currency translation adjustment																							Currency translation adjustment	—		—		—			—			(5,816)			(543)			(6,359)
Cash flow hedges																							Cash flow hedges	—		—		—			—			(13,132)			—			(13,132)
Debt securities available-for-sale																							Debt securities available-for-sale	—		—		—			—			39			—			39
Distributions to noncontrolling interest																							Distributions to noncontrolling interest	—		—		—			—			—			(6,877)			(6,877)
Contributions from noncontrolling interest																							Contributions from noncontrolling interest	—		—		—			—			—			24,675			24,675

Vesting of restricted stock																							Vesting of restricted stock	112		1		(1)			—			—			—			0

Shared-based compensation expense																							Shared-based compensation expense	—		—		10,717			—			—			—			10,717

Employee stock relinquished for payment of taxes																							Employee stock relinquished for payment of taxes	—		—		(1,609)			—			—			—			(1,609)

Other																							Other	—		—		(2,089)			—			—			—			(2,089)
Balance at December 31, 2019																							Balance at December 31, 2019	45,416		$	454	$	67,321		$	1,362,631		$	(261,018)		$	57,625		$	1,227,013
Components of comprehensive income, net of tax:																							Components of comprehensive income, net of tax:
Net income	—		—			—			86,158			—				11,521				97,679			Net income	—		—		—			149,339			—			18,403			167,742
Currency translation adjustments	—		—			—			—			(5,816		)		(543		)		(6,359		)	Currency translation adjustments	—		—		—			—			35,317			(15,261)			20,056
Cash flow hedges	—		—			—			—			(13,132		)		—				(13,132		)	Cash flow hedges	—		—		—			—			(20,261)			—			(20,261)
Debt securities available-for-sale	—		—			—			—			39				—				39			Debt securities available-for-sale	—		—		—			—			171			—			171
Distributions to noncontrolling interest	—		—			—			—			—				(6,877		)		(6,877		)	Distributions to noncontrolling interest	—		—		—			—			—			(30,276)			(30,276)
Contributions from noncontrolling interest	—		—			—			—			—				24,675				24,675			Contributions from noncontrolling interest	—		—		—			—			—			1,118			1,118
Vesting of restricted stock	112		1			(1		)	—			—				—				—			Vesting of restricted stock	169		2		(2)			—			—			—			0

Share-based compensation expense	—		—			10,717			—			—				—				10,717			Share-based compensation expense	—		—		14,387			—			—			—			14,387

Employee stock relinquished for payment of taxes	—		—			(1,609		)	—			—				—				(1,609		)	Employee stock relinquished for payment of taxes	—		—		(3,299)			—			—			—			(3,299)

Other	—		—			(2,089		)	—			—				—				(2,089		)	Other	—		—		(3,125)			—			—			—			(3,125)
Balance at December 31, 2019	45,416		$	454		$	67,321		$	1,362,631		$	(261,018	)		$	57,625			$	1,227,013
Balance at December 31, 2020																							Balance at December 31, 2020	45,585		$	456	$	75,282		$	1,511,970		$	(245,791)		$	31,609		$	1,373,526

(1) ~~Refer~~Reflects cumulative effect adjustment recorded to ~~Note 3~~beginning retained earnings for ~~further detail.~~the unrealized loss on investments in private equity funds.

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

Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017~~2018

(Amounts in thousands)


	2019			2018			2017				2020		2019		2018
Cash flows from operating activities:										Cash flows from operating activities:
Net income	$	97,679		$	75,734		$	171,125		Net income	$	167,742	$	97,679	$	75,734
Adjustments to reconcile net income to net cash provided by operating activities:										Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	10,717			8,521			8,678			Share-based compensation expense	14,387		10,717		8,521

Depreciation and amortization	17,464			19,322			19,763			Depreciation and amortization	18,465		17,464		19,322
Gain on sale of subsidiaries	—			(26,575		)	(48,474		)	Gain on sale of subsidiaries	0		0		(26,575)
Amortization of debt discount and issuance costs	22,987			22,057			18,152			Amortization of debt discount and issuance costs	21,063		22,987		22,057
Impairment of investments	—			—			1,745
Deferred tax benefit	(37,561		)	(56,208		)	(130,138		)

Changes in expected recoveries										Changes in expected recoveries	(69,297)		0		0
Deferred income taxes										Deferred income taxes	(58,503)		(37,561)		(56,208)
Net unrealized foreign currency transactions	(4,543		)	5,730			(1,098		)	Net unrealized foreign currency transactions	15,240		(4,543)		5,730

Fair value in earnings for equity securities	(5,826		)	(3,502		)	—			Fair value in earnings for equity securities	977		(5,826)		(3,502)
Net allowance charges	24,025			33,425			11,898			Net allowance charges	0		24,025		33,425
Other operating activities	(234		)	—			(4,033		)	Other operating activities	(893)		(234)		0
Changes in operating assets and liabilities:										Changes in operating assets and liabilities:
Other assets	3,313			(2,180		)	(460		)	Other assets	(2,429)		3,313		(2,180)
Other receivables, net	6,300			(4,269		)	(3,461		)	Other receivables, net	(2,215)		6,300		(4,269)
Accounts payable	(2,070		)	1,321			2,743			Accounts payable	914		(2,070)		1,321
Income taxes (payable)/receivable, net	(12,375		)	9,390			(22,715		)
Income taxes payable, net										Income taxes payable, net	22,001		(12,375)		9,390
Accrued expenses	11,632			(1,334		)	(5,752		)	Accrued expenses	7,767		11,632		(1,334)
Other liabilities	1,149			(566		)	(2,498		)	Other liabilities	6,496		1,149		(566)
Right of use asset/lease liability	731			—			—
Right of use assets/lease liabilities										Right of use assets/lease liabilities	(11)		731		0
Net cash provided by operating activities	133,388			80,866			15,475			Net cash provided by operating activities	141,704		133,388		80,866
Cash flows from investing activities:										Cash flows from investing activities:
Purchases of property and equipment	(18,033		)	(20,521		)	(22,840		)
Acquisition of finance receivables	(1,231,351		)	(1,105,759		)	(1,086,029		)
Purchases of property and equipment, net										Purchases of property and equipment, net	(17,230)		(18,033)		(20,521)

Purchases of finance receivables										Purchases of finance receivables	(903,588)		(1,231,351)		(1,105,759)
Recoveries applied to negative allowance										Recoveries applied to negative allowance	1,037,659		0		0
Collections applied to principal on finance receivables	842,910			733,306			717,170			Collections applied to principal on finance receivables	0		842,910		733,306
Business acquisition, net of cash acquired	(57,610		)	—			—
Cash received upon consolidation of Polish investment fund	—			17,531			—
Proceeds from sale of subsidiaries, net	31,177			4,905			93,304
Purchase of investments	(83,291		)	(42,622		)	(6,688		)	Purchase of investments	(45,229)		(83,291)		(42,622)
Proceeds from sales and maturities of investments	75,008			25,909			10,123			Proceeds from sales and maturities of investments	43,391		75,008		25,909
Net cash used in investing activities	(441,190		)	(387,251		)	(294,960		)
Business acquisition, net of cash acquired										Business acquisition, net of cash acquired	0		(57,610)		0
Proceeds from sale of subsidiaries, net										Proceeds from sale of subsidiaries, net	0		31,177		4,905
Cash received upon consolidation of Polish investment fund										Cash received upon consolidation of Polish investment fund	0		0		17,531

Net cash provided by/(used in) investing activities										Net cash provided by/(used in) investing activities	115,003		(441,190)		(387,251)
Cash flows from financing activities:										Cash flows from financing activities:

Proceeds from lines of credit	1,340,700			737,464			1,260,161			Proceeds from lines of credit	1,290,799		1,340,700		737,464
Principal payments on lines of credit	(728,282		)	(403,348		)	(1,549,833		)	Principal payments on lines of credit	(1,557,186)		(728,282)		(403,348)
Principal payments on notes payable and long-term debt	(313,165		)	(10,000		)	(15,021		)
Payments on convertible senior notes										Payments on convertible senior notes	(287,442)		0		0
Proceeds from senior notes										Proceeds from senior notes	300,000		0		0
Proceeds from long-term debt	—			—			310,000			Proceeds from long-term debt	55,000		0		0
Proceeds from convertible debt	—			—			345,000
Repurchases of common stock	—			—			(44,909		)
Principal payments on long-term debt										Principal payments on long-term debt	(10,000)		(313,165)		(10,000)

Payments of origination costs and fees										Payments of origination costs and fees	(17,218)		0		(2,260)

Tax withholdings related to share-based payments	(1,609		)	(2,087		)	(3,022		)	Tax withholdings related to share-based payments	(3,301)		(1,609)		(2,087)
Payments of origination costs and fees	—			(2,260		)	(18,240		)
Cash paid for purchase of portion of noncontrolling interest	(1,255		)	(1,664		)	—			Cash paid for purchase of portion of noncontrolling interest	0		(1,255)		(1,664)
Distributions paid to noncontrolling interest	(6,877		)	(14,486		)	(1,429		)	Distributions paid to noncontrolling interest	(30,276)		(6,877)		(14,486)
Contributions from noncontrolling interest	24,675			—			—			Contributions from noncontrolling interest	1,118		24,675		0
Net increase/(decrease) in interest-bearing deposits	27,427			(8,693		)	12,991			Net increase/(decrease) in interest-bearing deposits	9,591		27,427		(8,693)
Other financing activities	(2,091		)	—			—			Other financing activities	(3,185)		(2,091)		0
Net cash provided by financing activities	339,523			294,926			295,698

Net cash (used in)/provided by financing activities										Net cash (used in)/provided by financing activities	(252,100)		339,523		294,926
Effect of exchange rate on cash	(6,609		)	(10,362		)	10,016			Effect of exchange rate on cash	(7,367)		(6,609)		(10,362)
Net increase/(decrease) in cash and cash equivalents	25,112			(21,821		)	26,229
Cash and cash equivalents, beginning of year	98,695			120,516			94,287
Cash and cash equivalents, end of year	$	123,807		$	98,695		$	120,516
Net (decrease)/increase in cash, cash equivalents and restricted cash										Net (decrease)/increase in cash, cash equivalents and restricted cash	(2,760)		25,112		(21,821)
Cash, cash equivalents and restricted cash, beginning of year										Cash, cash equivalents and restricted cash, beginning of year	123,807		98,695		120,516
Cash, cash equivalents and restricted cash, end of year										Cash, cash equivalents and restricted cash, end of year	$	121,047	$	123,807	$	98,695
Supplemental disclosure of cash flow information:										Supplemental disclosure of cash flow information:
Cash paid for interest	$	119,424		$	97,475		$	79,825		Cash paid for interest	$	117,986	$	119,424	$	97,475
Cash paid for income taxes	68,979			73,483			144,341			Cash paid for income taxes	80,856		68,979		73,483
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets	$	119,774		$	98,695		$	120,516
Restricted cash included in Other Assets per Consolidated Balance Sheets	4,033			—			—
Total cash, cash equivalents and restricted cash	$	123,807		$	98,695		$	120,516

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

Consolidated Financial Statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. General and Summary of Significant Accounting ~~Policies~~:Policies:

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 of consumer bankruptcy accounts in the United States ("U.S.").

