UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

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

For the quarterly period ended March 31, ~~2019~~2020

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

For the transition period from ________ to ________

Commission File Number: 000-50058

PRA Group, ~~Inc.~~Inc.

(Exact name of registrant as specified in its charter)



Delaware		75-3078675
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

~~120 Corporate Boulevard, Norfolk, Virginia~~	~~23502~~	~~(888) 772-7326~~
~~(Address of principal executive offices)~~	~~(Zip Code)~~	~~(Registrant's Telephone No., including area code)~~

	~~Not Applicable~~

120 Corporate Boulevard

Norfolk, Virginia23502

(Address of principal executive offices)

(888) 772-7326

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

Not Applicable

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

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



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

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

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

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

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

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

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

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



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

The number of shares of the registrant's common stock outstanding as of May ~~6, 2019~~5, 2020 was ~~45,383,831.~~45,541,199.

Table of Contents



Part I. Financial Information

Item 1.	Financial Statements (Unaudited)	3
	Consolidated Balance Sheets	3
	Consolidated Income Statements	4
	Consolidated Statements of Comprehensive Income/(Loss)	5
	Consolidated Statement of Changes in Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements	8
	1. Organization and Business	8
	2. ~~Finance Receivables, net~~	9
	~~3. Investments~~Change in Accounting Principle	10
	~~4. Goodwill and Intangible Assets,~~3. Finance Receivables, net	11
	~~5. Leases~~	12
	~~6. Borrowings~~4. Investments	14
	~~7. Derivatives~~5. Goodwill and Intangible Assets, net	1715
	~~8. Fair Value~~6. Leases	1815
	7. Borrowings	16
	8. Derivatives	19
	9. ~~Accumulated Other Comprehensive Loss~~Fair Value	20
	10. ~~Earnings per Share~~Accumulated Other Comprehensive Loss	2023
	11. ~~Income Taxes~~Earnings per Share	2123
	12. ~~Commitments and Contingencies~~Income Taxes	2124
	13. Commitments and Contingencies	24
	14. Recently Issued Accounting Standards	2225
	15. Subsequent Events	26
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2527
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4244
Item 4.	Controls and Procedures	4345

Part II. Other Information

Item 1.	Legal Proceedings	4446
Item 1A.	Risk Factors	4446
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4446
Item 3.	Defaults Upon Senior Securities	4446
Item 4.	Mine Safety Disclosures	4446
Item 5.	Other Information	4447
Item 6.	Exhibits	4447

Signatures		4548

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

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

(Amounts in thousands)


	(unaudited)						(unaudited)
	March 31, 2019			December 31, 2018			March 31, 2020			December 31, 2019
Assets
Cash and cash equivalents	$	102,102		$	98,695		$	179,995		$	119,774
Investments	85,082			45,173			52,711			56,176
Finance receivables, net	3,177,229			3,084,777			3,408,074			3,514,165
Other receivables, net	18,082			46,157			11,383			10,606
Income taxes receivable	15,472			16,809			29,372			17,918
Net deferred tax asset	61,619			61,453
Deferred tax asset, net							63,911			63,225
Property and equipment, net	54,463			54,136			59,882			56,501
Right-of-use assets	70,550			—			66,655			68,972
Goodwill	480,518			464,116			418,565			480,794
Intangible assets, net	5,247			5,522			4,003			4,497
Other assets	35,970			32,721			55,548			31,263
Total assets	$	4,106,334		$	3,909,559		$	4,350,099		$	4,423,891
Liabilities and Equity
Liabilities:
Accounts payable	$	5,682		$	6,110		$	4,328		$	4,258
Accrued expenses	77,838			79,396			76,583			88,925
Income taxes payable	389			15,080			18,596			4,046
Net deferred tax liability	108,367			114,979
Deferred tax liability, net							69,845			85,390
Lease liabilities							71,102			73,377
Interest-bearing deposits	95,314			82,666			97,465			106,246
Borrowings	2,586,409			2,473,656			2,828,002			2,808,425
Lease liabilities	74,308			—
Other liabilities	25,789			7,370			63,502			26,211
Total liabilities	2,974,096			2,779,257			3,229,423			3,196,878
Redeemable noncontrolling interest	6,199			6,333
Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—			—			—			—
Common stock, $0.01 par value, 100,000 shares authorized, 45,384 shares issued and outstanding at March 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, 45,540 shares issued and outstanding at March 31, 2020; 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019							455			454
Additional paid-in capital	59,091			60,303			67,021			67,321
Retained earnings	1,291,700			1,276,473			1,381,766			1,362,631
Accumulated other comprehensive loss	(248,521		)	(242,109		)	(375,617		)	(261,018		)
Total stockholders' equity - PRA Group, Inc.	1,102,724			1,095,120			1,073,625			1,169,388
Noncontrolling interest	23,315			28,849			47,051			57,625
Total equity	1,126,039			1,123,969			1,120,676			1,227,013
Total liabilities and equity	$	4,106,334		$	3,909,559		$	4,350,099		$	4,423,891

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

PRA Group, Inc.

Consolidated Income Statements

For the three months ended March 31, ~~2019~~2020 and ~~2018~~2019

(unaudited)

(Amounts in thousands, except per share amounts)


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Revenues:
Portfolio income							$	262,022		$	—
Changes in expected recoveries							(12,816		)	—
Income recognized on finance receivables	$	238,836		$	218,624		—			238,836
Fee income	6,374			5,327			2,209			6,374
Other revenue	667			157			369			667
Total revenues	245,877			224,108			251,784			245,877

Net allowance charges	(6,095		)	(925		)	—			(6,095		)

Operating expenses:
Compensation and employee services	79,645			81,237			75,171			79,645
Legal collection fees	13,059			10,669			14,572			13,059
Legal collection costs	35,229			22,243			34,447			35,229
Agency fees	14,032			8,278			13,376			14,032
Outside fees and services	15,248			14,158			19,394			15,248
Communication	13,201			11,557			13,511			13,201
Rent and occupancy	4,363			4,314			4,484			4,363
Depreciation and amortization	4,572			4,929			4,084			4,572
Other operating expenses	11,585			12,184			12,205			11,585
Total operating expenses	190,934			169,569			191,244			190,934
Income from operations	48,848			53,614			60,540			48,848
Other income and (expense):
Interest expense, net	(33,981		)	(25,781		)	(37,211		)	(33,981		)
Foreign exchange gain	6,264			1,293			2,283			6,264
Other	(352		)	243			(76		)	(352		)
Income before income taxes	20,779			29,369			25,536			20,779
Income tax expense	3,867			6,137			3,100			3,867
Net income	16,912			23,232			22,436			16,912
Adjustment for net income attributable to noncontrolling interests	1,685			2,126			3,301			1,685
Net income attributable to PRA Group, Inc.	$	15,227		$	21,106		$	19,135		$	15,227
Net income per common share attributable to PRA Group, Inc.:
Basic	$	0.34		$	0.47		$	0.42		$	0.34
Diluted	$	0.34		$	0.47		$	0.42		$	0.34
Weighted average number of shares outstanding:
Basic	45,338			45,231			45,452			45,338
Diluted	45,419			45,370			45,784			45,419

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

PRA Group, Inc.

Consolidated Statements of Comprehensive Income/(Loss)

For the three months ended March 31, ~~2019~~2020 and ~~2018~~2019

(unaudited)

(Amounts in thousands)

Three Months Ended March 31,
2019 2018
Net income $ 16,912
$ 23,232
Less net income attributable to noncontrolling interests 1,685
2,126
Net income attributable to PRA Group, Inc. 15,227
21,106
Other comprehensive (loss)/income, net of tax:
Currency translation adjustments (1,173 ) 29,941
Cash flow hedges (5,715 ) —
Debt securities available-for-sale 45
—
Other comprehensive (loss)/income (6,843 ) 29,941
Less other comprehensive (loss)/income attributable to noncontrolling interests (431 ) 7,021
Other comprehensive (loss)/income attributable to PRA Group, Inc. (6,412 ) 22,920
Comprehensive income attributable to PRA Group, Inc. $ 8,815
$ 44,026



	Three Months Ended March 31,
	2020			2019
Net income	$	22,436		$	16,912
Other comprehensive (loss)/income, net of tax:
Currency translation adjustments	(108,076		)	(1,173		)
Cash flow hedges	(20,568		)	(5,715		)
Debt securities available-for-sale	170			45
Other comprehensive loss	(128,474		)	(6,843		)
Total comprehensive (loss)/income	(106,038		)	10,069
Less comprehensive (loss)/ income attributable to noncontrolling interests	(10,574		)	1,254
Comprehensive (loss)/income attributable to PRA Group, Inc.	$	(95,464	)	$	8,815

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

PRA Group, Inc.

Consolidated ~~Statement~~Statements of Changes in Equity

For the three months ended March 31, ~~2019~~2020 and ~~2018~~March 31, 2019

(unaudited)

(Amounts in thousands)



	Common Stock			Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive (Loss)			Noncontrolling Interest			Total Equity
	Shares	Amount		Additional Paid-in Capital			Retained Earnings		Accumulated Other Comprehensive (Loss)			Noncontrolling Interest			Total Equity
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:
Net income	—	—		—			19,135		—			3,301			22,436
Currency translation adjustments	—	—		—			—		(94,201		)	(13,875		)	(108,076		)
Cash flow hedges	—	—		—			—		(20,568		)	—			(20,568		)
Debt securities available-for-sale	—	—		—			—		170			—			170
Vesting of restricted stock	124	1		—			—		—			—			1
Share-based compensation expense	—	—		2,857			—		—			—			2,857
Employee stock relinquished for payment of taxes	—	—		(3,157		)	—		—			—			(3,157		)
Balance at March 31, 2020	45,540	$	455	$	67,021		$	1,381,766	$	(375,617	)	$	47,051		$	1,120,676


	Common Stock			Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss)			Noncontrolling Interest				Total Equity			Common Stock				Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss)				Noncontrolling Interest				Total Equity
	Shares	Amount						Retained Earnings			Shares				Noncontrolling Interest			Amount								Additional Paid-in Capital				Retained Earnings				Accumulated Other Comprehensive (Loss)				Noncontrolling Interest				Total Equity
Balance at December 31, 2018	45,304	$	453	Additional Paid-in Capital			$	60,303			$	Accumulated Other Comprehensive (Loss)	1,276,473		$	(242,109	)		Total Equity		$	28,849	$	1,123,969	45,304			$	453			$	60,303			$	1,276,473			$	(242,109	)		$	28,849	$	1,123,969
Components of comprehensive income, net of tax:
Net income	—	—		—				15,227				—			1,685				16,912			—	—			—				15,227				—				1,685				16,912
Currency translation adjustments	—	—		—				—				(742		)	(431		)		(1,173		)	—	—			—				—				(742		)		(431		)		(1,173		)
Cash flow hedges	—	—		—				—				(5,715		)	—				(5,715		)	—	—			—				—				(5,715		)		—				(5,715		)
Debt securities available-for-sale	—	—		—				—				45			—				45			—	—			—				—				45				—				45
Distributions to noncontrolling interest	—	—		—				—				—			(6,877		)		(6,877		)	—	—			—				—				—				(6,877		)		(6,877		)
Contributions from noncontrolling interest	—	—		—				—				—			89				89			—	—			—				—				—				89				89
Vesting of restricted stock	80	1		(1		)		—				—			—				—			80	1			(1		)		—				—				—				—
Share-based compensation expense	—	—		2,314				—				—			—				2,314			—	—			2,314				—				—				—				2,314
Employee stock relinquished for payment of taxes	—	—		(1,437		)		—				—			—				(1,437		)	—	—			(1,437		)		—				—				—				(1,437		)
Other	—	—		(2,088		)		—				—			—				(2,088		)	—	—			(2,088		)		—				—				—				(2,088		)
Balance at March 31, 2019	45,384	$	454	$	59,091			$	1,291,700			$	(248,521	)	$	23,315			$	1,126,039		45,384	$	454		$	59,091			$	1,291,700			$	(248,521	)		$	23,315			$	1,126,039

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		)
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 income	—	—		—				21,106				—			2,126				23,232
Currency translation adjustments	—	—		—				—				22,920			7,021				29,941
Distributions to noncontrolling interest	—	—		—				—				—			(11,807		)		(11,807		)
Vesting of restricted stock	86	1		(1		)		—				—			—				—
Share-based compensation expense	—	—		2,415				—				—			—				2,415
Employee stock relinquished for payment of taxes	—	—		(2,013		)		—				—			—				(2,013		)
Balance at March 31, 2018	45,275	$	453	$	54,271			$	1,232,016			$	(155,687	)	$	47,502			$	1,178,555

(1) Relates to the adoption of FASB ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). Refer to Note 3 for further detail.

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

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the three months ended March 31, ~~2019~~2020 and ~~2018~~2019

(unaudited)

(Amounts in thousands)


	Three Months Ended March 31,						Three Months Ended March 31,
	2019			2018			2020			2019
Cash flows from operating activities:
Net income	$	16,912		$	23,232		$	22,436		$	16,912
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	2,314			2,415			2,857			2,314
Depreciation and amortization	4,572			4,929			4,084			4,572
Amortization of debt discount and issuance costs	5,678			5,430			5,857			5,678
Deferred tax benefit	(9,994		)	(10,138		)
Net unrealized foreign currency transaction (gain)	(6,632		)	(467		)
Changes in expected recoveries							12,816			—
Deferred income taxes							(12,755		)	(9,994		)
Net unrealized foreign currency transactions							24,873			(6,632		)
Fair value in earnings for equity securities	(2,139		)	(409		)	(7,566		)	(2,139		)
Net allowance charges	6,095			925			—			6,095
Other							(135		)	—
Changes in operating assets and liabilities:
Other assets	550			(5,787		)	(1,242		)	550
Other receivables, net	(1,289		)	1,536			(545		)	(1,289		)
Accounts payable	(548		)	(2,749		)	221			(548		)
Income taxes payable, net	(13,040		)	9,984			3,835			(13,040		)
Accrued expenses	1,553			(1,058		)	(8,990		)	1,553
Other liabilities	10,888			6,799			994			10,888
Right of use asset/lease liability							66			—
Other, net	37			—			—			37
Net cash provided by operating activities	14,957			34,642			46,806			14,957
Cash flows from investing activities:
Purchases of property and equipment	(4,493		)	(7,917		)	(7,639		)	(4,493		)
Acquisition of finance receivables	(264,632		)	(165,913		)	(271,845		)	(264,632		)
Recoveries applied to negative allowance							236,656			—
Collections applied to principal on finance receivables	222,335			207,956			—			222,335
Proceeds from/(purchase of) investments							36			(82,616		)
Proceeds from sales and maturities of investments							612			42,940
Business acquisition, net of cash acquired	(57,610		)	—			—			(57,610		)
Proceeds from sale of subsidiaries, net	31,177			—			—			31,177
Purchase of investments	(82,616		)	(13,924		)
Proceeds from sales and maturities of investments	42,940			96
Net cash (used in)/provided by investing activities	(112,899		)	20,298
Net cash used in investing activities							(42,180		)	(112,899		)
Cash flows from financing activities:
Proceeds from lines of credit	537,891			101,015			315,118			537,891
Principal payments on lines of credit	(132,486		)	(147,980		)	(227,459		)	(132,486		)
Principal payments on notes payable and long-term debt							(2,500		)	(305,665		)
Payments of origination cost and fees							(8,203		)	—
Tax withholdings related to share-based payments	(1,437		)	(2,013		)	(3,156		)	(1,437		)
Distributions paid to noncontrolling interest	(6,877		)	(12,464		)	—			(6,877		)
Principal payments on notes payable and long-term debt	(305,665		)	(2,502		)
Payments of origination costs and fees	—			(380		)
Net increase/(decrease) in interest-bearing deposits	16,126			(6,314		)
Other	(2,088		)	—
Net cash provided by/(used in) financing activities	105,464			(70,638		)
Net (decrease)/increase in interest-bearing deposits							(1,658		)	16,126
Other financing activities							—			(2,088		)
Net cash provided by financing activities							72,142			105,464
Effect of exchange rate on cash	(4,115		)	(3,400		)	(16,575		)	(4,115		)
Net increase/(decrease) in cash and cash equivalents	3,407			(19,098		)
Net increase in cash and cash equivalents							60,193			3,407
Cash and cash equivalents, beginning of period	98,695			120,516			123,807			98,695
Cash and cash equivalents, end of period	$	102,102		$	101,418		$	184,000		$	102,102
Supplemental disclosure of cash flow information:
Cash paid for interest	$	25,479		$	22,833		$	30,502		$	25,479
Cash paid for income taxes	27,293			12,175			12,100			27,293
Cash, cash equivalents and restricted cash reconciliation:
Cash and cash equivalents per Consolidated Balance Sheets							$	179,995		$	102,102
Restricted cash included in Other assets per Consolidated Balance Sheets							4,005			—
Total cash, cash equivalents and restricted cash							$	184,000		$	102,102

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

As used herein, the terms "PRA Group," ~~"the Company,~~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 ~~Europe.~~Australia. The Company's primary business is the purchase, collection, and management of portfolios of nonperforming loans. The Company also provides fee-based services on class action claims recoveries and by servicing consumer bankruptcy accounts in the United States ("U.S.").

