UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

~~FORM~~ ~~10-Q~~

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

For the quarterly period ended March 31, ~~2020~~2021

☐ 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,, Virginia23502

(Address of principal executive offices)

(~~888~~) (888) 772-7326

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

Not Applicable

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

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



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

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

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

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

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

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

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

The number of shares of the registrant's common stock outstanding as of May 5, ~~2020~~2021 was ~~45,541,199.~~45,799,855.

Table of Contents


Part I. Financial Information

~~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. Change in Accounting Principle		109
		3. Finance Receivables, net		119
		4. Investments		1412
		5. Goodwill ~~and Intangible Assets, net~~		1512
		6. Leases		1513
		7. Borrowings		1614
		8. Derivatives		1917
		9. Fair Value		2018
		10. Accumulated Other Comprehensive Loss		2321
		11. Earnings per Share		2321
		12. Income Taxes		2422
		13. Commitments and Contingencies		2422
		~~14.~~1 4 . Recently Issued Accounting Standards		2523
		~~15. Subsequent Events~~		26
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations		2725
Item 3.		Quantitative and Qualitative Disclosures About Market Risk		44
Item 4.		Controls and Procedures		45

Part II. Other Information

Item 1.		Legal Proceedings		46
Item 1A.		Risk Factors		46
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds		46
Item 3.		Defaults Upon Senior Securities		46
Item 4.		Mine Safety Disclosures		46
Item 5.		Other Information		4746
Item 6.		Exhibits		4746

Signatures				4847

Part I. Financial Information

Item 1. Financial Statements (Unaudited)

PRA Group, Inc.

Consolidated Balance Sheets

March 31, ~~2020~~2021 and December 31, ~~2019~~2020

(Amounts in thousands)


	(unaudited)							(unaudited)
	March 31, 2020			December 31, 2019				March 31, 2021		December 31, 2020
Assets							Assets
Cash and cash equivalents	$	179,995		$	119,774		Cash and cash equivalents	$	92,798	$	108,613
Restricted cash							Restricted cash	16,057		12,434
Investments	52,711			56,176			Investments	54,682		55,759
Finance receivables, net	3,408,074			3,514,165			Finance receivables, net	3,372,666		3,514,788
Other receivables, net	11,383			10,606			Other receivables, net	3,223		13,194
Income taxes receivable	29,372			17,918			Income taxes receivable	27,246		21,928
Deferred tax asset, net	63,911			63,225
Deferred tax assets, net							Deferred tax assets, net	72,523		83,205
Right-of-use assets							Right-of-use assets	50,839		52,951
Property and equipment, net	59,882			56,501			Property and equipment, net	56,825		58,356
Right-of-use assets	66,655			68,972
Goodwill	418,565			480,794			Goodwill	492,751		492,989
Intangible assets, net	4,003			4,497
Other assets	55,548			31,263			Other assets	38,920		38,844

Total assets	$	4,350,099		$	4,423,891		Total assets	$	4,278,530	$	4,453,061
Liabilities and Equity							Liabilities and Equity
Liabilities:							Liabilities:
Accounts payable	$	4,328		$	4,258		Accounts payable	$	4,817	$	5,294
Accrued expenses	76,583			88,925			Accrued expenses	76,684		97,320
Income taxes payable	18,596			4,046			Income taxes payable	31,853		29,692
Deferred tax liability, net	69,845			85,390
Deferred tax liabilities, net							Deferred tax liabilities, net	39,739		40,867
Lease liabilities	71,102			73,377			Lease liabilities	55,322		57,348
Interest-bearing deposits	97,465			106,246			Interest-bearing deposits	124,998		132,739
Borrowings	2,828,002			2,808,425			Borrowings	2,501,133		2,661,289
Other liabilities	63,502			26,211			Other liabilities	40,755		54,986

Total liabilities	3,229,423			3,196,878			Total liabilities	2,875,301		3,079,535

Equity:							Equity:
Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	—			—			Preferred stock, $0.01 par value, 2,000 shares authorized, no shares issued and outstanding	0		0
Common stock, $0.01 par value, 100,000 shares authorized, 45,540 shares issued and outstanding at March 31, 2020; 100,000 shares authorized, 45,416 shares issued and outstanding at December 31, 2019	455			454
Common stock, $0.01 par value, 100,000 shares authorized, 45,799 shares issued and outstanding at March 31, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020							Common stock, $0.01 par value, 100,000 shares authorized, 45,799 shares issued and outstanding at March 31, 2021; 100,000 shares authorized, 45,585 shares issued and outstanding at December 31, 2020	458		456
Additional paid-in capital	67,021			67,321			Additional paid-in capital	47,236		75,282
Retained earnings	1,381,766			1,362,631			Retained earnings	1,582,384		1,511,970
Accumulated other comprehensive loss	(375,617		)	(261,018		)	Accumulated other comprehensive loss	(253,576)		(245,791)
Total stockholders' equity - PRA Group, Inc.	1,073,625			1,169,388			Total stockholders' equity - PRA Group, Inc.	1,376,502		1,341,917
Noncontrolling interest	47,051			57,625			Noncontrolling interest	26,727		31,609
Total equity	1,120,676			1,227,013			Total equity	1,403,229		1,373,526
Total liabilities and equity	$	4,350,099		$	4,423,891		Total liabilities and equity	$	4,278,530	$	4,453,061

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

Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Income Statements

For the three months ended March 31, ~~2020~~2021 and ~~2019~~2020

(unaudited)

(Amounts in thousands, except per share amounts)


	Three Months Ended March 31,							Three Months Ended March 31,
	2020			2019				2021		2020
Revenues:							Revenues:
Portfolio income	$	262,022		$	—		Portfolio income	$	231,672	$	262,022
Changes in expected recoveries	(12,816		)	—			Changes in expected recoveries	50,136		(12,816)
Income recognized on finance receivables	—			238,836

Fee income	2,209			6,374			Fee income	2,181		2,209
Other revenue	369			667			Other revenue	5,480		369
Total revenues	251,784			245,877			Total revenues	289,469		251,784

Net allowance charges	—			(6,095		)


Operating expenses:							Operating expenses:
Compensation and employee services	75,171			79,645			Compensation and employee services	73,984		75,171
Legal collection fees	14,572			13,059			Legal collection fees	12,926		14,572
Legal collection costs	34,447			35,229			Legal collection costs	21,312		34,447
Agency fees	13,376			14,032			Agency fees	15,591		13,376
Outside fees and services	19,394			15,248			Outside fees and services	20,760		19,394
Communication	13,511			13,201			Communication	12,663		13,511
Rent and occupancy	4,484			4,363			Rent and occupancy	4,480		4,484
Depreciation and amortization	4,084			4,572			Depreciation and amortization	3,981		4,084
Other operating expenses	12,205			11,585			Other operating expenses	13,018		12,205

Total operating expenses	191,244			190,934			Total operating expenses	178,715		191,244

Income from operations	60,540			48,848			Income from operations	110,754		60,540
Other income and (expense):							Other income and (expense):

Interest expense, net	(37,211		)	(33,981		)	Interest expense, net	(31,552)		(37,211)
Foreign exchange gain	2,283			6,264
Foreign exchange (loss)/gain							Foreign exchange (loss)/gain	(26)		2,283
Other	(76		)	(352		)	Other	26		(76)
Income before income taxes	25,536			20,779			Income before income taxes	79,202		25,536
Income tax expense	3,100			3,867			Income tax expense	17,322		3,100
Net income	22,436			16,912			Net income	61,880		22,436
Adjustment for net income attributable to noncontrolling interests	3,301			1,685			Adjustment for net income attributable to noncontrolling interests	3,474		3,301
Net income attributable to PRA Group, Inc.	$	19,135		$	15,227		Net income attributable to PRA Group, Inc.	$	58,406	$	19,135
Net income per common share attributable to PRA Group, Inc.:							Net income per common share attributable to PRA Group, Inc.:
Basic	$	0.42		$	0.34		Basic	$	1.28	$	0.42
Diluted	$	0.42		$	0.34		Diluted	$	1.27	$	0.42
Weighted average number of shares outstanding:							Weighted average number of shares outstanding:
Basic	45,452			45,338			Basic	45,669		45,452
Diluted	45,784			45,419			Diluted	46,045		45,784

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

Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Comprehensive Income/(Loss)

For the three months ended March 31, ~~2020~~2021 and ~~2019~~2020

(unaudited)

(Amounts in thousands)


	Three Months Ended March 31,							Three Months Ended March 31,
	2020			2019				2021		2020
Net income	$	22,436		$	16,912		Net income	$	61,880	$	22,436
Other comprehensive (loss)/income, net of tax:
Other comprehensive income/(loss), net of tax:							Other comprehensive income/(loss), net of tax:
Currency translation adjustments	(108,076		)	(1,173		)	Currency translation adjustments	(24,531)		(108,076)
Cash flow hedges	(20,568		)	(5,715		)	Cash flow hedges	12,323		(20,568)
Debt securities available-for-sale	170			45			Debt securities available-for-sale	0		170
Other comprehensive loss	(128,474		)	(6,843		)	Other comprehensive loss	(12,208)		(128,474)
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
Total comprehensive income/(loss)							Total comprehensive income/(loss)	49,672		(106,038)
Less comprehensive loss attributable to noncontrolling interests							Less comprehensive loss attributable to noncontrolling interests	(950)		(10,574)
Comprehensive income/(loss) attributable to PRA Group, Inc.							Comprehensive income/(loss) attributable to PRA Group, Inc.	$	50,622	$	(95,464)

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

Consolidated Financial Statements.

PRA Group, Inc.

Consolidated Statements of Changes in Equity

For the three months ended March 31, ~~2020~~2021 and ~~March 31, 2019~~2020

(unaudited)

(Amounts in thousands)

Common Stock Additional Paid-in Capital Retained Earnings Accumulated Other Comprehensive (Loss) Noncontrolling Interest Total Equity
Shares Amount
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		Retained		Accumulated Other Comprehensive		Noncontrolling		Total
	Shares	Amount		Capital		Earnings		(Loss)		Interest		Equity
Balance at December 31, 2020	45,585	$	456	$	75,282	$	1,511,970	$	(245,791)	$	31,609	$	1,373,526
Effect of change in accounting principle (1)	—	—		(26,697)		12,008		—		—		(14,689)
Balance at January 1, 2021	45,585	456		48,585		1,523,978		(245,791)		31,609		1,358,837
Components of comprehensive income, net of tax:
Net income	—	—		—		58,406		—		3,474		61,880
Currency translation adjustments	—	—		—		—		(20,108)		(4,423)		(24,531)
Cash flow hedges	—	—		—		—		12,323		—		12,323






Distributions to noncontrolling interest	—	—		—		—		—		(3,933)		(3,933)

Vesting of restricted stock	214	2		(2)		—		—		—		0

Share-based compensation expense	—	—		4,113		—		—		—		4,113

Employee stock relinquished for payment of taxes	—	—		(5,460)		—		—		—		(5,460)

Balance at March 31, 2021	45,799	$	458	$	47,236	$	1,582,384	$	(253,576)	$	26,727	$	1,403,229


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

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

PRA Group, Inc.

Consolidated Statements of Cash Flows

For the three months ended March 31, ~~2020~~2021 and ~~2019~~2020

(unaudited)

(Amounts in thousands)


	Three Months Ended March 31,							Three Months Ended March 31,
	2020			2019				2021		2020
Cash flows from operating activities:							Cash flows from operating activities:
Net income	$	22,436		$	16,912		Net income	$	61,880	$	22,436
Adjustments to reconcile net income to net cash provided by operating activities:							Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation expense	2,857			2,314			Share-based compensation expense	4,113		2,857
Depreciation and amortization	4,084			4,572			Depreciation and amortization	3,981		4,084

Amortization of debt discount and issuance costs	5,857			5,678			Amortization of debt discount and issuance costs	2,256		5,857
Changes in expected recoveries	12,816			—			Changes in expected recoveries	(50,136)		12,816

Deferred income taxes	(12,755		)	(9,994		)	Deferred income taxes	10,371		(12,755)
Net unrealized foreign currency transactions	24,873			(6,632		)	Net unrealized foreign currency transactions	2,134		24,873
Fair value in earnings for equity securities	(7,566		)	(2,139		)	Fair value in earnings for equity securities	(107)		(7,566)
Net allowance charges	—			6,095
Other	(135		)	—			Other	(419)		(135)

Changes in operating assets and liabilities:							Changes in operating assets and liabilities:
Other assets	(1,242		)	550			Other assets	670		(1,242)
Other receivables, net	(545		)	(1,289		)	Other receivables, net	10,043		(545)
Accounts payable	221			(548		)	Accounts payable	(431)		221
Income taxes payable, net	3,835			(13,040		)	Income taxes payable, net	(3,669)		3,835
Accrued expenses	(8,990		)	1,553			Accrued expenses	(20,227)		(8,990)
Other liabilities	994			10,888			Other liabilities	(336)		994
Right of use asset/lease liability	66			—			Right of use asset/lease liability	85		66
Other, net	—			37

Net cash provided by operating activities	46,806			14,957			Net cash provided by operating activities	20,208		46,806
Cash flows from investing activities:							Cash flows from investing activities:
Purchases of property and equipment	(7,639		)	(4,493		)
Acquisition of finance receivables	(271,845		)	(264,632		)
Purchases of property and equipment, net							Purchases of property and equipment, net	(2,366)		(7,639)

Purchases of finance receivables							Purchases of finance receivables	(159,328)		(271,845)
Recoveries applied to negative allowance	236,656			—			Recoveries applied to negative allowance	328,559		236,656
Collections applied to principal on finance receivables	—			222,335
Proceeds from/(purchase of) investments	36			(82,616		)

Proceeds from sales and maturities of investments	612			42,940			Proceeds from sales and maturities of investments	764		648
Business acquisition, net of cash acquired	—			(57,610		)	Business acquisition, net of cash acquired	(647)		0
Proceeds from sale of subsidiaries, net	—			31,177
Net cash used in investing activities	(42,180		)	(112,899		)

Net cash provided by/(used in) investing activities							Net cash provided by/(used in) investing activities	166,982		(42,180)
Cash flows from financing activities:							Cash flows from financing activities:
Proceeds from lines of credit	315,118			537,891			Proceeds from lines of credit	45,369		315,118
Principal payments on lines of credit	(227,459		)	(132,486		)	Principal payments on lines of credit	(226,621)		(227,459)
Principal payments on notes payable and long-term debt	(2,500		)	(305,665		)

Principal payments on long-term debt							Principal payments on long-term debt	(2,500)		(2,500)

Payments of origination cost and fees	(8,203		)	—			Payments of origination cost and fees	(113)		(8,203)
Tax withholdings related to share-based payments	(3,156		)	(1,437		)	Tax withholdings related to share-based payments	(5,460)		(3,156)
Distributions paid to noncontrolling interest	—			(6,877		)	Distributions paid to noncontrolling interest	(3,933)		0
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

Net increase/(decrease) in interest-bearing deposits							Net increase/(decrease) in interest-bearing deposits	303		(1,658)

Net cash (used in)/provided by financing activities							Net cash (used in)/provided by financing activities	(192,955)		72,142
Effect of exchange rate on cash	(16,575		)	(4,115		)	Effect of exchange rate on cash	(6,427)		(16,575)
Net increase in cash and cash equivalents	60,193			3,407
Cash and cash equivalents, beginning of period	123,807			98,695
Cash and cash equivalents, end of period	$	184,000		$	102,102
Net (decrease)/increase in cash, cash equivalents and restricted cash							Net (decrease)/increase in cash, cash equivalents and restricted cash	(12,192)		60,193
Cash, cash equivalents and restricted cash beginning of period							Cash, cash equivalents and restricted cash beginning of period	121,047		123,807
Cash, cash equivalents and restricted cash, end of period							Cash, cash equivalents and restricted cash, end of period	$	108,855	$	184,000
Supplemental disclosure of cash flow information:							Supplemental disclosure of cash flow information:
Cash paid for interest	$	30,502		$	25,479		Cash paid for interest	$	32,622	$	30,502
Cash paid for income taxes	12,100			27,293			Cash paid for income taxes	10,463		12,100
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.~~Consolidated Financial Statements.

PRA Group, Inc.

Notes to Consolidated Financial Statements

1. Organization and Business:

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

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

~~On March 11, 2020, due to the global outbreak~~Basis 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.

presentation: The ~~consolidated financial statements~~Consolidated Financial Statements of the Company are prepared in accordance with U.S. generally accepted accounting principles ("GAAP"). The accompanying interim financial statements have been prepared in accordance with the instructions for Quarterly Reports on Form 10-Q and, therefore, do not include all information and Notes to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of March 31, 2021 and its Consolidated Income Statements, Statements of Comprehensive Income/(Loss), Statements of Changes in Equity and Statements of Cash Flows for the three months ended March 31, 2021 and 2020, have been included. The Company's Consolidated Income Statements for the three months ended March 31, 2021 may not be indicative of future results.

These unaudited Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 (the "2020 Form 10-K").