On March 11, 2020, due to the global outbreak of the novel coronavirus ("COVID-19"), the World Health Organization declared a global pandemic. Since the initial outbreak was reported, COVID-19 has continued to adversely impact all countries in which the Company operates. As a result, the Company has taken steps to modify its operations to mitigate adverse effects where possible while conforming with various COVID-19 protocols within the countries in which it operates. These actions have allowed the Company to operate its business while minimizing disruption and complying with country-specific, federal, state and local laws, regulations and governmental actions related to the pandemic.

Basis of presentation: The ~~consolidated financial statements~~Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP") ~~and include the accounts of all of its subsidiaries. All significant intercompany accounts and transactions have been eliminated.~~. The preparation of the ~~consolidated financial statements~~Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts and disclosures. Realized results could differ from those estimates and assumptions.

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

Reclassification of prior year presentation: Certain prior year amounts have been reclassified for consistency with the current year presentation. Specifically, restricted cash is now presented as a separate line item on the Consolidated Balance Sheets and was previously included within Other assets. Furthermore, intangible assets, net is now included within Other assets on the Consolidated Balance Sheets.

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

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

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

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

Foreign currency: Assets and liabilities have been translated to the reporting currency using the exchange rates in effect on the ~~consolidated balance sheet~~Consolidated Balance Sheets dates. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Revenue and expense accounts are translated using the weighted average exchange rate during the period. The cumulative translation adjustments associated with the net assets of international subsidiaries are recorded in ~~accumulated~~Accumulated other comprehensive ~~income (loss~~)loss in the accompanying ~~consolidated statements~~Consolidated Statements of ~~changes~~Changes in ~~equity.~~Equity.

Segments: Under the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC Topic 280 "Segment Reporting" ("ASC 280"), the Company has determined that it has several operating segments that meet the aggregation criteria of ASC 280, and, therefore, it has 1 reportable segment, accounts receivable management. This conclusion is based on similarities among the operating units, including economic characteristics,

PRA Group, Inc.

Notes to Consolidated Financial Statements

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.

Revenues and long-lived assets by geographical location: Revenue for the years ended December 31, 2020, 2019 ~~2018~~ and ~~2017,~~2018, and long-lived assets held at December 31, ~~2019~~2020 and ~~2018,~~2019, both for the U.S., the Company's country of domicile, and outside of the U.S. were (amounts in thousands):

Years Ended December 31, As of December 31,
2019 2018 2017 2019 2018
Revenues
Long-Lived Assets ⁽²⁾
United States $ 673,264
$ 619,172
$ 560,278
$ 112,233
$ 48,581
United Kingdom 120,377
99,817
81,322
3,553
1,543
Others ⁽¹⁾
223,440
189,267
186,606
9,687
4,012
Total $ 1,017,081
$ 908,256
$ 828,206
$ 125,473
$ 54,136


	Years Ended December 31,						As of December 31,
	2020		2019		2018		2020		2019
	Revenues (2)						Long-Lived Assets
United States	$	677,234	$	673,264	$	619,172	$	99,271	$	112,233
United Kingdom	132,749		120,377		99,817		2,500		3,553
Others (1)	255,431		223,440		189,267		9,536		9,687
Total	$	1,065,414	$	1,017,081	$	908,256	$	111,307	$	125,473

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

(2) ~~2019 includes right-of-use assets~~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 ~~the adoption of ASU 2016-02 on January 1, 2019. Refer to Note 4.~~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.~~right-of-use assets. The Company reports revenues earned from ~~nonperforming loan acquisitions and~~ collection activities on nonperforming loans, fee-based services and investments. For additional information on the Company's investments, see Note ~~3. It is impracticable for the Company to report further breakdowns of revenues from external customers by product or service.~~4.

Cash and cash equivalents: The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents.

Restricted cash:Cash that is subject to legal restrictions or is unavailable for general operating purposes is classified as restricted cash on the Company's Consolidated Balance Sheets.

Concentrations of credit risk: Financial instruments, which potentially expose the Company to concentrations of credit risk, consist primarily of cash and cash equivalents, investments, derivative instruments and finance receivables.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Accumulated other comprehensive loss: The Company records unrealized gains and losses on certain available-for-sale investments and foreign currency translation adjustments in other comprehensive ~~income.~~income ("OCI"). Unrealized gains and losses on available for sale investments are reclassified to earnings as the gains or losses are realized upon sale of the securities. Translation gains or losses on foreign currency translation adjustments are reclassified to earnings upon the substantial sale or liquidation of investments in international operations. For the Company’s financial derivative instruments that are designated as hedging instruments, the change in fair value of the derivative is recorded in ~~other comprehensive income.~~OCI.

Investments:

Debt ~~Securities.~~Securities: The Company accounts for its investments in debt securities under the guidance of ASC Topic 320, "Investments-Debt Securities" ("ASC 320"). The Company determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates such determinations at each balance sheet date. Debt securities are classified as ~~held to maturity~~held-to-maturity when the Company has the positive intent and ability to hold the securities to maturity. Held-to-maturity securities are carried at amortized cost. Debt securities for which the Company does not have the intent or ability to hold to maturity are classified as ~~available for sale. Held-to-maturity securities are carried at amortized cost. Available for sale~~available-for-sale. Available-for-sale securities are carried at fair market value. Fair value is determined using quoted market prices. Unrealized gains and losses are included in comprehensive income and reported in stockholders' equity. If the fair value of the investment falls below its carrying amount and the decline is deemed to be other than temporary, the investment is written down, with a corresponding charge to earnings.

Equity ~~Securities~~Securities:. The Company accounts for its investments in equity securities in accordance with ASC Topic 321, ~~“Investments-Equity Securities” (“~~"Investments-Equity Securities" ("ASC ~~321”~~321"), which requires that investments in equity securities be measured at fair value with changes in unrealized gains and losses reported in earnings. The Company's investment in equity securities have historically been carried at cost with income recognized in Other Revenue in the consolidated income statements when distributions, up to reported income, were received from the partnerships. As of first quarter of 2018, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"), requires that investments in equity securities be measured at fair value with changes in unrealized gains and losses reported in earnings. See Note 3 for additional information.

Equity Method ~~Investments.~~Investments: Equity ~~method~~ investments that are not consolidated, but over which the Company exercises significant influence, are accounted for ~~under the equity method of accounting.~~in accordance with ASC Topic 323, "Investments—Equity Method and Joint Ventures" ("ASC 323"). Whether or not the Company exercises significant influence with respect to an investee company depends on an evaluation of several factors including, among others, representation on the investee company’s board of directors and ownership level, which is generally a 20% to 50% interest in the voting securities of the investee company. Under

PRA Group, Inc.

Notes to Consolidated Financial Statements

the equity method of accounting, an investee company’s accounts are not reflected within the Company’s ~~consolidated balance sheets~~Consolidated Balance Sheets and ~~income statements;~~Income Statements; however, the Company’s share of the earnings or losses of the investee company is reflected in the caption ‘‘Other revenue’’ in the ~~consolidated income statements.~~Consolidated Income Statements. The Company’s carrying value in an equity method investee company is reflected in the caption ‘‘Investments’’ in the Company’s ~~consolidated balance sheets.~~Consolidated Balance Sheets.

When the Company’s carrying value in an equity method investee company is reduced to zero, no further losses are recorded in the Company’s ~~consolidated financial statements~~Consolidated Financial Statements unless the Company guaranteed obligations of the investee company or has committed additional funding. When the investee company subsequently reports income, the Company will not record its share of such income until it equals the amount of its share of losses not previously recognized.

Finance receivables and income recognition: The Company accounts for its investment in finance receivables at amortized cost under the guidance of ASC Topic ~~310-30, "Loans~~310 "Receivables" ("ASC 310") and ~~Debt Securities Acquired~~ASC 326. ASC 326 requires a financial asset (or a group of financial assets) measured at amortized cost basis to be presented at the net amount expected to be collected.

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

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

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

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

The measurement of expected recoveries is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. Development of the Company’s forecasts rely on both quantitative and qualitative factors. Qualitative factors can include both external and internal information and consider management’s view on available facts and circumstances at each reporting period. More specifically, external factors that may have an impact on the collectability, and subsequently on the overall profitability of acquired portfolios of nonperforming loans, would include new laws or regulations relating to collections, new interpretations of existing laws or regulations, and the overall condition of the economy. Internal factors that may have an impact on the collectability, and subsequently the overall profitability of acquired portfolios of nonperforming loans, would include necessary revisions to initial and post-acquisition scoring and modeling estimates, operational activities, expected impact of operational strategies and changes in productivity related to turnover and tenure of the Company's collection staff.