On March 11, 2020, due to the global outbreak of the novel coronavirus ("COVID-19"), the World Health Organization declared a global pandemic. Since the initial outbreak was reported, all U.S. states have declared states of emergency and COVID-19 has spread to all countries in which the Company operates. As a result, the Company implemented business continuity plans including remote work practices where possible and have leveraged existing space to follow social distancing recommendations. To date, the pandemic has not prevented the Company's ability to operate the business and the Company has continued to take steps necessary to minimize impact or disruption to the Company's global operations.

The 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.

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 ~~one~~1 reportable segment, accounts receivable management. This conclusion is based on similarities among the operating units, including economic characteristics, the nature of the products and services, the nature of the production processes, the types or class of customer for their products and services, the methods used to distribute their products and services and the nature of the regulatory environment.

The following table shows the amount of revenue generated for the three months ended March 31, ~~2019~~2020 and ~~2018, respectively,~~2019, and long-lived assets held at March 31, ~~2019~~2020 and ~~2018, respectively,~~2019, both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands):


	As of and for the				As of and for the				As of and for the				As of and for the
	Three Months Ended March 31, 2019				Three Months Ended March 31, 2018				Three Months Ended March 31, 2020				Three Months Ended March 31, 2019
	Revenues		Long-Lived Assets		Revenues		Long-Lived Assets		Revenues		Long-Lived Assets		Revenues		Long-Lived Assets
United States	$	167,576	$	110,643	$	153,402	$	46,439	$	153,335	$	115,053	$	167,576	$	110,643
United Kingdom	29,756		3,993		24,726		2,225		36,340		3,076		29,756		3,993
Other ⁽¹⁾	48,545		10,377		45,980		5,124		62,109		8,408		48,545		10,377
Total	$	245,877	$	125,013	$	224,108	$	53,788	$	251,784	$	126,537	$	245,877	$	125,013

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

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

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

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

Credit quality information: The Company acquires portfolios of accounts that have experienced deterioration of credit quality between origination and the Company's acquisition of the accounts. The amount paid for a portfolio reflects the Company's determination that it is probable the Company will be unable to collect all amounts due according to an account's contractual terms.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The Company accounts for the portfolios in accordance with the guidance for purchased credit deteriorated ("PCD") assets. The initial allowance for credit losses is added to the purchase price rather than recorded as a credit loss expense. The Company has established a policy to writeoff the amortized cost of individual assets when it deems probable that it will not collect on an individual asset. Due to the deteriorated credit quality of the individual accounts, the Company may writeoff the unpaid principal balance of all accounts in a portfolio at the time of acquisition. However, when the Company has an expectation of collecting cash flows at the portfolio level, a negative allowance is established for expected recoveries at an amount not to exceed the amount paid for the financial portfolios.

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

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

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

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

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

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

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

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

Basis of presentation: The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and ~~notes~~Notes to the ~~consolidated financial statements~~Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's ~~consolidated balance sheet~~Consolidated Balance Sheets as of March 31, ~~2019,~~2020, its ~~consolidated income statements~~Consolidated Income Statements, and ~~statements~~Statements of ~~comprehensive income/(loss)~~Comprehensive Income/(Loss) for the three months ended March 31, 2020 and 2019, and ~~2018,~~ its ~~consolidated statement~~Statements of ~~changes~~Changes in ~~equity~~Equity and Consolidated Statements of Cash Flows for the three months ended March 31, ~~2019~~2020 and ~~2018, and its consolidated statements of cash flows for the three months ended March 31,~~ 2019, ~~and 2018,~~ have been included. The ~~consolidated income statements~~Consolidated Income Statements of the Company for the three months ended March 31, ~~2019~~2020 may not be indicative of future results.

Certain prior year period amounts have been reclassified for consistency with the current period presentation. The Company revised the presentation of its consolidated income statements for the prior year period by reclassifying allowance adjustments to the valuation of its finance receivables as a line item separate from revenues. The Company also revised the presentation in its consolidated statement of cash flows for the prior year period by reclassifying allowance charges on its finance receivables from investing activities to operating activities.These presentation changes had no other impacts on the Company's consolidated financial statements.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 (the ~~"2018~~"2019 Form 10-K").

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

The Company adopted ASC Topic 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 writeoff 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 Topic 310-30, were aggregated into annual pools based on similar risk characteristics and an effective interest rate was established based on the estimated remaining cash flows of the annual pool. The immediate writeoff and subsequent recognition of expected recoveries had no impact on the Company’s Consolidated Income Statements or the Consolidated Balance Sheets at the date of adoption. The Company develops its estimate of expected 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 expected recoveries.

PRA Group, Inc.

Notes to Consolidated Financial Statements

2.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 Topic 326 (refer to Note 2)

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



Amortized cost	$	—
Negative allowance for expected recoveries⁽¹⁾	3,408,074
Balance at end of period	$	3,408,074

(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 three months ended March 31, 2020 were as follows (amounts in thousands):



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

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

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



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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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



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

(2) Recoveries applied to negative allowance

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



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

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

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

(3) Changes in expected recoveries

Changes in expected recoveries consists of the following for the three months ended March 31, 2020 (amounts in thousands):



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

In order to evaluate the impact of the COVID-19 pandemic on expectations 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 government stimulus packages and the reduced economic activity required by stay at home orders. The Company also considered current collection activity in its determination to adjust the timing of near term ERC for certain pools. Based on these considerations, the Company’s estimates incorporate changes in the timing of expected cash collections over the next 6 to 12 months. Changes in expected recoveries were a net write down of $12.8 million. This reflects a $20.6 million net, negative adjustment to the expected future recoveries primarily related to an expected delay in cash collections from the impact of COVID-19, partially offset by $7.8 million in recoveries in excess of expectations in the current quarter. Changes in the Company’s assumptions regarding the duration and impact of COVID-19 to cash collections could change significantly as conditions evolve.

Finance Receivables, net prior to adoption of ASC Topic 326

The following information reflect finance receivables, net as previously disclosed in the Company's Quarterly Report on Form 10-Q for the three months ended March 31, 2019 which was under previous revenue recognition accounting standard ASC Topic 310-30.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Changes in finance receivables, net for the three months ended March 31, 2019 ~~and 2018~~ were as follows (amounts in thousands):



	Three Months Ended March 31, 2019
Balance at beginning of period	$	3,084,777
Acquisitions of finance receivables ⁽¹⁾	313,446
Foreign currency translation adjustment	7,436
Cash collections	(461,171		)
Income recognized on finance receivables	238,836
Net allowance charges	(6,095		)
Balance at end of period	$	3,177,229

Three Months Ended March 31,
2019 2018
Balance at beginning of period $ 3,084,777
$ 2,776,199
Acquisitions of finance receivables ⁽¹⁾
313,446
165,020
Foreign currency translation adjustment 7,436
39,070
Cash collections (461,171 ) (426,580 )
Income recognized on finance receivables 238,836
�� 218,624
Net allowance charges (6,095 ) (925 )
Balance at end of period $ 3,177,229
$ 2,771,408

(1)

~~Acquisitions of finance receivables are~~Includes portfolio purchases ~~that are net of~~adjusted for buybacks and ~~include certain capitalized~~ acquisition related ~~costs. They also include the finance receivable~~costs, and portfolios ~~that are acquired in connection with certain business acquisitions. The buybacks and capitalized acquisition costs are netted against~~from the acquisition of ~~finance receivables when paid and may relate to portfolios purchased~~a business in ~~prior periods.~~Canada made during the first quarter of 2019.

During the three months ended March 31, 2019, the Company acquired finance ~~receivables~~receivable portfolios with a face value of $4.7 billion for $318.8 million. ~~During the three months ended March 31, 2018, the Company acquired finance receivables portfolios with a face value of $1.5 billion for $168.3 million.~~ At March 31, 2019, the ~~estimated remaining collections ("ERC")~~ERC on the receivables acquired during the three months ended March 31, 2019 ~~and 2018~~ were $541.1 ~~million and $232.9 million, respectively.~~million.

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



2020	$	850,955
2021	718,010
2023	562,256
2024	426,004
2025	258,793
2026	137,843
2027	77,642
2028	47,138
2029	38,084
2030	28,474
Thereafter	32,030
Total ERC expected to be applied to principal	$	3,177,229

2020 $ 850,955
2021 718,010
2022 562,256
2023 426,004
2024 258,793
2025 137,843
2026 77,642
2027 47,138
2028 38,084
2029 28,474
Thereafter 32,030
Total ERC expected to be applied to principal $ 3,177,229

At March 31, 2019, the Company had aggregate net finance receivables balances in pools accounted for under the cost recovery method of $43.5 ~~million; at December 31, 2018, the amount was $48.0~~ million.

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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



	Three Months Ended March 31, 2019
Balance at beginning of period	$	3,058,445
Income recognized on finance receivables	(238,836		)
Net allowance charges	6,095
Additions from portfolio acquisitions	235,814
Reclassifications from nonaccretable difference	19,161
Foreign currency translation adjustment	(511		)
Balance at end of period	$	3,080,168

PRA Group, Inc.

Notes to Consolidated Financial Statements

Three Months Ended March 31,
2019 2018
Balance at beginning of period $ 3,058,445
$ 2,927,866
Income recognized on finance receivables (238,836 ) (218,624 )
Net allowance charges 6,095
925
Additions from portfolio purchases ⁽¹⁾
235,814
146,832
Reclassifications from nonaccretable difference 19,161
112,028
Foreign currency translation adjustment (511 ) 37,241
Balance at end of period $ 3,080,168
$ 3,006,268

~~(1) Also includes accretable yield additions resulting from certain business acquisitions.~~

The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired ~~nonperforming loans,~~finance receivables, for the three months ended March 31, 2019 ~~and 2018~~ (amounts in thousands):



	Three Months Ended March 31, 2019
Beginning balance	$	257,148
Allowance charges	7,977
Reversal of previously recorded allowance charges	(1,882		)
Net allowance charges	6,095
Foreign currency translation adjustment	81
Ending balance	$	263,324

Three Months Ended March 31,
2019 2018
Beginning balance $ 257,148
$ 225,555
Allowance charges 7,977
6,833
Reversal of previously recorded allowance charges (1,882 ) (5,908 )
Net allowance charges 6,095
925
Foreign currency translation adjustment 81
495
Ending balance $ 263,324
$ 226,975

3.4. Investments:

Investments consisted of the following at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (amounts in thousands):



	March 31, 2020		December 31, 2019
Debt securities
Available-for-sale	$	4,347	$	5,052
Equity securities
Private equity funds	7,141		7,218
Mutual funds	33,353		33,677
Equity method investments	7,870		10,229
Total investments	$	52,711	$	56,176

March 31, 2019 December 31, 2018
Debt securities
Available-for-sale $ 5,088
$ 5,077
Equity securities
Private equity funds 7,498
7,973
Mutual funds 62,192
21,753
Equity method investments 10,304
10,370
Total investments $ 85,082
$ 45,173

Debt Securities

Available-for-sale

Government ~~bonds~~:bonds: The Company's investments in government bonds are classified as available-for-sale and are stated at fair value. ~~Fair value is determined using quoted market prices. Unrealized gains and losses are included in comprehensive income and reported in equity.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The amortized cost and estimated fair value of investments in debt securities at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 were as follows (amounts in thousands):



	March 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale
Government bonds	$	4,219	$	128	$	—	$	4,347

	December 31, 2019
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale
Government bonds	$	5,095	$	—	$	43	$	5,052

March 31, 2019
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value
Available-for-sale
Government bonds $ 5,126
$ —
$ 38
$ 5,088

December 31, 2018
Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Aggregate Fair Value
Available-for-sale
Government bonds $ 5,160
$ —
$ 83
$ 5,077

Equity Securities

Investments in private equity funds: Investments in private equity funds represent limited partnerships in which the Company has less than a 3%1% interest. In the first quarter of 2018, the Company adopted ASU 2016-01, "Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"), which requires that investments in equity securities be measured at fair value with changes in unrealized gains and losses reported in earnings. Upon adoption of ASU 2016-01, the investments are carried at the fair value reported by the Fund manager. The Company recorded a cumulative effect adjustment of $3.9 million, net of tax, to beginning retained earnings for the unrealized loss on the investments. Prior to 2018, the investments were 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.

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

Unrealized gains and losses: Net unrealized gains on the Company's equity securities were ~~$2.1~~$7.6 million and ~~$0.4~~$2.1 million for the three months ended March 31, 2020 and 2019, ~~and 2018, respectively, on its equity securities.~~respectively.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Equity Method Investments

~~Effective December 20, 2018, the~~The Company has aan 11.7% interest in RCB Investimentos S.A. ("RCB"), a servicing platform for nonperforming loans in Brazil. This investment is accounted for on the equity method because the Company exercises significant influence over RCB’s operating and financial activities. Accordingly, the Company’s investment in RCB is adjusted for the Company’s proportionate share of RCB’s earnings or losses.

4.5. Goodwill and Intangible Assets, net:

In connection with the Company's business acquisitions, the Company acquired certain tangible and intangible assets. Intangible assets resulting from these acquisitions include client and customer relationships, non-compete agreements, trademarks and technology. The Company performs aan annual review of goodwill as of October 1 of each year or more frequently if indicators of impairment exist.

~~PRA Group, Inc.~~

~~Notes~~ The Company performed its most recent annual review as of October 1, 2019 and concluded that no goodwill impairment was necessary. The Company performed its quarterly assessment by evaluating whether a triggering event had occurred as of March 31, 2020 considering current market conditions resulting from the global COVID-19 pandemic. The Company concluded that no triggering event had occurred at March 31, 2020 and will continue to ~~Consolidated Financial Statements~~

monitor the market for any adverse conditions resulting from the COVID-19 pandemic.

The following table represents the changes in goodwill for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands):



	Three Months Ended March 31,
	2020			2019
Goodwill:
Balance at beginning of period	$	480,794		$	464,116
Changes:
Acquisition ⁽¹⁾	—			13,653
Foreign currency translation adjustment	(62,229		)	2,749
Net change in goodwill	(62,229		)	16,402

Balance at end of period	$	418,565		$	480,518

Three Months Ended March 31,
2019 2018
Balance at beginning of period:
Goodwill $ 464,116
$ 526,513
Accumulated impairment loss —
—
464,116
526,513
Changes:
Acquisition ⁽¹⁾
13,653
—
Foreign currency translation adjustment 2,749
17,780
Net change in goodwill 16,402
17,780

Goodwill 480,518
544,293
Accumulated impairment loss —
—
Balance at end of period $ 480,518
$ 544,293

(1) The $13.7 million addition to goodwill during the three months ended March 31, 2019, is ~~the result of~~related to the acquisition of a business in Canada.