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

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

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

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

Segments: Under the guidance of the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") ASC Topic 280 "Segment Reporting" ("ASC 280"), the Company has determined that it has several operating segments that meet the aggregation criteria of ASC 280, and, therefore, it has 1 reportable segment, accounts receivable management. This conclusion is based on similarities among the operating units, including economic characteristics, 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, ~~2020~~2021 and ~~2019,~~2020, and long-lived assets held at March 31, ~~2020~~2021 and ~~2019,~~2020, both for the U.S., the Company's country of domicile, and outside of the U.S. (amounts in thousands):


	As of and for the				As of and for the
	Three Months Ended March 31, 2021				Three Months Ended March 31, 2020
	Revenues (2)		Long-Lived Assets		Revenues (2)		Long-Lived Assets
United States	$	178,181	$	96,630	$	153,335	$	115,053
United Kingdom	48,177		2,269		36,340		3,076
Other (1)	63,111		8,765		62,109		8,408
Total	$	289,469	$	107,664	$	251,784	$	126,537

As of and for the As of and for the
Three Months Ended March 31, 2020 Three Months Ended March 31, 2019
Revenues Long-Lived Assets Revenues Long-Lived Assets
United States $ 153,335
$ 115,053
$ 167,576
$ 110,643
United Kingdom 36,340
3,076
29,756
3,993
Other ⁽¹⁾
62,109
8,408
48,545
10,377
Total $ 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.

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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 acquisitions and~~ collection activities on nonperforming loans, fee-based services and 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.~~4.

~~Beginning January 1,~~

2. Change in Accounting Principle:

In August 2020, the ~~Company implemented~~FASB issued Accounting Standards Update ("ASU") ~~ASU 2016-13, "Financial~~2020-06 Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments ~~- Credit Losses" ("Topic 326")~~and Contracts in an Entity’s Own Equity ("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"2020-06"). ~~Refer~~ASU 2020-06 reduces the number of accounting models for convertible debt instruments and convertible preferred stock. Additionally, ASU 2020-06 removes certain settlement conditions that are required for equity contracts to ~~Note 2.~~qualify for the derivative scope exception and simplifies the diluted earnings per share ("EPS") calculation in certain areas.

~~Finance receivables and income recognition:~~ The Company accounts for its ~~investment in finance receivables at amortized cost under~~3.50% Convertible Notes due 2023 (the "2023 Notes" or the ~~guidance of ASC Topic 310 “Receivables” (“ASC Topic 310”~~"Convertible Notes") 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~~470-20, "Debt with Conversion and ~~Other"~~Other Options" ("ASC ~~350"~~470"). Under ASU 2020-06, the embedded conversion features are no longer separated from the host contract for convertible instruments with conversion features that are not required to be accounted for as derivatives under ASC Topic 815 "Derivatives and Hedging" ("ASC 815"), isor that do not result in substantial premiums accounted for as paid-in capital. Consequently, a convertible debt instrument will be accounted for as a single liability measured at its amortized ~~but rather is reviewed for impairment annually or more frequently if indicators~~cost. The Company adopted the standard using a modified retrospective method, with adjustments which increased retained earnings by $12.0 million, reduced additional paid-in capital by $26.7 million and increased the net carrying amount of ~~potential impairment exist. On~~the 2023 Notes by $19.8 million at January 1, ~~2020,~~2021. Additionally, 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~~effect 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 to the Consolidated Financial Statements necessary for a complete presentation of financial position, results of operations, comprehensive income/(loss) and cash flows in conformity with GAAP. In the opinion of management, all adjustments, consisting of normal and recurring items, necessary for the fair presentation of the Company's Consolidated Balance Sheets as of March 31, 2020, its Consolidated Income Statements, and Statements of Comprehensive Income/(Loss)adoption reduced interest expense for the three months ended March 31, ~~2020~~2021 by $2.0 million, increased net income by $1.6 million and 2019, and its Statements of Changes in Equity and Consolidated Statements of Cash Flows for the three months ended March 31, 2020 and 2019, have been included. The Consolidated Income Statements of the Company for the three months ended March 31, 2020 may not be indicative of future results.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2019 (the "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 presentincreased earnings per share by $0.04 per share. For more information 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.~~

2023 Notes, ~~to Consolidated Financial Statements~~

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

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

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

see
Note 7.

3. Finance Receivables, net:

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

~~Finance~~ receivables, net ~~consists~~consisted of the following at March 31, 2021 and December 31, 2020 (amounts in thousands):

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


	March 31, 2021		December 31, 2020
Amortized cost	$	0	$	0
Negative allowance for expected recoveries (1)	3,372,666		3,514,788
Balance at end of period	$	3,372,666	$	3,514,788

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

Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended March 31, 2021 and 2020 were as follows (amounts in thousands):


	March 31, 2021
	Core		Insolvency		Total
Balance at beginning of period	$	3,019,477	$	495,311	$	3,514,788
Initial negative allowance for expected recoveries - portfolio acquisitions (1)	133,007		25,954		158,961
Foreign currency translation adjustment	(24,249)		1,589		(22,660)
Recoveries applied to negative allowance (2)	(285,171)		(43,388)		(328,559)
Changes in expected recoveries (3)	48,410		1,726		50,136
Balance at end of period	$	2,891,474	$	481,192	$	3,372,666

PRA Group, Inc.

Notes to Consolidated Financial Statements


											March 31, 2020
	Core			Insolvency			Total				Core		Insolvency		Total
Balance at beginning of period	$	3,051,426		$	462,739		$	3,514,165		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			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		)	Foreign currency translation adjustment	(120,214)		(9,642)		(129,856)
Recoveries applied to negative allowance ⁽²⁾	(199,038		)	(37,618		)	(236,656		)	Recoveries applied to negative allowance (2)	(199,038)		(37,618)		(236,656)
Changes in expected recoveries ⁽³⁾	(16,477		)	3,661			(12,816		)	Changes in expected recoveries (3)	(16,477)		3,661		(12,816)
Balance at end of period	$	2,949,384		$	458,690		$	3,408,074		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, 2021 and 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


	March 31, 2021
	Core		Insolvency		Total
Face value	$	1,088,655	$	134,811	$	1,223,466
Noncredit discount	(132,532)		(7,498)		(140,030)
Allowance for credit losses at acquisition	(823,116)		(101,359)		(924,475)
Purchase price	$	133,007	$	25,954	$	158,961

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~


	March 31, 2020
	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

The initial negative allowance recorded on portfolio acquisitions for the three months ended March 31, 2021 and 2020 ~~was~~were as follows (amounts in thousands):


	March 31, 2021
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(823,116)	$	(101,359)	$	(924,475)
Writeoffs, net	823,116		101,359		924,475
Expected recoveries	133,007		25,954		158,961
Initial negative allowance for expected recoveries	$	133,007	$	25,954	$	158,961


	March 31, 2020
	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

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

(2) Recoveries applied to negative allowance

Recoveries applied to the negative allowance were computed as follows for the three months ended March 31, 2021 and 2020 (amounts in thousands):


	March 31, 2021
	Core		Insolvency		Total
Recoveries (a)	$	500,332	$	59,899	$	560,231
Less - amounts reclassified to portfolio income (b)	215,161		16,511		231,672
Recoveries applied to negative allowance	$	285,171	$	43,388	$	328,559


								March 31, 2020
	Core		Insolvency		Total			Core		Insolvency		Total
Recoveries^(a)	$	440,694	$	57,984	$	498,678	Recoveries (a)	$	440,694	$	57,984	$	498,678
Less - amounts reclassified to portfolio income ^(b)	241,656		20,366		262,022		Less - amounts reclassified to portfolio income (b)	241,656		20,366		262,022
Recoveries applied to negative allowance	$	199,038	$	37,618	$	236,656	Recoveries applied to negative allowance	$	199,038	$	37,618	$	236,656

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

(b) ~~The Company reported income on expected recoveries based on~~For more information, refer to the ~~constant effective interest rate in~~Company's discussion of portfolio income onwithin finance receivables and income recognition within Note 1 of the Company's Consolidated ~~Income Statements.~~Financial Statements included in Item 8 of the 2020 Form 10-K.

(3) Changes in expected recoveries

Changes in expected recoveries ~~consists~~consisted of the following for the three months ended March 31, 2021 and 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 )


	March 31, 2021
	Core		Insolvency		Total
Changes in expected future recoveries	$	(46,502)	$	(6,350)	$	(52,852)
Recoveries received in excess of forecast	94,912		8,076		102,988
Changes in expected recoveries	$	48,410	$	1,726	$	50,136


	March 31, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(20,524)	$	(102)	$	(20,626)
Recoveries received in excess 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~~make estimates 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.~~consumer habits. The Company ~~also~~ considered ~~current~~recent collection activity in its determination to adjust ~~the timing of near term ERC~~assumptions related to near-term estimated remaining collections ("ERC") for certain pools. Based on these considerations, the Company’s estimates incorporate changes in both amounts and in the timing of expected cash collections over the ~~next 6 to 12 months. Changes~~forecast period.

For the three months ended March 31, 2021, changes in expected recoveries were a ~~net write down~~positive $50.1 million. This reflects $103.0 million in recoveries received in excess of forecast, which was largely due to significant cash collections overperformance, reduced by a $52.9 million negative adjustment to changes in expected future recoveries. The changes in expected future recoveries reflect the Company's assumption that the majority of the current quarter overperformance was due to acceleration in the timing of cash collections rather than an increase to total expected collections resulting in a present value adjustment.

For the three months ended March 31, 2020, changes in expected recoveries were a negative $12.8 million. This ~~reflects~~reflected a $20.6 million ~~net,~~ negative adjustment to the present value of expected future recoveries primarily related to an expected delay in cash collections from the impact of ~~COVID-19,~~the novel coronavirus ("COVID-19") pandemic, partially offset by $7.8 million in recoveries received in excess of ~~expectations~~forecast 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 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


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

During the three months ended March 31, 2019, the Company acquired finance receivable portfolios with a face value of $4.7 billion for $318.8 million. At March 31, 2019, the ERC on the receivables acquired during the three months ended March 31, 2019 were $541.1 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

~~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.~~

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

~~Changes in accretable yield for the three months ended March 31, 2019 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~~

The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired finance receivables, for the three months ended March 31, 2019 (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

4. Investments:

Investments consisted of the following at March 31, ~~2020~~2021 and December 31, ~~2019~~2020 (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, 2021		December 31, 2020


Debt securities



Available-for-sale	$	5,308	$	5,368


Equity securities
Exchange traded funds	34,841		34,847
Private equity funds	6,155		6,123
Mutual funds	896		1,023
Equity method investments	7,482		8,398

Total investments	$	54,682	$	55,759

Debt Securities

Available-for-sale

Government bonds: The Company's investments in government bonds are classified as available-for-sale and are stated at fair value.

The amortized cost and estimated fair value of investments in debt securities at March 31, ~~2020~~2021 and December 31, ~~2019~~2020 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, 2021
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale


Government bonds	$	5,179	$	129	$	0	$	5,308






	December 31, 2020
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses		Aggregate Fair Value
Available-for-sale

Government bonds	$	5,239	$	129	$	0	$	5,368

Equity Securities

~~Investments~~Exchange traded funds: The Company invests in ~~private~~certain treasury bill exchange traded funds, which are accounted for as equity securities and carried at fair value. Gains and losses from these investments are included within Other income and (expense) in the Company's Consolidated Income Statements.

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

Mutual funds: ~~The Company invests certain excess~~Mutual funds represent funds held in Brazil in a Brazilian real denominated mutual fund benchmarked to the U.S. dollar that invests principally in Brazilian fixed income securities. The investments are carried at fair value based on quoted market prices. Gains and losses from this investment are included as a foreign exchange component of ~~other~~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 $7.6 million and $2.1 million for the three months ended March 31, 2020 and 2019, respectively.~~

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Equity Method Investments

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

5. ~~Goodwill and Intangible Assets, net:~~Goodwill:

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 an annual review of goodwill as of October 1 of each year or more frequently if indicators of impairment exist. The Company performed its most recent annual review as of October 1, ~~2019~~2020 and concluded that no goodwill

PRA Group, Inc.

Notes to Consolidated Financial Statements

impairment was necessary. The Company performed its quarterly assessment by evaluating whether aany triggering ~~event~~events had occurred as of March 31, ~~2020~~2021, which included considering current market ~~conditions resulting from the global COVID-19 pandemic.~~conditions. The Company concluded that no triggering event had occurred atas of March 31, ~~2020~~2021 and will continue to monitor the market for any adverse ~~conditions resulting from the COVID-19 pandemic.~~conditions.

The ~~following table represents the~~ changes in goodwill for the three months ended March 31, 2021 and 2020, ~~and 2019~~were as follows (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,
	2021		2020
Balance at beginning of period	$	492,989	$	480,794






Change in foreign currency translation adjustment	(238)		(62,229)




Balance at end of period	$	492,751	$	418,565

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

6. Leases:

The Company's operating lease portfolio primarily includes corporate offices and call centers. The majority of its leases have remaining lease terms of 1one year to 2015 years, some of which include options to extend the leases for 5five years, and others include options to terminate the leases within 1one year. Exercises of lease renewal options are typically at the Company's sole discretion and are included in its right-of-use ("ROU") assets and lease liabilities based upon whether the Company is reasonably certain of exercising the renewal options. The Company has lease agreements with lease and non-lease components, which are generally accounted for separately. The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

As most of the Company's leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments.

The components of lease expense for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, 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~~


	Three Months Ended March 31,
	2021		2020
Operating lease expense	$	2,981	$	3,063
Short-term lease expense	676		693







Total lease expense	$	3,657	$	3,756

Supplemental cash flow information and non-cash activity related to leases for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 were as follows (amounts in thousands):


	Three Months Ended March 31,
	2021		2020
Cash paid for amounts included in the measurement of operating lease liabilities	$	2,865	$	2,991

ROU assets obtained in exchange for operating lease obligations	304		531

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

Lease term and discount rate information related to operating leases were as follows as of the dates indicated:


	Three months ended March 31,					Three Months Ended March 31,
	2020		2019			2021		2020
Weighted-average remaining lease term (years)	10.6		11.0		Weighted-average remaining lease term (years)	9.0		10.6


Weighted-average discount rate	4.89	%	4.95	%	Weighted-average discount rate	4.72	%	4.89	%

PRA Group, Inc.

Notes to Consolidated Financial Statements

Maturities of lease liabilities at March 31, ~~2020~~2021 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 ending December 31, 2021	$	8,821
For the year ending December 31, 2022	9,745
For the year ending December 31, 2023	7,421
For the year ending December 31, 2024	6,374
For the year ending December 31, 2025	6,178
Thereafter	29,877
Total lease payments	$	68,416
Less: imputed interest	13,094
Total	$	55,322

7. Borrowings:

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


	March 31, 2021		December 31, 2020
Americas revolving credit (1)	$	376,392	$	405,706
Europe revolving credit	1,023,039		1,171,890

Term loan	467,500		470,000


Senior Notes	300,000		300,000
Convertible Notes	345,000		345,000
	2,511,931		2,692,596
Less: Debt discount and issuance costs	(10,798)		(31,307)
Total	$	2,501,133	$	2,661,289

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

(1) Includes North American revolver and Colombian revolver.

The following principal payments are due on the Company's borrowings as of March 31, ~~2020~~2021 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


2022	$	10,979
2023	1,033,708
2024	355,000
2025	812,244
2026	300,000

Total	$	2,511,931

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

2021.

North American Revolving Credit and Term Loan

~~On May 5, 2017, the~~The Company ~~amended and restated its existing~~has a 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.~~ therein,(the "North American Credit Agreement").

The total credit facility under the North American Credit Agreement includes an aggregate principal amount of ~~$1,540.5 million~~$1.5 billion (subject to compliance with a borrowing base and applicable debt covenants), which consists of (i) a fully-funded ~~$422.5~~$467.5 million term loan, (ii) a ~~$1,068.0 million~~$1.0 billion domestic revolving credit facility, and (iii) a ~~$50.0~~$75.0 million Canadian revolving credit facility. The facility includes an accordion feature for up to $500.0 million in additional commitments (at the option of the lender) and also provides for up to $25.0 million of letters of credit and a $25.0 million swingline loan ~~sublimit~~sub-limit that would reduce amounts available for borrowing. The term and revolving loans accrue interest, at the option of the Company, at either the base rate 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~~revolving loans within 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 bear interest atcredit facility are subject to a ~~rate per annum equal~~0.75% floor.

PRA Group, Inc.

Notes to ~~the Canadian Prime Rate plus 1.50%.~~ Consolidated Financial Statements

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.~~2024. As of March 31, ~~2020,~~2021, the unused portion of the North American Credit Agreement was ~~$371.2~~$700.3 million. Considering borrowing base restrictions, as of March 31, ~~2020,~~2021, the amount available to be drawn was ~~$175.7~~$251.0 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~~ERC borrowing base ~~calculations and may not exceed~~is 35% ~~of the ERC of~~for all ~~domestic or Canadian, as applicable,~~eligible core ~~eligible~~ asset pools ~~plus~~and 55% ~~of ERC of domestic or Canadian, as applicable,~~for all insolvency eligible asset ~~pools, plus 75% of domestic or Canadian, as applicable, eligible accounts receivable;~~pools;

•the consolidated total leverage ratio cannot exceed ~~2.75~~3.50 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; and

~~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);~~

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

~~restrictions on changes in control.~~quarter.

European Revolving Credit Facility ~~and Term Loan~~

~~On October 23, 2014,~~ European subsidiaries of the Company ("PRA Europe") ~~entered into~~are parties to a credit agreement with DNB Bank ASA and a syndicate of lenders named therein, for a Multicurrency Revolving Credit Facility (such agreement as later amended or modified, the "European Credit Agreement"). ~~In the first quarter of 2020,~~On March 12, 2021, the Company entered into the ~~Sixth~~Seventh Amendment and Restatement ~~Agreement~~ to its European Credit Agreement ~~which,~~that, among other things, increased ~~the total commitments~~borrowings by ~~$200 million, extended the majority of the facility by 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.~~through the accordion feature.