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

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

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

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

Prior to ASC ~~310-30").~~326: The Company accounts for its investment in finance receivables under the guidance of ASC 310-30. The Company acquires portfolios of accounts that have experienced deterioration of credit quality between origination and the Company's acquisition of the accounts. The amount paid for a portfolio reflects the Company's determination that it is probable the Company will be unable to collect all amounts due according to an account's contractual terms. At acquisition, the Company reviews the accounts to determine whether there is evidence of deterioration of credit quality since origination, and if it is probable that the Company will be unable to collect all amounts due according to the loan's contractual terms. If both conditions exist, the Company then determines whether each such account is to be accounted for individually or whether such accounts will be assembled into pools based on common risk characteristics. The Company considers expected prepayments and estimates the amount and timing of undiscounted expected principal, interest and other cash flows (expected at acquisition) for each acquired portfolio based on the Company's proprietary models, and the Company subsequently aggregates portfolios of accounts into quarterly pools. The Company determines the excess of the pool's scheduled contractual principal and contractual interest payments over all cash flows expected at acquisition as an amount that should not be accreted (nonaccretable difference). The remaining amount, representing the excess of the pool's cash flows expected to be collected over the amount paid, is accreted into income recognized on finance receivables over the remaining estimated life of the pool (accretable yield). ASC 310-30 requires that the excess of the contractual cash flows over expected cash flows, based on the Company's estimates derived from proprietary collection models, not be recognized as an adjustment of revenue or expense or on the balance sheet.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Each pool is recorded at cost and is accounted for as a single unit for the recognition of income, payments applied to principal and loss provision. Once a pool is established for a calendar quarter, individual receivable accounts are not added to the pool (unless replaced by the seller) or removed from the pool (unless sold or returned to the seller). The yield is estimated and periodically recalculated based on the timing and amount of anticipated cash flows. Income on finance receivables is accrued quarterly based on each pool's effective yield. Significant increases in expected future cash flows may be recognized prospectively, through an upward adjustment of the yield, over a pool's remaining life. Under ASC 310-30, rather than lowering the estimated yield if the collection estimates are below previous expectations, the carrying value of a pool would be written down to maintain the then current yield and is shown as an allowance charge in the consolidated income statements with a corresponding valuation allowance offsetting finance receivables on the consolidated balance sheets. Cash flows greater than the interest accrual will reduce the carrying value of the pool. This reduction in carrying value is defined as payments applied to principal (also referred to as principal amortization). Likewise, cash flows that are less than the interest accrual will accrete the carrying balance. Generally, the Company does not record accretion in the first six to twelve months of the estimated life of the pool; accordingly, the Company utilizes either the cost recovery method or cash method when necessary to prevent accretion as permitted by ASC 310-30. Under the cash method, revenue is recognized as it would be under the interest method up to the amount of cash collections. Under the cost recovery method, no revenue is recognized until the Company has fully collected the cost of the pool, or until such time that the Company considers the collections to be probable and estimable and begins to recognize income based on the interest method as described above. The Company also uses the cost recovery method when collections on a particular pool of accounts cannot be reasonably estimated.

A pool can become fully amortized (zero carrying balance on the balance sheet) while still generating cash collections. In this case, all subsequent cash collections are recognized as revenue when received.

The Company records a valuation allowance when significant decreases in expected cash flows are identified or there are changes in the timing of expected cash flows that would otherwise require a reduction in the stated yield on a pool of accounts. Factors that may contribute to the recording of valuation allowances include both external and internal factors. External factors that may have an impact on the collectability, and subsequently on the overall profitability of acquired pools of nonperforming

PRA Group, Inc.

Notes to Consolidated Financial Statements

loans, would include new laws or regulations relating to collections, new interpretations of existing laws or regulations, and the overall condition of the economy. Internal factors that may have an impact on the collectability, and subsequently the overall profitability of acquired pools of nonperforming loans, would include necessary revisions to initial and post-acquisition scoring and modeling estimates, non-optimal operational activities, and decreases in productivity related to turnover and tenure of the Company's collection staff.

The Company capitalizes certain fees paid to third parties related to the direct acquisition of a portfolio of accounts. These fees are added to the acquisition cost of the portfolio and accordingly are amortized over the life of the portfolio using the interest method.

The agreements to purchase the aforementioned nonperforming loans include general representations and warranties from the sellers covering account holder death or insolvency and accounts settled or disputed prior to sale. The representation and warranty period permitting the return of these accounts from the Company to the seller is typically 90 to 180 days. Any funds received from the seller as a return of purchase price are referred to as buybacks. Buyback funds are applied against the finance receivable balance received and are not included in the Company's cash collections from operations. In some cases, the seller will replace the returned accounts with new accounts in lieu of returning the purchase price. In that case, the old account is removed from the pool and the new account is added.

Fee income recognition: The Company recognizes revenue from its class action claims recovery services when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the amount is fixed or determinable, and collectability is reasonably assured.

Property and equipment: Property and equipment, including improvements that significantly add to the productive capacity or extend useful life, are recorded at cost. Maintenance and repairs are expensed as incurred. Property and equipment are depreciated over their useful lives using the straight-line method of depreciation. Software and computer equipment are generally amortized or depreciated over three to five years. Furniture and fixtures are depreciated over five to ten years. Equipment is depreciated over five to seven years. Leasehold improvements are depreciated over the lesser of the useful life, which ranges from three to ten years, or the remaining term of the lease. Building improvements are depreciated straight-line over ten to ~~thirty-nine~~39 years. When property is sold or retired, the cost and related accumulated depreciation are removed from the balance sheet and any gain or loss is included in the ~~income statement.~~Company's Consolidated Income Statements.

Business combinations: The Company accounts for business combinations under the acquisition method in accordance with ASC 805, "Business Combinations" ("ASC 805"). The cost of an acquired company is assigned to the tangible and intangible assets acquired and the liabilities assumed on the basis of their fair values at the date of acquisition. The determination of fair

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

values of assets acquired and liabilities assumed requires management to make estimates and use valuation techniques when market values are not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill. Transaction costs associated with business combinations are expensed as incurred.

~~Goodwill and intangible assets:~~Goodwill: Goodwill, in accordance with ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), is not amortized but rather is reviewed for impairment annually or more frequently if indicators of potential impairment exist. On January 1, 2020, the Company adopted ASU 2017-04, "Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). The Company performs its annual assessment of goodwill as of October 1. The Company may first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill. If management concludes that it is more likely than not that the fair value of a reporting unit is less than its carrying amount, ~~management conducts a two-step quantitative goodwill~~an impairment ~~test.~~loss is recognized. The ~~first step of~~loss will be recorded at the impairment test involves comparing the fair value of the applicable reporting unit with its carrying value. The Company estimates the fair values of its reporting units using a combination of the income approach, which uses present value techniques, and the market approach, which uses market multiples from comparable transactions where the acquisition target has similar operating and investment characteristics to the reporting unit. If the carrying amount of a reporting unit exceeds the reporting unit's fair value, management performs the second step of the goodwill impairment test. The second step of the goodwill impairment test involves comparing the implied fair value of the affected reporting unit's goodwill with the carrying value of that goodwill. The amount by which the carrying ~~value of~~amount exceeds the ~~goodwill exceeds its implied~~reporting unit’s fair value, ~~if any, is recognized as an impairment loss~~. ~~See Note 5 for additional information.~~not to exceed the total amount of goodwill allocated to the respective reporting unit.

Convertible senior notes: The Company accounts for its ~~3.00% Convertible Senior Notes due 2020 (the "2020 Notes") and its~~ 3.50% Convertible Notes due 2023 (the "2023 Notes" ~~and, together with the 2020 Notes, the "Notes"~~or "Convertible Notes") in accordance with ASC 470-20, "Debt with Conversion and Other Options" ("ASC 470-20"). ASC 470-20 requires that, for convertible debt instruments that must be settled fully or partially in cash upon conversion, issuers must separately account for the liability and equity components in a manner that will reflect the entity's nonconvertible debt borrowing rate when interest cost is recognized in subsequent periods. The excess of the principal amount of the liability component over its carrying amount is amortized to interest expense over the expected life of a similar liability that does not have an associated equity component, using the effective interest method. The equity component is not remeasured as long as it continues to meet the conditions for equity classification under ASC 815-40, "Derivatives and Hedging - Contracts in an Entity's Own Equity." Transaction costs incurred with third parties are allocated to the liability and equity components in proportion to the allocation of proceeds and accounted for as debt issuance costs and equity issuance costs, respectively.

PRA Group, Inc.

Notes to Consolidated Financial Statements

For diluted earnings per share purposes, based upon the Company's intent and ability to settle conversions of the Convertible Notes through a combination of cash and shares, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds ~~$65.72 for~~$60.11, which is 130% of the ~~2020 Notes or $46.24 for the 2023 Notes, neither of which occurred during~~conversion price. During the respective periods from when the 2023 Notes were issued through December 31, ~~2019.~~2020, the average share price of the Company's common stock did not exceed $60.11 during any quarter.

Income taxes: The Company follows the guidance of ASC Topic 740 "Income Taxes" ("ASC 740") as it relates to the provision for income taxes and uncertainty in income taxes. Accordingly, the Company records 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 carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled.

The ~~evaluation~~Company is subject to income taxes throughout the U.S. and in numerous international jurisdictions. The Company recognizes the financial statement benefits of a tax position ~~in accordance with the guidance is a two-step process. The first step is recognition: the enterprise determines whether~~if it is ~~more-likely-than-not that a tax position will~~more likely than not to be sustained ~~upon examination, including resolution~~in the event of ~~any related appeals or litigation processes,~~challenges by relevant taxing authorities based on the technical merits of the position. In evaluating whether a tax position has met the more-likely-than-not recognition threshold, the enterprise should presume that the position will be examined by the appropriate taxing authority that would have full knowledge of all relevant information.merit. The ~~second step is measurement: a tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount~~amounts of benefit to recognize in the financial ~~statements. The tax position is measured as~~statements are the largest ~~amount of benefit~~benefits that ishave a greater than 50 percent ~~likely~~likelihood of being realized upon ~~ultimate settlement. Tax positions that previously failed to meet~~settlement with the ~~more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized~~relevant tax ~~positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.~~authorities. The Company records interest and penalties related to unrecognized tax benefits as a component of income tax expense when ~~positions~~the more likely than not standards are not met.