5.6. Leases:

In February 2016, FASB issued ASU 2016-02, "Leases (Topic 842) Section A - Leases: Amendments to the FASB Account Standards Codification" ("ASU 2016-02"). ASU 2016-02 requires that a lessee should recognize a liability to make 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 ASU 2016-02 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 transition package of practical expedients permitted within the new standard, which among other things, allows it to carryforward 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 1 year to 20 years, some of which include options to extend the leases for 5 years, and others include options to terminate the leases within 1 year. ~~The exercise~~Exercises of lease renewal options isare 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.~~

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



	Three months ended March 31,
	2020		2019
Operating lease expense	$	3,063	$	2,863
Short-term lease expense	693		842
Total lease expense	$	3,756	$	3,705

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

Three Months Ended March 31, 2019
Operating lease cost $ 2,863
Short-term lease cost 842
Total lease cost $ 3,705



	Three months ended March 31,
	2020		2019
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,991	$	2,780

ROU assets obtained in exchange for operating lease obligations	531		76,175

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

~~Supplemental cash flow information related to leases for the three months ended March 31, 2019 were as follows (amounts in thousands):~~

Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases $ 2,780

Right-of-use assets obtained in exchange for lease obligations:
Operating leases 76,175

Lease term and discount rate information related to operating leases were as follows as of the dates ~~indicated (amounts in thousands):~~indicated:



	Three months ended March 31,
	2020		2019
Weighted-average remaining lease term (years)	10.6		11.0

Weighted-average discount rate	4.89	%	4.95	%



	~~March 31, 2019~~
~~Weighted-average remaining lease term (years)~~
~~Operating leases~~	11
~~Weighted-average discount rate~~
~~Operating leases~~	~~4.95~~	%

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



	Operating Leases
For the nine months ending December 31, 2020	$	8,747
For the year ending December 31, 2021	11,250
For the year ending December 31, 2022	9,281
For the year ending December 31, 2023	7,148
For the year ending December 31, 2024	6,387
Thereafter	49,434
Total lease payments	$	92,247
Less imputed interest	21,145
Total	$	71,102

Operating Leases
For the Nine Months Ended December 31, 2019 $ 8,415
For the Year Ended December 31, 2020 11,183
For the Year Ended December 31, 2021 10,660
For the Year Ended December 31, 2022 8,797
For the Year Ended December 31, 2023 6,667
Thereafter 52,275
Total lease payments 97,997
Less imputed interest (23,689 )
Total $ 74,308

As previously disclosed in the 2018 Form 10-K and under the previous lease accounting standard (which excludes the impact of the Company's intent to exercise renewal options as required by ASU 2016-02), future minimum lease payments for operating leases at December 31, 2018, are as follows for the years ending December 31, (amounts in thousands):

2019 $ 11,470
2020 11,451
2021 10,809
2022 7,287
2023 6,189
Thereafter 7,866
Total future minimum lease payments $ 55,072

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

6.7. Borrowings:

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



	March 31, 2020			December 31, 2019
Americas revolving credit	$	749,211		$	772,037
Europe revolving credit	1,058,348			1,017,465
Term loans	422,500			425,000
Convertible senior notes	632,500			632,500
	2,862,559			2,847,002
Less: Debt discount and issuance costs	(34,557		)	(38,577		)
Total	$	2,828,002		$	2,808,425

March 31, 2019 December 31, 2018
Revolving credit $ 1,571,749
$ 1,160,161
Term loans 432,500
740,551
Convertible senior notes 632,500
632,500
2,636,749
2,533,212
Less: Debt discount and issuance costs (50,340 ) (59,556 )
Total $ 2,586,409
$ 2,473,656

The following principal payments are due on the Company's borrowings as of March 31, ~~2019~~2020 for the 12-month periods ending March 31, (amounts in thousands):



2021	$	298,395
2022	10,895
2023	2,208,269
2024	345,000
Total	$	2,862,559

2020 $ 10,000
2021 1,203,005
2022 10,000
2023 1,068,744
2024 345,000
Thereafter —
Total $ 2,636,749

The Company ~~believes~~determined that it was in compliance with the covenants of its financing arrangements as of March 31, ~~2019.~~2020.

PRA Group, Inc.

Notes to Consolidated Financial Statements

North American Revolving Credit and Term Loan

On May 5, 2017, the Company amended and restated its existing credit agreement (as amended, and modified from time to time, the “North American Credit Agreement”) with Bank of America, N.A., as administrative agent, Bank of America, National Association, acting through its Canada branch, as the Canadian administrative agent, and a syndicate of lenders named therein. The total credit facility under the North American Credit Agreement includes an aggregate principal amount of ~~$1.6 billion~~$1,540.5 million (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded ~~$432.5~~$422.5 million term loan, (ii) a $1,068.0 million domestic revolving credit facility, and (iii) a $50.0 million Canadian revolving credit facility. The facility includes an accordion feature for up to $500.0 million in additional commitments (at the option of the lender) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan sublimit that would reduce amounts available for borrowing. The term and revolving loans accrue interest, at the option of the Company, at either the base rate or the Eurodollar rate (as defined in the North American Credit Agreement) for the applicable term plus 2.50% per annum in the case of the Eurodollar rate loans and 1.50% in the case of the base rate loans. The base rate is the highest of (a) the Federal Funds Rate (as defined in the North American Credit Agreement) plus 0.50%, (b) Bank of America's prime rate, or (c) the one-month Eurodollar rate plus 1.00%. Canadian Prime Rate Loans ~~will~~ bear interest at a rate per annum equal to the Canadian Prime Rate plus 1.50%. The revolving credit facilities also bear an unused line fee of 0.375% per annum, payable quarterly in arrears. The loans under the North American Credit Agreement mature May 5, 2022. As of March 31, ~~2019,~~2020, the unused portion of the North American Credit Agreement was ~~$451.8~~$371.2 million. Considering borrowing base restrictions, as of March 31, ~~2019,~~2020, the amount available to be drawn was ~~$263.8~~$175.7 million.

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

borrowings under each of the domestic revolving loan facility and the Canadian revolving loan facility are subject to separate borrowing base calculations and may not exceed 35% of the ERC of all domestic or Canadian, as applicable, core eligible asset pools, plus 55% of ERC of domestic or Canadian, as applicable, insolvency eligible asset pools, plus 75% of domestic or Canadian, as applicable, eligible accounts receivable;

the consolidated total leverage ratio cannot exceed 2.75 to 1.0 as of the end of any fiscal quarter;

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

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

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

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

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

restrictions on changes in control.

European Revolving Credit Facility and Term Loan

On October 23, 2014, European subsidiaries of the Company ("PRA Europe") entered into a credit agreement with DNB Bank ASA for a Multicurrency Revolving Credit Facility (such agreement as later amended or modified, the "European Credit Agreement"). In the first quarter of ~~2019,~~2020, the Company entered into the ~~Fifth~~Sixth Amendment and Restatement Agreement to its European Credit Agreement which, among other things, ~~merged~~increased the ~~term loan facility with~~total commitments by $200 million, extended the ~~revolving credit facility and increased all applicable margins for~~majority of the ~~interest payable under the multicurrency revolving credit~~ facility by ~~5 basis points.~~2 years and includes an accordion feature of no less than $50.0 million not to exceed $500.0 million, to allow for future increases.

Under the terms of the European Credit Agreement, the credit facility includes an aggregate amount of ~~approximately $1.1 billion~~$1,300.0 million (subject to the borrowing base), accrues interest at the Interbank Offered Rate ("IBOR") plus 2.70% - 3.80% (as determined by the ~~loan-to-value~~estimated remaining collections ratio ("~~LTV~~ERC Ratio") as defined in the European Credit Agreement), bears an unused line fee, currently ~~1.21%~~1.23% per annum, of 35% of the margin, is payable monthly in arrears, and matures February 19, ~~2021.~~2023. The European Credit Agreement also includes an overdraft facility in the aggregate amount of $40.0 million (subject to the borrowing base), which accrues interest (per currency) at the daily rates as published by the facility agent, bears a facility line fee of 0.125% per quarter, payable quarterly in arrears, and matures February 19, ~~2021.~~2023. As of March 31, ~~2019,~~2020, the outstanding balance under the European Credit Agreement was $1,058.3 million and the unused portion of the European Credit Agreement (including the overdraft facility) was ~~$234.5~~$281.7 million. Considering borrowing base restrictions and other covenants, as of March 31, ~~2019,~~2020, the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was ~~$125.0~~$56.4 million.

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

the ~~LTV~~ERC Ratio cannot exceed ~~75%~~45%;

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

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

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

Colombian Revolving Credit Facility

PRA Group Colombia Holding SAS, a subsidiary of the Company in Colombia, has a credit agreement that provides for borrowings in an aggregate amount of approximately $4.9 million. As of March 31, 2020, the outstanding balance under the credit agreement was $2.4 million, with a weighted average interest rate of 7.13%. The outstanding balance accrues interest at the Indicador Bancario de Referencia rate ("IBR") plus a weighted average spread of 2.74%, is payable quarterly in arrears, amortizes quarterly, and matures on October 17, 2022 (per the credit agreement, maturity represents three years from the last draw). This credit facility is fully collateralized using time deposits with the lender that are subject to certain limitations regarding withdrawal and usage and are included within other assets on the Company's Consolidated Balance Sheets. As of March 31, 2020, the unused portion of the Colombia Credit Agreement was $2.5 million.

Convertible Senior Notes due 2020

On August 13, 2013, the Company completed the private offering of $287.5 million in aggregate principal amount of its 3.00% Convertible Senior Notes due August 1, 2020 (the "2020 Notes"). The 2020 Notes were issued pursuant to an Indenture, dated August 13, 2013 (the "2013 Indenture"), between the Company and Regions Bank, as successor trustee. The 2013 Indenture contains customary terms and covenants, including certain events of default after which the 2020 Notes may be due and payable immediately. The 2020 Notes are senior unsecured obligations of the Company. Interest on the 2020 Notes is payable semi-annually, in arrears, on February 1 and August 1 of each ~~year, beginning on February 1, 2014.~~year. Prior to February 1, 2020, the 2020 Notes ~~will be~~were convertible only upon the occurrence of specified events. ~~On or after February 1,~~As of March 31, 2020 the 2020 Notes ~~will be~~are convertible at any time. The Company does not have the right to redeem the 2020 Notes prior to maturity. As of March 31, 2019, the Company does not believe that any of the conditions allowing holders of the 2020 Notes to convert their notes have occurred.

The conversion rate for the 2020 Notes is initially 15.2172 shares per $1,000 principal amount of 2020 Notes, which is equivalent to an initial conversion price of approximately $65.72 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2013 Indenture. Upon conversion, holders of the 2020 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's intent is to settle conversions through combination settlement (i.e., the 2020 Notes would be convertedinto cash up to the aggregate principal amount, and shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, for the remainder). As a result and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the 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.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The Company determined that the fair value of the 2020 Notes at the date of issuance was approximately $255.3 million, and designated the residual value of approximately $32.2 million as the equity component. Additionally, the Company allocated approximately $7.3 million of the $8.2 million 2020 Notes issuance cost as debt issuance cost and the remaining $0.9 million as equity issuance cost.

Convertible Senior Notes due 2023

On May 26, 2017, the Company completed the private offering of $345.0 million in aggregate principal amount of its 3.50% Convertible Senior Notes due June 1, 2023 (the "2023 Notes" and, together with the 2020 Notes, the "Notes"). The 2023 Notes were issued pursuant to an Indenture, dated May 26, 2017 (the "2017 Indenture"), between the Company and Regions Bank, as trustee. The 2017 Indenture contains customary terms and covenants, including certain events of default after which the 2023 Notes may be due and payable immediately. The 2023 Notes are senior unsecured obligations of the Company. Interest on the 2023 Notes is payable semi-annually, in arrears, on June 1 and December 1 of each ~~year, beginning on December 1, 2017.~~year. Prior to March 1, 2023, the 2023 Notes will be convertible only upon the occurrence of specified events. On or after March 1, 2023, the 2023 Notes will be convertible at any time. The Company has the right, at its election, to redeem all or any part of the outstanding 2023 Notes at any time on or after June 1, 2021 for cash, but only if the last reported sale price (as defined in the 2017 Indenture) exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on and including the trading day immediately before the date the Company sends the related redemption notice. As of March 31, ~~2019,~~2020, the Company does not believe that any of the conditions allowing holders of the 2023 Notes to convert their notes have occurred.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The conversion rate for the 2023 Notes is initially 21.6275 shares per $1,000 principal amount of 2023 Notes, which is equivalent to an initial conversion price of approximately $46.24 per share of the Company's common stock, and is subject to adjustment in certain circumstances pursuant to the 2017 Indenture. Upon conversion, holders of the 2023 Notes will receive cash, shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election. The Company's intent is to settle conversions through combination settlement (i.e., the 2023 Notes would be convertedinto cash up to the aggregate principal amount, and shares of the Company's common stock or a combination of cash and shares of the Company's common stock, at the Company's election, for the remainder). As a result and in accordance with authoritative guidance related to derivatives and hedging and earnings per share, only the conversion spread is included in the diluted earnings per share calculation, if dilutive. Under such method, the settlement of the conversion spread has a dilutive effect when the average share price of the Company's common stock during any quarter exceeds $46.24.

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

The balances of the liability and equity components of the Notes outstanding were as follows as of the dates indicated (amounts in thousands):



	March 31, 2020			December 31, 2019
Liability component - principal amount	$	632,500		$	632,500
Unamortized debt discount	(28,197		)	(31,414		)
Liability component - net carrying amount	$	604,303		$	601,086
Equity component	$	76,216		$	76,216

March 31, 2019 December 31, 2018
Liability component - principal amount $ 632,500
$ 632,500
Unamortized debt discount (40,769 ) (43,812 )
Liability component - net carrying amount $ 591,731
$ 588,688
Equity component $ 76,216
$ 76,216

The debt discount is being amortized into interest expense over the remaining life of the 2020 Notes and the 2023 Notes using the effective interest rate, which is 4.92% and 6.20%, respectively.

Interest expense related to the Notes was as follows for the periods indicated (amounts in thousands):



	Three Months Ended March 31,
	2020		2019
Interest expense - stated coupon rate	$	5,175	$	5,175
Interest expense - amortization of debt discount	3,217		3,042
Total interest expense - convertible senior notes	$	8,392	$	8,217

Three Months Ended March 31,
2019 2018
Interest expense - stated coupon rate $ 5,175
$ 5,175
Interest expense - amortization of debt discount 3,042
2,877
Total interest expense - convertible senior notes $ 8,217

$ 8,052

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

7.8. Derivatives:

The Company periodically enters into derivative financial instruments, typically interest rate swap agreements, interest rate caps, and foreign currency contracts to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. The Company does not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor does it enter into or hold derivatives for trading or speculative purposes. The Company periodically reviews the creditworthiness of the ~~swap~~ counterparty to assess the counterparty’s ability to honor its obligation. Counterparty default would expose the Company to fluctuations in interest and currency rates. Derivative financial instruments are recognized at fair value in the ~~consolidated balance sheets,~~Consolidated Balance Sheets, in accordance with the guidance of ASC Topic 815 “Derivatives and Hedging” (“ASC 815”).

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table summarizes the fair value of derivative instruments in the ~~consolidated balance sheets~~Company's Consolidated Balance Sheets (amounts in thousands):

March 31, 2020

December 31, 2019

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

—

Other assets

323

Interest rate contracts

Other liabilities

43,674

Other liabilities

17,807

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

18,126

Other assets

552

Foreign currency contracts

Other liabilities

15,614

Other liabilities

5,856

March 31, 2019 December 31, 2018
Balance Sheet Location Fair Value Balance Sheet Location Fair Value
Derivatives designated as hedging instruments:
Interest rate contracts Other liabilities $ 7,390
Other assets $ 44
Derivatives not designated as hedging instruments:
Foreign currency contracts Other assets 950
Other assets 2,555
Foreign currency contracts Other liabilities 748
Other liabilities —
Interest rate contracts Other assets 791
Other assets 735
Interest rate contracts Other liabilities 415
Other liabilities —

Derivatives ~~designated~~Designated as ~~hedging instruments:~~Hedging Instruments:

Changes in fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the notional amount of interest rate contracts designated as cash flow hedging instruments was ~~$661.9~~$922.2 million and ~~$260.8~~$959.0 million, respectively. Derivatives designated as cash flow hedging instruments were evaluated and remain highly effective at March 31, ~~2019.~~2020 and have initial terms of two to seven years. The Company estimates that approximately ~~$1.2~~$8.4 million of net derivative ~~gain (loss)~~loss included in OCI will be reclassified into earnings within the next 12 months.