~~Under the terms of the~~The European Credit Agreement ~~the credit facility includes~~provides borrowings for an aggregate amount of ~~$1,300.0 million~~approximately $1.35 billion (subject to the borrowing base), accrues interest at the Interbank Offered Rate ~~("IBOR")~~ plus 2.70% - 3.80% (as determined by the estimated remaining collections ratio ("ERC Ratio") as defined in the European Credit Agreement), bears an unused line fee, currently 1.23% per annum, ofor 35% of the margin, is payable monthly in arrears and matures February 19, 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, 2023. As of March 31, ~~2020, the outstanding balance under the European Credit Agreement was $1,058.3 million and~~2021, the unused portion of the European Credit Agreement (including the overdraft facility) was ~~$281.7~~$367.0 million. Considering borrowing base restrictions and other covenants as of March 31, ~~2020,~~2021, the amount available to be drawn under the European Credit Agreement (including the overdraft facility) was ~~$56.4~~$237.0 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 loans receivable in Europe. The European Credit Agreement contains restrictive covenants and events of default including the following:

•the ERC Ratio cannot exceed 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~~is party to a credit agreement ~~that provides for borrowings~~with Bancolombia in an aggregate amount of approximately ~~$4.9~~$5.3 million. As of March 31, ~~2020,~~2021, the outstanding balance under the credit agreement was ~~$2.4~~approximately $1.6 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.~~lender. As of March 31, ~~2020,~~2021, the unused portion of the ~~Colombia Credit Agreement~~credit agreement was ~~$2.5~~approximately $3.7 million.

~~Convertible~~ Senior Notes due ~~2020~~2025

On August ~~13, 2013,~~27, 2020, the Company completed the private offering of ~~$287.5~~$300.0 million in aggregate principal amount of its ~~3.00% Convertible~~7.375% Senior Notes due ~~August~~September 1, ~~2020~~2025 (the ~~"2020~~"2025 Notes" or "Senior Notes"). The ~~2020~~2025 Notes were issued pursuant to an Indenture dated August ~~13, 2013~~27, 2020 (the ~~"2013~~"2020 Indenture"), between the Company and Regions Bank, as ~~successor~~a trustee. The ~~2013~~ 2020

PRA Group, Inc.

Notes to Consolidated Financial Statements

Indenture contains customary terms and covenants, including certain events of default after which the ~~2020~~2025 Notes may be due and payable immediately. The ~~2020~~2025 Notes are senior unsecured obligations of the ~~Company.~~Company and are guaranteed on a senior unsecured basis by all of the Company's existing and future domestic restricted subsidiaries that guarantee the North American Credit Agreement, subject to certain exceptions. Interest on the ~~2020~~2025 Notes is payable semi-annually, in arrears, on ~~February~~March 1 and ~~August~~September 1 of each year. ~~Prior~~

On or after September 1, 2022, the 2025 Notes may be redeemed, in whole or in part, at a price equal to ~~February 1, 2020, the 2020 Notes were convertible only upon the occurrence~~103.688% of ~~specified events. As of March 31, 2020 the 2020 Notes are convertible at any time.~~

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~~2025 Notes being redeemed. The applicable redemption price changes if redeemed during the 12-months beginning September 1 of each year to, 101.844% for 2023 and then 100% for 2024 and thereafter.

In addition, on or before September 1, 2022, the Company may redeem up to 40% of the aggregate principal amount of the 2025 Notes at a redemption price of 107.375% plus accrued and unpaid interest subject to the rights of holders of the 2025 Notes with the net cash proceeds of a public offering of common stock ~~or a combination of cash and shares~~ of the ~~Company's common stock,~~Company provided, that at ~~the Company's election, for the remainder). As a result and~~least 60% 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 settlementaggregate principal amount of the ~~conversion spread has a dilutive effect when~~2025 Notes remains outstanding immediately after the ~~average share price~~occurrence of ~~the Company's common stock during any quarter exceeds $65.72.~~

~~The Company determined~~such redemption and that ~~the fair value~~such redemption will occur within 90 days of ~~the 2020 Notes at~~ the date of ~~issuance was approximately $255.3 million, and designated~~ the ~~residual value~~closing of ~~approximately $32.2 million as~~such public offering.

In the ~~equity component. Additionally,~~event of a Change of Control (as defined in the 2020 Indenture), the Company ~~allocated approximately $7.3 million~~must offer to repurchase all of the ~~$8.2 million 2020~~2025 Notes ~~issuance cost as debt issuance cost~~(unless otherwise redeemed) at a price equal to 101% of their aggregate principal amount, plus accrued and unpaid interest. If the ~~remaining $0.9 million as equity issuance cost.~~Company sells assets under certain circumstances and does not use the proceeds for specified purposes, the Company will be required to make an offer to repurchase the 2025 Notes at 100% of their principal amount, plus accrued and unpaid interest.

Convertible Senior Notes due 2023

On May 26, 2017, the Company completed the private offering of $345.0 million in aggregate principal amount of its 3.50% Convertible Senior Notes due June 1, ~~2023 (the "2023 Notes" and, together with the 2020 Notes, the "Notes").~~2023. 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. ~~Prior~~

The holders of the 2023 Notes have the right to convert all, or a portion of, the 2023 Notes upon occurrence of specific events prior to the close of business on the business day immediately preceding prior to March 1, 2023 including:

•if during any calendar quarter, the last reported sales price of the Company's common stock is greater than 130% of the conversion price for at least 20 trading days during the period of 30 consecutive trading days;

•if the trading price of the 2023 Notes ~~will be convertible only upon~~is less than 98% of the ~~occurrence~~product of ~~specified events.~~ the last reported sales price of the Company's common stock and the conversion rate for a 10 consecutive trading day period;

•the Company elects to issue to all, or substantially all, holders of its common stock any rights, options or warrants entitling them, for a period of more than 45 calendar days, to subscribe for or purchase shares at a price per share that is less than the average of the last reported sales price (as defined in the 2017 Indenture) for the 10 consecutive trading day-period ending on the trading day immediately preceding the date of announcement of such issuance;

•the Company elects to distribute to all, or substantially all, holders of its common stock the Company’s assets, debt securities or rights to purchase securities of the Company, which distribution has a share value exceeding 10% of the last reported sale price (as defined in the 2017 Indenture) on the trading day preceding the announcement of such distribution; or

•a transaction occurs that constitutes a fundamental change (as defined in the 2017 Indenture) or, the Company is party to a consolidation, merger, binding share exchange, or transfer or lease of all, or substantially all, of the Company’s assets.

On or after March 1, 2023, the 2023 Notes will be convertible at any time. ~~The~~As of March 31, 2021, the Company does not believe that any of the conditions allowing holders of the 2023 Notes to convert their notes has occurred.

Furthermore, the Company has the right, at its election, to redeem all or any part of the outstanding 2023 Notes at any time on or after June 1, 2021 for cash, but only if the last reported sale price (as defined in the 2017 Indenture) of the Company's common stock exceeds 130% of the conversion price on each of at least 20 trading days during the 30 consecutive trading days ending on and including the trading day immediately before the date the Company sends the related redemption notice. ~~As of March 31, 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~~Company has made an irrevocable election to settle conversions ~~through combination settlement (i.e~~., by paying holders of the 2023 Notes ~~would be convertedinto~~ cash up to the aggregate principal amount of the 2023 Notes and shares of the Company's common stock or a combination of cash ~~and~~and shares of the Company's common stock, at the Company's election, for the ~~remainder). As a result and in~~remaining amounts owed, if any.

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~~EPS 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.~~market conversion criteria is met.

The Company determined that the fair value of the 2023 Notes at the date of issuance was approximately $298.8 million, and designated the residual value of approximately $46.2 million as the equity component. Additionally, the Company allocated approximately $8.3 million of the $9.6 million 2023 Notes issuance cost as debt issuance cost and the remaining $1.3 million as equity issuance cost. Upon adoption of ASU 2020-06, the equity classification model was eliminated, resulting in an adjustment to retained earnings and an increase to the 2023 Notes. Refer to Note 2, Change in Accounting Principle, for further information.

The balances of the liability and equity components of the ~~Notes~~Company's convertible notes outstanding as of March 31, 2021 and December 31, 2020, 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, 2021		December 31, 2020
Liability component - principal amount	$	345,000	$	345,000
Unamortized debt discount	0		(20,603)
Unamortized debt issuance costs	(3,732)		(3,335)
Liability component - net carrying amount	$	341,268	$	321,062
Equity component	$	0	$	44,910

The Company amortizes debt ~~discount is being amortized into interest expense~~issuance costs over the ~~remaining~~ life of the ~~2020 Notes and the 2023 Notes~~debt using the effective interest method. Upon adoption of ASU 2020-06 the debt discount was eliminated and the debt issuance costs were remeasured, resulting in an effective interest rate ~~which is 4.92% and 6.20%, respectively.~~of 4.00%.

Interest expense related to the ~~Notes~~Company's convertible notes for the three months ended March 31, 2021 and 2020, 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,
	2021		2020 (1)
Interest expense - stated coupon rate	$	3,019	$	5,175
Interest expense - amortization of debt discount	0		3,217
Interest expense - amortization of debt issuance costs	$	404	$	606
Total interest expense - convertible notes	$	3,423	$	8,998

(1) 2020 amounts include interest expense related to the 3.00% Convertible Senior Notes due August 1, 2020, which were repaid in the third quarter of 2020. Refer to Note 7 of the Company's Consolidated Financial Statements included in Item 8 of the 2020 Form 10-K.

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 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, in accordance with the guidance of ASC ~~Topic 815 “Derivatives and Hedging”~~815. In 2020, the Company adopted ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effect of Reference Rate Reform on Financial Reporting” (“~~ASC 815”~~ASU 2020-04”). ASU 2020-04 allows the Company to elect certain expedients to continue accounting for its interest rate swap contracts designated as cash flow hedges.

PRA Group, Inc.

Notes to Consolidated Financial Statements

The following table summarizes the fair value of derivative instruments in the Company's Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020 (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, 2021

December 31, 2020

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value

Derivatives designated as hedging instruments:

Interest rate contracts

Other assets

1,413

Other assets

Interest rate contracts

Other liabilities

29,081

Other liabilities

43,017

Derivatives not designated as hedging instruments:

Foreign currency contracts

Other assets

3,437

Other assets

3,512

Foreign currency contracts

Other liabilities

2,369

Other liabilities

2,415

Derivatives Designated as Hedging Instruments:

Changes in fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, the notional amount of interest rate contracts designated as cash flow hedging instruments was ~~$922.2~~$901.8 million and ~~$959.0~~$967.2 million, respectively. Derivatives designated as cash flow hedging instruments were evaluated and remain highly effective at March 31, ~~2020~~2021 and have initial terms of ~~two~~one to ~~seven~~five years. The Company estimates that approximately ~~$8.4~~$9.1 million of net derivative 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~~Consolidated Financial Statements for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (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
Derivatives designated as cash flow hedging instruments	March 31, 2021		March 31, 2020
Interest rate contracts	$	9,692	$	(21,350)

	Gain or (loss) reclassified from OCI into income
Location of gain or (loss) reclassified from OCI into income	March 31, 2021		March 31, 2020
Interest expense, net	$	(3,336)	$	(1,012)

Derivatives Not Designated as Hedging Instruments:

Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. 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, ~~2020~~2021 and December 31, ~~2019,~~2020, the notional amount of foreign currency contracts that are not designated as hedging instruments was ~~$747.8~~$447.2 million and ~~$469.9~~$500.8 million, respectively.

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s Consolidated Income Statements for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (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

Derivatives not designated as hedging instruments	Location of gain or (loss) recognized in income	March 31, 2021		March 31, 2020
Foreign currency contracts	Foreign exchange (loss)/gain	$	2,097	$	26,786
Foreign currency contracts	Interest expense, net	114		(1,001)
Interest rate contracts	Interest expense, net	0		1,038

9. Fair Value:

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

~~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.

PRA Group, Inc.

Notes to Consolidated Financial Statements

•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 Carried at Fair Value

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

The carrying amounts in the table are recorded in the Consolidated Balance Sheets at March 31, ~~2020~~2021 and December 31, ~~2019~~2020 (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, 2021				December 31, 2020
	Carrying Amount		Estimated Fair Value		Carrying Amount		Estimated Fair Value
Financial assets:
Cash and cash equivalents	$	92,798	$	92,798	$	108,613	$	108,613


Restricted cash	16,057		16,057		12,434		12,434
Finance receivables, net	3,372,666		3,365,936		3,514,788		3,541,159
Financial liabilities:
Interest-bearing deposits	124,998		124,998		132,739		132,739
Revolving lines of credit	1,399,431		1,399,431		1,577,596		1,577,596
Term loan	467,500		467,500		470,000		470,000
Senior Notes	300,000		321,495		300,000		324,408
Convertible Notes	345,000		370,627		324,397		376,012

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

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

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

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

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

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Senior and Convertible ~~senior notes:~~Notes: The fair value estimates for the Senior Notes and the Convertible Notes incorporate quoted market prices, which were obtained from secondary market broker quotes, which were derived from a variety of inputs including client orders, information from their pricing vendors, modeling software and actual trading prices when they occur. Accordingly, the Company uses Level 2 inputs for its fair value estimates. Furthermore, in the table above, the carrying amount of December 31, 2020 represents the ~~portion~~Convertible Notes net of the ~~Notes classified as~~ debt ~~while estimated fair value pertains to~~discount. Upon adoption of ASU 2020-06, the ~~face~~carrying amount of the ~~Notes.~~Convertible Notes reflects face value as the debt discount was eliminated.

Financial Instruments Required To Be Carried At Fair Value

The carrying amounts in the following table are measured at fair value on a recurring basis in the accompanying Consolidated Balance Sheets at March 31, ~~2020~~2021 and December 31, ~~2019~~2020 (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, 2021
	Level 1		Level 2		Level 3		Total
Assets:

Available-for-sale investments
Government bonds	$	5,308	$	0	$	0	$	5,308
Fair value through net income
Exchange traded funds	34,841		0		0		34,841
Mutual funds	896		0		0		896
Derivative contracts (recorded in other assets)	0		4,850		0		4,850
Liabilities:
Derivative contracts (recorded in other liabilities)	0		31,450		0		31,450

	Fair Value Measurements as of December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:

Available-for-sale investments
Government bonds	$	5,368	$	0	$	0	$	5,368
Fair value through net income
Exchange traded funds	34,847		0		0		34,847
Mutual funds	1,023		0		0		1,023
Derivative contracts (recorded in other assets)	0		3,512		0		3,512
Liabilities:
Derivative contracts (recorded in other liabilities)	0		45,432		0		45,432

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.

Fair value through net income investments

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

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

Derivative contracts: The estimated fair value of the derivative contracts is determined using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves and other factors. Accordingly, the Company uses Level 2 inputs for its fair value estimates.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Investments measured using net asset value ("NAV")

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

~~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 one to five years. The fair value of these private equity funds following the application of the ~~Net Asset Value ("NAV")~~NAV practical expedient was ~~$7.1~~$6.2 million and ~~$7.2~~$6.1 million as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

10. Accumulated Other Comprehensive Loss:

The following table provides details about the reclassifications ~~out of~~from accumulated other comprehensive loss for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (amounts in thousands):


	Three Months Ended March 31,								Three Months Ended March 31,
Gains and losses on cash flow hedges	2020			2019			Affected line in the consolidated income statement	Gains and losses on cash flow hedges	2021		2020		Affected line in the Consolidated Income Statement
Interest rate swaps	$	(1,012	)	$	(80	)	Interest expense, net	Interest rate swaps	$	(3,336)	$	(1,012)	Interest expense, net
Income tax effect of item above	230			—			Income tax expense	Income tax effect of item above	705		230		Income tax expense
Total losses on cash flow hedges	$	(782	)	$	(80	)	Net of tax	Total losses on cash flow hedges	$	(2,631)	$	(782)	Net of tax

The following table represents the changes in accumulated other comprehensive loss by component, after tax, for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (amounts in thousands):


														Three Months Ended March 31, 2021
														Debt Securities		Cash Flow		Currency Translation		Accumulated Other
														Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance at beginning of period													Balance at beginning of period	$	127	$	(33,349)	$	(212,569)	$	(245,791)
Other comprehensive loss before reclassifications													Other comprehensive loss before reclassifications	0		9,692		(20,108)		(10,416)
Reclassifications, net													Reclassifications, net	0		2,631		0		2,631
Net current period other comprehensive loss													Net current period other comprehensive loss	0		12,323		(20,108)		(7,785)
Balance at end of period													Balance at end of period	$	127	$	(21,026)	$	(232,677)	$	(253,576)

														Three Months Ended March 31, 2020
														Debt Securities		Cash Flow		Currency Translation		Accumulated Other
														Available-for-sale		Hedges		Adjustments		Comprehensive Loss (1)
Balance at beginning of period													Balance at beginning of period	$	(44)	$	(13,088)	$	(247,886)	$	(261,018)
Other comprehensive loss before reclassifications													Other comprehensive loss before reclassifications	170		(21,350)		(94,201)		(115,381)
Reclassifications, net													Reclassifications, net	0		782		0		782
Net current period other comprehensive loss													Net current period other comprehensive loss	170		(20,568)		(94,201)		(114,599)
Balance at end of period													Balance at end of period	$	126	$	(33,656)	$	(342,087)	$	(375,617)

	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~~$6.4 million and ~~$1.7~~$10.0 million for the three months ended March 31, ~~2020~~2021 and ~~2019,~~2020, respectively.