In preparation of the Consolidated Financial Statements, the Company exercises significant judgment in estimating the potential exposure to unresolved tax matters and applies a more likely than not criteria approach for recording tax benefits related to uncertain tax positions in the application of complex tax laws. While actual results could vary, the Company believes it has adequate tax accruals with respect to the ultimate outcome of such tax matters.

The Company, in the event that all or part of the deferred tax assets are determined not to be realizable in the future, would establish a valuation allowance ~~would be established~~ and ~~charged~~charge to earnings the impact in the period such a determination is made. If the Company subsequently realizes

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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 estimate of income tax expense involves significant judgment in evaluating 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.

Beginning with the 2017 tax year, the Company utilizes a new tax accounting method to recognize net finance receivables income. Under the new method, a portion of the annual collections amortize principal and the remaining portion is taxable income. The deferred tax liability related to the difference in timing between the new method and the cost recovery method will be incorporated evenly into the Company’s tax filings over four years. For additional information, see Note 13.

~~Advertising costs:~~ ~~Advertising costs are expensed when incurred.~~

Leases: ~~The~~Beginning in 2019, the Company accounts for leases in accordance with ~~the provisions of FASB issued ASU~~ASC 2016-02, "Leases (Topic 842) Section A - Leases: Amendments to the FASB Account Standards Codification" ("~~ASU 2016-02"~~ASC 842"). ~~ASU 2016-02~~ASC 842 requires that a lessee should recognize a liability ~~to make~~for future lease payments and a right-of-use asset representing its right to use the underlying asset for the lease term on the balance sheet. The Company adopted ASC 842 on January 1, 2019 using the alternative method which resulted in the recording of operating lease right-of-use ("ROU") assets and lease liabilities of $72.1 million and $75.8 million, respectively. The Company's balance sheets for reporting periods beginning on or after January 1, 2019 are presented under the new guidance, while prior periods amounts are not adjusted and continue to be reported in accordance with previous guidance.

The Company elected to apply the package of practical expedients permitted within the new standard, which among other things, allows it to carry forward the historical lease classification. In addition, the Company elected the practical expedient to exclude short-term leases (lease terms of less than one year) from its ROU assets and lease liabilities.

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 ~~twenty~~15 years, some of which include options to extend the leases for five years, and others include options to terminate the leases within one year. Exercises of lease renewal options are typically at the Company's sole discretion and are included in its ~~ROU~~right-of-use ("ROU") assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal options. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. ~~The Company used its incremental borrowing rate as of January 1, 2019 to calculate the present value of the lease payments of its existing leases at adoption.~~

Share-based compensation: The Company accounts for share-based compensation in accordance with the provisions of ASC Topic 718 "Compensation-Stock Compensation" ("ASC 718"). ASC 718 requires that compensation expense associated with share equity awards be recognized in the income statement. The Company determines stock-based compensation expense for all share-based payment awards based on the measurement date fair value. The Company has certain share awards that include market conditions that affect vesting. The fair value of these shares is estimated using a lattice model. Compensation cost is not adjusted if the market condition is not met, as long as the requisite service is provided. The Company estimates a forfeiture rate for most equity share grants based on historical experience. Time-based equity share awards generally vest between one and three years from the grant date and are expensed on a straight-line basis over the vesting period. Equity share awards that contain a performance metric, are expensed over the requisite service period, generally three years, in accordance with the performance level achieved at each reporting period. See Note 1112 for additional information.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Derivatives: The Company periodically enters into derivative financial instruments, typically interest rate swap agreements, interest rate caps, and foreign currency contracts to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. The Company does not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor does it enter into or hold derivatives for trading or speculative purposes.

The Company follows the guidance of ASC Topic 815 "Derivatives and Hedging" ("ASC 815") to account for its derivatives. All of the Company's outstanding derivative financial instruments are recognized in the balance sheet at their fair values. The effect on earnings from recognizing the fair values of these derivative financial instruments depends on their intended use, their hedge designation, and their effectiveness in offsetting changes in the fair values of the exposures they are hedging. Changes in the fair values of instruments designated to reduce or eliminate adverse fluctuations in the fair values of recognized assets and

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

liabilities and unrecognized firm commitments are reported ~~currently~~ in earnings along with changes in the fair values of the hedged items. Changes in the effective portions of the fair values of instruments used to reduce or eliminate adverse fluctuations in cash flows of anticipated or forecasted transactions are reported in equity as a component of ~~accumulated~~Accumulated other comprehensive ~~income.~~loss. Amounts in ~~accumulated~~Accumulated other comprehensive ~~income~~loss are reclassified to earnings when the related hedged items affect earnings or the anticipated transactions are no longer probable. Changes in the fair values of derivative instruments that are not designated as hedges or do not qualify for hedge accounting treatment are reported ~~currently~~ in earnings. The Company realizes gains and losses from derivative instruments in the same financial statement line item as the hedged item/forecasted transaction. Changes in unrealized gains and losses for derivatives not designated in a hedge accounting relationship are recorded directly in earnings each period and are also recorded in the same financial statement line item as the hedged item/forecasted transaction. Cash flows from the settlement of derivatives, including both economic hedges and those designated in hedge accounting relationships, appear in the ~~consolidated statements~~Consolidated Statements of ~~cash flows~~Cash Flows in the same categories as the cash flows of the hedged item.

For derivative financial instruments accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective, and the manner in which effectiveness of the hedge will be assessed. The Company formally assesses, both at inception and at each reporting period thereafter, whether the derivative financial instruments used in hedging transactions are effective in offsetting changes in fair value or cash flows of the related underlying exposures. ~~Any ineffective portion of the change in fair value of the instruments is recognized immediately in earnings.~~

The Company discontinues the use of hedge accounting prospectively when (1) the derivative instrument is no longer effective in offsetting changes in fair value or cash flows of the underlying hedged item; (2) the derivative instrument expires, is sold, terminated, or exercised; or (3) designating the derivative instrument as a hedge is no longer appropriate. See Note 910 for additional information.

Use of estimates: The preparation of the ~~consolidated financial statements~~Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the ~~consolidated financial statements~~Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant estimates have been made by management with respect to the timing and amount of future cash collections of the Company's finance receivables portfolios. Actual results could differ from these estimates making it reasonably possible that a change in these estimates could occur within one year.

Commitments and contingencies: The Company is subject to various claims and contingencies related to lawsuits, certain taxes and commitments under contractual and other obligations. The Company recognizes liabilities for ~~contingencies~~commitments and ~~commitments~~contingencies when a loss is probable and estimable. The Company expenses related legal costs as incurred. For additional information, see Note ~~14.~~15.

Estimated fair value of financial instruments: The Company applies the provisions of ASC Topic 820 "Fair Value Measurements and Disclosures" ("ASC 820"). ASC 820 defines fair value as 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 also requires the consideration of differing levels of inputs in the determination of fair values. Disclosure of the estimated fair values of financial instruments often requires the use of estimates. See Note 89 for additional information.

~~Recent accounting pronouncements:~~

~~Recently Issued Accounting Standards Adopted:~~

~~Codification Improvements to Leases~~

In February 2016, the FASB issued ASU 2016-02 which requires that a lessee should recognize a liability to make lease payments and a ROU representing its right to use the underlying asset for the lease term on the balance sheet. In July 2018, FASB issued ASU 2018-10, "Codification Improvements to Topic 842, Leases" and ASU 2018-11, "Leases (Topic 842) Targeted Improvements" which among other things, allowed for an alternative transition method which eliminated the requirement to restate the earliest prior period presented in an entity's financial statements. Entities that elected this transition option, including the Company, were required to adopt the new lease standard using the modified retrospective transition method required by the standard, but recognized a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption rather than in the earliest period presented. The Company adopted the new leasing standard on January 1, 2019 and as a result recorded operating lease ROU assets and lease liabilities of $72.1 million and $75.8 million, respectively. The adoption of the standard did not have any other material impact on the Company's consolidated financial statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

~~Statement of Cash Flows- Classification of Certain Cash Receipts and Cash Payments~~

In August 2016, FASB issued ASU 2016-15, "Statement of Cash Flows - Classification of Certain Cash Receipts and Cash Payments (Topic 230)" ("ASU 2016-15"). ASU 2016-15 reduces diversity in practice of how certain transactions are classified in the statement of cash flows. The new guidance clarifies the classification of cash activity related to debt prepayment or debt extinguishment costs, settlement of zero-coupon debt instruments, contingent consideration payments made after a business combination, proceeds from the settlement of insurance claims, proceeds from the settlement of corporate and bank-owned life insurance policies, distributions received from equity-method investments, and beneficial interests in securitization transactions. The guidance also describes a predominance principle in which cash flows with aspects of more than one class that cannot be separated should be classified based on the activity that is likely to be the predominant source or use of cash flow. ASU 2016-15 is effective for the Company for fiscal years beginning after December 15, 2018. The new standard must be adopted using a retrospective transition method. The Company adopted ASU 2016-15 in the first quarter of 2019 which had no material impact on its consolidated financial statements.