The following table summarizes the effects of derivatives designated as cash flow hedging instruments on the consolidated financial statements for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands):



	Gain or (loss) recognized in OCI, net of tax							Gain or (loss) reclassified from OCI into income
	Three Months Ended March 31,								Three Months Ended March 31,
Derivatives designated as cash flow hedging instruments	2020			2019			Location of gain or (loss) reclassified from OCI into income		2020			2019
Interest rate contracts	$	(21,350	)	$	(5,795	)	Interest expense, net		$	(1,012	)	$	(80	)

Gain or (loss) recognized in OCI, net of tax Gain or (loss) reclassified from OCI into income
Three Months Ended March 31, Three Months Ended March 31,
Derivatives designated as cash flow hedging instruments 2019 2018 Location of gain or (loss) reclassified from OCI into income 2019 2018
Interest rate contracts $ (5,795 ) $ —
Interest expense, net $ (80 ) $ —

Derivatives ~~not designated~~Not Designated as ~~hedging instruments:~~Hedging Instruments:

Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. ~~As of March 31, 2019 and December 31, 2018, the notional amount of interest rate contracts not designated as hedging instruments was $172.3 million and $169.7 million, respectively.~~ The Company also enters into foreign currency contracts to economically hedge the foreign currency re-measurement exposure related to certain balances that are denominated in currencies other than the functional currency of the entity. As of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, the notional amount of foreign currency contracts that are not designated as hedging instruments was ~~$359.0~~$747.8 million and ~~$144.7~~$469.9 million, respectively.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s ~~consolidated income statements~~Consolidated Income Statements for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands):



		Amount of gain or (loss) recognized in income
		Three Months Ended March 31,
Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	2020			2019
Foreign currency contracts	Foreign exchange gain	$	26,786		$	(5,256	)
Foreign currency contracts	Interest expense, net	(1,001		)	—
Interest rate contracts	Interest expense, net	1,038			(349		)

Amount of gain or (loss) recognized in income
Three Months Ended March 31,
Derivatives not designated as hedging instruments Location of gain or (loss) recognized in income 2019 2018
Foreign currency contracts Foreign exchange gain/(loss) $ (5,256 ) $ —
Interest rate contracts Interest expense, net (349 ) $ 3,673

8.9. Fair Value:

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Those levels of input are summarized as follows:

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

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

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

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

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

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

The carrying amounts ~~of the financial instruments~~ in the ~~following~~ table are recorded in the ~~consolidated balance sheets~~Consolidated Balance Sheets at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (amounts in thousands):



	March 31, 2020				December 31, 2019
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	179,995	$	179,995	$	119,774	$	119,774
Finance receivables, net	3,408,074		3,503,737		3,514,165		3,645,610
Financial liabilities:
Interest-bearing deposits	97,465		97,465		106,246		106,246
Revolving lines of credit	1,807,559		1,807,559		1,789,502		1,789,502
Term loans	422,500		422,500		425,000		425,000
Convertible senior notes	604,303		589,742		601,086		648,968

March 31, 2019
December 31, 2018
Carrying
Amount Estimated
Fair Value Carrying
Amount Estimated
Fair Value
Financial assets:
Cash and cash equivalents $ 102,102
$ 102,102
$ 98,695
$ 98,695
Finance receivables, net 3,177,229
3,464,135
3,084,777
3,410,475
Financial liabilities:
Interest-bearing deposits 95,314
95,314
82,666
82,666
Revolving lines of credit 1,571,749
1,571,749
1,160,161
1,160,161
Term loans 432,500
432,500
740,551
740,551
Convertible senior notes 591,731
588,503
588,688
557,122

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

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

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

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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

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

Financial Instruments Required ~~to be~~To Be Carried atAt Fair Value

The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying ~~consolidated balance sheets~~Consolidated Balance Sheets at March 31, ~~2019~~2020 and December 31, ~~2018~~2019 (amounts in thousands):



	Fair Value Measurements as of March 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale investments
Government bonds	$	4,347	$	—	$	—	$	4,347
Fair value through net income
Mutual funds	33,353		—		—		33,353
Derivative contracts (recorded in other assets)	—		18,126		—		18,126
Liabilities:
Derivative contracts (recorded in other liabilities)	—		59,288		—		59,288
	Fair Value Measurements as of December 31, 2019
	Level 1		Level 2		Level 3		Total
Assets:
Available-for-sale investments
Government bonds	$	5,052	$	—	$	—	$	5,052
Fair value through net income
Mutual funds	33,677		—		—		33,677
Derivative contracts (recorded in other assets)	—		875		—		875
Liabilities:
Derivative contracts (recorded in other liabilities)	—		23,663		—		23,663

Fair Value Measurements as of March 31, 2019
Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale investments
Government bonds $ 5,088
$ —
$ —
$ 5,088
Fair value through net income
Mutual funds 62,192
—
—
62,192
Derivative contracts (recorded in other assets) —
1,741
—
1,741
Liabilities:
Derivative contracts (recorded in other liabilities) —
8,553
—
8,553
Fair Value Measurements as of December 31, 2018
Level 1 Level 2 Level 3 Total
Assets:
Available-for-sale investments
Government bonds $ 5,077
$ —
$ —
$ 5,077
Fair value through net income
Mutual funds 21,753
—
—
21,753
Derivative contracts (recorded in other assets) —
3,334
—
3,334

Available-for-sale investments

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Fair value through net income investments

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

Derivative contracts: The estimated fair value of the derivative contracts is determined using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Effective in the second quarter of 2018, the Company began to apply hedge accounting to certain of its derivative contracts. By applying hedge accounting, changes in market value are reflected as adjustments in Other Comprehensive Income. The hedges were evaluated and remain highly effective at March 31, 2019 and have initial terms of 2 to 7 years.

Investments measured using net asset value

Private equity funds: This class of investments consists of private equity funds that invest primarily in loans and securities including single-family residential debt; corporate debt products; and financially-oriented, real-estate-rich and other operating companies in the Americas, Western Europe, and Japan. These investments are subject to certain restrictions regarding transfers and withdrawals. The investments cannot be redeemed with the funds. Instead, the nature of the investments in this class is that

PRA Group, Inc.

Notes to Consolidated Financial Statements

distributions are received through the liquidation of the underlying assets of the fund. The investments are expected to be returned through distributions as a result of liquidations of the funds' underlying assets over 1one to 6five years. The fair value of these private equity funds following the application of the Net Asset Value ("NAV") practical expedient was ~~$7.5~~$7.1 million and ~~$8.0~~$7.2 million as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

9.10. Accumulated Other Comprehensive Loss:

The following table provides details about the reclassifications out of accumulated other comprehensive loss for the three months ended March 31, 2020 and 2019 (amounts in thousands):



	Three Months Ended March 31,
Gains and losses on cash flow hedges	2020			2019			Affected line in the consolidated income statement
Interest rate swaps	$	(1,012	)	$	(80	)	Interest expense, net
Income tax effect of item above	230			—			Income tax expense
Total losses on cash flow hedges	$	(782	)	$	(80	)	Net of tax

The following table represents the changes in accumulated other comprehensive loss by component, ~~net of~~after tax, for the three months ended March 31, 2020 and 2019 (amounts in thousands):

Debt Securities Currency Translation Accumulated Other
Available-for-sale Cash Flow Hedges Adjustments
Comprehensive Loss ⁽¹⁾
Balance at January 1, 2019 $ (83 ) $ 44
$ (242,070 ) $ (242,109 )
Other comprehensive (loss)/income before reclassifications, net ⁽¹⁾
45
(5,795 ) (742 ) (6,492 )
Amounts reclassified from other comprehensive loss:

Reclassifications —
80
—
80
Tax effect —
—
—
—
Amounts reclassified from other comprehensive loss, net —
80
—
80
Net current period other comprehensive (loss)/income 45
(5,715 ) (742 ) (6,412 )
Balance at March 31, 2019 $ (38 ) $ (5,671 ) $ (242,812 ) $ (248,521 )



	Three Months Ended March 31, 2020
	Debt Securities			Cash Flow			Currency Translation			Accumulated Other
	Available-for-sale			Hedges			Adjustments			Comprehensive Loss ⁽¹⁾
Ending balance at December 31, 2019	$	(44	)	$	(13,088	)	(247,886		)	$	(261,018	)
Other comprehensive loss before reclassifications	170			(21,350		)	(94,201		)	(115,381		)
Reclassifications, net	—			782			—			782
Net current period other comprehensive loss	170			(20,568		)	(94,201		)	(114,599		)
Ending balance at March 31, 2020	$	126		(33,656		)	$	(342,087	)	$	(375,617	)

	Three Months Ended March 31, 2019
	Debt Securities			Cash Flow			Currency Translation			Accumulated Other
	Available-for-sale			Hedges			Adjustments			Comprehensive Loss ⁽¹⁾
Ending balance December 31, 2018	$	(83	)	$	44		$	(242,070	)	$	(242,109	)
Other comprehensive loss before reclassifications	45			(5,795		)	(742		)	(6,492		)
Reclassifications, net	—			80			—			80
Net current period other comprehensive loss	45			(5,715		)	(742		)	(6,412		)
Ending balance March 31, 2019	$	(38	)	$	(5,671	)	$	(242,812	)	$	(248,521	)

(1) Net of deferred taxes for unrealized losses from cash flow hedges of $10.0 million and $1.7 million atfor the three months ended March 31, ~~2019.~~2020 and 2019, respectively.

~~10.~~11. Earnings per Share:

Basic earnings per share ("EPS") are computed by dividing net income available to common stockholders of PRA Group, Inc. by weighted average common shares outstanding. Diluted EPS are computed using the same components as basic EPS with the denominator adjusted for the dilutive effect of the Notes and nonvested share awards, if dilutive. ~~For the Notes, only the conversion spread is included in the diluted EPS calculation, if dilutive. Under such method, the settlement~~There has been no dilutive effect 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 the 2020 Notes or $46.24 for the 2023 Notes, neither of which occurred during the respective periods from which the Notes were issuedconvertible senior notes since issuance through March 31, ~~2019.~~2020. Share-based awards that are contingent upon the attainment of performance goals are included in the computation of diluted EPS if the effect is dilutive. The dilutive effect of nonvested shares is computed using the treasury stock method, which assumes any proceeds that could be obtained upon the vesting of nonvested shares would be used to purchase common shares at the average market price for the period.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table provides a reconciliation between the computation of basic EPS and diluted EPS for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands, except per share amounts):


	For the Three Months Ended March 31,										For the Three Months Ended March 31,
	2019					2018					2020					2019
	Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net income attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS		Net Income Attributable to PRA Group, Inc.		Weighted Average Common Shares	EPS
Basic EPS	$	15,227	45,338	$	0.34	$	21,106	45,231	$	0.47	$	19,135	45,452	$	0.42	$	15,227	45,338	$	0.34
Dilutive effect of nonvested share awards			81	—				139	—		—		332	—		—		81	—
Diluted EPS	$	15,227	45,419	$	0.34	$	21,106	45,370	$	0.47	$	19,135	45,784	$	0.42	$	15,227	45,419	$	0.34

There were no0 antidilutive options outstanding for the three months ended March 31, ~~2019~~2020 and ~~2018.~~2019.

~~11.~~12. Income Taxes:

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

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

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

At March 31, ~~2019,~~2020, the tax years subject to examination by the major federal, state and international taxing jurisdictions are 2013 and subsequent years.

The Company intends for predominantly all ~~foreign~~international earnings to be indefinitely reinvested in its ~~foreign operations.~~international operations and, therefore, the recording of deferred tax liabilities for such unremitted earnings is not required. If ~~foreign~~international earnings were repatriated, the Company may need to accrue and pay taxes, although foreign tax credits may be available to partially reduce U.S. income taxes. The amount of cash on hand related to ~~foreign~~international operations with indefinitely reinvested earnings was ~~$83.8~~$115.4 million and ~~$78.6~~$109.7 million as of March 31, ~~2019~~2020 and December 31, ~~2018,~~2019, respectively.

~~12.~~13. Commitments and Contingencies:

Employment ~~agreements:~~Agreements:

The Company has entered into employment agreements, most of which expire on December 31, 2020, with all of its U.S. executive officers and with several members of its U.S. senior management group. Such agreements provide for base salary payments as well as potential discretionary bonuses that take into consideration the Company’s overall performance against its ~~short-~~short and long-term financial and strategic objectives. At March 31, ~~2019,~~2020, estimated future compensation under these agreements was approximately ~~$14.3~~$6.2 million. The agreements also contain confidentiality and non-compete provisions. Outside the U.S., employment agreements are in place with employees pursuant to local country regulations. Generally, these agreements do not have expiration dates and therefore it is impractical to estimate the amount of future compensation under these agreements. Accordingly, the future compensation under these agreements is not included in the ~~$14.3~~$6.2 million total above.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Forward ~~flow agreements:~~Flow Agreements:

The Company is party to several forward flow agreements that allow for the purchase of nonperforming loans at pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at March 31, ~~2019~~2020, was approximately ~~$351.5~~$629.2 million.

Finance ~~receivables:~~Receivables:

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Litigation and ~~regulatory matters:~~Regulatory Matters:

The Company isand its subsidiaries are from time to time subject to a variety of routine legal and regulatory claims, inquiries and proceedings and regulatory matters, most of which are incidental to the ordinary course of its business. The Company initiates lawsuits against customers and is occasionally countersued by them in such actions. Also, customers, either individually, as members of a class action, or through a governmental entity on behalf of customers, may initiate litigation against the Company in which they allege that the Company has violated a state or federal law in the process of collecting on an account. From time to time, other types of lawsuits are brought against the Company. Additionally, the Company receives subpoenas and other requests or demands for information from regulators or governmental authorities who are investigating the Company's debt collection activities.

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

The Company believes that the estimate of the aggregate range of reasonably possible losses in excess of the amount accrued for its legal proceedings outstanding at March 31, ~~2019,~~2020, where the range of loss can be estimated, was not material.

In certain legal proceedings, the Company may have recourse to insurance or third-party contractual indemnities to cover all or portions of its litigation expenses, judgments, or settlements. Loss estimates and accruals for potential liability related to legal proceedings are typically exclusive of potential recoveries, if any, under the Company's insurance policies or third-party indemnities.

~~The matters described below fall outside of~~ During the ~~normal parameters of the Company's routine legal proceedings.~~

~~Multi-State Investigation~~

On November 17, 2015, the Company received civil investigative demands from multiple state Attorney General offices ("AGOs") broadly relating to its debt collection practices in the U.S. The Company believes that it has fully cooperated with the investigations and discussed potential resolution of the investigations with the AGOs. In these discussions, the AGOs have taken positions with which the Company disagrees, including positions related to penalties, restitution and/or the adoption of new practices and controls in the conduct of the Company's business. If the Company is unable to resolve its differences with the AGOs, it is possible that one or more individual state AGOs may file claims against the Company. The range of loss, if any, cannot be estimated at this time.

~~Iris Pounds v. Portfolio Recovery Associates, LLC~~

On November 21, 2016, Iris Pounds filed suit against the Company in Durham County, North Carolina alleging violations of the North Carolina Prohibited Practices by Collection Agencies Act. The purported class consists of all individuals against whom the Company had obtained a judgment by default in North Carolina on or after October 1, 2009. Onyear ended December 9, 2016, the Company removed the matter to the United States District Court for the Middle District of North Carolina (the "District Court"). On March 28, 2018, the District Court entered an order remanding the matter to the North Carolina state court which the Fourth Circuit Court of Appeals affirmed on May 17, 2018. On January 11,31, 2019, the Company ~~filed a motion to compel arbitration with the North Carolina state court. The North Carolina state court denied~~recorded $1.0 million in recoveries receivable under the Company's ~~motion to compel arbitration and~~insurance policies or third-party indemnities which is included in other receivables, net at December 31, 2019.