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 Convertible Notes and nonvested share awards, if dilutive. There has been no dilutive effect of the ~~convertible senior notes~~Convertible Notes since issuance through March 31, ~~2020.~~2021. 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

PRA Group, Inc.

Notes to Consolidated Financial Statements

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, ~~2020~~2021 and ~~2019~~2020 (amounts in thousands, except per share amounts):


	For the Three Months Ended March 31,											For the Three Months Ended March 31,
	2020					2019						2021					2020
	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	$	19,135	45,452	$	0.42	$	15,227	45,338	$	0.34	Basic EPS	$	58,406	45,669	$	1.28	$	19,135	45,452	$	0.42
Dilutive effect of nonvested share awards	—		332	—		—		81	—		Dilutive effect of nonvested share awards	—		376	(0.01)		—		332	0

Diluted EPS	$	19,135	45,784	$	0.42	$	15,227	45,419	$	0.34	Diluted EPS	$	58,406	46,045	$	1.27	$	19,135	45,784	$	0.42

There were 0 ~~antidilutive~~ options outstanding, ~~for the three months ended~~antidilutive or otherwise, as of March 31, ~~2020~~2021 and ~~2019.~~2020.

12. Income Taxes:

The Company ~~follows the guidance of~~accounts for income taxes in accordance with 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 ("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 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, ~~2020,~~2021, 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 international earnings to be indefinitely reinvested in its international ~~operations and,~~operations; therefore, the recording of deferred tax liabilities for such unremitted earnings is not required. If international earnings were repatriated, the Company may need to accrue and pay taxes, although foreign tax credits may be available to partially reduce U.S. income taxes. The amount of cash on hand related to international operations with indefinitely reinvested earnings was ~~$115.4~~$62.2 million and ~~$109.7~~$97.0 million as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively.

13. Commitments and Contingencies:

Employment Agreements:

The Company has entered into employment agreements ~~most~~with each of its U.S. executive officers, 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.~~2023. Such agreements provide for base salary payments as well as potential discretionary bonuses that ~~take into consideration~~consider the Company’s overall performance against its short and long-term financial and strategic objectives. The agreements also contain customary confidentiality and non-compete provisions. At March 31, ~~2020,~~2021, estimated future compensation under these agreements was approximately ~~$6.2~~$17.8 million. ~~The agreements also contain confidentiality and non-compete provisions.~~ Outside the U.S., the Company has entered into employment agreements ~~are in place~~ with certain employees pursuant to local country regulations. Generally, these agreements do not have expiration ~~dates and therefore~~dates. As a result it is impractical to estimate the amount of future compensation under these agreements. Accordingly, the future compensation under these agreements is not included in the ~~$6.2~~$17.8 million total above.

~~PRA Group, Inc.~~

~~Notes to Consolidated Financial Statements~~

Forward Flow Agreements:

The Company is party to several forward flow agreements that allow for the purchase of nonperforming loans at pre-established prices. The maximum remaining amount to be purchased under forward flow agreements at March 31, ~~2020,~~2021, was approximately ~~$629.2~~$640.7 million.

Finance Receivables:

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

PRA Group, Inc.

Notes to Consolidated Financial Statements

Litigation and Regulatory Matters:

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

The Company accrues for potential liability arising from legal proceedings and regulatory matters when it is probable that such liability has been incurred and the amount of the loss can be reasonably estimated. This determination is based upon currently available information for those proceedings in which the Company is involved, taking into account the Company's best estimate of such losses for those cases for which such estimates can be made. The Company's estimate involves significant judgment, given the varying stages of the proceedings (including the fact that many of them are currently in preliminary stages), the number of unresolved issues in many of the proceedings (including issues regarding class certification and the scope of many of the claims), and the related uncertainty of the potential outcomes of these proceedings. In making determinations of the likely outcome of pending litigation, the Company considers many factors, including, but not limited to, the nature of the claims, the Company's experience with similar types of claims, the jurisdiction in which the matter is filed, input from outside 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, ~~2020,~~2021, 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. During the year ended December 31, 2019, the Company recorded $1.0 million in recoveries receivable under the Company's 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 ~~2019~~2020 Form 10-K.

14. Recently Issued Accounting Standards:

Recently issued accounting standards adopted:

~~Financial Instruments - Credit Losses~~

Effective January 1, 2020, the Company adopted ASC 326 on a prospective basis. Prior to January 1, 2020, substantially all of the Company's investment in finance receivables were accounted for under ASC 310-30. Refer to Note 2 for comprehensive details.

~~Intangibles - Goodwill and Other~~

In January 2017, FASB issued ASU 2017-04 which eliminates Step 2 of the goodwill impairment test. Instead, an entity performs its annual or interim goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An entity recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the

~~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 on January 1, 2020 which had no impact 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

InIn December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes (“("ASU ~~2019-12”~~2019-12")~~, which simplifies~~. ASU 2019-12 removes certain exceptions for recognizing deferred taxes for investments and calculating income taxes in interim periods. Additionally, the ~~accounting~~standard adds guidance to reduce complexity in certain areas, including recognizing taxes for ~~income taxes. This standard~~tax goodwill and allocating taxes to members of a consolidated group. ASU 2019-12 is effective for annual and interim periods beginning af~~ter~~after December 15, 2020 on a prospective basis, and early adoption is permitted. The Company ~~is currently evaluating the impact of~~adopted ASU 2019-12 on January 1, 2021 with no material impact to its c~~onsolidated~~ financial statements ~~and expects that the adoption of the standard will result in additional and modified disclosures.~~ upon adoption.

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”~~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~~The Company adopted ASU 2020-01 on January 1, 2021 with no impact to its financial statements ~~issued~~upon adoption.

PRA Group, Inc.

Notes to Consolidated Financial Statements

Accounting for ~~fiscal years and interim periods beginning after December 15, 2020. The~~Convertible Instruments

Effective January 1, 2021, the Company ~~is evaluating the impact of~~early adopted ASU ~~2020-01 but does not expect adoption~~2020-06. Refer to ~~have a material effect on its consolidated financial statements.~~Note 2 for details.

Reference Rate Reform

In ~~March 2020,~~January 2021, the FASB issued ASU ~~2020-04, “Reference~~2021-01, "Reference Rate Reform (Topic 848): ~~Facilitation of the Effects of Reference Rate Reform on Financial Reporting” (“~~Overall" ("ASU ~~2020-04”~~2021-01"). ASU ~~2020-04 provides temporary optional guidance~~2021-01 expands the scope of ASC 848 to ~~ease~~include derivatives affected by the ~~potential burden in accounting~~discounting transition for ~~reference rate reform. The new guidance provides~~certain 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.exceptions. ASU ~~2020-04~~2021-01 is effective immediately for a limited time through December 31, 2022. The Company is ~~currently~~ evaluating the impact of ASU ~~2020-04.~~2021-01 but does not expect it to have a material impact on its financial statements.

Recently issued accounting standards not yet adopted:

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

~~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%;

Consolidated Financial Statements.

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

~~Forward-Looking Statements:~~

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

Forward-Looking Statements:

This Quarterly Report contains forward-looking statements ~~within~~as defined by the ~~meaning~~Private Securities Litigation Reform Act 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,1995. Statements other than statements of historical fact are forward-looking statements, including statements regarding overall cash collection trends, operating cost trends, liquidity and capital needs and other statements of expectations, beliefs, future plans, strategies and ~~strategies,~~ anticipated events or ~~trends, and similar expressions concerning matters that are not historical facts. The~~trends. Our results could differ materially from those expressed or implied by such forward-looking statements, or our forward looking statements could be wrong, as a result of risks, uncertainties and assumptions ~~referred to above may include~~including the following:

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

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

~~the impact of the COVID-19~~ pandemic on the markets in which we operate, including business disruptions, unemployment, economic disruption, overall market volatility and the inability or unwillingness of consumers to pay the amounts owed to us;

•our inability to successfully manage the challenges associated with a disease outbreak, including epidemics, pandemics or similar widespread public health concerns, including the COVID-19 pandemic;

•a deterioration in the economic or inflationary environment in the markets in which we operate;

•our inability to replace our portfolios of nonperforming loans with additional portfolios sufficient to operate efficiently and profitably and/or purchase nonperforming loans at appropriate prices;

•our inability to collect sufficient amounts on our nonperforming loans to fund our operations, including as a result of restrictions imposed by federal, state and international laws and regulations;

•changes in accounting standards and their interpretations;

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

•the occurrence of goodwill impairment charges;

•loss contingency accruals that are inadequate to cover actual losses;

•our inability to manage risks associated with our international operations;

~~changes in tax laws and interpretations regarding earnings of our domestic and 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 exit of the United Kingdom ("UK") from the European Union ("EU");

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

~~adverse outcomes~~•changes 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, ~~and~~local or international laws ~~regulations~~or the interpretation of these laws, including tax, bankruptcy and ~~policies;~~collection laws;

•changes in the administrative practices of various bankruptcy courts;

•our ~~ability~~inability 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;industry;

•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 acquisitions volume, make collection of account balances more difficult or expose us to the risk of fines, penalties, restitution payments, and litigation;

the possibility that compliance with 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~~inability to comply with data privacy regulations such as the General Data Protection Regulation ("GDPR");

•adverse outcomes in pending litigation or administrative proceedings;

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

•our ~~ability~~inability to ~~raise the funds necessary to repurchase~~manage effectively our ~~convertible senior notes~~capital and liquidity needs, including as a result of changes in credit or ~~to settle conversions in cash;~~capital markets;

~~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,~~rates;

~~the possibility that the adoption of future accounting standards could negatively impact our business;~~

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

•uncertainty about the future of the London Inter-Bank Offer ~~Rate~~Rate;

•disruptions of business operations caused by cybersecurity incidents or the underperformance or failure of information technology infrastructure, networks or communication systems; and

•the "Risk Factors" in Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2020 ("~~LIBOR"~~2020 Form 10-K") ~~may adversely affect our business; and~~

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

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

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, 2019 ("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~~publically 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 ~~document:~~Quarterly Report:

~~"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.~~estimated remaining collections.

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

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

•"Insolvency" accounts or portfolios refer to accounts or portfolios of receivables that are in an insolvent status when we purchase them and as such are purchased as a pool of insolvent accounts. These accounts include Individual Voluntary Arrangements ("IVAs"), 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~~added as a result of business acquisitions.

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

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

•"Purchase price" refers to the cash paid to a seller to acquire nonperforming loans. ~~Prior to the adoption of ASC Topic 326 purchase price also included certain capitalized costs 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 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, ~~2020,~~2021, employed ~~4,014~~3,822 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~~continued 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~~adversely impact all countries in which we operate. ~~As a result, we~~We have ~~implemented~~taken steps to modify our ~~business continuity plans including remote work practices~~operations to mitigate adverse effects where possible while conforming with various COVID-19 protocols within the countries in which we operate. We continue to enable employees to work remotely and ~~have leveraged existing space to~~ follow social distancing ~~guidelines. To date,~~in the ~~pandemic has not prevented our ability~~workplaces that remain open. These actions have allowed us to operate ~~the~~our business while minimizing disruption 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~~complying with country-specific, federal, state and local laws, regulations, guidelines and governmental actions related 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,pandemic. Additional information regarding the impact of COVID-19 ~~may have~~ on our business ~~results of operations or financial condition is also difficult to predict. See discussion~~can be found in Part II, Item ~~1A - “Risk Factors”.~~7 to our 2020 Form 10-K.

Results of Operations

The results of operations include the financial results of the Company and all of our subsidiaries. As of January 1, 2020 we adopted 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 amounts as a percentage of ~~total~~Total revenues for the periods indicated (dollars in thousands):


	For the Three Months Ended March 31,
	2021				2020
Revenues:
Portfolio income	$	231,672	80.0	%	$	262,022	104.1	%
Changes in expected recoveries	50,136		17.3		(12,816)		(5.1)
Fee income	2,181		0.8		2,209		0.9
Other revenue	5,480		1.9		369		0.1
Total revenues	289,469		100.0		251,784		100.0

Operating expenses:
Compensation and employee services	73,984		25.6		75,171		29.9
Legal collection fees	12,926		4.5		14,572		5.8
Legal collection costs	21,312		7.4		34,447		13.7
Agency fees	15,591		5.4		13,376		5.3
Outside fees and services	20,760		7.1		19,394		7.7
Communication	12,663		4.4		13,511		5.4
Rent and occupancy	4,480		1.5		4,484		1.8
Depreciation and amortization	3,981		1.4		4,084		1.6
Other operating expenses	13,018		4.5		12,205		4.8

Total operating expenses	178,715		61.8		191,244		76.0

Income from operations	110,754		38.2		60,540		24.0
Other income and (expense):

Interest expense, net	(31,552)		(10.9)		(37,211)		(14.8)
Foreign exchange (loss)/gain	(26)		—		2,283		0.9
Other	26		—		(76)		—
Income before income taxes	79,202		27.3		25,536		10.1
Income tax expense	17,322		5.9		3,100		1.2
Net income	61,880		21.4		22,436		8.9
Adjustment for net income attributable to noncontrolling interests	3,474		1.2		3,301		1.3
Net income attributable to PRA Group, Inc.	$	58,406	20.2	%	$	19,135	7.6	%

For the Three Months Ended March 31,
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
Fee income 2,209
0.9
6,374
2.6
Other revenue 369
0.1
667
0.3
Total revenues 251,784
100.0
245,877
100.0

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

Operating expenses:
Compensation and employee services 75,171
29.9
79,645
32.4
Legal collection fees 14,572
5.8
13,059
5.3
Legal collection costs 34,447
13.7
35,229
14.3
Agency fees 13,376
5.3
14,032
5.7
Outside fees and services 19,394
7.7
15,248
6.2
Communication 13,511
5.4
13,201
5.4
Rent and occupancy 4,484
1.8
4,363
1.8
Depreciation and amortization 4,084
1.6
4,572
1.9
Other operating expenses 12,205
4.8
11,585
4.7
Total operating expenses 191,244
76.0
190,934
77.7
Income from operations 60,540
24.0
48,848
19.9
Other income and (expense):
Interest expense, net (37,211 ) (14.8 ) (33,981 ) (13.8 )
Foreign exchange gain 2,283
0.9
6,264
2.5
Other (76 ) —
(352 ) (0.1 )
Income before income taxes 25,536
10.1
20,779
8.5
Income tax expense 3,100
1.2
3,867
1.6
Net income 22,436
8.9
16,912
6.9
Adjustment for net income attributable to noncontrolling interests 3,301
1.3
1,685
0.7
Net income attributable to PRA Group, Inc. $ 19,135
7.6 % $ 15,227
6.2 %

Three Months Ended March 31, ~~2020~~2021 Compared To Three Months Ended March 31, ~~2019~~2020

Cash Collections

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


									For the Three Months Ended March 31,
	For the Three Months Ended March 31,				Variances				2021		2020		Change
(Amounts in thousands)	2020		2019		2020 vs. 2019
Americas Core	$	305,780	$	290,723	$	15,057
Americas and Australia Core								Americas and Australia Core	$	347,638	$	305,780	$	41,858
Americas Insolvency	43,210		44,613		(1,403		)	Americas Insolvency	35,253		43,210		(7,957)
Europe Core	131,340		116,858		14,482			Europe Core	149,486		131,340		18,146
Europe Insolvency	14,243		8,977		5,266			Europe Insolvency	23,510		14,243		9,267
Total cash collections	$	494,573	$	461,171	$	33,402		Total cash collections	$	555,887	$	494,573	$	61,314

Cash collections adjusted ⁽¹⁾	$	494,573	$	454,654	$	39,919		Cash collections adjusted (1)	$	555,887	$	502,305	$	53,582

(1) Cash collections adjusted refers to ~~2019~~2020 cash collections remeasured using ~~2020~~2021 exchange rates.

Cash collections were $555.9 million for the three months ended March 31, 2021, an increase of $61.3 million, or 12.4%, compared to $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. The increase was~~2020. Cash collections increased in Americas and Australia Core largely due to 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 and an increase in Other Americas, slightly offset by lowerour U.S. call center and other ~~collections. The~~collections, including higher level of collections through our digital platforms, increasing $54.3 million, or 32.3%. This was primarily due to what we believe to be various circumstances that have provided U.S. consumers with additional discretionary funds and a willingness to voluntarily resolve their debts. This increase was partly offset by a $10.8 million, or 10.4%, decrease in legal collections ~~increase of $9.9 million, or 10.4% was~~ due ~~primarily~~ to a ~~higher number~~lower volume of accounts ~~placed~~ in the legal ~~channel. Other Americas increased $6.8 million, or 25.6%,~~channel primarily as a result of ~~increased portfolio purchasing~~a shift in ~~South America. Furthermore,~~collections from the ~~increase of $14.5~~legal channel to our call centers and digital platforms. Cash collections in Americas Insolvency also decreased $8.0 million, or ~~12.4% in Europe Core~~18.4%, mainly due to the runoff of older portfolios. While cash collections ~~reflects higher 2019~~in Other Americas Core decreased $1.6 million, or 4.8%, the primary driver of the decrease was foreign exchange rates. Europe cash collections increased $27.4 million, or 18.8%, primarily reflecting the impact of 2020 purchases.