~~Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income~~

In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"). Under existing GAAP, the effects of changes in tax rates and laws on deferred tax balances are recorded as a component of income tax expense in the period in which the law was enacted. When deferred tax balances related to items originally recorded in accumulated other comprehensive income are adjusted, certain tax effects become stranded in accumulated other comprehensive income. The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded income tax effects resulting from the 2017 Tax Cuts and Jobs Act ("Tax Act"). The amendments in this ASU also require certain disclosures about stranded income tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. The Company’s provisional adjustments recorded during the year ended December 31, 2017 to account for the impact of the Tax Act did not result in stranded tax effects. The Company adopted ASU 2018-02 in the first quarter of 2019 which had no material impact on its consolidated financial statements.Recent accounting pronouncements:

Recently ~~Issued Accounting Standards Not Yet Adopted:~~issued accounting standards adopted:

Financial Instruments - Credit Losses

~~In June 2016, FASB issued ASU 2016-13, "Financial Instruments - Credit Losses (Topic 326)" ("ASU 2016-13"), which introduces~~Effective January 1, 2020, the Company adopted ASC 326 on a ~~new methodology requiring~~prospective basis. Prior to January 1, 2020, substantially all of the measurement of expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and otherCompany's investment in finance receivables measured at amortized cost. The new methodology requires an entity to present on the balance sheet the net amount expected to be collected. This methodology replaces the multiple impairment methods under existing GAAP, including for purchased credit impaired ("PCI") assets, and introduces the concept of purchased credit deteriorated (“PCD”) financial assets. The Company's PCI assets currentlywere accounted for under ~~existing GAAP will be accounted~~ASC 310-30. Refer to Note 2 for as PCD financial assets upon adoption of ASU 2016-13. ASU 2016-13 requires PCD assets to be recognized at their purchase price plus the allowance for credit losses expected at the time of acquisition. ASU 2016-13 also requires that financial assets should be written off when they are deemed uncollectible.

In November 2019, FASB issued ASU 2019-11, “Codification Improvements to Topic 326, Financial Instruments - Credit Losses” (“ASU 2019-11”), which amends the PCD financial asset guidance in ASU 2016-13 to clarify that expected recoveries of amounts previously written off and expected to be written off should be included in the valuation account and should not exceed the aggregate of amounts previously written off and expected to be written off by an entity. Further, ASU 2019-11 clarifies that a negative allowance is recognized when an entity determines, after a full or partial writeoff of the amortized cost basis, that it will recover all or a portion of the basis.

Based on the guidance in ASU 2016-13 and 2019-11, substantially all the Company’s PCI assets will transition using the PCD guidance; the Company will gross up the amortized cost of the PCI assets by adding the allowance for credit losses estimated at transition. The Company will then immediately write off the amortized cost basis of individual accounts and establish a negative allowance for expected recoveries. The immediate writeoff and subsequent recognition of estimated recoveries are expected to have no impact on the Company’s statement of income, balance sheet or retained earnings at the date of adoption. The Company will estimate expected recoveries using a discounted cash flow approach and will recognize income over the estimated life of the pool at an effective interest rate. Subsequent changes (favorable and unfavorable) in expected cash flows will be recognized in current period earnings by adjusting the present value of the expected recoveries.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Subsequent to adoption, ASU 2016-13 and ASU 2019-11 represent a significant change from existing GAAP and are expected to result in material changes to the Company’s accounting for its finance receivables, including recognizing revenue at a fixed rate and recognizing both positive and negative changes to the forecast as an adjustment to current period earnings. The guidance will be effective prospectively for the Company as of January 1, 2020. Implementation efforts, including model finalization and drafting of accounting and internal control policies and procedures are nearly complete.comprehensive details.

Intangibles - Goodwill and Other

In January 2017, FASB issued ASU 2017-04 ~~"Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment" ("ASU 2017-04"). ASU 2017-04~~which eliminates ~~Step~~step 2 of the goodwill impairment test. Instead, an entity ~~should perform~~performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity ~~should recognize~~recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. ASU 2017-04 is effective for annual and interim periods beginning after December 15, 2019, and early adoption was permitted for interim or annual goodwill impairment tests performed after January 1, 2017. Based on the Company's most recent goodwill impairment assessment, there were no reporting units for which it was more-likely-than-not that the carrying amount of a reporting unit exceeded its respective fair value; therefore, the Company believes that ASU 2017-04 would not have an impact on its consolidated financial statements or related disclosures. If subsequent to adoption, the carrying amount of a reporting unit exceeds its respective fair value, the Company would be required to recognize an impairment charge. The Company ~~will adopt this standard~~adopted ASU 2017-04 on January 1, 2020 ~~and does not expect that the adoption of these amendments will have a material effect~~which had no impact on its ~~consolidated financial statements.~~Consolidated Financial Statements.

Fair Value Measurement

In August 2018, the FASB issued ASU 2018-13, ~~“Fair~~"Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value ~~Measurement”~~Measurement" ("ASU 2018-13"). ASU 2018-13 eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. The standard is effective for all entities for financial statements issued for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company ~~will adopt this standard~~adopted ASU 2018-13 on January 1, 2020 which had no impact to the Company's Notes to Consolidated Financial Statements.

Reference Rate Reform

In March 2020, the FASB issued ASU 2020-04, "Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting" ("ASU 2020-04"). ASU 2020-04 provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The new guidance provides optional expedients and ~~expects~~exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference London Inter-bank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. ASU 2020-04 is effective immediately for a limited time through December 31, 2022. The Company is evaluating the ~~adoption~~impact of ASU ~~2018-13~~2020-04 but does not expect it will ~~result in additional and modified disclosures in~~have a material impact on its ~~consolidated financial statements without any financial impact.~~Consolidated Financial Statements.

Recently issued accounting standards not yet adopted:

Income Taxes

InIn December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“("ASU ~~2019-12”~~2019-12")~~, which simplifies the accounting~~. ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments and calculating income ~~taxes. This standard~~taxes in interim periods. Additionally, it adds guidance to reduce complexity in certain areas, including recognizing taxes for tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual and interim periods beginning af~~ter~~after December 15, 2020 on a prospective basis, and early adoption is permitted. The Company ~~is currently evaluating~~has evaluated the impact of ASU 2019-12 on ~~our consolidated~~its Consolidated Financial Statements and has adopted the standard on January 1, 2021. The Company does not expect adoption to have a material impact on its Consolidated Financial Statements.

Investments-Equity Securities

In January 2020, the FASB issued ASU 2020-01 "Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815" ("ASU 2020-01"). ASU 2020-01 clarifies that a company should consider observable transactions that require a company to either apply or discontinue the equity method of accounting under Topic 323, Investments-Equity Method and Joint Ventures, for the purposes of applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the equity method. Additionally, it clarifies that, when determining the accounting for certain forward contracts and purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities would be accounted for under the equity method or fair value option. This standard is effective for public entities for financial statements issued for fiscal years and ~~expects it~~interim periods beginning after

PRA Group, Inc.

Notes to ~~result~~Consolidated Financial Statements

December 15, 2020. The Company is evaluating the impact of ASU 2020-01 but does not expect adoption to have a material impact on its Consolidated Financial Statements.

Accounting for Convertible Instruments

In August 2020, the FASB issued ASU 2020-06, "Debt —Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging —Contracts in ~~additional~~Entity 's Own Equity (Subtopic 815-40) —Accounting for Convertible Instruments and Contracts in an Entity 's Own Equity" ("ASU 2020-06"). ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. Additionally, ASU 2020-06 removes certain settlement conditions that are required for equity contracts to qualify for the derivative scope exception and simplifies the diluted earnings per share calculation in certain areas. ASU 2020-06 is effective for public entities for financial statements issued for fiscal years and interim periods beginning after December 15, 2021 with early adoption permitted for the fiscal years beginning after December 15, 2020. The Company will early adopt the amended guidance on January 1, 2021 using a modified ~~disclosures.~~retrospective transition method. The Company does not expect adoption to have a material impact on its Consolidated Financial Statements.

The Company does not expect that any other recently issued accounting pronouncements will have a material ~~effect~~impact on its ~~consolidated~~Consolidated Financial Statements.

2. Change in Accounting Principle:

Financial Instruments - Credit Losses

In June 2016, FASB issued ASU 2016-13, which introduced a new methodology requiring the measurement of expected credit losses for financial ~~statements.~~instruments held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. ASU 2016-13 utilizes a lifetime "expected credit loss" measurement objective for the recognition of credit losses for loans, held-to-maturity debt securities and other receivables measured at amortized cost. The new methodology requires an entity to present on the balance sheet the net amount expected to be collected. This methodology replaces the multiple impairment methods under prior GAAP, including for purchased credit impaired ("PCI") assets, and introduces the concept of PCD assets. The Company's PCI assets previously accounted for under ASC 310-30 are now accounted for as PCD assets upon adoption. ASU 2016-13 requires PCD assets to be recognized at their purchase price plus the allowance for credit losses expected at the time of acquisition. ASU 2016-13 also requires that financial assets should be written off when they are deemed uncollectible.

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

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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


Amortized cost	$	3,514,165
Allowance for credit losses	125,757,689
Noncredit discount	3,240,131
Face value	$	132,511,985

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

3. Finance Receivables, net:

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

Finance receivables, net consisted of the following at December 31, 2020 (amounts in thousands):


Amortized cost	$	0
Negative allowance for expected recoveries (1)	3,514,788
Balance at end of year	$	3,514,788

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

Changes in the negative allowance for expected recoveries by portfolio segment for the year ended December 31, 2020 was as follows (amounts in thousands):


	For the Year Ended December 31, 2020
	Core		Insolvency		Total
Balance at beginning of year	$	3,051,426	$	462,739	$	3,514,165
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	742,583		162,535		905,118
Foreign currency translation adjustment	54,735		9,132		63,867
Recoveries applied to negative allowance (2)	(891,925)		(145,734)		(1,037,659)
Changes in expected recoveries (3)	62,658		6,639		69,297
Balance at end of year	$	3,019,477	$	495,311	$	3,514,788

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

Portfolio acquisitions for the year ended December 31, 2020 was as follows (amounts in thousands):


	For the Year Ended December 31, 2020
	Core		Insolvency		Total
Face value	$	5,820,159	$	887,134	$	6,707,293
Noncredit discount	(710,636)		(53,357)		(763,993)
Allowance for credit losses at acquisition	(4,366,940)		(671,242)		(5,038,182)
Purchase price	$	742,583	$	162,535	$	905,118

PRA Group, Inc.