Matters that are not considered routine legal proceedings were disclosed previously in the Company is seeking review of that decision. The range of loss, if any, cannot be estimated at this time due to the uncertainty surrounding liability, class certification and the interpretation of statutory damages.2019 Form 10-K.

~~13.~~14. Recently Issued Accounting Standards:

Recently issued accounting standards adopted:

~~PRA Group, Inc.~~

~~Notes to Consolidated~~ Financial ~~Statements~~

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 still adopted the new lease standard using the modified retrospective transition method required by the standard, but they 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 affect on the Company's consolidated financial statements.

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.

In February 2018, the FASB issued ASU 2018-02, "Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income" ("ASU 2018-02"). Under existing U.S. 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. 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.

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

~~In June 2016, FASB issued ASU 2016-13, "Financial~~ Instruments - Credit Losses ~~(Topic 326) ("ASU 2016-13"), which requires~~

Effective January 1, 2020, the ~~measurement of expected credit losses for financial instruments held at the reporting date based~~Company adopted ASC 326 on ~~historical experience, current conditions and reasonable and supportable forecasts. The main objective of ASU 2016-13 is~~a prospective basis. Prior to provide financial statement users with more decision-useful information about expected credit losses and recoveries on financial instruments measured at amortized cost held by a reporting entity at each reporting date. Under this model, an entity would recognize an allowance equal to its current estimate ofJanuary 1, 2020, substantially all contractual cash flows that the entity does not expect to collect. The expected credit losses, and subsequent adjustments to such losses, will be recorded through an allowance account that is deducted from the amortized cost basis of the financial asset, with the net carrying value of the financial asset presented on the consolidated balance sheet at the net amount expected to be collected. Revenue is recognized over the life of the portfolio at the initial effective interest rate. Subsequent changesCompany's investment in cash flow forecasts, on a present value basis, are adjusted through revenue. ASU 2016-13 supersedes ASC Topic 310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30"), which the Company currently follows to account for income recognized on its finance ~~receivables. Financial assets~~receivables were accounted for under ASC ~~310-30 should use a prospective transition approach where upon adoption, the amortized cost basis should be adjusted~~310-30. Refer to ~~reflect the addition of the allowance~~Note 2 for ~~credit losses. ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years~~comprehensive details.

Intangibles - Goodwill and allows for early adoption as of the beginning of an interim or annual reporting period beginning after December 15, 2018. The Company expects ASU 2016-13, including the effect of ongoing developments and amendments to the guidance, will have a significant impact on how it measures and records income recognized on its finance receivables and its balance sheet presentation. The Company is in the process of evaluating the impact of adoption on its consolidated financial statements including accounting policy and operational implementation issues.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 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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the

PRA Group, Inc.

Notes to Consolidated Financial Statements

option to perform the qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The Company adopted ASU 2017-04 ~~is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for interim or annual goodwill impairment tests performed after~~on January 1, ~~2017. The Company is in the process of evaluating the~~2020 which had no impact ~~of adoption of ASU 2017-04~~ on its consolidated financial statements.

Fair Value Measurement

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

Recently issued accounting standards not yet adopted:

Income Taxes

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“ASU 2019-12”), which simplifies the accounting for income taxes. This standard is effective for ~~all~~annual and interim periods beginning after December 15, 2020 on a prospective basis, and early adoption is permitted. The Company is currently evaluating the impact of ASU 2019-12 on its consolidated financial statements and expects that the adoption of the standard will result in additional and modified disclosures.

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 interim periods beginning after December 15, ~~2019, and interim periods within those fiscal years. Early adoption is permitted.~~2020. The Company is ~~currently in the process of~~ evaluating the impact of ASU 2020-01 but does not expect adoption ~~of ASU 2018-13~~to have a material effect on its 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 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 currently evaluating the impact of ASU 2020-04.

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

15. Subsequent Events:

On May 6, 2020 , the Company entered into the Second Amendment to the North American Credit Facility, which, among other things, includes:

the consolidated total leverage ratio limit will increase to 3.25 from 2.75 effective after June 30, 2020 through December 31, 2020. After December 31, 2020, the consolidated total leverage ratio limit will decrease to 3.0 until maturity;

the LIBOR floor increases from zero to 100% on the revolving loans;


•	the consolidated senior secured leverage ratio limit will increase from 2.25 to 2.75 until March 31, 2021. On March 31, 2021, the senior secured leverage ratio will decrease to 2.25 until maturity;

the ERC borrowing base on all domestic Core eligible pools will increase from 35% to 40% effective July 31, 2020 until January 31, 2021. If the ERC advance rate drops to 35% or below during this period, the ERC borrowing base will return to 35%;

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

Forward-Looking Statements:

This Quarterly Report on Form 10-Q (this "Quarterly Report") contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that could cause our results to differ materially from those expressed or implied by such forward-looking statements. All statements, other than statements of historical fact, are forward-looking statements, including statements regarding overall cash collection trends, ~~gross margin trends,~~ operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. The risks, uncertainties and assumptions referred to above may include the following:

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

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

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

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

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

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

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

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

the ~~possibility that~~impact of the COVID-19 pandemic on the markets in which we ~~could incur significant allowance charges on our finance receivables;~~operate, including business disruptions, unemployment, economic disruption, overall market volatility, and the inability or unwillingness of consumers to pay the amounts owed to us;

changes in or interpretations of, bankruptcy or collection laws that could negatively affect our business, including by causing an increase in certain types of bankruptcy filings involving liquidations, which may cause our collections to decrease;accounting standards and their interpretations;

our ability to manage risks associated with our international operations;

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

the impact of the Tax Cuts and Jobs Act ("Tax Act"), including interpretations and determinations by tax authorities;

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

adverse effects from the ~~vote by~~exit of the United Kingdom ("UK") ~~to leave~~from the European ~~Union;~~

~~adverse outcomes in pending litigation or administrative proceedings;~~Union ("EU");

our loss contingency accruals may not be adequate to cover actual losses;

adverse outcomes in pending litigation or administrative proceedings;

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

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

disruptions of business operations caused by the underperformance or failure of information technology infrastructure, networks or telephone systems;

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

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

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

the ~~ability of our European operations to comply with the provisions of the General Data Protection Regulation;~~

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

our ability to ~~raise~~comply with data privacy regulations such as the ~~funds necessary to repurchase the convertible senior notes or to settle conversions in cash;~~General Data Protection Regulation ("GDPR");

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

our ability to raise the funds necessary to repurchase our convertible senior notes or to settle conversions in cash;

our ability to refinance our indebtedness, including our outstanding convertible senior notes;

changes in interest or exchange rates, which could reduce our net income, and the possibility that future hedging strategies may not be successful, ~~which could adversely affect our results of operations and financial condition;~~

the possibility that the adoption of ~~or delays in implementing,~~future accounting standards could negatively impact our ~~results~~business;

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

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

the risk factors discussed herein and in our other filings with the Securities and Exchange Commission ("SEC").

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

You should carefully consider the factors listed above and review the following "Management's Discussion and Analysis of Financial Condition and Results of Operations," as well as the "Risk Factors" section and "Business" section of our Annual Report on Form 10-K for the year ended December 31, ~~2018~~2019 ("~~2018~~2019 Form 10-K").

and the "Risk Factors" section of this Quarterly Report.

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

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

Frequently Used Terms

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

"Amortization rate" refers to cash collections applied to principal on finance receivables as a percentage of total cash collections.

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

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

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

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

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

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

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

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

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

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

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

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

"Purchase price" refers to the cash paid to a seller to acquire nonperforming ~~loans, plus~~loans. Prior to the adoption of ASC Topic 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.

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

Overview

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

We are headquartered in Norfolk, Virginia, and as of March 31, ~~2019~~2020, employed ~~5,236~~4,014 full time equivalents. Our shares of common stock are traded on the NASDAQ Global Select Market under the symbol ~~"PRAA."~~"PRAA".

COVID-19 Update

The recent outbreak of COVID-19, which was declared a pandemic by the World Health Organization on March 11, 2020, has led to adverse impacts on the U.S. and global economies and created uncertainty. Since the initial outbreak was reported, all states in the U.S. have declared states of emergency and COVID-19 has spread to all countries in which we operate. As a result, we have implemented our business continuity plans including remote work practices where possible and have leveraged existing space to follow social distancing guidelines. To date, the pandemic has not prevented our ability to operate the business and we have continued to take steps necessary to minimize impact or disruption to our global operations. We believe we have sufficient liquidity on hand, or access to the capital markets to provide liquidity, to continue normal business operations. Refer to the Liquidity and Capital Resources section below for further discussion. Furthermore, the pandemic presents potential new risks which are difficult to reasonably estimate. As a result, the impact COVID-19 may have on our business, results of operations or financial condition is also difficult to predict. See discussion in Part II, Item 1A - “Risk Factors”.

Results of Operations

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


	For the Three Months Ended March 31,										For the Three Months Ended March 31,
	2019					2018					2020					2019
Revenues:
Portfolio income											$	262,022		104.1	%	$	—		—	%
Changes in expected recoveries											(12,816		)	(5.1	)	—			—
Income recognized on finance receivables	$	238,836		97.1	%	$	218,624		97.6	%	—			—		238,836			97.1
Fee income	6,374			2.6		5,327			2.4		2,209			0.9		6,374			2.6
Other revenue	667			0.3		157			0.1		369			0.1		667			0.3
Total revenues	245,877			100.0		224,108			100.0		251,784			100.0		245,877			100.0

Net allowance charges	(6,095		)	(2.5	)	(925		)	(0.4	)	—			—		(6,095		)	(2.5	)

Operating expenses:
Compensation and employee services	79,645			32.4		81,237			36.2		75,171			29.9		79,645			32.4
Legal collection fees	13,059			5.3		10,669			4.8		14,572			5.8		13,059			5.3
Legal collection costs	35,229			14.3		22,243			9.9		34,447			13.7		35,229			14.3
Agency fees	14,032			5.7		8,278			3.7		13,376			5.3		14,032			5.7
Outside fees and services	15,248			6.2		14,158			6.3		19,394			7.7		15,248			6.2
Communication	13,201			5.4		11,557			5.2		13,511			5.4		13,201			5.4
Rent and occupancy	4,363			1.8		4,314			1.9		4,484			1.8		4,363			1.8
Depreciation and amortization	4,572			1.9		4,929			2.2		4,084			1.6		4,572			1.9
Other operating expenses	11,585			4.7		12,184			5.4		12,205			4.8		11,585			4.7
Total operating expenses	190,934			77.7		169,569			75.7		191,244			76.0		190,934			77.7
Income from operations	48,848			19.9		53,614			23.9		60,540			24.0		48,848			19.9
Other income and (expense):
Interest expense, net	(33,981		)	(13.8	)	(25,781		)	(11.5	)	(37,211		)	(14.8	)	(33,981		)	(13.8	)
Foreign exchange gain	6,264			2.5		1,293			0.6		2,283			0.9		6,264			2.5
Other	(352		)	(0.1	)	243			0.1		(76		)	—		(352		)	(0.1	)
Income before income taxes	20,779			8.5		29,369			13.1		25,536			10.1		20,779			8.5
Income tax expense	3,867			1.6		6,137			2.7		3,100			1.2		3,867			1.6
Net income	16,912			6.9		23,232			10.4		22,436			8.9		16,912			6.9
Adjustment for net income attributable to noncontrolling interests	1,685			0.7		2,126			0.9		3,301			1.3		1,685			0.7
Net income attributable to PRA Group, Inc.	$	15,227		6.2	%	$	21,106		9.4	%	$	19,135		7.6	%	$	15,227		6.2	%

Three Months Ended March 31, 2020 Compared To Three Months Ended March 31, 2019

Cash Collections

Cash collections were as follows for the periods indicated:

For the Three Months Ended March 31, Variance
(Amounts in thousands) 2019 2018 2019 vs. 2018
   Americas-Core $ 290,723
$ 246,237
$ 44,486
   Americas-Insolvency 44,613
55,280
(10,667 )
   Europe-Core 116,858
118,109
(1,251 )
   Europe-Insolvency 8,977
6,954
2,023
Total cash collections $ 461,171
$ 426,580
$ 34,591

Cash collections adjusted ⁽¹⁾
$ 461,171
$ 414,902
$ 46,269
Cash collections on fully amortized pools 12,084
15,622
(3,538 )
Cash collections on cost recovery pools 3,653
17,524
(13,871 )
Net finance receivables on cost recovery at period-end 43,479
149,179
(105,700 )



	For the Three Months Ended March 31,				Variances
(Amounts in thousands)	2020		2019		2020 vs. 2019
Americas Core	$	305,780	$	290,723	$	15,057
Americas Insolvency	43,210		44,613		(1,403		)
Europe Core	131,340		116,858		14,482
Europe Insolvency	14,243		8,977		5,266
Total cash collections	$	494,573	$	461,171	$	33,402

Cash collections adjusted ⁽¹⁾	$	494,573	$	454,654	$	39,919

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

Cash collections were $494.6 million for the three months ended March 31, 2020, an increase of $33.4 million, or 7.2%, compared to $461.2 million for the three months ended March 31, ~~2019, an increase of $34.6 million or 8.1%, compared to $426.6 million for the three months ended March 31, 2018.~~2019. The increase was largely due to ~~our~~increases in Americas Core and Europe Core cash collections, partially offset by the overall economic disruption in the last two weeks of the quarter. Americas Core cash collections increased $15.1 million, or 5.2%, mainly driven by higher U.S. legal collections ~~increasing $22.1~~and an increase in Other Americas, slightly offset by lower U.S. call center and other collections. The U.S. legal collections increase of $9.9 million, or ~~30.6%,~~10.4% was due primarily to ~~the increase in the~~a higher number of accounts ~~qualifying for~~placed in the legal ~~channel, and our U.S. call center collections increasing $14.3~~channel. Other Americas increased $6.8 million, or ~~9.2%~~25.6%, ~~due~~ primarily ~~to record U.S. Core~~as a result of increased portfolio purchasing in ~~2018. These increases were partially offset by a decline~~South America. Furthermore, the increase of ~~$10.7~~$14.5 million, or ~~19.3%,~~12.4% in ~~Americas Insolvency~~Europe Core cash collections ~~caused mainly by a decline in Americas Insolvency portfolio purchasing in 2018 not offsetting the continued runoff of the older portfolios.~~reflects higher 2019 purchases.

Revenues

Total revenues were $245.9 million for the three months ended March 31, 2019, an increase of $21.8 million, or 9.7%, compared to total revenues of $224.1 million for the three months ended March 31, 2018.

A summary of our revenue generation during the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 is as follows (amounts in thousands):


	For the Three Months Ended March 31,						For the Three Months Ended March 31,
	2019			2018			2020			2019
Cash collections	$	461,171		$	426,580
Principal amortization	(222,335		)	(207,956		)
Portfolio income							$	262,022		—
Changes in expected recoveries							(12,816		)	—
Income recognized on finance receivables	238,836			218,624			—			238,836
Fee income	6,374			5,327			2,209			6,374
Other revenue	667			157			369			667
Total revenues	$	245,877		$	224,108		$	251,784		$	245,877

~~Income recognized on finance receivables~~

~~Income recognized on finance receivables was $238.8~~Total revenues were $251.8 million for the three months ended March 31, ~~2019,~~2020, an increase of ~~$20.2~~$5.9 million, or ~~9.2%~~2.4%, compared to ~~income recognized on finance receivables of $218.6~~$245.9 million for the three months ended March 31, ~~2018. The~~2019. This increase was ~~primarily the result of~~driven by higher cash collections, somewhat offset by adjustments to our estimated remaining collections mainly to reflect the impact of ~~record Americas Core purchasing in 2018~~COVID-19 and the impact of overperformance on select Americas Core and Europe Core portfolios which resulted in yield increases on certain pools. This was partially offset by a decline in our Americas Insolvency revenue caused mainly by reduced Americas Insolvency portfolio purchasing in 2018 not offsetting the continued runoff of our older portfolios.

~~We have revised the presentation of our consolidated~~lower fee income statements for the prior year reporting period by reclassifying net allowance charges on our finance receivables as a line item separate from revenues. As a result, we no longer include net allowance charges as part of "Income recognized on finance receivables, net" on the face of our consolidated income statements and report income recognized on finance receivables gross of valuation allowances.