Revenues

A summary of our revenue generation during the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 is as follows (amounts in thousands):


	For the Three Months Ended March 31,
	2021		2020		Change
Portfolio income	$	231,672	$	262,022	$	(30,350)
Changes in expected recoveries	50,136		(12,816)		62,952


Fee income	2,181		2,209		(28)
Other revenue	5,480		369		5,111
Total revenues	$	289,469	$	251,784	$	37,685

Portfolio Income

Portfolio income was $231.7 million for the three months ended March 31, 2021, a decrease of $30.3 million, or 11.6%, compared to $262.0 million for the three months ended March 31, 2020. The decrease was mainly due to our assumption that the significant cash overperformance in 2020 was largely acceleration versus an increase in total estimated collections combined with recent purchases not offsetting runoff, primarily in Americas Insolvency and Other Americas.

Changes in Expected Recoveries

Changes in expected recoveries for the three months ended March 31, 2021, were a positive $50.1 million. The change was the net result of recoveries received in excess of forecast of $103.0 million from significant cash collection overperformance reduced by a $52.9 million negative adjustment to changes in expected future recoveries. The changes in expected future recoveries reflect our assumption that the majority of the current quarter overperformance was due to acceleration in the timing of cash collections rather than an increase to total expected collections resulting in a present value adjustment. This compares to a negative $12.8 million for the three months ended March 31, 2020. The change was the net result of recoveries in excess of forecast of $7.8 million reduced by a $20.6 million negative adjustment to changes in expected future recoveries due to an expected delay in cash collections from the impact of COVID-19.

For the Three Months Ended March 31,
2020 2019
Portfolio income $ 262,022
—
Changes in expected recoveries (12,816 ) —
Income recognized on finance receivables —
238,836
Fee income 2,209
6,374
Other revenue 369
667
Total revenues $ 251,784
$ 245,877
Other Revenue

~~Total revenues were $251.8~~Other revenue was $5.5 million for the three months ended March 31, 2021, an increase of $5.1 million compared to $0.4 million for the three months ended March 31, 2020 ~~an increase of $5.9 million, or 2.4%, compared to $245.9~~reflecting a gain on sale from certain other assets.

Operating Expenses

Total operating expenses were $178.7 million for the three months ended March 31, ~~2019. This increase was driven by higher cash collections, somewhat offset by adjustments~~2021, a decrease of $12.5 million, or 6.5%, compared to ~~our estimated remaining collections mainly to reflect the impact of COVID-19 and lower fee income reflecting settlement timing in our claims processing company, Claims Compensation Bureau.~~

~~Net Allowance Charges~~

In 2019, under ASC Topic 310-30, net allowance charges 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. Effective January 1, 2020, under ASC Topic 326 changes to expected cash flows are recorded 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.~~

2020.

Compensation and Employee Services

Compensation and employee services expenses were $74.0 million for the three months ended March 31, 2021, a decrease of $1.2 million, or 1.6%, compared to $75.2 million for the three months ended March 31, ~~2020, a decrease of $4.4 million, or 5.5%, compared to $79.6 million for the three months ended March 31, 2019.~~2020. The slight decrease in compensation expense was primarily attributable to a reduction in the U.S. call center workforce ~~as we balance the volume between the legal collection channel and call centers.~~due to efficiencies realized mostly offset by higher headcount in Europe. Total full-time equivalents decreased to 3,822 as of March 31, 2021, from 4,014 as of March 31, ~~2020, from 5,236 as of March 31, 2019.~~2020.

Legal Collection Fees

Legal collection fees represent contingent fees incurred for the cash collections generated by our independent third-party attorney network. Legal collection fees were $12.9 million for the three months ended March 31, 2021, a decrease of $1.7 million, or 11.6%, compared to $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 primarily~~2020. The decrease was due to ~~an increase in~~lower external legal cash collections in the U.S.

Legal Collection Costs

Legal collection costs primarily consist of costs paid to courts where a lawsuit is filed for the purpose of attempting to collect on an account. Legal collection costs were $21.3 million for the three months ended March 31, 2021, a decrease of $13.1 million, or 38.1%, compared to $34.4 million for the three months ended March 31, ~~2020,~~2020. The decrease was primarily due to lower levels of accounts placed in the legal channel in the U.S. primarily reflecting a ~~decrease~~shift in collections from the legal channel to our call centers and digital platforms partially offset by higher levels of ~~$0.8 million, or 2.3% compared to $35.2~~accounts placed in the legal channel in Europe.

Agency Fees

Agency fees primarily represent third-party collection fees. Agency fees were $15.6 million for the three months ended March 31, ~~2019. The decrease~~2021, an increase of $2.2 million, or 16.4%, compared to $13.4 million for the three months ended March 31, 2020 primarily ~~reflects slightly lower court costs~~reflecting an increase in ~~the U.S. due to the disruption in the last two weeks~~agency fees primarily outside of the ~~quarter resulting from the COVID-19 pandemic, mostly offset by higher costs in Europe.~~U.S.

Outside Fees and Services

Outside fees and services expenses were $20.8 million for the three months ended March 31, 2021, an increase of $1.4 million, or 7.2%, compared to $19.4 million for the three months ended March 31, 2020 primarily due to higher fees related to an ~~increase~~increased number of ~~$4.2~~debit card transactions.

Interest Expense, Net

Interest expense, net was $31.6 million during the three months ended March 31, 2021, a decrease of $5.6 million, or ~~27.6%~~15.1%, compared to ~~$15.2~~$37.2 million for the three months ended March 31, ~~2019. The increase was~~2020 primarily ~~due~~reflecting the 2021 change in accounting related to ~~a number~~our convertible notes (see Note 2 to our Consolidated Financial Statements included in Part I, Item 1 of ~~items that were not material individually~~this Quarterly Report for further information) 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 $3.2 million, or 9.4%, compared to $34.0 million for the three months ended March 31, 2019. The increase was primarily due to higherlower levels of average outstanding borrowings ~~primarily to fund increased portfolio investments and the impact of changes in the fair value of~~on our ~~derivatives.~~debt obligations.

Interest expense, net consisted of the following for the three months ended March 31, ~~2020~~2021 and ~~2019~~2020 (amounts in thousands):


	For the Three Months Ended March 31,
	2021		2020		Change
Interest on debt obligations and unused line fees	$	20,910	$	26,498	$	(5,588)
Interest on senior notes	5,531		—		5,531
Coupon interest on convertible debt	3,019		5,175		(2,156)
Amortization of convertible debt discount	—		3,217		(3,217)
Amortization of loan fees and other loan costs	2,256		2,640		(384)
Interest income	(164)		(319)		155
Interest expense, net	$	31,552	$	37,211	$	(5,659)

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

~~Net~~ Foreign ~~Currency Transaction Gains~~Exchange (Loss)/Gain

Foreign currency transaction losses were near zero for the three months ended March 31, 2021, compared to foreign currency gains ~~were~~of $2.3 million for the three months ended March 31, ~~2020, compared to $6.3 million for the three months ended March 31, 2019.~~2020. In any given period, we may incur foreign currency transaction gains or losses from transactions in currencies other than the functional currency. ~~The decrease was primarily related to lower foreign currency gains in Europe and slightly lower gains on U.S. dollar linked investments held in Brazil.~~

Income Tax Expense

Income tax expense was $17.3 million for the three months ended March 31, 2021, an increase of $14.2 million, or 458.1%, compared to $3.1 million for the three months ended March 31, ~~2020, a decrease of $0.8~~2020. The increase was primarily due to higher income before taxes, which increased $53.7 million, or ~~20.5%~~210.6%, and the mix of earnings between jurisdictions. During the three months ended March 31, 2021, our effective tax rate was 21.9%, compared to ~~$3.9 million~~12.1% for the three months ended March 31, ~~2019.~~2020. The ~~decrease~~increase in rate was primarily due to an estimated provision to return ~~to provision adjustments partially offset by changes~~adjustment recorded in the prior year and a change in mix of income between countries of operation. ~~During the three months ended March 31, 2020, our effective tax rate was 12.1%, compared to 18.6% for the three months ended March 31, 2019.~~

Supplemental Performance Data

Finance Receivables Portfolio Performance

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

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

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

When competition increases and/or supply decreases, pricing often becomes negatively impacted relative to expected collections, and yields 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 lower profitability. As portfolio pricing becomes more favorable on a relative basis, our profitability will tend to increase. Profitability within given Core portfolio types may also be impacted by the age and quality of the receivables, which impact the cost to collect those accounts. Fresher accounts, for example, typically carry lower associated collection expenses, while older accounts and lower balance accounts typically carry higher costs and, as a result, require higher purchase price multiples to achieve the same net profitability as fresher paper.

Revenue recognition under ~~ASC 310-10 and ASC~~Accounting Standards Codification ("ASC") Topic 326 "Financial Instruments-Credit Losses" ("ASC 326") is driven by estimates of the amount and timing of collections. We record new portfolio acquisitions at the purchase price which reflects the amount we expect to collect discounted at an effective interest rate. During the year of acquisition, the annual pool is aggregated and the blended effective interest rate will change to reflect new buying and new cash flow estimates until the end of the year. At that time, the 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 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 acquisition than a pool that was just two years from acquisition.

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

Purchase Price Multiples
as of March 31, 2020

Amounts in thousands
Purchase Period
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
1996-2009 $ 930,026
$ 38,390
$ 2,886,117
$ 38,390
310 % 238 %
2010 148,193
26,621
535,652
26,621
361 % 247 %
2011 209,602
44,992
738,981
44,992
353 % 245 %
2012 254,076
56,991
680,187
56,991
268 % 226 %
2013 390,826
85,283
928,709
85,283
238 % 211 %
2014 404,117
138,067
921,659
135,051
228 % 204 %
2015 443,114
206,581
960,145
205,976
217 % 205 %
2016 455,767
327,345
1,093,346
314,819
240 % 201 %
2017 532,851
468,942
1,167,610
464,659
219 % 193 %
2018 653,975
762,474
1,337,704
749,410
205 % 202 %
2019 581,476
969,495
1,198,926
933,976
206 % 206 %
2020 172,697
329,648
336,822
329,648
195 % 195 %
Subtotal 5,176,720
3,454,829
12,785,858
3,385,816

Americas Insolvency
1996-2009 397,453
794
835,929
794
210 % 178 %
2010 208,942
1,016
546,844
1,016
262 % 184 %
2011 180,432
848
370,113
848
205 % 155 %
2012 251,395
688
392,419
688
156 % 136 %
2013 227,834
1,728
354,918
1,728
156 % 133 %
2014 148,420
2,252
217,283
2,232
146 % 124 %
2015 63,170
6,655
87,791
6,655
139 % 125 %
2016 91,442
18,596
116,061
18,536
127 % 123 %
2017 275,257
104,624
349,186
104,624
127 % 125 %
2018 97,879
85,846
127,700
85,846
130 % 127 %
2019 123,077
137,797
158,639
137,556
129 % 128 %
2020 20,772
25,768
27,344
25,768
132 % 132 %
Subtotal 2,086,073
386,612
3,584,227
386,291

Total Americas 7,262,793
3,841,441
16,370,085
3,772,107

Europe Core
2012 20,409
533
40,607
406
199 % 187 %
2013 20,334
262
25,056
196
123 % 119 %
2014 773,811
759,304
2,202,629
640,238
285 % 208 %
2015 411,340
323,139
734,838
285,151
179 % 160 %
2016 333,090
310,630
557,579
291,054
167 % 167 %
2017 252,174
229,143
361,268
204,423
143 % 144 %
2018 341,775
385,373
518,022
369,842
152 % 148 %
2019 518,610
706,719
790,270
665,335
152 % 152 %
2020 60,990
105,783
108,540
105,783
178 % 178 %
Subtotal 2,732,533
2,820,886
5,338,809
2,562,428

Europe Insolvency
2014 10,876
798
18,164
678
167 % 129 %
2015 18,973
4,969
29,054
4,162
153 % 139 %
2016 39,338
14,946
56,971
15,133
145 % 130 %
2017 39,235
27,096
48,706
24,854
124 % 128 %
2018 44,908
43,766
55,331
42,403
123 % 123 %
2019 77,218
91,096
102,236
85,535
132 % 130 %
2020 18,778
23,947
24,090
23,947
128 % 128 %
Subtotal 249,326
206,618
334,552
196,712

Total Europe 2,981,859
3,027,504
5,673,361
2,759,140

Total PRA Group $ 10,244,652
$ 6,868,945
$ 22,043,446
$ 6,531,247


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


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


~~(3)~~	~~For our non-US amounts, ERC-Historical Period Exchange Rates is presented at the year-end exchange rate for the respective year of purchase.~~


~~(4)~~	~~For our non-US amounts, TEC is presented at the year-end exchange rate for the respective year of purchase.~~


~~(5)~~	~~For our non-U.S. amounts, ERC-Current Period Exchange Rates is presented at the March 31, 2020 exchange rate.~~


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


Purchase Price Multiples as of March 31, 2021 Amounts in thousands
Purchase Period	Purchase Price (1)(2)		Total Estimated Collections (3)		Estimated Remaining Collections (4)		Current Purchase Price Multiple	Original Estimated Purchase Price Multiple(5)
Americas and Australia Core
1996-2010	$	1,078,219	$	3,397,952	$	24,585	315%	240%
2011	209,602		719,618		15,897		343%	245%
2012	254,076		652,293		18,061		257%	226%
2013	390,826		894,640		30,051		229%	211%
2014	404,117		859,775		45,345		213%	204%
2015	443,114		913,857		106,551		206%	205%
2016	455,767		1,098,295		207,608		241%	201%
2017	532,851		1,211,584		325,675		227%	193%
2018	653,975		1,368,879		447,682		209%	202%
2019	581,476		1,239,777		622,713		213%	206%
2020	435,668		931,493		717,342		214%	213%
2021	88,822		188,644		184,196		212%	212%
Subtotal	5,528,513		13,476,807		2,745,706
Americas Insolvency
1996-2010	606,395		1,382,677		920		228%	180%
2011	180,432		370,183		493		205%	155%
2012	251,395		392,723		184		156%	136%
2013	227,834		354,943		651		156%	133%
2014	148,420		218,432		1,695		147%	124%
2015	63,170		87,087		876		138%	125%
2016	91,442		117,159		6,736		128%	123%
2017	275,257		349,209		51,318		127%	125%
2018	97,879		131,461		58,999		134%	127%
2019	123,077		158,692		105,361		129%	128%
2020	62,130		84,972		75,489		137%	136%
2021	9,486		13,185		13,168		139%	139%
Subtotal	2,136,917		3,660,723		315,890
Total Americas and Australia	7,665,430		17,137,530		3,061,596
Europe Core
2012	20,409		41,543		—		204%	187%
2013	20,334		25,653		—		126%	119%
2014	773,811		2,240,653		586,113		290%	208%
2015	411,340		725,713		250,732		176%	160%
2016	333,090		562,194		285,405		169%	167%
2017	252,174		354,024		184,108		140%	144%
2018	341,775		529,154		346,370		155%	148%
2019	518,610		776,604		587,133		150%	152%
2020	324,119		557,506		491,301		172%	172%
2021	43,635		77,780		76,397		178%	178%
Subtotal	3,039,297		5,890,824		2,807,559
Europe Insolvency
2014	10,876		18,228		130		168%	129%
2015	18,973		29,018		1,997		153%	139%
2016	39,338		56,926		8,784		145%	130%
2017	39,235		49,255		17,707		126%	128%
2018	44,908		52,080		32,060		116%	123%
2019	77,218		101,866		72,242		132%	130%
2020	105,440		135,896		121,891		129%	129%
2021	16,621		20,786		20,151		125%	125%
Subtotal	352,609		464,055		274,962
Total Europe	3,391,906		6,354,879		3,082,521
Total PRA Group	$	11,057,336	$	23,492,409	$	6,144,117

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

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

(3)For our non-U.S. amounts, TEC is presented at the year-end exchange rate for the respective year of purchase.

(4)For our non-U.S. amounts, ERC is presented at the March 31, 2021 exchange rate.