Notes to Consolidated Financial Statements

The initial negative allowance recorded on portfolio acquisitions for the year ended December 31, 2020 was as follows (amounts in thousands):


	For the Year Ended December 31, 2020
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(4,366,940)	$	(671,242)	$	(5,038,182)
Writeoffs, net	4,366,940		671,242		5,038,182
Expected recoveries	742,583		162,535		905,118
Initial negative allowance for expected recoveries	$	742,583	$	162,535	$	905,118

(2) Recoveries applied to negative allowance

Recoveries applied to the negative allowance for the year ended December 31, 2020 was as follows (amounts in thousands):


	For the Year Ended December 31, 2020
	Core		Insolvency		Total
Recoveries (a)	$	1,803,480	$	218,215	$	2,021,695
Less - amounts reclassified to portfolio income (b)	911,555		72,481		984,036
Recoveries applied to negative allowance	$	891,925	$	145,734	$	1,037,659

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

(b) For more information, refer to the Company's discussion of portfolio income within finance receivables and income recognition in Note 1.

(3) Changes in expected recoveries

Changes in expected recoveries for the year ended December 31, 2020 was as follows (amounts in thousands):


	For the Year Ended December 31, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(207,982)	$	(5,289)	$	(213,271)
Recoveries received in excess of forecast	270,640		11,928		282,568
Changes in expected recoveries	$	62,658	$	6,639	$	69,297

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

For the year ended December 31, 2020, changes in expected recoveries were $69.3 million. This reflects $282.6 million in recoveries received in excess of forecast, which was largely due to significant cash collections overperformance during the last three quarters of 2020. This was mostly offset by a $213.3 million decrease in the present value of expected future recoveries. The decrease reflects the Company's assumption that the majority of the current year overperformance was primarily due to acceleration in the timing of cash collections rather than an increase to total expected collections. Additionally, the Company made forecast adjustments in all quarters deemed appropriate given the current environment in which the Company operates.

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Finance Receivables, net prior to adoption of ASC 326

The following information reflects finance receivables, net as previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2019, which was under the previous revenue recognition accounting standard.

Changes in finance receivables, net, for the ~~years~~year ended ~~December 31,~~ 2019 ~~and 2018, were~~was as follows (amounts in thousands):

2019 2018
Balance at beginning of year $ 3,084,777
$ 2,776,199
Acquisitions of finance receivables ⁽¹⁾
1,274,317
1,105,423
Addition relating to consolidation of Polish investment fund
—
34,871
Foreign currency translation adjustment 22,006
(64,985 )
Cash collections (1,841,271 ) (1,625,205 )
Income recognized on finance receivables 998,361
891,899
Net allowance charges (24,025 ) (33,425 )
Balance at end of year $ 3,514,165
$ 3,084,777


	2019
Balance at beginning of year	$	3,084,777
Acquisitions of finance receivables (1)	1,274,317

Foreign currency translation adjustment	22,006
Cash collections	(1,841,271)
Income recognized on finance receivables	998,361
Net allowance charges	(24,025)
Balance at end of year	$	3,514,165

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

During the year ended December 31, 2019, the Company acquired finance receivable portfolios with a face value of $11.7 billion for $1.3 ~~billion as compared to the same period last year with a face value of $9.2 billion for $1.1~~ billion. At December 31, 2019, the estimated remaining collections ~~("ERC")~~ on the receivables acquired during the ~~years~~year ended December 31, 2019 ~~and 2018 were~~was $2.0 ~~billion and $1.4 billion, respectively.~~billion. At December 31, 2019, ~~and 2018,~~ ERC was $6.8 ~~billion and $6.1 billion, respectively.~~billion.

At the time of acquisition and each quarter thereafter, the life of each pool is estimated based on projected amounts and timing of future cash collections using the proprietary models of the Company. Based upon current projections, estimated cash collections expected to be applied to principal are as follows for the ~~twelve-month~~12-month periods ending December 31, (amounts in thousands):


2020	$	831,769
2021	672,699
2022	500,597
2023	368,332
2024	263,785
2025	193,831
2026	156,456
2027	135,238
2028	125,673
2029	116,008
Thereafter	149,777
Total ERC expected to be applied to principal	$	3,514,165

At December 31, 2019, ~~and 2018,~~ the Company had aggregate net finance receivables balances in pools accounted for under the cost recovery method of $33.7 ~~million and $48.0 million, respectively.~~million.

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

~~Changes in accretable yield for the years ended December 31, 2019 and 2018 were as follows (amounts in thousands):~~

2019 2018
Balance at beginning of year $ 3,058,445
$ 2,927,866
Income recognized on finance receivables (998,361 ) (891,899 )
Net allowance charges 24,025
33,425
Additions from portfolio acquisitions 943,887
876,112
Reclassifications from nonaccretable difference 205,464
194,992
Foreign currency translation adjustment 6,671
(82,051 )
Balance at end of year $ 3,240,131
$ 3,058,445

5860



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


Part I
Item 1.			Business	5
Item 1A.			Risk Factors	9
Item 1B.			Unresolved Staff Comments	16
Item 2.			Properties	17
Item 3.			Legal Proceedings	17
Item 4.			Mine Safety Disclosure	17

Part III
Item 1.5.			~~Business~~	5
~~Item 1A.~~	~~Risk Factors~~	9
~~Item 1B.~~	~~Unresolved Staff Comments~~	17
~~Item 2.~~	~~Properties~~	17
~~Item 3.~~	~~Legal Proceedings~~	17
~~Item 4.~~	~~Mine Safety Disclosure~~	18

~~Part II~~
~~Item 5.~~	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1918
Item 6.			Selected Financial Data	2119
Item 7.			Management’s Discussion and Analysis of Financial Condition and Results of Operations	2420
Item 7A.			Quantitative and Qualitative Disclosures about Market Risk	4039
Item 8.			Financial Statements and Supplementary Data	4241
			Report of Independent Registered Public Accounting Firm	4342
			Consolidated Balance Sheets	4544
			Consolidated Income Statements	4645
			Consolidated Statements of Comprehensive Income	4746
			Consolidated Statements of Changes in Equity	4847
			Consolidated Statements of Cash Flows	4948
			Notes to Consolidated Financial Statements	5049
			1 – General and Summary of Significant Accounting Policies	5049
			2 – Change in Accounting Principle	257
			3 – Finance Receivables, net	5758
			34 – Investments	5961
			45 – Leases	6062
			56 – Goodwill and Intangible Assets, net	6163
			67 – Borrowings	6264
			78 – Property and Equipment, net	6668
			89 – Fair Value	6668
			910 – Derivatives	6971
			101 1 – Accumulated Other Comprehensive Income	7072
			111 2 – Share-Based Compensation	7072
			121 3 – Earnings Per Share	7274
			131 4 – Income Taxes	7374
			141 5 – Commitments and Contingencies	7577
			151 6 – Retirement Plans	7678
Item 9.			~~16 – Redeemable Noncontrolling interest~~	76
	~~17 – Sales of Subsidiaries~~	77
~~Item 9.~~	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	7879
Item 9A.			Controls and Procedures	7879
Item 9B.			Other Information	8081


continued
Part III
Item 10.	Directors, Executive Officers and Corporate Governance	8081
Item 11.	Executive Compensation	8081
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	8081
Item 13.	Certain Relationships and Related Transactions, and Director Independence	8081
Item 14.	Principal Accountant Fees and Services	8081

Part IV
Item 15.	Exhibits and Financial Statement Schedules	8081
Item 16.	Form 10-K Summary	8283

Signatures		8384


Portfolio Financial Information For the Year Ended December 31, 2020 Amounts in thousands
Purchase Period	Cash Collections (1)		Portfolio Income (1)		Changes in Expected Recoveries (1)		Total Portfolio Revenue (1)(2)		Net Finance Receivables as of December 31, 2020 (3)
Americas Core
1996-2010	$	18,838	$	15,419	$	(3,156)	$	12,263	$	6,140


2011	10,855		10,016		(3,722)		6,294		3,142
2012	11,805		10,055		(7,485)		2,570		6,761
2013	23,161		16,709		(10,833)		5,876		16,290
2014	31,921		23,563		(21,081)		2,482		25,525
2015	57,223		34,339		(14,111)		20,228		56,170
2016	105,905		59,388		796		60,184		93,024
2017	192,524		91,632		25,085		116,717		165,492
2018	337,697		135,689		32,123		167,812		286,204
2019	349,021		175,258		36,325		211,583		380,756
2020	132,945		78,573		18,114		96,687		398,271
Subtotal	1,271,895		650,641		52,055		702,696		1,437,775
Americas Insolvency
1996-2010	844		992		(128)		864		—


2011	483		406		79		485		—
2012	925		697		509		1,206		—
2013	1,311		1,310		11		1,321		—
2014	2,229		2,500		(734)		1,766		224
2015	7,909		4,036		(1,002)		3,034		898
2016	14,362		3,402		970		4,372		7,423
2017	58,826		15,607		(428)		15,179		51,771
2018	30,513		8,762		2,960		11,722		55,653
2019	31,360		11,293		3,480		14,773		97,250
2020	6,525		4,064		(869)		3,195		57,929
Subtotal	155,287		53,069		4,848		57,917		271,148
Total Americas	1,427,182		703,710		56,903		760,613		1,708,923
Europe Core
2012	1,218		687		531		1,218		—
2013	685		333		353		686		—
2014	149,782		106,875		11,173		118,048		168,604
2015	54,252		30,917		(575)		30,342		144,112
2016	48,333		26,722		(2,260)		24,462		172,697
2017	36,084		13,521		(5,500)		8,021		135,149
2018	71,253		26,261		3,519		29,780		235,099
2019	125,712		43,091		(2,837)		40,254		416,812
2020	32,339		12,507		6,199		18,706		309,229
Subtotal	519,658		260,914		10,603		271,517		1,581,702
Europe Insolvency
2014	802		511		69		580		90
2015	2,871		1,367		49		1,416		1,627
2016	7,950		3,047		(204)		2,843		7,583
2017	9,819		1,960		568		2,528		17,602
2018	10,315		2,935		(2,229)		706		31,143
2019	21,082		6,637		1,933		8,570		63,230
2020	6,046		2,955		1,605		4,560		102,888
Subtotal	58,885		19,412		1,791		21,203		224,163
Total Europe	578,543		280,326		12,394		292,720		1,805,865
Total PRA Group	$	2,005,725	$	984,036	$	69,297	$	1,053,333	$	3,514,788