~~Fee income~~

Fee income was $6.4 million in the three months ended March 31, 2019, an increase of $1.1 million or 20.8%, compared to $5.3 million in the three months ended March 31, 2018. The increase is primarily attributable toreflecting settlement timing in our claims processing company, Claims Compensation Bureau.

~~Other revenue~~

~~Other revenue was $0.7 million and $0.2 million in the three months ended March 31, 2019 and 2018, respectively.~~

Net Allowance Charges

~~Net~~In 2019, under ASC Topic 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. ~~For the three months ended March 31, 2019, we~~Effective January 1, 2020, under ASC Topic 326 changes to expected cash flows are recorded net allowance charges of $6.1 million consisting of $4.8 million on our Americas Core portfolios, primarily on vintages purchased between 2013-2015, and $1.3 million on our European portfolios. For the three months ended March 31, 2018, we recorded net allowance charges of $0.9 million, consisting of net allowance reversals of $0.7 million on our Americas Core portfolios and net allowance charges of $0.2 million and $1.4 million on our Americas Insolvency and our European Core portfolios, respectively.in changes in expected recoveries within revenues.

Operating Expenses

Total operating expenses were $191.2 million for the three months ended March 31, 2020, an increase of $0.3 million, or 0.2%, compared to $190.9 million for the three months ended March 31, ~~2019, an increase of $21.3 million or 12.6%, compared to operating~~2019.

Compensation and Employee Services

Compensation and employee services expenses ~~of $169.6~~were $75.2 million for the three months ended March 31, ~~2018.~~

~~Compensation and employee services~~

~~Compensation and employee services expenses were~~2020, a decrease of $4.4 million, or 5.5%, compared to $79.6 million for the three months ended March 31, ~~2019,~~2019. The decrease in compensation expense was primarily attributable to a ~~decrease of $1.6 million, or 2.0%, compared to $81.2 million for~~reduction in the ~~three months ended March 31, 2018. Compensation expense decreased primarily as a result of the impact of the deconsolidation of RCB Investimentos S.A. ("RCB") in December 2018. Additionally,~~ U.S. call ~~centers compensation expenses declined compared to~~center workforce as we balance the ~~first quarter of 2018 as~~volume between the ~~total number of collectors decreased, but this was offset by higher medical costs.~~legal collection channel and call centers. Total full-time equivalents decreased to 4,014 as of March 31, 2020, from 5,236 as of March 31, ~~2019, compared to 5,639 as of March 31, 2018.~~2019.

Legal ~~collection fees~~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 $14.6 million for the three months ended March 31, 2020, an increase of $1.5 million, or 11.5%, compared to $13.1 million for the three months ended March 31, 2019 ~~an increase of $2.4 million or 22.4%, compared to legal collection fees of $10.7 million for the three months ended March 31, 2018. The increase was~~ primarily due to an increase in external legal cash collections in the U.S.

Legal ~~collection costs~~Collection Costs

Legal collection costs primarily consist of costs paid to courts where a lawsuit is ~~filed.~~filed for the purpose of attempting to collect on an account. Legal collection costs were $34.4 million for the three months ended March 31, 2020, a decrease of $0.8 million, or 2.3% compared to $35.2 million for the three months ended March 31, ~~2019, an increase~~2019. The decrease primarily reflects slightly lower court costs in the U.S. due to the disruption in the last two weeks of ~~$13.0 million or 58.6%, compared to legal collection~~the quarter resulting from the COVID-19 pandemic, mostly offset by higher costs ~~of $22.2~~in Europe.

Outside Fees and Services

Outside fees and services expenses were $19.4 million for the three months ended March 31, 2018. The increase was primarily due to additional court costs related to the expansion of the number of accounts qualifying for the legal channel in the U.S. partially offset by a reduction in Europe. This expansion is the result of a change in the nature of the accounts purchased, the regulatory environment and consumer behavior.

~~Agency fees~~

~~Agency fees primarily represent third-party collection fees incurred mainly outside the U.S. Agency fees were $14.0 million for the three months ended March 31, 2019,~~2020, an increase of ~~$5.7~~$4.2 million, or ~~68.7%~~27.6%, compared to $8.3 million for the three months ended March 31, 2018. The increase was primarily the result of higher volumes of servicing activity in areas where we utilize third party agencies to collect. Additionally, with the sale of the RCB operating platform, certain expenses in other line items shifted from fixed to variable and are now recorded on the agency fees line.

~~Outside fees and services~~

~~Outside fees and services expenses were~~ $15.2 million for the three months ended March 31, ~~2019,~~2019. The increase was primarily due to a number of items that were not material individually and higher consulting fees in 2020.

Interest Expense, Net

Interest expense, net was $37.2 million during the three months ended March 31, 2020, an increase of ~~$1.0~~$3.2 million, or ~~7.0%~~9.4%, compared to ~~outside fees and services expenses of $14.2~~$34.0 million for the three months ended March 31, ~~2018.~~

~~Communication~~

Communication expenses were $13.2 million for the three months ended March 31, 2019, an increase of $1.6 million or 13.8%, compared to communication expenses of $11.6 million for the three months ended March 31, 2018. These increases are primarily the result of increased letter and call volume associated with record portfolio purchases in Americas Core in 2018.

~~Rent and occupancy~~

Rent and occupancy expenses were $4.4 million for the three months ended March 31, 2019, an increase of $0.1 million or 2.3%, compared to rent and occupancy expense of $4.3 million for the three months ended March 31, 2018.

~~Depreciation and amortization~~

Depreciation and amortization expenses were $4.6 million for the three months ended March 31, 2019, a decrease of $0.3 million or 6.1% , compared to depreciation and amortization expenses of $4.9 million for the three months ended March 31, 2018.

~~Other operating expenses~~

Other operating expenses were $11.6 million for the three months ended March 31, 2019, a decrease of $0.6 million, or 4.9%, compared to other operating expenses of $12.2 million for the three months ended March 31, 2018.

~~Interest Expense, Net~~

~~Interest expense, net was $34.0 million during the three months ended March 31, 2019, an increase of $8.2 million or 31.8%, compared to $25.8 million for the three months ended March 31, 2018.~~2019. The increase was primarily due to higher ~~average interest rates paired with higher~~ levels of average borrowings ~~outstanding on our debt obligations in addition~~primarily to fund increased portfolio investments and the impact of ~~the~~ changes in the fair value of ~~interest rate swap agreements not designated as hedging instruments.~~our derivatives.

Interest expense, net consisted of the following for the three months ended March 31, ~~2019~~2020 and ~~2018~~2019 (amounts in thousands):


	Three Months Ended March 31,								For the Three Months Ended March 31,
	2019			2018			Change		2020			2019			Change
Stated interest on debt obligations and unused line fees	$	23,397		$	20,043		$	3,354	$	24,459		$	23,397		$	1,062
Coupon interest on convertible debt	5,175			5,175			—		5,175			5,175			—
Amortization of convertible debt discount	3,042			2,877			165		3,217			3,042			175
Amortization of loan fees and other loan costs	2,636			2,553			83		2,640			2,636			4
Change in fair value on derivatives	349			(3,673		)	4,022
Change in fair value of derivatives									2,039			349			1,690
Interest income	(618		)	(1,194		)	576		(319		)	(618		)	299
Interest expense, net	$	33,981		$	25,781		$	8,200	$	37,211		$	33,981		$	3,230

Net Foreign Currency Transaction ~~Gains/(Losses)~~Gains

~~Net foreign~~Foreign currency transaction gains were $2.3 million for the three months ended March 31, 2020, compared to $6.3 million for the three months ended March 31, ~~2019, compared to $1.3 million for the three months ended March 31, 2018.~~2019. In any given period, we may incur foreign currency ~~transactions gains or~~transaction losses from transactions in currencies other than the functional currency.

~~Other Expense~~

~~Other expense~~ The decrease was ~~$0.4 million~~primarily related to lower foreign currency gains in Europe and ~~$0.2 million during the three months ended March 31, 2019 and March 31, 2018, respectively.~~slightly lower gains on U.S. dollar linked investments held in Brazil.

Income Tax Expense

Income tax expense was $3.1 million for the three months ended March 31, 2020, a decrease of $0.8 million, or 20.5%, compared to $3.9 million for the three months ended March 31, ~~2019, a~~2019. The decrease was primarily due to estimated return to provision adjustments partially offset by changes in the mix of ~~$2.2 million, or 36.1%~~income between countries of operation. During the three months ended March 31, 2020, our effective tax rate was 12.1%, compared to ~~provision for income taxes of $6.1 million~~18.6% for the three months ended March 31, 2018. The decrease was primarily due to decreases in income before income taxes and our effective tax rate. During the three months ended March 31, 2019, our income before income taxes was $20.8 million, compared to $29.4 million for the three months ended March 31, 2018. During the three months ended March 31, 2019, our effective tax rate was 18.6%, compared to 20.9% for the three months ended March 31, 2018. The decrease was due to changes in the mix of projected taxable income between tax jurisdictions including a decrease in the estimated blended rate for U.S. state taxes due to state apportionment.2019.

Supplemental Performance Data

Finance ~~receivables portfolio performance~~Receivables Portfolio Performance

The following tables show certain data related to our finance receivables portfolios. Certain adjustments, as noted in the footnotes to these tables, have been made to reduce the impact of foreign currency fluctuations on ERC and purchase price multiples.

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

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

Within a given portfolio type, to the extent that lower purchase price multiples are the result of more competitive pricing and lower net yields, this will generally lead to ~~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 ~~accounts.~~paper.

Revenue recognition under ASC 310-10 and ASC Topic ~~310-30, "Loans and Debt Securities Acquired with Deteriorated Credit Quality" ("ASC 310-30")~~326 is driven by estimates of the amount and timing of ~~collections as well as the timing of those~~ collections. We record new portfolio ~~purchases based on our best estimate of~~acquisitions 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. During the ~~purchase~~year of ~~nonperforming loans~~acquisition, the annual pool is aggregated and the ~~results~~blended effective interest rate will change to reflect new buying 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 allow purchase price multiples to expand. 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 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 ~~purchase~~acquisition than a pool that was just two years from ~~purchase.~~

We hold a beneficial interest in certain pools of finance receivables in Europe. Revenue is recognized 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 pools are included in the following tables as they perform economically similar to finance receivables accounted for under ASC 310-30.acquisition.

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

We hold a majority interest in a Polish investment fund that was previously classified in our Consolidated Balance Sheets as "Investments" and previously excluded from the following tables. Effective July 1, 2018, we assumed servicing responsibilities for approximately 50% of the portfolios held by the Polish investment fund which led to an accounting reconsideration event and the consolidation of this investment. The finance receivables recorded at the consolidation date and the related portfolio performance information are included in the Supplemental Performance Data section in the Europe-Core 2018 line unless otherwise indicated. ~~On March 29, 2019, we signed an agreement making PRA Group the servicer of effectively 100% of the portfolios held by the Polish investment fund effective April 1, 2019.~~

Purchase Price Multiples as of March 31, 2019 Amounts in thousands
Purchase Price Multiples as of March 31, 2020 Amounts in thousands															Purchase Price Multiples as of March 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 Price ⁽¹⁾⁽²⁾		ERC-Historical Period Exchange Rates ⁽³⁾		Total Estimated Collections ⁽⁴⁾		ERC-Current Period Exchange Rates ⁽⁵⁾		Current Estimated Purchase Price Multiple		Original Estimated Purchase Price Multiple⁽⁶⁾
Americas-Core
1996-2008	$	804,882	$	8,460	$	32,757	$	2,424,133	$	32,757	301	%	236	%
2009	125,153		642		20,893		459,594		20,893		367	%	252	%
Americas Core
1996-2009															$	930,026	$	38,390	$	2,886,117	$	38,390	310	%	238	%
2010	148,199		4,239		34,123		534,384		34,123		361	%	247	%	148,193		26,621		535,652		26,621		361	%	247	%
2011	209,606		9,231		57,522		736,144		57,522		351	%	245	%	209,602		44,992		738,981		44,992		353	%	245	%
2012	254,118		18,385		74,305		681,435		74,305		268	%	226	%	254,076		56,991		680,187		56,991		268	%	226	%
2013	390,979		44,602		129,076		939,654		129,076		240	%	211	%	390,826		85,283		928,709		85,283		238	%	211	%
2014	405,398		73,574		193,729		931,183		190,424		230	%	204	%	404,117		138,067		921,659		135,051		228	%	204	%
2015	443,992		122,428		288,967		970,072		288,804		218	%	205	%	443,114		206,581		960,145		205,976		217	%	205	%
2016	453,575		176,337		428,963		1,054,922		423,406		233	%	201	%	455,767		327,345		1,093,346		314,819		240	%	201	%
2017	534,185		330,760		657,395		1,119,849		653,959		210	%	193	%	532,851		468,942		1,167,610		464,659		219	%	193	%
2018	656,699		588,009		1,108,027		1,323,983		1,105,245		202	%	202	%	653,975		762,474		1,337,704		749,410		205	%	202	%
2019	169,526		166,465		335,384		345,455		335,384		204	%	204	%	581,476		969,495		1,198,926		933,976		206	%	206	%
2020															172,697		329,648		336,822		329,648		195	%	195	%
Subtotal	4,596,312		1,543,132		3,361,141		11,520,808		3,345,898						5,176,720		3,454,829		12,785,858		3,385,816
Americas-Insolvency
2004-2008	241,465		—		582		365,645		582		151	%	155	%
2009	155,988		—		1,084		470,628		1,084		302	%	214	%
Americas Insolvency															Americas Insolvency
1996-2009															397,453		794		835,929		794		210	%	178	%
2010	208,942		—		1,915		547,132		1,915		262	%	184	%	208,942		1,016		546,844		1,016		262	%	184	%
2011	180,433		—		262		368,873		262		204	%	155	%	180,432		848		370,113		848		205	%	155	%
2012	251,418		—		163		390,297		163		155	%	136	%	251,395		688		392,419		688		156	%	136	%
2013	227,903		—		4,024		355,004		4,024		156	%	133	%	227,834		1,728		354,918		1,728		156	%	133	%
2014	148,710		5,226		12,734		216,687		12,701		146	%	124	%	148,420		2,252		217,283		2,232		146	%	124	%
2015	63,181		12,929		18,623		84,083		18,623		133	%	125	%	63,170		6,655		87,791		6,655		139	%	125	%
2016	92,280		26,671		34,798		114,224		34,741		124	%	123	%	91,442		18,596		116,061		18,536		127	%	123	%
2017	275,287		139,471		178,661		346,306		178,661		126	%	125	%	275,257		104,624		349,186		104,624		127	%	125	%
2018	98,102		90,015		112,373		124,694		112,373		127	%	127	%	97,879		85,846		127,700		85,846		130	%	127	%
2019	48,230		47,935		59,136		60,056		59,136		125	%	125	%	123,077		137,797		158,639		137,556		129	%	128	%
2020															20,772		25,768		27,344		25,768		132	%	132	%
Subtotal	1,991,939		322,247		424,355		3,443,629		424,265						2,086,073		386,612		3,584,227		386,291
Total Americas	6,588,251		1,865,379		3,785,496		14,964,437		3,770,163						7,262,793		3,841,441		16,370,085		3,772,107
Europe-Core
Europe Core
2012	20,423		—		1,028		39,353		824		193	%	187	%	20,409		533		40,607		406		199	%	187	%
2013	20,346		8		615		24,356		483		120	%	119	%	20,334		262		25,056		196		123	%	119	%
2014	796,860		225,367		873,647		2,177,579		744,656		273	%	208	%	773,811		759,304		2,202,629		640,238		285	%	208	%
2015	420,576		181,626		393,001		742,543		355,328		177	%	160	%	411,340		323,139		734,838		285,151		179	%	160	%
2016	348,370		215,547		380,638		582,463		379,792		167	%	167	%	333,090		310,630		557,579		291,054		167	%	167	%
2017	247,719		181,807		270,435		354,772		264,864		143	%	144	%	252,174		229,143		361,268		204,423		143	%	144	%
2018 ⁽⁸⁾	345,892		310,988		465,042		514,378		466,881		149	%	148	%
2018															341,775		385,373		518,022		369,842		152	%	148	%
2019	93,270		92,656		137,193		138,379		137,193		148	%	148	%	518,610		706,719		790,270		665,335		152	%	152	%
2020															60,990		105,783		108,540		105,783		178	%	178	%
Subtotal	2,293,456		1,207,999		2,521,599		4,573,823		2,350,021						2,732,533		2,820,886		5,338,809		2,562,428
Europe-Insolvency
Europe Insolvency															Europe Insolvency
2014	10,876		692		2,064		18,029		1,841		166	%	129	%	10,876		798		18,164		678		167	%	129	%
2015	19,393		4,621		9,165		29,219		8,027		151	%	139	%	18,973		4,969		29,054		4,162		153	%	139	%
2016	42,190		17,448		26,534		61,144		26,416		145	%	130	%	39,338		14,946		56,971		15,133		145	%	130	%
2017	38,787		30,359		39,064		50,550		38,307		130	%	128	%	39,235		27,096		48,706		24,854		124	%	128	%
2018	45,633		43,606		53,453		56,077		53,283		123	%	123	%	44,908		43,766		55,331		42,403		123	%	123	%
2019	7,125		7,125		9,360		9,393		9,360		132	%	132	%	77,218		91,096		102,236		85,535		132	%	130	%
2020															18,778		23,947		24,090		23,947		128	%	128	%
Subtotal	164,004		103,851		139,640		224,412		137,234						249,326		206,618		334,552		196,712
Total Europe	2,457,460		1,311,850		2,661,239		4,798,235		2,487,255						2,981,859		3,027,504		5,673,361		2,759,140
Total PRA Group	$	9,045,711	$	3,177,229	$	6,446,735	$	19,762,672	$	6,257,418					$	10,244,652	$	6,868,945	$	22,043,446	$	6,531,247


(1)	~~The amount reflected in Purchase Price also includes~~Includes the acquisition date finance receivables portfolios that were acquired through our ~~various~~ business acquisitions.