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

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

Portfolio Financial Information Year-to-date as of March 31, 2021 Amounts in thousands												Portfolio Financial Information Year-to-date as of March 31, 2021 Amounts in thousands
Purchase Period	Cash Collections ⁽¹⁾		Portfolio Income ⁽¹⁾		Changes in Expected Recoveries			Total Portfolio Revenue ⁽¹⁾⁽²⁾		Net Finance Receivables as of March 31, 2020 ⁽³⁾		Purchase Period	Cash Collections (1)		Portfolio Income (1)		Changes in Expected Recoveries (1)		Total Portfolio Revenue (1)(2)		Net Finance Receivables as of March 31, 2021 (3)
Americas Core
1996-2009	$	3,940	$	2,922	$	228		$	3,150	$	8,489
2010	2,016		1,826		(31		)	1,795		3,263
Americas and Australia Core												Americas and Australia Core
1996-2010												1996-2010	$	3,726	$	2,319	$	447	$	2,766	$	5,178
2011	3,383		3,081		(176		)	2,905		7,229		2011	2,259		1,405		309		1,714		2,596
2012	3,556		3,115		(160		)	2,955		15,406		2012	2,786		1,286		375		1,661		5,638
2013	6,966		5,299		(2,285		)	3,014		29,641		2013	4,968		2,526		(351)		2,175		13,495
2014	9,452		7,547		(4,072		)	3,475		48,628		2014	6,937		3,494		(2,154)		1,340		19,677
2015	16,050		10,589		(4,661		)	5,928		83,039		2015	11,958		6,355		(4,961)		1,394		45,306
2016	27,017		17,389		(2,817		)	14,572		126,158		2016	24,893		11,990		3,908		15,898		84,015
2017	53,489		26,613		(1,857		)	24,756		212,544		2017	41,722		18,236		3,937		22,173		145,799
2018	89,601		40,978		(2,418		)	38,560		404,887		2018	75,462		25,404		10,591		35,995		245,467
2019	83,127		49,886		(3,509		)	46,377		477,513		2019	88,246		35,129		6,417		41,546		331,169
2020	7,183		5,611		365			5,976		170,995		2020	80,231		35,446		16,613		52,059		369,418
2021												2021	4,450		2,728		838		3,566		87,902
Subtotal	305,780		174,856		(21,393		)	153,463		1,587,792		Subtotal	347,638		146,318		35,969		182,287		1,355,660
Americas Insolvecy
1996-2009	95		123		(28		)	95		—
2010	137		165		(28		)	137		—
Americas Insolvency												Americas Insolvency
1996-2010												1996-2010	181		186		(5)		181		—
2011	135		125		11			136		—		2011	76		73		3		76		—
2012	307		265		42			307		—		2012	190		72		120		192		—
2013	410		415		(4		)	411		—		2013	201		181		20		201		—
2014	837		1,085		(500		)	585		503		2014	298		355		(90)		265		190
2015	3,280		1,661		21			1,682		4,182		2015	446		247		(202)		45		497
2016	4,076		1,130		220			1,350		14,704		2016	2,727		491		241		732		5,429
2017	17,250		4,813		377			5,190		83,360		2017	11,752		2,621		468		3,089		43,107
2018	7,717		2,409		450			2,859		69,595		2018	7,812		1,778		751		2,529		50,368
2019	7,390		2,992		1,240			4,232		111,219		2019	8,594		2,488		(1,786)		702		89,380
2020	1,576		300		(1		)	299		19,433		2020	2,960		1,897		535		2,432		57,174
2021												2021	16		101		(14)		87		9,553
Subtotal	43,210		15,483		1,800			17,283		302,996		Subtotal	35,253		10,490		41		10,531		255,698
Total Americas	348,990		190,339		(19,593		)	170,746		1,890,788
Total Americas and Australia												Total Americas and Australia	382,891		156,808		36,010		192,818		1,611,358
Europe Core												Europe Core
2012	321		270		51			321		—		2012	283		—		283		283		—
2013	178		131		47			178		—		2013	171		—		171		171		—
2014	38,124		28,465		(92		)	28,373		168,327		2014	37,843		25,589		7,184		32,773		159,401
2015	14,761		8,134		(58		)	8,076		146,671		2015	13,464		7,427		(6,091)		1,336		130,541
2016	12,548		7,010		44			7,054		165,489		2016	11,956		6,431		(649)		5,782		164,228
2017	9,631		3,587		(186		)	3,401		141,100		2017	9,565		3,191		(1,076)		2,115		127,233
2018	19,535		6,900		454			7,354		240,588		2018	18,365		6,289		4,576		10,865		226,773
2019	33,449		11,457		2,958			14,415		440,409		2019	32,020		10,111		2,450		12,561		390,892
2020	2,793		846		1,698			2,544		59,008		2020	24,425		9,595		4,578		14,173		293,315
2021												2021	1,394		210		1,015		1,225		43,431
Subtotal	131,340		66,800		4,916			71,716		1,361,592		Subtotal	149,486		68,843		12,441		81,284		1,535,814
Europe Insolvency												Europe Insolvency
2014	240		177		10			187		243		2014	88		48		6		54		55
2015	928		422		110			532		2,506		2015	530		225		5		230		1,335
2016	2,200		911		(74		)	837		10,497		2016	1,762		546		118		664		6,487
2017	2,401		556		69			625		21,319		2017	2,484		398		140		538		15,696
2018	2,472		788		(16		)	772		35,749		2018	2,967		640		(764)		(124)		27,919
2019	5,854		1,773		1,589			3,362		67,269		2019	6,222		1,554		183		1,737		59,244
2020	148		256		173			429		18,111		2020	8,817		2,410		850		3,260		98,227
2021												2021	640		200		1,147		1,347		16,531
Subtotal	14,243		4,883		1,861			6,744		155,694		Subtotal	23,510		6,021		1,685		7,706		225,494
Total Europe	145,583		71,683		6,777			78,460		1,517,286		Total Europe	172,996		74,864		14,126		88,990		1,761,308
Total PRA Group	$	494,573	$	262,022	$	(12,816	)	$	249,206	$	3,408,074	Total PRA Group	$	555,887	$	231,672	$	50,136	$	281,808	$	3,372,666

(1)

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

(2)Total Portfolio Revenue refers to Portfolio Income and Changes in Expected Recoveries combined.

(3)For our non-U.S. amounts, Net Finance Receivables are presented at the March 31, 2021 exchange rate.


~~(2)~~	~~Total Portfolio Revenue refers to portfolio income and changes in expected recoveries combined.~~


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

The following table, which excludes any proceeds from cash sales of finance receivables, illustrates historical cash collections, by year, on our portfolios.


Cash Collections by Year, By Year of Purchase (1) as of March 31, 2021 Amounts in millions
			Cash Collections
Purchase Period	Purchase Price (2)(3)		1996-2010		2011		2012		2013		2014		2015		2016		2017		2018		2019		2020		2021		Total
Americas and Australia Core
1996-2010	$	1,078.2	$	1,990.5	$	367.1	$	311.5	$	228.4	$	157.7	$	109.3	$	70.2	$	46.0	$	34.4	$	28.4	$	18.8	$	3.7	$	3,366.0
2011	209.6		—		62.0		174.5		152.9		108.5		73.8		48.7		32.0		21.6		16.6		10.9		2.3		703.8
2012	254.1		—		—		56.9		173.6		146.2		97.3		60.0		40.0		27.8		17.9		11.8		2.8		634.3
2013	390.8		—		—		—		101.6		247.8		194.0		120.8		78.9		56.4		36.9		23.2		5.0		864.6
2014	404.1		—		—		—		—		92.7		253.4		170.3		114.2		82.2		55.3		31.9		6.9		806.9
2015	443.1		—		—		—		—		—		117.0		228.4		185.9		126.6		83.6		57.2		12.0		810.7
2016	455.8		—		—		—		—		—		—		138.7		256.5		194.6		140.6		105.9		24.9		861.2
2017	532.9		—		—		—		—		—		—		—		107.3		278.7		256.5		192.5		41.7		876.7
2018	654.0		—		—		—		—		—		—		—		—		122.7		361.9		337.7		75.5		897.8
2019	581.5		—		—		—		—		—		—		—		—		—		143.8		349.0		88.2		581.0
2020	435.7		—		—		—		—		—		—		—		—		—		—		133.0		80.2		213.2
2021	88.8		—		—		—		—		—		—		—		—		—		—		—		4.4		4.4
Subtotal	5,528.6		1,990.5		429.1		542.9		656.5		752.9		844.8		837.1		860.8		945.0		1,141.5		1,271.9		347.6		10,620.6
Americas Insolvency
1996-2010	606.4		390.9		261.2		270.4		231.0		158.9		51.2		8.6		4.6		2.5		1.4		0.8		0.2		1,381.7
2011	180.4		—		15.2		66.4		82.8		85.8		76.9		36.0		3.7		1.6		0.7		0.5		0.1		369.7
2012	251.4		—		—		17.4		103.6		94.1		80.1		60.7		29.3		4.3		1.9		0.9		0.2		392.5
2013	227.8		—		—		—		52.5		82.6		81.7		63.4		47.8		21.9		2.9		1.3		0.2		354.3
2014	148.4		—		—		—		—		37.0		50.9		44.3		37.4		28.8		15.8		2.2		0.3		216.7
2015	63.2		—		—		—		—		—		3.4		17.9		20.1		19.8		16.7		7.9		0.4		86.2
2016	91.4		—		—		—		—		—		—		18.9		30.4		25.0		19.9		14.4		2.7		111.3
2017	275.3		—		—		—		—		—		—		—		49.1		97.3		80.9		58.8		11.8		297.9
2018	97.9		—		—		—		—		—		—		—		—		6.7		27.4		30.5		7.8		72.4
2019	123.1		—		—		—		—		—		—		—		—		—		13.3		31.4		8.6		53.3
2020	62.1		—		—		—		—		—		—		—		—		—		—		6.6		3.0		9.6
2021	9.5		—		—		—		—		—		—		—		—		—		—		—		—		—
Subtotal	2,136.9		390.9		276.4		354.2		469.9		458.4		344.2		249.8		222.4		207.9		180.9		155.3		35.3		3,345.6
Total Americas and Australia	7,665.5		2,381.4		705.5		897.1		1,126.4		1,211.3		1,189.0		1,086.9		1,083.2		1,152.9		1,322.4		1,427.2		382.9		13,966.2
Europe Core
2012	20.4		—		—		11.6		9.0		5.6		3.2		2.2		2.0		2.0		1.5		1.2		0.3		38.6
2013	20.3		—		—		—		7.1		8.5		2.3		1.3		1.2		1.3		0.9		0.7		0.2		23.5
2014	773.8		—		—		—		—		153.2		292.0		246.4		220.8		206.3		172.9		149.8		37.8		1,479.2
2015	411.3		—		—		—		—		—		45.8		100.3		86.2		80.9		66.1		54.3		13.4		447.0
2016	333.1		—		—		—		—		—		—		40.4		78.9		72.6		58.0		48.3		12.0		310.2
2017	252.2		—		—		—		—		—		—		—		17.9		56.0		44.1		36.1		9.6		163.7
2018	341.8		—		—		—		—		—		—		—		—		24.3		88.7		71.2		18.4		202.6
2019	518.6		—		—		—		—		—		—		—		—		—		47.9		125.7		32.0		205.6
2020	324.1		—		—		—		—		—		—		—		—		—		—		32.4		24.4		56.8
2021	43.6		—		—		—		—		—		—		—		—		—		—		—		1.4		1.4
Subtotal	3,039.2		—		—		11.6		16.1		167.3		343.3		390.6		407.0		443.4		480.1		519.7		149.5		2,928.6
Europe Insolvency
2014	10.9		—		—		—		—		—		4.3		3.9		3.2		2.6		1.5		0.8		0.1		16.4
2015	19.0		—		—		—		—		—		3.0		4.4		5.0		4.8		3.9		2.9		0.5		24.5
2016	39.3		—		—		—		—		—		—		6.2		12.7		12.9		10.7		7.9		1.8		52.2
2017	39.2		—		—		—		—		—		—		—		1.2		7.9		9.2		9.8		2.5		30.6
2018	44.9		—		—		—		—		—		—		—		—		0.6		8.4		10.3		3.0		22.3
2019	77.2		—		—		—		—		—		—		—		—		—		5.1		21.1		6.2		32.4
2020	105.4		—		—		—		—		—		—		—		—		—		—		6.1		8.8		14.9
2021	16.7		—		—		—		—		—		—		—		—		—		—		—		0.6		0.6
Subtotal	352.6		—		—		—		—		—		7.3		14.5		22.1		28.8		38.8		58.9		23.5		193.9
Total Europe	3,391.8		—		—		11.6		16.1		167.3		350.6		405.1		429.1		472.2		518.9		578.6		173.0		3,122.5
Total PRA Group	$	11,057.3	$	2,381.4	$	705.5	$	908.7	$	1,142.5	$	1,378.6	$	1,539.6	$	1,492.0	$	1,512.3	$	1,625.1	$	1,841.3	$	2,005.8	$	555.9	$	17,088.7

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

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

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

Cash Collections by Year, By Year of Purchase ⁽¹⁾
as of March 31, 2020

Amounts in millions
Cash Collections
Purchase Period
Purchase Price ⁽²⁾⁽³⁾
1996-
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total
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 148.2
—
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 209.6
—
—
62.0
174.5
152.9
108.5
73.8
48.7
32.0
21.6
16.6
3.4
694.0
2012 254.1
—
—
—
56.9
173.6
146.2
97.3
60.0
40.0
27.8
17.9
3.6
623.3
2013 390.8
—
—
—
—
101.6
247.8
194.0
120.8
78.9
56.4
36.9
7.0
843.4
2014 404.1
—
—
—
—
—
92.7
253.4
170.3
114.2
82.2
55.3
9.5
777.6
2015 443.1
—
—
—
—
—
—
117.0
228.4
185.9
126.6
83.6
16.1
757.6
2016 455.8
—
—
—
—
—
—
—
138.7
256.5
194.6
140.6
27.0
757.4
2017 532.9
—
—
—
—
—
—
—
—
107.3
278.7
256.5
53.5
696.0
2018 654.0
—
—
—
—
—
—
—
—
—
122.7
361.9
89.6
574.2
2019 581.5
—
—
—
—
—
—
—
—
—
—
143.8
83.1
226.9
2020 172.7
—
—
—
—
—
—
—
—
—
—
—
7.1
7.1
Subtotal 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
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 208.9
—
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 180.4
—
—
15.2
66.4
82.8
85.8
76.9
36.0
3.7
1.6
0.7
0.1
369.2
2012 251.4
—
—
—
17.4
103.6
94.1
80.1
60.7
29.3
4.3
1.9
0.3
391.7
2013 227.8
—
—
—
—
52.5
82.6
81.7
63.4
47.8
21.9
2.9
0.4
353.2
2014 148.4
—
—
—
—
—
37.0
50.9
44.3
37.4
28.8
15.8
0.8
215.0
2015 63.2
—
—
—
—
—
—
3.4
17.9
20.1
19.8
16.7
3.3
81.2
2016 91.4
—
—
—
—
—
—
—
18.9
30.4
25.0
19.9
4.1
98.3
2017 275.3
—
—
—
—
—
—
—
—
49.1
97.3
80.9
17.3
244.6
2018 97.9
—
—
—
—
—
—
—
—
—
6.7
27.4
7.7
41.8
2019 123.1
—
—
—
—
—
—
—
—
—
—
13.4
7.4
20.8
2020 20.8
—
—
—
—
—
—
—
—
—
—
—
1.6
1.6
Subtotal 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 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
2012 20.4
—
—
—
11.6
9.0
5.6
3.2
2.2
2.0
2.0
1.5
0.3
37.4
2013 20.3
—
—
—
—
7.1
8.5
2.3
1.3
1.2
1.3
0.9
0.2
22.8
2014 773.8
—
—
—
—
—
153.2
292.0
246.4
220.8
206.3
172.9
38.1
1,329.7
2015 411.3
—
—
—
—
—
—
45.8
100.3
86.2
80.9
66.1
14.8
394.1
2016 333.1
—
—
—
—
—
—
—
40.4
78.9
72.6
58.0
12.5
262.4
2017 252.2
—
—
—
—
—
—
—
—
17.9
56.0
44.1
9.6
127.6
2018 341.8
—
—
—
—
—
—
—
—
—
24.3
88.7
19.5
132.5
2019 518.6
—
—
—
—
—
—
—
—
—
—
48.0
33.4
81.4
2020 61.0
—
—
—
—
—
—
—
—
—
—
—
2.9
2.9
Subtotal 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
2014 10.9
—
—
—
—
—
—
4.3
3.9
3.2
2.6
1.5
0.2
15.7
2015 19.0
—
—
—
—
—
—
3.0
4.4
5.0
4.8
3.9
0.9
22.0
2016 39.3
—
—
—
—
—
—
—
6.2
12.7
12.9
10.7
2.2
44.7
2017 39.2
—
—
—
—
—
—
—
—
1.2
7.9
9.2
2.4
20.7
2018 44.9
—
—
—
—
—
—
—
—
—
0.6
8.4
2.5
11.5
2019 77.2
—
—
—
—
—
—
—
—
—
—
5.0
5.9
10.9
2020 18.8
—
—
—
—
—
—
—
—
—
—
—
0.1
0.1
Subtotal 249.3
—
—
—
—
—
—
7.3
14.5
22.1
28.8
38.7
14.2
125.6
Total Europe 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 $ 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


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


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


~~(3)~~	For our non-US amounts, purchase price is presented at the exchange rate at the end of the 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 year-end exchange rate for the respective year of purchase.

Estimated remaining collections

The following chart shows our ERC of ~~$6,531.2~~$6,144.1 million at March 31, ~~2020~~2021 by geographical region (amounts in millions).

The following chart shows our ERC by year for the 12 month periods ending March 31 in each of the years represented below. The forecast amounts reflect our estimate at March 31, 2021 of how much we expect to collect on our portfolios. These estimates are translated to U.S. dollar at the March 31, 2021 exchange rate (amounts in millions).

Seasonality

~~Cash~~Although 2020 deviated from usual seasonal patterns due to the impact of COVID-19, typically cash collections in the Americas tend to be higher in the first half of the year due to the high volume of income tax refunds received by individuals in the U.S., and trend lower as the year progresses. Customer payment patterns in all of the countries in which we operate can be affected by seasonal employment trends, income tax refunds, and holiday spending habits.

Cash Collections

The following table displays our quarterly cash collections by geography and portfolio type, for the periods ~~indicated.~~indicated (amounts in thousands).