Cash Collections by Geography and Type Amounts in thousands

Cash Collections by Geography and Type																	Cash Collections by Geography and Type
	2019								2018									2020								2019
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1			Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Americas Core	$	276,639	$	279,902	$	294,243	$	290,723	$	233,937	$	231,253	$	233,752	$	246,237	Americas Core	$	286,524	$	336,322	$	343,269	$	305,780	$	276,639	$	279,902	$	294,243	$	290,723
Americas Insolvency	40,801		45,759		49,770		44,613		48,000		48,518		56,063		55,280		Americas Insolvency	36,048		37,344		38,685		43,210		40,801		45,759		49,770		44,613
Europe Core	126,649		118,917		117,635		116,858		113,154		102,780		109,359		118,109		Europe Core	141,471		131,702		115,145		131,340		126,649		118,917		117,635		116,858
Europe Insolvency	12,520		8,639		8,626		8,977		7,618		6,731		7,460		6,954		Europe Insolvency	17,830		13,971		12,841		14,243		12,520		8,639		8,626		8,977
Total Cash Collections	$	456,609	$	453,217	$	470,274	$	461,171	$	402,709	$	389,282	$	406,634	$	426,580	Total Cash Collections	$	481,873	$	519,339	$	509,940	$	494,573	$	456,609	$	453,217	$	470,274	$	461,171


•	~~our Code of Conduct, which applies to all directors, officers, and employees, is available at the Investor Relations page of our website at~~ ~~www.pragroup.com~~;


•	•Fair Debt Collection Practices Act ("FDCPA"), which imposes certain obligations and restrictions on the practices of debt collectors, including specific restrictions regarding the time, place and manner of the communications.

Consolidated Income Statements, Operating and Other Financial Data $ in thousands, except per share amounts

	Years Ended December 31,
Income Statement Data:	2019			2018			2017			2016			2015
Revenues:
Income recognized on finance receivables	$	998,361		$	891,899		$	795,435		$	845,142		$	894,491
Fee income	15,769			14,916			24,916			77,381			64,383
Other revenue	2,951			1,441			7,855			8,080			12,513
Total revenues	1,017,081			908,256			828,206			930,603			971,387

Net allowance charges	(24,025		)	(33,425		)	(11,898		)	(98,479		)	(29,369		)

Operating expenses:
Compensation and employee services	310,441			319,400			273,033			258,846			268,345
Legal collection fees	55,261			42,941			43,351			47,717			53,393
Legal collection costs	134,156			104,988			76,047			84,485			76,063
Agency fees	55,812			33,854			35,530			44,922			32,188
Outside fees and services	63,513			61,492			62,792			63,098			65,155
Communication	44,057			43,224			33,132			33,771			33,113
Rent and occupancy	17,854			16,906			14,823			15,710			14,714
Depreciation and amortization	17,464			19,322			19,763			24,359			19,874
Other operating expenses	46,811			47,444			44,103			39,466			68,829
Total operating expenses	745,369			689,571			602,574			612,374			631,674
Income from operations	247,687			185,260			213,734			219,750			310,344
Other income and (expense):
Gain on sale of subsidiaries	—			26,575			48,474			—			—
Interest expense, net	(141,918		)	(121,078		)	(98,041		)	(80,864		)	(60,336		)
Foreign exchange gain/(loss)	11,954			(944		)	(1,104		)	2,564			7,514
Other	(364		)	(316		)	(2,790		)	(5,823		)	—
Income before income taxes	117,359			89,497			160,273			135,627			257,522
Income tax expense/(benefit)	19,680			13,763			(10,852		)	43,577			89,391
Net income	97,679			75,734			171,125			92,050			168,131
Adjustment for net income attributable to noncontrolling interests	11,521			10,171			6,810			5,795			205
Net income attributable to PRA Group, Inc.	$	86,158		$	65,563		$	164,315		$	86,255		$	167,926
Net income per share attributable to PRA Group, Inc.:
Basic	$1.90			$1.45			$3.60			$1.86			$3.49
Diluted	$1.89			$1.44			$3.59			$1.86			$3.47
Weighted average number of shares outstanding:
Basic	45,387			45,280			45,671			46,316			48,128
Diluted	45,577			45,413			45,823			46,388			48,405
Operating and Other Financial Data:
Cash receipts	$	1,857,040		$	1,640,121		$	1,537,521		$	1,569,367		$	1,603,878
Cash Efficiency Ratio ⁽¹⁾	59.9		%	58.0		%	60.8		%	61.0		%	60.6		%
Acquisitions of finance receivables, at cost ⁽²⁾	$	1,289,327		$	1,117,997		$	1,108,959		$	947,331		$	963,811
Full-time equivalents at period end	4,412			5,377			5,154			4,019			3,799

Quarterly Income Statement Data Amounts in thousands, except per share amounts

	Dec 31, 2019			Sep 30, 2019			Jun 30, 2019			Mar 31, 2019			Dec 31, 2018			Sep 30, 2018			Jun 30, 2018			Mar 31, 2018
Revenues:
Income recognized on finance receivables	$	262,835		$	247,471		$	249,219		$	238,836		$	231,029		$	223,228		$	219,018		$	218,624
Fee income	4,297			2,391			2,707			6,374			4,686			2,561			2,342			5,327
Other revenue	2,001			152			131			667			1,027			99			158			157
Total revenues	269,133			250,014			252,057			245,877			236,742			225,888			221,518			224,108

Net allowance charges	(12,598		)	(4,136		)	(1,196		)	(6,095		)	(21,381		)	(8,285		)	(2,834		)	(925		)

Operating expenses:
Compensation and employee services	75,671			75,317			79,808			79,645			79,123			78,350			80,690			81,237
Legal collection fees	13,822			14,083			14,297			13,059			11,501			10,428			10,343			10,669
Legal collection costs	34,411			31,395			33,121			35,229			33,281			30,769			18,695			22,243
Agency fees	15,979			12,788			13,013			14,032			9,088			8,350			8,138			8,278
Outside fees and services	15,239			16,733			16,293			15,248			17,068			15,701			14,565			14,158
Communication	9,722			10,310			10,824			13,201			10,645			10,240			10,782			11,557
Rent and occupancy	4,586			4,414			4,491			4,363			4,319			4,270			4,003			4,314
Depreciation and amortization	4,123			4,046			4,723			4,572			5,092			4,776			4,525			4,929
Other operating expenses	12,198			12,102			10,926			11,585			13,030			10,602			11,628			12,184
Total operating expenses	185,751			181,188			187,496			190,934			183,147			173,486			163,369			169,569
Income from operations	70,784			64,690			63,365			48,848			32,214			44,117			55,315			53,614
Other income and (expense):
Gain on sale of subsidiaries	—			—			—			—			26,575			—			—			—
Interest expense, net	(36,046		)	(35,864		)	(36,027		)	(33,981		)	(33,549		)	(30,624		)	(31,124		)	(25,781		)
Foreign exchange gain/(loss)	595			5,406			(311		)	6,264			(4,553		)	626			1,690			1,293
Other	(241		)	(19		)	248			(352		)	(381		)	222			(400		)	243
Income before income taxes	35,092			34,213			27,275			20,779			20,306			14,341			25,481			29,369
Income tax expense	4,073			6,665			5,075			3,867			1,980			1,789			3,857			6,137
Net income	31,019			27,548			22,200			16,912			18,326			12,552			21,624			23,232
Adjustment for net income attributable to noncontrolling interests	3,678			2,577			3,581			1,685			3,384			2,625			2,036			2,126
Net income attributable to PRA Group, Inc.	$	27,341		$	24,971		$	18,619		$	15,227		$	14,942		$	9,927		$	19,588		$	21,106
Net income per share attributable to PRA Group, Inc.:
Basic	$	0.60		$	0.55		$	0.41		$	0.34		$	0.33		$	0.22		$	0.43		$	0.47
Diluted	$	0.60		$	0.55		$	0.41		$	0.34		$	0.33		$	0.22		$	0.43		$	0.47
Weighted average number of shares outstanding:
Basic	45,413			45,410			45,387			45,338			45,304			45,302			45,283			45,231
Diluted	45,748			45,645			45,495			45,419			45,394			45,440			45,449			45,370



	Twelve Months Ended December 31,									Variances
	2019			2018			2017			2019 vs. 2018		2018 vs. 2017
Stated interest on debt obligations and unused line fees	$	94,841		$	83,983		$	71,656		$	10,858	$	12,327
Coupon interest on convertible debt	20,700			20,700			15,870			—		4,830
Amortization of convertible debt discount	12,398			11,725			8,583			673		3,142
Amortization of loan fees and other loan costs	10,589			10,332			9,569			257		763
Change in fair value on derivatives	5,636			(2,532		)	(2,025		)	8,168		(507		)
Interest income	(2,246		)	(3,130		)	(5,612		)	884		2,482
Interest expense, net	$	141,918		$	121,078		$	98,041		$	20,840	$	23,037


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


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


~~(3)~~	~~For our non-U.S. amounts, Net Finance Receivables are presented at the December 31, 2019 exchange rate.~~


~~(4)~~	~~For our non-U.S. amounts, ERC-Historical Period Exchange Rates is presented at the period-end exchange rate for the respective quarter of purchase.~~


~~(5)~~	~~For our non-U.S. amounts, TEC is presented at the period-end exchange rate for the respective quarter of purchase.~~


~~(6)~~	~~For our non-U.S. amounts, ERC-Current Period Exchange Rates is presented at the December 31, 2019 exchange rate.~~


~~(7)~~	~~The Original Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.~~


~~(8)~~	~~Includes a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the accounting consolidation of a Polish investment fund.~~