(2)	For our ~~international~~non-US amounts, ~~Purchase Price~~purchase price is presented at the exchange rate at the end of the ~~quarter~~year 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~~year-end exchange rate for the respective ~~quarter~~year of purchase.


(3)	For our ~~international~~non-US amounts, ~~Net Finance Receivables are~~ERC-Historical Period Exchange Rates is presented at the ~~March 31, 2019~~year-end exchange ~~rate.~~rate for the respective year of purchase.


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


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


~~(6)~~	~~For our international~~non-U.S. amounts, ERC-Current Period Exchange Rates is presented at the March 31, ~~2019~~2020 exchange rate.


~~(7)~~(6)	The Original Estimated Purchase Price Multiple represents the purchase price multiple at the end of the year of acquisition.


~~(8)~~	~~The Europe-Core purchases include a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.~~

Portfolio Financial Information Year-to-date as of March 31, 2019 Amounts in thousands
Portfolio Financial Information Year-to-date as of March 31, 2020 Amounts in thousands																Portfolio Financial Information Year-to-date as of March 31, 2020 Amounts in thousands

Purchase Period	Purchase Price ⁽¹⁾⁽²⁾		Cash Collections ⁽³⁾		Gross Revenue ⁽³⁾		Amortization ⁽³⁾		Net Allowance Charges/(Reversals) ⁽³⁾			Net Revenue ⁽³⁾⁽⁴⁾		Net Finance Receivables as of March 31, 2019 ⁽⁵⁾		Cash Collections ⁽¹⁾		Portfolio Income ⁽¹⁾		Changes in Expected Recoveries			Total Portfolio Revenue ⁽¹⁾⁽²⁾		Net Finance Receivables as of March 31, 2020 ⁽³⁾
Americas-Core
1996-2008	$	804,882	$	3,551	$	2,353	$	1,198	$	(550	)	$	2,903	$	8,460
2009	125,153		1,900		1,789		111		(100		)	1,889		642
Americas Core
1996-2009																$	3,940	$	2,922	$	228		$	3,150	$	8,489
2010	148,199		2,448		2,204		244		160			2,044		4,239		2,016		1,826		(31		)	1,795		3,263
2011	209,606		4,653		4,025		628		575			3,450		9,231		3,383		3,081		(176		)	2,905		7,229
2012	254,118		5,355		3,821		1,534		(300		)	4,121		18,385		3,556		3,115		(160		)	2,955		15,406
2013	390,979		10,972		7,576		3,396		2,505			5,071		44,602		6,966		5,299		(2,285		)	3,014		29,641
2014	405,398		16,884		10,884		6,000		1,533			9,351		73,574		9,452		7,547		(4,072		)	3,475		48,628
2015	443,992		25,966		14,919		11,047		494			14,425		122,428		16,050		10,589		(4,661		)	5,928		83,039
2016	453,575		41,916		23,291		18,625		505			22,786		176,337		27,017		17,389		(2,817		)	14,572		126,158
2017	534,185		74,211		33,808		40,403		—			33,808		330,760		53,489		26,613		(1,857		)	24,756		212,544
2018	656,699		92,768		52,025		40,743		—			52,025		588,009		89,601		40,978		(2,418		)	38,560		404,887
2019	169,526		10,099		7,023		3,076		—			7,023		166,465		83,127		49,886		(3,509		)	46,377		477,513
2020																7,183		5,611		365			5,976		170,995
Subtotal	4,596,312		290,723		163,718		127,005		4,822			158,896		1,543,132		305,780		174,856		(21,393		)	153,463		1,587,792
Americas-Insolvency
2004-2008	241,465		68		68		—		—			68		—
2009	155,988		151		151		—		—			151		—
Americas Insolvecy
1996-2009																95		123		(28		)	95		—
2010	208,942		189		189		—		—			189		—		137		165		(28		)	137		—
2011	180,433		224		224		—		—			224		—		135		125		11			136		—
2012	251,418		579		579		—		—			579		—		307		265		42			307		—
2013	227,903		1,061		1,061		—		—			1,061		—		410		415		(4		)	411		—
2014	148,710		5,313		3,051		2,262		—			3,051		5,226		837		1,085		(500		)	585		503
2015	63,181		4,261		959		3,302		—			959		12,929		3,280		1,661		21			1,682		4,182
2016	92,280		4,987		1,052		3,935		—			1,052		26,671		4,076		1,130		220			1,350		14,704
2017	275,287		21,239		5,108		16,131		—			5,108		139,471		17,250		4,813		377			5,190		83,360
2018	98,102		5,622		1,727		3,895		—			1,727		90,015		7,717		2,409		450			2,859		69,595
2019	48,230		919		625		294		—			625		47,935		7,390		2,992		1,240			4,232		111,219
2020																1,576		300		(1		)	299		19,433
Subtotal	1,991,939		44,613		14,794		29,819		—			14,794		322,247		43,210		15,483		1,800			17,283		302,996
Total Americas	6,588,251		335,336		178,512		156,824		4,822			173,690		1,865,379		348,990		190,339		(19,593		)	170,746		1,890,788
Europe-Core
Europe Core
2012	20,423		402		402		—		—			402		—		321		270		51			321		—
2013	20,346		271		178		93		—			178		8		178		131		47			178		—
2014	796,860		45,432		30,356		15,076		(250		)	30,606		225,367		38,124		28,465		(92		)	28,373		168,327
2015	420,576		17,889		7,932		9,957		(333		)	8,265		181,626		14,761		8,134		(58		)	8,076		146,671
2016	348,370		15,303		7,261		8,042		1,392			5,869		215,547		12,548		7,010		44			7,054		165,489
2017	247,719		11,524		4,058		7,466		576			3,482		181,807		9,631		3,587		(186		)	3,401		141,100
2018 ⁽⁶⁾	345,892		24,843		6,571		18,272		—			6,571		310,988
2018																19,535		6,900		454			7,354		240,588
2019	93,270		1,194		576		618		—			576		92,656		33,449		11,457		2,958			14,415		440,409
2020																2,793		846		1,698			2,544		59,008
Subtotal	2,293,456		116,858		57,334		59,524		1,385			55,949		1,207,999		131,340		66,800		4,916			71,716		1,361,592
Europe-Insolvency
Europe Insolvency
2014	10,876		555		268		287		—			268		692		240		177		10			187		243
2015	19,393		1,104		482		622		(72		)	554		4,621		928		422		110			532		2,506
2016	42,190		2,961		1,106		1,855		(40		)	1,146		17,448		2,200		911		(74		)	837		10,497
2017	38,787		2,359		605		1,754		—			605		30,359		2,401		556		69			625		21,319
2018	45,633		1,964		495		1,469		—			495		43,606		2,472		788		(16		)	772		35,749
2019	7,125		34		34		—		—			34		7,125		5,854		1,773		1,589			3,362		67,269
2020																148		256		173			429		18,111
Subtotal	164,004		8,977		2,990		5,987		(112		)	3,102		103,851		14,243		4,883		1,861			6,744		155,694
Total Europe	2,457,460		125,835		60,324		65,511		1,273			59,051		1,311,850		145,583		71,683		6,777			78,460		1,517,286
Total PRA Group	$	9,045,711	$	461,171	$	238,836	$	222,335	$	6,095		$	232,741	$	3,177,229	$	494,573	$	262,022	$	(12,816	)	$	249,206	$	3,408,074



	March 31, 2019		December 31, 2018
Debt securities
Available-for-sale	$	5,088	$	5,077
Equity securities
Private equity funds	7,498		7,973
Mutual funds	62,192		21,753
Equity method investments	10,304		10,370
Total investments	$	85,082	$	45,173



	Three Months Ended March 31, 2019
Operating lease cost	$	2,863
Short-term lease cost	842
Total lease cost	$	3,705



	Three Months Ended March 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	2,780

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	76,175



	Operating Leases
For the Nine Months Ended December 31, 2019	$	8,415
For the Year Ended December 31, 2020	11,183
For the Year Ended December 31, 2021	10,660
For the Year Ended December 31, 2022	8,797
For the Year Ended December 31, 2023	6,667
Thereafter	52,275
Total lease payments	97,997
Less imputed interest	(23,689		)
Total	$	74,308



2019	$	11,470
2020	11,451
2021	10,809
2022	7,287
2023	6,189
Thereafter	7,866
Total future minimum lease payments	$	55,072



	March 31, 2019			December 31, 2018
Revolving credit	$	1,571,749		$	1,160,161
Term loans	432,500			740,551
Convertible senior notes	632,500			632,500
	2,636,749			2,533,212
Less: Debt discount and issuance costs	(50,340		)	(59,556		)
Total	$	2,586,409		$	2,473,656



2020	$	10,000
2021	1,203,005
2022	10,000
2023	1,068,744
2024	345,000
Thereafter	—
Total	$	2,636,749



	For the Three Months Ended March 31,				Variance
(Amounts in thousands)	2019		2018		2019 vs. 2018
Americas-Core	$	290,723	$	246,237	$	44,486
Americas-Insolvency	44,613		55,280		(10,667		)
Europe-Core	116,858		118,109		(1,251		)
Europe-Insolvency	8,977		6,954		2,023
Total cash collections	$	461,171	$	426,580	$	34,591

Cash collections adjusted ⁽¹⁾	$	461,171	$	414,902	$	46,269
Cash collections on fully amortized pools	12,084		15,622		(3,538		)
Cash collections on cost recovery pools	3,653		17,524		(13,871		)
Net finance receivables on cost recovery at period-end	43,479		149,179		(105,700		)


~~(2)~~	For our international 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 international~~non-U.S. amounts, amounts are presented using the average exchange rates during the current reporting period.


~~(4)~~(2)	~~Net~~ Total Portfolio Revenue refers to portfolio income ~~recognized on finance receivables, net of allowance charges/(reversals).~~and changes in expected recoveries combined.


~~(5)~~(3)	For our ~~international~~non-U.S. amounts, net finance receivables are presented at the March 31, ~~2019~~2020 exchange rate.

Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of March 31, 2019 Amounts in thousands
Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of March 31, 2020 Amounts in millions																													Cash Collections by Year, By Year of Purchase ⁽¹⁾ as of March 31, 2020 Amounts in millions