Cash Collections by Geography and Type Amounts in thousands

Cash Collections by Geography and Type																	Cash Collections by Geography and Type
																		2021		2020								2019
	2020		2019								2018							Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas Core	$	305,780	$	276,639	$	279,902	$	294,243	$	290,723	$	233,937	$	231,253	$	233,752
Americas and Australia Core																	Americas and Australia Core	$	347,638	$	286,524	$	336,322	$	343,269	$	305,780	$	276,639	$	279,902	$	294,243
Americas Insolvency	43,210		40,801		45,759		49,770		44,613		48,000		48,518		56,063		Americas Insolvency	35,253		36,048		37,344		38,685		43,210		40,801		45,759		49,770
Europe Core	131,340		126,649		118,917		117,635		116,858		113,154		102,780		109,359		Europe Core	149,486		141,471		131,702		115,145		131,340		126,649		118,917		117,635
Europe Insolvency	14,243		12,520		8,639		8,626		8,977		7,618		6,731		7,460		Europe Insolvency	23,510		17,830		13,971		12,841		14,243		12,520		8,639		8,626
Total Cash Collections	$	494,573	$	456,609	$	453,217	$	470,274	$	461,171	$	402,709	$	389,282	$	406,634	Total Cash Collections	$	555,887	$	481,873	$	519,339	$	509,940	$	494,573	$	456,609	$	453,217	$	470,274

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

U.S. Core Portfolio Cash Collections by Source
Amounts in thousands
2020 2019 2018
Q1 Q4 Q3 Q2 Q1 Q4 Q3 Q2
Call Center and Other Collections $ 168,166
$ 139,399
$ 149,782
$ 160,479
$ 169,753
$ 134,543
$ 137,325
$ 143,527
External Legal Collections 66,190
58,831
64,301
63,490
57,419
47,410
41,935
40,631
Internal Legal Collections 38,111
33,944
35,679
38,065
37,018
30,724
32,064
32,532
Total US Core Cash Collections $ 272,467
$ 232,174
$ 249,762
$ 262,034
$ 264,190
$ 212,677
$ 211,324
$ 216,690


Cash Collections by Source - Core Portfolios Only
	2021		2020								2019
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Call Center and Other Collections	$	355,043	$	296,865	$	325,898	$	319,236	$	288,596	$	262,570	$	254,798	$	264,478
External Legal Collections	65,613		58,481		68,861		70,310		75,699		70,867		75,082		75,624
Internal Legal Collections	76,468		72,649		73,265		68,868		72,825		69,851		68,939		71,776
Total Core Cash Collections	$	497,124	$	427,995	$	468,024	$	458,414	$	437,120	$	403,288	$	398,819	$	411,878

Collections Productivity (U.S. Portfolio)

The following tables ~~display certain~~displays a collections productivity ~~measures.~~measure for our U.S. Portfolios for the periods indicated.





























Cash Collections per Collector Hour Paid U.S. Portfolio
	Call center and other cash collections (1)
	2021		2020		2019		2018		2017
First Quarter	$	279	$	172	$	139	$	121	$	161
Second Quarter	—		263		139		101		129
Third Quarter	—		246		124		107		125
Fourth Quarter	—		204		128		104		112

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

Cash Efficiency Ratio

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





























Cash Efficiency Ratio (1)
	2021	2020	2019
First Quarter	68.0%	61.5%	59.2%
Second Quarter	—	68.7	60.4
Third Quarter	—	65.6	60.2
Fourth Quarter	—	61.9	59.7
Full Year	—	64.5	59.9

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

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

Call center and other cash collections ⁽¹⁾
2020 2019 2018 2017 2016
First Quarter $ 172
$ 139
$ 121
$ 161
$ 168
Second Quarter —
139
101
129
167
Third Quarter —
124
107
125
177
Fourth Quarter —
128
104
112
153


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

Portfolio Acquisitions

The following graph shows the purchase price of our portfolios by year since ~~2009.~~2011. It includes the acquisition date finance receivable portfolios that were acquired through our business acquisitions. The ~~2020~~2021 totals represent portfolio acquisitions through the three months ended March 31, ~~2020~~2021 while the prior ~~years~~year totals are for the full year.

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

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


Portfolio Acquisitions by Geography and Type
	2021		2020								2019
	Q1		Q4		Q3		Q2		Q1		Q4		Q3		Q2
Americas and Australia Core	$	88,912	$	67,460	$	84,139	$	110,474	$	172,697	$	118,153	$	168,185	$	121,996
Americas Insolvency	9,486		12,504		14,328		14,527		20,772		22,650		26,311		26,092
Europe Core	44,095		137,647		74,930		34,247		60,990		218,919		64,728		136,344
Europe Insolvency	16,468		72,171		4,203		5,251		18,778		42,613		19,772		4,715
Total Portfolio Acquisitions	$	158,961	$	289,782	$	177,600	$	164,499	$	273,237	$	402,335	$	278,996	$	289,147

Portfolio Acquisitions by ~~Stratifications~~Stratification (U.S. Only)

The following table categorizes our quarterly U.S. portfolio acquisitions for the periods indicated into major asset type and delinquency category. Since our inception in 1996, we have acquired more than 5557 million customer accounts in the ~~U.S.~~U.S (amounts in thousands).


U.S. Portfolio Acquisitions by Major Asset Type
	2021				2020
	Q1				Q4				Q3				Q2				Q1
Major Credit Cards	$	28,230	31.1	%	$	22,500	28.9	%	$	23,322	25.7	%	$	50,270	40.9	%	$	71,225	38.3	%
Private Label Credit Cards	50,180		55.4		48,335		62.1		60,331		66.5		69,651		56.7		104,300		56.0
Consumer Finance	11,861		13.1		5,978		7.6		6,333		7.0		2,430		2.0		2,109		1.1
Auto Related	381		0.4		1,081		1.4		680		0.8		460		0.4		8,510		4.6
Total	$	90,652	100.0	%	$	77,894	100.0	%	$	90,666	100.0	%	$	122,811	100.0	%	$	186,144	100.0	%

U.S. Portfolio Acquisitions by Major Asset Type
Amounts in thousands
2020 2019
Q1 Q4 Q3 Q2 Q1
Major Credit Cards $ 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 2,109
1.1
2,046
1.7
2,090
1.7
28,649
20.4
$ 2,424
1.5
Auto Related 8,510
4.6
6,991
5.6
638
0.5
1,407
1.0
30,358
18.9
Total $ 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
	2021				2020
	Q1				Q4				Q3				Q2				Q1
Fresh (1)	$	21,502	26.4	%	$	21,985	33.6	%	$	25,236	33.1	%	$	28,847	26.6	%	$	51,126	30.9	%
Primary (2)	1,360		1.7		1,002		1.5		5,187		6.8		9,887		9.1		18,152		11.0
Secondary (3)	50,546		62.1		41,164		63.0		44,534		58.3		67,609		62.5		92,855		56.1
Other (4)	8,050		9.8		1,239		1.9		1,381		1.8		1,941		1.8		3,239		2.0

Total Core	81,458		100.0	%	65,390		100.0	%	76,338		100.0	%	108,284		100.0	%	165,372		100.0	%
Insolvency	9,194				12,504				14,328				14,527				20,772
Total	$	90,652			$	77,894			$	90,666			$	122,811			$	186,144

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

Non-GAAP Financial Measures

We report financial results in accordance with U.S. generally accepted accounting principles ("GAAP"). However, management uses certain non-GAAP financial measures including adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"), to evaluate our operating and financial performance as well as to set performance goals. We present Adjusted EBITDA because we consider it an important supplemental measure of operations and financial performance. Management believes Adjusted EBITDA helps provide enhanced period-to-period comparability of operations and financial performance, as it excludes certain items whose fluctuations from period to period do not necessarily correspond to changes in the operations of our business, and is useful to investors as other companies in the industry report similar financial measures. Adjusted EBITDA should not be considered as an alternative to net income determined in accordance with GAAP. In addition, our calculation of Adjusted EBITDA may not be comparable to the calculation of similarly titled measures presented by other companies.

Adjusted EBITDA is calculated starting with our GAAP financial measure, net income attributable to PRA Group, Inc. and is adjusted for:

•income tax expense (or less income tax benefit);

•foreign exchange loss (or less foreign exchange gain);

•interest expense, net (or less interest income, net);

•other expense (or less other income);

•depreciation and amortization;

•net income attributable to noncontrolling interests; and

•recoveries applied to negative allowance less changes in expected recoveries.

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


~~(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.~~

The following table is a reconciliation of net income, as reported in accordance with GAAP, to Adjusted EBITDA for the last 12 months ("LTM") as of March 31, 2021 and for the year ended December 31, 2020 (amounts in thousands):


Reconciliation of Non-GAAP Financial Measures
	LTM		For the Year Ended
	March 31, 2021		December 31, 2020
Net income attributable to PRA Group, Inc.	$	188,610	$	149,339
Adjustments:
Income tax expense	55,425		41,203
Foreign exchange losses/(gains)	304		(2,005)
Interest expense, net	136,053		141,712
Other expense (1)	947		1,049
Depreciation and amortization	18,362		18,465
Adjustment for net income attributable to noncontrolling interests	18,576		18,403

Recoveries applied to negative allowance less Changes in expected recoveries	997,313		968,362
Adjusted EBITDA	$	1,415,590	$	1,336,528

(1) Other expense reflects non-operating expenses.

Additionally, we evaluate our business using certain ratios that use Adjusted EBITDA. Debt to Adjusted EBITDA is calculated by dividing borrowings by Adjusted EBITDA.The following table reflects our Debt to Adjusted EBITDA for the LTM as of March 31, 2021 and for the year ended December 31, 2020 (amounts in thousands):


Debt to Adjusted EBITDA
	LTM			For the Year Ended
	March 31, 2021			December 31, 2020
Borrowings	$	2,501,133		$	2,661,289
Adjusted EBITDA	$	1,415,590		$	1,336,528
Debt to Adjusted EBITDA	1.77		x	1.99		x

Liquidity and Capital Resources

We actively manage our liquidity to help provide access to sufficient funding to meet our business needs and financial obligations. As of March 31, ~~2020,~~2021, cash and cash equivalents totaled ~~$180.0~~$92.8 million. Of the cash and cash equivalent balance as of March 31, ~~2020, $115.4~~2021, $62.2 million consisted of cash on hand related to international operations with indefinitely reinvested earnings. See the "Undistributed Earnings of International Subsidiaries" section below for more information.

At March 31, ~~2020,~~2021, we had ~~approximately $2.8 billion in~~the following borrowings outstanding ~~with $655.4 million of~~and availability under ~~all of~~ our credit facilities ~~(subject to the~~(amounts in thousands):


	Outstanding		Available without Restrictions		Available with Restrictions (1)
Americas revolving credit (2)	$	376,392	$	703,995	$	254,772
European revolving credit	1,023,039		366,961		236,961
Term loan	467,500		—		—
Senior Notes	300,000		—		—
Convertible Notes	345,000		—		—
Less: Debt discounts and issuance costs	(10,798)		—		—
Total	$	2,501,133	$	1,070,956	$	491,733

(1) Available borrowings after calculation of current borrowing base and ~~applicable~~ debt covenants). Considering borrowing base restrictions, as of March 31, 2020, the amount available to be drawn was $234.6 million. Of the $655.4 million of borrowing availability, $281.7 million was available under our European credit facility, $371.2 million was available under ourcovenants.

(2) Includes North American ~~credit facility~~revolver and ~~$2.5 million was available under our~~ Colombian revolving credit facility. Of the $234.6 million available considering borrowing base restrictions, $56.4 million was available under our European credit facility, $175.7 million was available under our North American credit facility and $2.5 million was available under the Colombian revolving credit facility. For more information, see Note 7 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.revolver.

An additional funding source for our Europe operations is interest-bearing deposits. Per the terms of our European credit facility, we are permitted to obtain interest-bearing deposit funding of up to SEK 1.2 billion (approximately ~~$119.7~~$137.4 million as of March 31, ~~2020)~~2021). Interest-bearing deposits as of March 31, ~~2020~~2021 were ~~$97.5~~$125.0 million.

We determined that we were in compliance with the covenants of our financing arrangements as of March 31, ~~2020.~~

2021.

We have the ability to slow the purchase of finance receivables if necessary, ~~with low impact to current year~~and use the net cash ~~collections. For example, we invested $1,289.3 million in portfolio acquisitions in 2019. The portfolios acquired in 2019~~flow generated ~~$210.2 million of~~from our cash collections ~~representing only 11.4% of 2019 cash collections.~~from our existing finance receivables to temporarily service our debt and fund existing operations.

Contractual obligations over the next year are primarily related to ~~debt maturities and~~ purchase commitments. ~~Our North American credit facility expires in May 2022. Our European credit facility expires in February 2023. Of our $422.5 million in term loans outstanding at~~As of March 31, ~~2020, $10.0 million in principal is due within one year.~~

Additionally, the $287.5 million principal amount of the 3.00% Convertible Senior Notes due 2020 is due on August 1, 2020. Based upon our current availability considering borrowing base restrictions in North America ($175.7 million), our cash on hand, the recent modifications to our credit facilities, our ability to secure additional financing in the open market, and our strong operating cash flows,2021, we ~~believe that we~~ have ~~the ability to settle this instrument in cash at maturity.~~

~~We have in place~~ forward flow commitments in place for the purchase of nonperforming loans ~~primarily over the next 12 months~~ with a maximum purchase price of ~~$626.5~~$640.7 million, as of ~~March 31, 2020.~~which $621.2 million is due within the next 12 months. The ~~$626.5~~$640.7 million is comprised of ~~$443.0~~$452.7 million for the Americas and ~~$183.5~~Australia and $188.0 million for ~~Europe.We~~Europe. We may also enter into new or renewed forward flow commitments and close on spot transactions in addition to the aforementioned forward flow agreements.

~~In May 2017, we reached a settlement with~~Additionally, of our $2.5 billion borrowings at March 31, 2021, estimated interest, unused fees and principal payments for the ~~Internal Revenue Service ("IRS") in regard~~next 12 months are approximately $106.7 million, of which, $11.0 million relates to the IRS assertion that tax revenue recognition using the cost recovery method did not clearly reflect taxable income. In accordance with the settlement, our tax accounting method to recognize finance receivables revenue changed effective with tax year 2017. Under the new method, a portion of the annual collections amortizesprincipal. Our principal ~~and the remaining portion is taxable income. The revenue~~payment obligations related to ~~the difference~~debt maturities occur within three to five years as our European credit facility expires in ~~timing between the new method and the cost recovery method has been included evenly into~~February 2023, our tax filings over four years effective with tax year 2017. We estimate the related tax payments to be approximately $9.2 million per quarter through the year 2020. No interest or penalties were assessed as part of the settlement.

~~We continue to monitor the recent outbreak of COVID-19 on~~convertible notes mature in June 2023, our ~~operations and how that may impact our cash flows~~North American credit facility expires in May 2024 and our ~~ability to settle debt. As a result of COVID-19, global financial markets have experienced overall volatility and disruptions to capital and credit markets.~~ senior notes mature in September 2025.

We believe that funds generated from operations and from cash collections on finance receivables, together with existing cash, available borrowings under our revolving credit facilities, and ~~recent modifications~~access to the ~~terms of those facilities,~~capital markets will be sufficient to finance our operations, planned capital expenditures, forward flow purchase commitments, debt maturities and additional portfolio purchases during the next 12 months. We may, however, seek to access the debt or equity capital markets as we deem appropriate, market permitting. Business acquisitions ~~adverse outcomes in pending litigation~~ or higher than expected levels of portfolio purchasing could require additional financing from other sources.

For more information, see Note 7 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Cash Flows Analysis

The following table summarizes our cash flow activity for the three months ended March 31, ~~2020~~2021 compared to the three months ended March 31, ~~2019~~2020 (amounts in thousands):


	Three Months Ended March 31,							Three Months Ended March 31,
	2020			2019				2021		2020		Change
Total cash provided by (used in):							Total cash provided by (used in):
Operating activities	$	46,806		$	14,957		Operating activities	$	20,208	$	46,806	$	(26,598)
Investing activities	(42,180		)	(112,899		)	Investing activities	166,982		(42,180)		209,162
Financing activities	72,142			105,464			Financing activities	(192,955)		72,142		(265,097)
Effect of exchange rate on cash	(16,575		)	(4,115		)	Effect of exchange rate on cash	(6,427)		(16,575)		10,148
Net increase in cash and cash equivalents	$	60,193		$	3,407
Net (decrease)/increase in cash and cash equivalents							Net (decrease)/increase in cash and cash equivalents	$	(12,192)	$	60,193	$	(72,385)

Operating Activities

Cash provided by operating activities mainly reflects cash collections recognized as revenue partially offset by cash paid for operating expenses, interest and income taxes. Key drivers of operating activities were adjusted for (i) non-cash items included in net income such as provisions for unrealized gains and losses, changes in expected recoveries, depreciation and amortization, deferred taxes, fair value ~~change of derivatives,~~changes in equity securities, and stock-based compensation as well as (ii) changes in the balances of operating assets and liabilities, which can vary significantly in the normal course of business due to the amount and timing of payments.

Net cash provided by operating activities ~~increased $31.8~~decreased $26.6 million ~~for~~during the three months ended March 31, ~~2020,~~2021, mainly driven by ~~a $31.5 million impact of unrealized foreign currency transactions~~lower cash collections recognized as revenue and ~~changes in expected recoveries compared to the prior~~

~~year net allowance charges. These increases are partially offset by deferred taxes and changes in~~ other ~~operating assets and liabilities.~~various offsetting noncash items.

Investing Activities

~~Cash used in investing activities mainly reflects acquisitions of nonperforming loans.~~ Cash provided by investing activities mainly reflects recoveries applied to our negative ~~allowances.~~

~~Net cash~~allowance. Cash used in investing activities ~~decreased $70.7~~mainly reflects purchases of nonperforming loans.

Net cash provided by investing activities increased $209.2 million ~~or 62.6%~~ during the three months ended March 31, ~~2020,~~2021 primarily ~~from~~driven by a ~~$82.7~~$112.5 million decrease in ~~investment~~ purchases of nonperforming loans and ~~$57.6 million of cash used related to~~ a ~~business acquisition during the first quarter of 2019. These decreases were partially offset by a $42.3~~$91.9 million increase in ~~proceeds from sales and maturities of investments and $31.2 million of cash received during the first quarter of 2019 related~~recoveries applied to ~~the sale of a subsidiary in the fourth quarter of 2018.~~our negative allowance.