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


~~(3)~~	~~For our non-U.S. amounts, amounts are presented using the average exchange rates during the current reporting period.~~


~~(4)~~	~~Net Revenue refers to income recognized on finance receivables, net of allowance charges/(reversals).~~


Cash Collections by Year, By Year of Purchase (1) as of December 31, 2020 Amounts in millions
			Cash Collections
Purchase Period (2)	Purchase Price (2)(3)		1996-2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		Total
Americas Core
1996-2010	$	1,078.2	$	1,990.5	$	367.1	$	311.5	$	228.4	$	157.7	$	109.3	$	70.2	$	46.0	$	34.4	$	28.4	$	18.8	$	3,362.3
2011	209.6		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		10.9		701.5
2012	254.1		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		631.5
2013	390.8		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		859.6
2014	404.1		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		800.0
2015	443.1		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		798.7
2016	455.8		—		—		—		—		—		—		138.7		256.5		194.6		140.6		105.9		836.3
2017	532.9		—		—		—		—		—		—		—		107.3		278.7		256.5		192.5		835.0
2018	654.0		—		—		—		—		—		—		—		—		122.7		361.9		337.7		822.3
2019	581.5		—		—		—		—		—		—		—		—		—		143.8		349.0		492.8
2020	435.7		—		—		—		—		—		—		—		—		—		—		133.0		133.0
Subtotal	5,439.8		1,990.5		429.1		542.9		656.5		752.9		844.8		837.1		860.8		945.0		1,141.5		1,271.9		10,273.0
Americas Insolvency
1996-2010	606.4		390.9		261.2		270.4		231.0		158.9		51.2		8.6		4.6		2.5		1.4		0.8		1,381.5
2011	180.4		—		15.2		66.4		82.8		85.8		76.9		36.0		3.7		1.6		0.7		0.5		369.6
2012	251.4		—		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		392.3
2013	227.8		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		354.1
2014	148.4		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		216.4
2015	63.2		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		85.8
2016	91.4		—		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		108.6
2017	275.3		—		—		—		—		—		—		—		49.1		97.3		80.9		58.8		286.1
2018	97.9		—		—		—		—		—		—		—		—		6.7		27.4		30.5		64.6
2019	123.1		—		—		—		—		—		—		—		—		—		13.3		31.4		44.7
2020	62.1		—		—		—		—		—		—		—		—		—		—		6.6		6.6
Subtotal	2,127.4		390.9		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		180.9		155.3		3,310.3
Total Americas	7,567.2		2,381.4		705.5		897.1		1,126.4		1,211.3		1,189.0		1,086.9		1,083.2		1,152.9		1,322.4		1,427.2		13,583.3
Europe Core
2012	20.4		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		38.3
2013	20.3		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		23.3
2014	773.8		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		1,441.4
2015	411.3		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		433.6
2016	333.1		—		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		298.2
2017	252.2		—		—		—		—		—		—		—		17.9		56.0		44.1		36.1		154.1
2018	341.8		—		—		—		—		—		—		—		—		24.3		88.7		71.2		184.2
2019	518.6		—		—		—		—		—		—		—		—		—		47.9		125.7		173.6
2020	324.1		—		—		—		—		—		—		—		—		—		—		32.4		32.4
Subtotal	2,995.6		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		2,779.1
Europe Insolvency
2014	10.9		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		16.3
2015	19.0		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		24.0
2016	39.3		—		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		50.4
2017	39.2		—		—		—		—		—		—		—		1.2		7.9		9.2		9.8		28.1
2018	44.9		—		—		—		—		—		—		—		—		0.6		8.4		10.3		19.3
2019	77.2		—		—		—		—		—		—		—		—		—		5.1		21.1		26.2
2020	105.4		—		—		—		—		—		—		—		—		—		—		6.1		6.1
Subtotal	335.9		—		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		170.4
Total Europe	3,331.5		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		2,949.5
Total PRA Group	$	10,898.7	$	2,381.4	$	705.5	$	908.7	$	1,142.5	$	1,378.6	$	1,539.6	$	1,492.0	$	1,512.3	$	1,625.1	$	1,841.3	$	2,005.8	$	16,532.8


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

U.S. Core Portfolio Cash Collections by Source Amounts in thousands

	2019								2018
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Call Center and Other Collections	$	139,399	$	149,782	$	160,479	$	169,753	$	134,543	$	137,325	$	143,527	$	155,448
External Legal Collections	58,831		64,301		63,490		57,419		47,410		41,935		40,631		38,891
Internal Legal Collections	33,944		35,679		38,065		37,018		30,724		32,064		32,532		33,423
Total U.S.-Core Cash Collections	$	232,174	$	249,762	$	262,034	$	264,190	$	212,677	$	211,324	$	216,690	$	227,762


Cash Collections by Source - Core Portfolios Only
	2020								2019
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Call Center and Other Collections	$	296,865	$	325,898	$	319,236	$	288,596	$	262,570	$	254,798	$	264,478	$	274,221
External Legal Collections	58,481		68,861		70,310		75,699		70,867		75,082		75,624		68,421
Internal Legal Collections	72,649		73,265		68,868		72,825		69,851		68,939		71,776		64,939
Total Core Cash Collections	$	427,995	$	468,024	$	458,414	$	437,120	$	403,288	$	398,819	$	411,878	$	407,581





























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

Cash Collections per Collector Hour Paid U.S. Portfolio

	Call center and other cash collections ⁽¹⁾
	2019		2018		2017		2016		2015
First Quarter	$	139	$	121	$	161	$	168	$	143
Second Quarter	139		101		129		167		141
Third Quarter	124		107		125		177		145
Fourth Quarter	128		104		112		153		139


~~(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 (1)
	2020	2019	2018
First Quarter	61.5%	59.2%	60.7%
Second Quarter	68.7	60.4	60.1
Third Quarter	65.6	60.2	55.7
Fourth Quarter	61.9	59.7	55.0
Full Year	64.5	59.9	58.0

Portfolio Acquisitions by Geography and Type Amounts in thousands

Portfolio Acquisitions by Geography and Type																	Portfolio Acquisitions by Geography and Type
	2019								2018									2020								2019
	Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1			Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1
Americas Core	$	118,153	$	168,185	$	121,996	$	169,189	$	172,511	$	170,426	$	182,768	$	131,427	Americas Core	$	67,460	$	84,139	$	110,474	$	172,697	$	118,153	$	168,185	$	121,996	$	169,189
Americas Insolvency	22,650		26,311		26,092		48,243		52,871		17,151		16,651		13,436		Americas Insolvency	12,504		14,328		14,527		20,772		22,650		26,311		26,092		48,243
Europe Core	218,919		64,728		136,344		94,283		231,810		45,754		19,403		18,000		Europe Core	137,647		74,930		34,247		60,990		218,919		64,728		136,344		94,283
Europe Insolvency	42,613		19,772		4,715		7,134		33,661		4,159		2,577		5,392		Europe Insolvency	72,171		4,203		5,251		18,778		42,613		19,772		4,715		7,134
Total Portfolio Acquisitions	$	402,335	$	278,996	$	289,147	$	318,849	$	490,853	$	237,490	$	221,399	$	168,255	Total Portfolio Acquisitions	$	289,782	$	177,600	$	164,499	$	273,237	$	402,335	$	278,996	$	289,147	$	318,849

U.S. Portfolio Acquisitions by Major Asset Type Amounts in thousands

U.S. Portfolio Acquisitions by Major Asset Type																					U.S. Portfolio Acquisitions by Major Asset Type
	2019																2018					2020																2019
	Q4				Q3				Q2				Q1				Q4					Q4				Q3				Q2				Q1				Q4
Major Credit Cards	$	30,337	24.3	%	$	50,500	40.1	%	$	39,468	28.2	%	$	43,440	27.0	%	$	65,025	32.5	%	Major Credit Cards	$	22,500	28.9	%	$	23,322	25.7	%	$	50,270	40.9	%	$	71,225	38.3	%	$	30,337	24.3	%
Private Label Credit Cards	85,351		68.4	%	72,714		57.7	%	70,536		50.4	%	84,515		52.6	%	100,633		50.3	%	Private Label Credit Cards	48,335		62.1		60,331		66.5		69,651		56.7		104,300		56.0		85,351		68.4
Consumer Finance	2,046		1.7	%	2,090		1.7	%	28,649		20.4	%	2,424		1.5	%	2,619		1.3	%	Consumer Finance	5,978		7.6		6,333		7.0		2,430		2.0		2,109		1.1		2,046		1.7
Auto Related	6,991		5.6	%	638		0.5	%	1,407		1.0	%	30,358		18.9	%	31,892		15.9	%	Auto Related	1,081		1.4		680		0.8		460		0.4		8,510		4.6		6,991		5.6
Total	$	124,725	100.0	%	$	125,942	100.0	%	$	140,060	100.0	%	$	160,737	100.0	%	$	200,169	100.0	%	Total	$	77,894	100.0	%	$	90,666	100.0	%	$	122,811	100.0	%	$	186,144	100.0	%	$	124,725	100.0	%


U.S. Portfolio Acquisitions by Delinquency Category
	2020																2019
	Q4				Q3				Q2				Q1					Q4
Fresh (1)	$	21,985	33.6	%	$	25,236	33.1	%	$	28,847	26.6	%	$	51,126	30.9	%		$	35,330	34.6	%
Primary (2)	1,002		1.5		5,187		6.8		9,887		9.1		18,152		11.0			5,796		5.7
Secondary (3)	41,164		63.0		44,534		58.3		67,609		62.5		92,855		56.1			52,899		51.8
Tertiary (3)	1,239		1.9		1,381		1.8		1,941		1.8		3,239		2.0			4,409		4.3
Other (4)	—		—		—		—		—		—		—		—			3,641		3.6
Total Core	65,390		100.0	%	76,338		100.0	%	108,284		100.0	%	165,372		100.0	%		102,075		100.0	%
Insolvency	12,504				14,328				14,527				20,772					22,650
Total	$	77,894			$	90,666			$	122,811			$	186,144				$	124,725


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


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


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