			Cash Collections																												Cash Collections
Purchase Period	Purchase Price ⁽²⁾⁽³⁾		1996- 2008		2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		Total		Purchase Price ⁽²⁾⁽³⁾		1996- 2009		2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		Total
Americas-Core
1996-2008	$	804,882	$	1,366,034	$	240,929	$	200,052	$	169,205	$	132,255	$	95,262	$	66,274	$	46,277	$	29,734	$	19,458	$	15,092	$	3,551	$	2,384,123
2009	125,153		—		40,703		95,627		84,339		69,385		51,121		35,555		24,896		16,000		10,994		8,180		1,900		438,700
Americas Core																													Americas Core
1996-2009																													$	930.0	$	1,647.7	$	295.7	$	253.5	$	201.6	$	146.4	$	101.8	$	71.2	$	45.7	$	30.5	$	23.3	$	19.2	$	3.9	$	2,840.5
2010	148,199		—		—		47,076		113,554		109,873		82,014		55,946		38,110		24,515		15,587		11,140		2,448		500,263		148.2		—		47.1		113.6		109.9		82.0		55.9		38.1		24.5		15.6		11.1		9.2		2.0		509.0
2011	209,606		—		—		—		61,971		174,461		152,908		108,513		73,793		48,711		31,991		21,622		4,653		678,623		209.6		—		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		3.4		694.0
2012	254,118		—		—		—		—		56,901		173,589		146,198		97,267		59,981		40,042		27,797		5,355		607,130		254.1		—		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		3.6		623.3
2013	390,979		—		—		—		—		—		101,614		247,849		194,026		120,789		78,880		56,449		10,972		810,579		390.8		—		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		7.0		843.4
2014	405,398		—		—		—		—		—		—		92,660		253,448		170,311		114,219		82,244		16,884		729,766		404.1		—		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		9.5		777.6
2015	443,992		—		—		—		—		—		—		—		116,951		228,432		185,898		126,605		25,966		683,852		443.1		—		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		16.1		757.6
2016	453,575		—		—		—		—		—		—		—		—		138,723		256,531		194,605		41,916		631,775		455.8		—		—		—		—		—		—		—		138.7		256.5		194.6		140.6		27.0		757.4
2017	534,185		—		—		—		—		—		—		—		—		—		107,327		278,733		74,211		460,271		532.9		—		—		—		—		—		—		—		—		107.3		278.7		256.5		53.5		696.0
2018	656,699		—		—		—		—		—		—		—		—		—		—		122,712		92,768		215,480		654.0		—		—		—		—		—		—		—		—		—		122.7		361.9		89.6		574.2
2019	169,526		—		—		—		—		—		—		—		—		—		—		—		10,099		10,099		581.5		—		—		—		—		—		—		—		—		—		—		143.8		83.1		226.9
2020																													172.7		—		—		—		—		—		—		—		—		—		—		—		7.1		7.1
Subtotal	4,596,312		1,366,034		281,632		342,755		429,069		542,875		656,508		752,995		844,768		837,196		860,927		945,179		290,723		8,150,661		5,176.8		1,647.7		342.8		429.1		542.9		656.5		752.9		844.8		837.1		860.9		945.0		1,141.5		305.8		9,307.0
Americas-Insolvency
2004-2008	241,465		117,972		69,736		65,321		53,924		37,530		13,534		3,035		1,836		1,098		653		356		68		365,063
2009	155,988		—		16,635		81,780		102,780		107,888		95,725		53,945		5,781		2,531		1,581		747		151		469,544
Americas Insolvency																													Americas Insolvency
1996-2009																													397.5		204.3		147.1		156.7		145.4		109.3		57.0		7.6		3.6		2.2		1.1		0.7		0.1		835.1
2010	208,942		—		—		39,486		104,499		125,020		121,717		101,873		43,649		5,008		2,425		1,352		189		545,218		208.9		—		39.5		104.5		125.0		121.7		101.9		43.6		5.0		2.4		1.4		0.7		0.1		545.8
2011	180,433		—		—		—		15,218		66,379		82,752		85,816		76,915		35,996		3,726		1,584		224		368,610		180.4		—		—		15.2		66.4		82.8		85.8		76.9		36.0		3.7		1.6		0.7		0.1		369.2
2012	251,418		—		—		—		—		17,388		103,610		94,141		80,079		60,715		29,337		4,284		579		390,133		251.4		—		—		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.3		391.7
2013	227,903		—		—		—		—		—		52,528		82,596		81,679		63,386		47,781		21,948		1,061		350,979		227.8		—		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		0.4		353.2
2014	148,710		—		—		—		—		—		—		37,045		50,880		44,313		37,350		28,759		5,313		203,660		148.4		—		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		0.8		215.0
2015	63,181		—		—		—		—		—		—		—		3,395		17,892		20,143		19,769		4,261		65,460		63.2		—		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		3.3		81.2
2016	92,280		—		—		—		—		—		—		—		—		18,869		30,426		25,047		4,987		79,329		91.4		—		—		—		—		—		—		—		18.9		30.4		25.0		19.9		4.1		98.3
2017	275,287		—		—		—		—		—		—		—		—		—		49,093		97,315		21,239		167,647		275.3		—		—		—		—		—		—		—		—		49.1		97.3		80.9		17.3		244.6
2018	98,102		—		—		—		—		—		—		—		—		—		—		6,700		5,622		12,322		97.9		—		—		—		—		—		—		—		—		—		6.7		27.4		7.7		41.8
2019	48,230		—		—		—		—		—		—		—		—		—		—		—		919		919		123.1		—		—		—		—		—		—		—		—		—		—		13.4		7.4		20.8
2020																													20.8		—		—		—		—		—		—		—		—		—		—		—		1.6		1.6
Subtotal	1,991,939		117,972		86,371		186,587		276,421		354,205		469,866		458,451		344,214		249,808		222,515		207,861		44,613		3,018,884		2,086.1		204.3		186.6		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		181.0		43.2		3,198.3
Total Americas	6,588,251		1,484,006		368,003		529,342		705,490		897,080		1,126,374		1,211,446		1,188,982		1,087,004		1,083,442		1,153,040		335,336		11,169,545		7,262.9		1,852.0		529.4		705.5		897.1		1,126.4		1,211.3		1,189.0		1,086.9		1,083.3		1,152.9		1,322.5		349.0		12,505.3
Europe-Core
Europe Core																													Europe Core
2012	20,423		—		—		—		—		11,604		8,995		5,641		3,175		2,198		2,038		1,996		402		36,049		20.4		—		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		0.3		37.4
2013	20,346		—		—		—		—		—		7,068		8,540		2,347		1,326		1,239		1,331		271		22,122		20.3		—		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.2		22.8
2014	796,860		—		—		—		—		—		—		153,180		291,980		246,365		220,765		206,255		45,432		1,163,977		773.8		—		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		38.1		1,329.7
2015	420,576		—		—		—		—		—		—		—		45,760		100,263		86,156		80,858		17,889		330,926		411.3		—		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		14.8		394.1
2016	348,370		—		—		—		—		—		—		—		—		40,368		78,915		72,603		15,303		207,189		333.1		—		—		—		—		—		—		—		40.4		78.9		72.6		58.0		12.5		262.4
2017	247,719		—		—		—		—		—		—		—		—		—		17,894		56,033		11,524		85,451		252.2		—		—		—		—		—		—		—		—		17.9		56.0		44.1		9.6		127.6
2018 ⁽⁴⁾	345,892		—		—		—		—		—		—		—		—		—		—		24,326		24,843		49,169
2018																													341.8		—		—		—		—		—		—		—		—		—		24.3		88.7		19.5		132.5
2019	93,270		—		—		—		—		—		—		—		—		—		—		—		1,194		1,194		518.6		—		—		—		—		—		—		—		—		—		—		48.0		33.4		81.4
2020																													61.0		—		—		—		—		—		—		—		—		—		—		—		2.9		2.9
Subtotal	2,293,456		—		—		—		—		11,604		16,063		167,361		343,262		390,520		407,007		443,402		116,858		1,896,077		2,732.5		—		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.2		131.3		2,390.8
Europe-Insolvency
Europe Insolvency																													Europe Insolvency
2014	10,876		—		—		—		—		—		—		5		4,297		3,921		3,207		2,620		555		14,605		10.9		—		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.2		15.7
2015	19,393		—		—		—		—		—		—		—		2,954		4,366		5,013		4,783		1,104		18,220		19.0		—		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		0.9		22.0
2016	42,190		—		—		—		—		—		—		—		—		6,175		12,703		12,856		2,961		34,695		39.3		—		—		—		—		—		—		—		6.2		12.7		12.9		10.7		2.2		44.7
2017	38,787		—		—		—		—		—		—		—		—		—		1,233		7,862		2,359		11,454		39.2		—		—		—		—		—		—		—		—		1.2		7.9		9.2		2.4		20.7
2018	45,633		—		—		—		—		—		—		—		—		—		—		642		1,964		2,606		44.9		—		—		—		—		—		—		—		—		—		0.6		8.4		2.5		11.5
2019	7,125		—		—		—		—		—		—		—		—		—		—		—		34		34		77.2		—		—		—		—		—		—		—		—		—		—		5.0		5.9		10.9
2020																													18.8		—		—		—		—		—		—		—		—		—		—		—		0.1		0.1
Subtotal	164,004		—		—		—		—		—		—		5		7,251		14,462		22,156		28,763		8,977		81,614		249.3		—		—		—		—		—		—		7.3		14.5		22.1		28.8		38.7		14.2		125.6
Total Europe	2,457,460		—		—		—		—		11,604		16,063		167,366		350,513		404,982		429,163		472,165		125,835		1,977,691		2,981.8		—		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		145.5		2,516.4
Total PRA Group	$	9,045,711	$	1,484,006	$	368,003	$	529,342	$	705,490	$	908,684	$	1,142,437	$	1,378,812	$	1,539,495	$	1,491,986	$	1,512,605	$	1,625,205	$	461,171	$	13,147,236	$	10,244.7	$	1,852.0	$	529.4	$	705.5	$	908.7	$	1,142.5	$	1,378.6	$	1,539.6	$	1,492.0	$	1,512.4	$	1,625.1	$	1,841.4	$	494.5	$	15,021.7


~~(4)~~	~~The Europe-Core purchases include a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.~~

Cash Collections by Geography and Type Amounts in thousands

	2019		2018								2017
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas-Core	$	290,723	$	233,937	$	231,253	$	233,752	$	246,237	$	204,245	$	212,756	$	217,020
Americas-Insolvency	44,613		48,000		48,518		56,063		55,280		59,103		60,436		53,163
Europe-Core	116,858		113,154		102,780		109,359		118,109		107,124		102,681		99,121
Europe-Insolvency	8,977		7,618		6,731		7,460		6,954		5,794		5,961		5,371
Total Cash Collections	$	461,171	$	402,709	$	389,282	$	406,634	$	426,580	$	376,266	$	381,834	$	374,675

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

	2019		2018								2017						2020		2019								2018
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Call Center and Other Collections	$	169,753	$	134,543	$	137,325	$	143,527	$	155,448	$	120,349	$	123,009	$	122,780	$	168,166	$	139,399	$	149,782	$	160,479	$	169,753	$	134,543	$	137,325	$	143,527
External Legal Collections	57,419		47,410		41,935		40,631		38,891		31,960		35,042		37,863		66,190		58,831		64,301		63,490		57,419		47,410		41,935		40,631
Internal Legal Collections	37,018		30,724		32,064		32,532		33,423		31,154		31,761		32,511		38,111		33,944		35,679		38,065		37,018		30,724		32,064		32,532
Total US-Core Cash Collections	$	264,190	$	212,677	$	211,324	$	216,690	$	227,762	$	183,463	$	189,812	$	193,154
Total US Core Cash Collections																	$	272,467	$	232,174	$	249,762	$	262,034	$	264,190	$	212,677	$	211,324	$	216,690

Cash Collections per Collector Hour Paid U.S. Portfolio
Cash Collections per Collector Hour Paid U.S. Portfolio Amounts in millions											Cash Collections per Collector Hour Paid U.S. Portfolio Amounts in millions

	Total U.S. core cash collections ⁽¹⁾										Call center and other cash collections ⁽¹⁾
	2019		2018		2017		2016		2015		2020		2019		2018		2017		2016
First Quarter	$	215	$	176	$	254	$	274	$	247	$	172	$	139	$	121	$	161	$	168
Second Quarter	—		152		202		269		245		—		139		101		129		167
Third Quarter	—		163		191		281		250		—		124		107		125		177
Fourth Quarter	—		163		170		248		239		—		128		104		112		153

	Call center and other cash collections ⁽²⁾
	2019		2018		2017		2016		2015
First Quarter	$	139	$	121	$	161	$	168	$	143
Second Quarter	—		101		129		167		141
Third Quarter	—		107		125		177		145
Fourth Quarter	—		104		112		153		139


~~(2)~~	Represents total cash collections less internal legal cash collections, external legal cash collections, and Insolvency cash collections from trustee-administered accounts.

Portfolio Purchases by Geography and Type Amounts in thousands

	2019		2018								2017
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas-Core	$	169,189	$	172,511	$	170,426	$	182,768	$	131,427	$	160,278	$	115,572	$	144,871
Americas-Insolvency	48,243		52,871		17,151		16,651		13,436		44,195		73,497		100,040
Europe-Core ⁽¹⁾	94,283		231,810		45,754		19,403		18,000		152,417		14,695		42,876
Europe-Insolvency	7,134		33,661		4,159		2,577		5,392		17,698		7,146		7,860
Total Portfolio Purchasing	$	318,849	$	490,853	$	237,490	$	221,399	$	168,255	$	374,588	$	210,910	$	295,647

Portfolio Acquisitions by Geography and Type Amounts in thousands

	2020		2019								2018
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas Core	$	172,697	$	118,153	$	168,185	$	121,996	$	169,189	$	172,511	$	170,426	$	182,768
Americas Insolvency	20,772		22,650		26,311		26,092		48,243		52,871		17,151		16,651
Europe Core	60,990		218,919		64,728		136,344		94,283		231,810		45,754		19,403
Europe Insolvency	18,778		42,613		19,772		4,715		7,134		33,661		4,159		2,577
Total Portfolio Acquisitions	$	273,237	$	402,335	$	278,996	$	289,147	$	318,849	$	490,853	$	237,490	$	221,399


~~(1)~~	The Europe-Core purchases in the above table and graph exclude a $34.9 million finance receivables portfolio addition in the third quarter of 2018 relating to the consolidation of a Polish investment fund.

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

	2019		2018								2017						2020				2019
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2		Q1				Q4				Q3				Q2				Q1
Major Credit Cards	$	43,440	$	65,025	$	78,864	$	100,160	$	84,858	$	87,895	$	54,892	$	65,177	$	71,225	38.3	%	$	30,337	24.3	%	$	50,500	40.1	%	$	39,468	28.2	%	$	43,440	27.0	%
Private Label Credit Cards																	104,300		56.0		85,351		68.4		72,714		57.7		70,536		50.4		$	84,515	52.6
Consumer Finance	2,424		2,619		2,248		4,098		3,558		2,360		3,308		7,354		2,109		1.1		2,046		1.7		2,090		1.7		28,649		20.4		$	2,424	1.5
Private Label Credit Cards	84,515		100,633		100,517		82,406		47,962		90,332		78,609		101,162
Auto Related	30,358		31,892		330		427		613		21,219		49,741		67,701		8,510		4.6		6,991		5.6		638		0.5		1,407		1.0		30,358		18.9
Total	$	160,737	$	200,169	$	181,959	$	187,091	$	136,991	$	201,806	$	186,550	$	241,394	$	186,144	100.0	%	$	124,725	100.0	%	$	125,942	100.0	%	$	140,060	100.0	%	$	160,737	100.0	%

U.S. Portfolio Acquisitions by Delinquency Category Amounts in thousands

	2020				2019
	Q1				Q4				Q3				Q2				Q1
Fresh ⁽¹⁾	$	51,126	30.9	%	$	35,330	34.6	%	$	27,600	27.1	%	$	33,288	29.3	%	$	51,212	45.6	%
Primary ⁽²⁾	18,152		11.0		5,796		5.7		17,658		17.3		40,027		35.1		19,725		17.5
Secondary ⁽³⁾	92,855		56.1		52,899		51.8		50,082		49.2		34,920		30.6		35,857		31.9
Tertiary ⁽³⁾	3,239		2.0		4,409		4.3		6,483		6.4		5,733		5.0		4,435		3.9
Other ⁽⁴⁾	—		—		3,641		3.6		—		—		—		—		1,265		1.1
Total Core	165,372		100.0	%	102,075		100.0	%	101,823		100.0	%	113,968		100.0	%	112,494		100.0	%
Insolvency	20,772				22,650				24,119				26,092				48,243
Total	$	186,144			$	124,725			$	125,942			$	140,060			$	160,737

U.S. Portfolio Purchases by Delinquency Category Amounts in thousands

	2019		2018								2017
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Fresh ⁽¹⁾	$	51,212	$	61,730	$	61,882	$	80,976	$	71,067	$	76,910	$	67,540	$	73,813
Primary ⁽²⁾	19,725		39,690		37,670		34,166		3,290		23,100		1,623		4,314
Secondary ⁽³⁾	35,857		45,878		63,525		55,299		49,198		48,865		43,366		52,217
Tertiary ⁽³⁾	4,435		—		—		—		—		8,736		524		—
Insolvency	48,243		52,871		17,151		16,650		13,436		44,195		73,497		100,040
Other ⁽⁴⁾	1,265		—		1,731		—		—		—		—		11,010
Total	$	160,737	$	200,169	$	181,959	$	187,091	$	136,991	$	201,806	$	186,550	$	241,394


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


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


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


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



3.1	Fourth Amended and Restated Certificate of Incorporation of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File No. 000-50058) filed on October 29, 2014).
3.2	Amended and Restated By-Laws of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K (File No. 000-50058) filed on May 22, 2015).
4.1	Form of Common Stock Certificate (Incorporated by reference to Exhibit 4.1 of Amendment No. 1 to the Registration Statement on Form S-1 (Registration No. 333-99225) filed on October 15, 2002).
4.2	Form of Warrant (Incorporated by reference to Exhibit 4.2 of Amendment No. 2 to the Registration Statement on Form S-1 (Registration No. 333-99225) filed on October 30, 2002).
4.3	Indenture dated August 13, 2013 between Portfolio Recovery Associates, Inc. and Wells Fargo Bank, National Association, as trustee (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No. 000-50058) filed on August 14, 2013).
4.4	Indenture dated May 26, 2017 between PRA Group, Inc. and Regions Bank, as trustee (Incorporated by reference to Exhibit 4.1 of the Current Report on Form 8-K (File No. 000-50058) filed on May 26, 2017).
~~10.1~~4.5	~~Fifth~~Description of the Registrant's Securities Registered pursuant to Section 12 of the Securities Exchange Act of 1934 (Incorporated by reference to Exhibit 4.5 of the Current Report on Form 10-K (File No. 000-50058) filed on March 2, 2020).
10.1	Sixth Amendment and Restatement Agreement to the Multicurrency Revolving Credit Facility Agreement, dated as of March ~~25, 2019,~~27, 2020 by and among PRA Group Europe Holding S.à ~~r.l., PRA Group Europe Holding S.à r.l.~~.r.l., Luxembourg, Zug Branch, along with certain guarantors named therein, and ~~DNB Bank ASA.~~the lenders party thereto (filed herewith).
31.1	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
31.2	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes Oxley Act of 2002 (filed herewith).
32.1	Certifications of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes Oxley Act of 2002 (filed herewith).
101.INS	XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH	XBRL Taxonomy Extension Schema Document
101.CAL	XBRL Taxonomy Extension Calculation Linkable Document
101.LAB	XBRL Taxonomy Extension Label Linkable Document
101.PRE	XBRL Taxonomy Extension Presentation Linkable Document
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document
104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)




	PRA Group, Inc.
	(Registrant)

May ~~9, 2019~~7, 2020	By:	/s/ Kevin P. Stevenson
		Kevin P. Stevenson
		President and Chief Executive Officer
		(Principal Executive Officer)