Financing Activities

Cash ~~for~~provided by financing activities is normally provided by draws on our lines of credit and proceeds from debt offerings. Cash used in financing activities is primarily driven by principal payments on our lines of credit and long-term debt.

~~Cash provided by~~Changes in net cash flow related to financing activities ~~decreased $33.3 million or 31.6% during the three months ended March 31, 2020,~~was driven primarily ~~from~~by a ~~$222.8~~$269.7 million decrease in proceeds from our lines of ~~credit and a $17.8 million decrease in interest-bearing deposits partially offset by a $208.2 million decrease in principal payments on our lines of credit, notes payables and long-term debt.~~credit.

Undistributed Earnings of International Subsidiaries

We intend to use predominantly all of our accumulated and future undistributed earnings of international subsidiaries to expand operations outside the U.S.; therefore, such undistributed earnings of international subsidiaries are considered to be indefinitely reinvested outside the U.S. Accordingly, no provision for income tax and withholding tax has been provided thereon. If management's intentions change and eligible undistributed earnings of international subsidiaries are repatriated, we could be subject to additional income taxes and withholding taxes. This could result in a higher effective tax rate in the period in which such a decision is made to repatriate accumulated or future undistributed international earnings. The amount of cash on hand related to international operations with indefinitely reinvested earnings was ~~$115.4~~$62.2 million and ~~$109.7~~$97.0 million as of March 31, ~~2020~~2021 and December 31, ~~2019,~~2020, respectively. Refer to Note 12 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report for further information related to our income taxes and undistributed international earnings.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K promulgated under the Securities Exchange Act of 1934, as amended (the "Exchange Act").

Recent Accounting Pronouncements

For a summary of recent accounting pronouncements and the anticipated effects on our Consolidated Financial Statements see Note 14 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Critical Accounting Policies and Estimates

Our ~~consolidated financial statements~~Consolidated Financial Statements have been prepared in accordance with GAAP. Our significant accounting policies are discussed in Note 1 to our Consolidated Financial Statements included in Item 8 of our ~~2019~~2020 Form 10-K. Our significant accounting policies are fundamental to understanding our results of operations and financial condition because they require that we use estimates, assumptions and judgments that affect the reported amounts of revenues, expenses, assets, and liabilities.

Three of these policies are considered to be critical because they are important to the portrayal of our financial condition and results, and because they require management to make judgments and estimates that are difficult, subjective, and complex regarding matters that are inherently uncertain.

We base our estimates on historical experience, current trends and various other assumptions that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. If these estimates differ significantly from actual results, the impact on our Consolidated Financial Statements may be material.

Management has reviewed these critical accounting policies with the Audit Committee of our Board of Directors.

Revenue Recognition - Finance Receivables

We account for the majority of our investment in finance receivables 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”).~~326. Revenue recognition for finance receivables involves the use of estimates and the exercise of judgment on the part of management. These estimates include projections of the quantity and timing of future cash flows and economic lives of our pools of finance receivables. Significant changes in such estimates could result in increased or decreased revenue as we immediately recognize the discounted value of such changes using the constant effective interest rate of the pool.

We account for our finance receivables as follows:

We create each annual accounting pool using our projections of estimated cash flows and expected economic life. We then compute a constant effective interest rate based on the net carrying amount of the pool and reasonable projections of estimated cash flows and expectation of its economic life. As actual cash flow results are received we record the time value of the expected cash as ~~portfolio~~Portfolio income and over and under performance and changes in expected future cash flows from expected cash as ~~change~~Changes in expected recoveries. We review each pool watching for trends, actual performance versus projections and curve shape (a graphical depiction of the timing of cash flows). We then re-forecast future cash flows by applying discounted cash flow methodologies to our ERC and recognize income over the estimated life of the pool at the constant effective interest rate of the pool.

Significant judgment is used in evaluating expected recoveries using the discounted cash flow approach and the estimated life of the pool.

Valuation of ~~Acquired Intangibles and~~ Goodwill

In accordance with ~~FASB~~ ASC Topic 350, "Intangibles-Goodwill and Other" ("ASC 350"), we ~~amortize intangible assets over their estimated useful lives.~~evaluate Goodwill ~~pursuant to ASC 350, is not amortized but rather evaluated~~ for impairment annually and more frequently if indicators of potential impairment exist. Goodwill is reviewed for potential impairment at the reporting unit level. ~~A reporting unit is an operating segment or one level below an operating segment.~~

Goodwill is evaluated for impairment either under the qualitative assessment ~~option.~~option or using a quantitative forecast approach depending on facts and circumstances of a reporting unit, including the excess of fair value over carrying amount in the last valuation, changes in the business environment and changes of the reporting unit or its composition. If upon evaluation of the qualitative factors, we ~~qualitatively~~ determine it is more likely than not that the fair value of a reporting unit is greater than its carrying amount, anthere is no impairment loss to record and a quantitative assessment is ~~recognized for the amount by which~~not required. If the carrying amount exceeds the reporting unit’s fair ~~value.~~value, then we are required to determine the reporting unit’s fair value and record as an impairment loss the amount the carrying value exceeds fair value, not to exceed the total amount of goodwill allocated to the respective reporting unit.

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

Income Taxes

We are subject to income taxes throughout the ~~income tax laws of the various jurisdictions~~U.S. and in ~~which we operate, including U.S. federal, state, local, and~~numerous international jurisdictions. These tax laws are complex and are subject to different interpretations by the taxpayer and the relevant government taxing authorities. When determining our domestic and international income tax expense, we ~~must~~ make judgments about the application of these inherently complex laws.

We follow 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. Accordingly, we record a tax provision for the anticipated tax consequences of the reported results of operations. ~~In accordance with ASC 740, the~~The provision for income taxes is ~~computed~~estimated using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax basis of assets and liabilities, and for operating losses and tax credit carry-forwards. Deferred tax assets and liabilities are measured using the currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets ~~and liabilities~~ are expected to be realized or settled. ~~The evaluation of~~

We exercise significant judgment in estimating the potential exposure to unresolved tax matters and apply a more-likely-than-not criteria approach for recording tax ~~position~~benefits related to uncertain tax positions in ~~accordance with~~ the guidance is a two-step process. The first step is recognition: the Company determines whether it is more-likely-than-not that a tax position will be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical meritsapplication of the ~~position. In evaluating whether a~~complex tax ~~position has met~~laws. While actual results could vary, we believe we have adequate tax accruals with respect to the ~~more-likely-than-not recognition threshold, the Company~~

~~should presume that the position will be examined by the appropriate taxing authority that would have full knowledge~~ultimate outcome of ~~all relevant information. The second step is measurement: a~~such unresolved tax position that meets the more-likely-than-not recognition threshold is measured to determine the amount of benefit to recognize in the financial statements. The tax position is measured as the largest amount of benefit that is greater than fifty percent likely of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met. Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met.matters. We record interest and penalties related to ~~unrecognized~~unresolved tax ~~benefits~~matters as a component of income tax ~~expense.~~expense when the more-likely-than-not standards are met.

In the event that all or part of the deferred tax assets are determined not to be realizable in the future, we would establish a valuation allowance ~~would be established~~ and ~~charged~~charge to earnings the impact in the period such a determination is made. If we subsequently realize deferred tax assets that were previously determined to be unrealizable, the respective valuation allowance would be reversed, resulting in a positive adjustment to ~~earnings in the period such determination is made.~~earnings. The establishment or release of a valuation allowance does not have an impact on cash, nor does such an allowance preclude the use of loss ~~carry-forwards~~carryforwards or other deferred tax assets in future periods. The calculation of tax liabilities involves significant judgment in estimating the impact of uncertainties in the application of complex tax laws. Resolution of these uncertainties in a manner inconsistent with our expectations could have a material impact on our results of operations and financial position.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our activities are subject to various financial risks, including market risk, currency and interest rate risk, credit risk, liquidity risk and cash flow risk. Our financial risk management program focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on our financial performance. We may periodically enter into derivative financial instruments, typically interest rate and currency derivatives, to reduce our exposure to fluctuations in interest rates on variable-rate debt, fluctuations in currency rates and their impact on earnings and cash flows. We do not utilize derivative financial instruments with a level of complexity or with a risk greater than the exposure to be managed nor do we enter into or hold derivatives for trading or speculative purposes. Derivative instruments involve, to varying degrees, elements of non-performance, or credit risk. We do not believe that we currently face a significant risk of loss in the event of non-performance by the counterparties associated with these instruments, as these transactions were executed with a diversified group of major financial institutions with an investment-grade credit rating. Our intention is to spread our counterparty credit risk across a number of counterparties so that exposure to a single counterparty is minimized.

Interest Rate Risk

We are subject to interest rate risk from outstanding borrowings on our variable rate credit facilities. As such, our consolidated financial results are subject to fluctuations due to changes in the market rate of interest. We assess this interest rate risk by estimating the increase or decrease in interest expense that would occur due to a change in short-term interest rates. The borrowings on our variable rate credit facilities were approximately ~~$2.2~~$1.9 billion as of March 31, ~~2020.~~2021. Based on our ~~current~~ debt structure at March 31, ~~2020,~~2021, assuming a 50 basis point decrease in interest rates, for example, interest expense over the following 12 months would decrease by an estimated ~~$7.5~~$1.8 million. Assuming a 50 basis point increase in interest rates, interest expense over the following 12 months would increase by an estimated ~~$7.7~~$3.7 million.

To reduce the exposure to changes in the market rate of interest and to be in compliance with the terms of our European credit facility, we have entered into interest rate derivative contracts for a portion of our borrowings under our floating rate financing arrangements. We apply hedge accounting to certain of our interest rate derivative contracts. By applying hedge accounting, changes in market value are reflected as adjustments in Other Comprehensive Income. All derivatives to which we have applied hedge accounting were evaluated and ~~remain~~remained highly effective at March ~~30, 2020.~~31, 2021. Terms of the interest rate derivative contracts require us to receive a variable interest rate and pay a fixed interest rate. The sensitivity calculations above consider the impact of our interest rate derivative ~~contracts.~~contracts and a 75 basis point floor on revolving loans in our North American credit facility.

Currency Exchange Risk

We operate internationally and enter into transactions denominated in various foreign currencies. During the three months ended March 31, ~~2020,~~2021, we generated ~~$98.4~~$111.3 million of revenues from operations outside the U.S. and used ~~eleven~~12 functional currencies, excluding the U.S. dollar. Weakness in one particular currency might be offset by strength in other currencies over time.

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

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

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

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

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. We maintain disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate. We conducted an evaluation, under the supervision and with the participation of our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report. Based on this evaluation, the principal executive officer and principal financial officer have concluded that, as of March 31, ~~2020,~~2021, our disclosure controls and procedures were effective.

Changes in Internal Control over Financial Reporting. There was no change in our internal control over financial reporting that occurred during the quarter ended March 31, ~~2020~~2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Part II. Other Information

Item 1. Legal Proceedings

For information regarding legal proceedings as of March 31, ~~2020,~~2021, refer to Note 13 to our Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report.

Item 1A. Risk Factors

~~With the exception of the following, there~~There have been no ~~other~~ material changes in our risk factors from those disclosed in Part I, Item 1A, of our ~~fiscal 2019~~2020 Form 10-K.

~~The novel coronavirus ("COVID-19") pandemic could have an adverse effect on our business, results of operations, and financial results.~~

In December 2019, a COVID-19 outbreak was reported in China. By March 11, 2020, the World Health Organization declared COVID-19 a global pandemic and to date, all countries in which we operate have acted to address the spread of COVID-19 including restricting travel, closing country borders, banning gatherings of unrelated individuals, quarantining and isolating infected individuals, closing schools and non-essential businesses and establishing criteria that must be met before businesses reopen. The global spread of COVID-19 has disrupted normal business operations and resulted in significant unemployment, recessionary economic trends and overall volatility, uncertainty, and economic disruption.

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

Although it is difficult to predict the extent to which COVID-19 will impact us due to numerous evolving factors that we are unable to predict, the COVID-19 pandemic could have an adverse effect on our business, results of operations and financial condition if:

~~the duration and scope of the pandemic result in deterioration in the economic or inflationary environment in the Americas or Europe;~~

political, legal and regulatory actions and policies in response to the pandemic prevent us from performing our collection activities or result in material increases in our costs to comply with such laws and regulations;

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

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

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

~~we are unable to purchase nonperforming loans needed to operate our business because debt owners become unable or unwilling to sell their nonperforming loans consistent with recent levels; or~~

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

Any of these factors could cause or contribute to the risks and uncertainties identified in our fiscal 2019 Form 10-K and could materially adversely affect our business, operations, and financial results.

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

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

~~On May 6, 2020, we entered into the Second Amendment to the North American Credit Facility that includes:~~None.

The consolidated total leverage ratio limit will increase to 3.25 from 2.75 effective after June 30, 2020 and 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 1.00% 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%.

Bank of America, National Association, Capital One, N.A., Fifth Third Bank and SunTrust Bank, DNB Capital, ING Capital, MUFG Union Bank, N.A. and Regions Bank and their respective affiliates, who are lenders and serve in various capacities under the North American Credit Agreement, have engaged in, and may in the future engage in, banking and other commercial dealings in the ordinary course of business with the Company, the Borrowers or their affiliates. They have received, or may in the future receive, customary fees and commissions for these transactions.

The foregoing description of the Second Amendment does not purport to be complete and is qualified in its entirety by reference to the complete text of the Second Amendment, a copy of which will be filed with our Quarterly Report on Form 10-Q for the quarter ending June 30, 2020.

Item 6. Exhibits



3.1		~~Fourth~~Fifth Amended and Restated Certificate of Incorporation of PRA Group, Inc. (Incorporated by reference to Exhibit 3.1 of the Current Report on Form 8-K ~~(File~~filed June 17, 2020 (File No. ~~000-50058) filed on October 29, 2014)~~000-50058 )).
3.2		Amended and Restated By-Laws of PRA Group, Inc. (Incorporated by reference to Exhibit ~~3.1~~3.2 of the Current Report on Form 8-K ~~(File~~filed June 17, 2020 (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 filed October 15, 2002 (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 filed October 30, 2002 (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~~ filed May 26, 2017 (File No. 000-50058) ~~filed on May 26, 2017)~~).
~~4.5~~4.4		Indenture dated as of August 27,2020 among PRA Group Inc., the domestic subsidiaries of PRA Group Inc., party thereto and Regions Bank, or Trustee (Incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed September 1, 2020(File No. 000-50058)).
4.5		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~~4.3 of the ~~Current~~Annual Report on Form 10-K ~~(File~~filed February 26, 2021(File No. 000-50058) ~~filed on March 2, 2020)~~).
10.1		Form of Performance Stock Unit Agreement (filed herein).
~~Sixth~~10.2		Seventh Amendment and Restatement Agreement to the Multicurrency Revolving Credit Facility Agreement, dated as of March ~~27, 2020~~12, 2021 by and among PRA Group Europe Holding S.à .r.l., PRA Group Europe Holding S.à .r.l., Luxembourg, Zug Branch ~~along with certain guarantors named therein,~~ and ~~the lenders party thereto~~DNB Bank ASA (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)

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

PRA Group, Inc.

(Registrant)

May ~~7, 2020~~6, 2021

By:

/s/ Kevin P. Stevenson

Kevin P. Stevenson

President and Chief Executive Officer

(Principal Executive Officer)




May 6, 2021		By:
~~May 7, 2020~~	~~By:~~	/s/ Peter M. Graham
			Peter M. Graham
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer)



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



	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



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



	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



	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



	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



	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



	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



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

Purchase Price Multiples as of March 31, 2020 Amounts in thousands

Purchase Period	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
1996-2009	$	930,026	$	38,390	$	2,886,117	$	38,390	310	%	238	%
2010	148,193		26,621		535,652		26,621		361	%	247	%
2011	209,602		44,992		738,981		44,992		353	%	245	%
2012	254,076		56,991		680,187		56,991		268	%	226	%
2013	390,826		85,283		928,709		85,283		238	%	211	%
2014	404,117		138,067		921,659		135,051		228	%	204	%
2015	443,114		206,581		960,145		205,976		217	%	205	%
2016	455,767		327,345		1,093,346		314,819		240	%	201	%
2017	532,851		468,942		1,167,610		464,659		219	%	193	%
2018	653,975		762,474		1,337,704		749,410		205	%	202	%
2019	581,476		969,495		1,198,926		933,976		206	%	206	%
2020	172,697		329,648		336,822		329,648		195	%	195	%
Subtotal	5,176,720		3,454,829		12,785,858		3,385,816
Americas Insolvency
1996-2009	397,453		794		835,929		794		210	%	178	%
2010	208,942		1,016		546,844		1,016		262	%	184	%
2011	180,432		848		370,113		848		205	%	155	%
2012	251,395		688		392,419		688		156	%	136	%
2013	227,834		1,728		354,918		1,728		156	%	133	%
2014	148,420		2,252		217,283		2,232		146	%	124	%
2015	63,170		6,655		87,791		6,655		139	%	125	%
2016	91,442		18,596		116,061		18,536		127	%	123	%
2017	275,257		104,624		349,186		104,624		127	%	125	%
2018	97,879		85,846		127,700		85,846		130	%	127	%
2019	123,077		137,797		158,639		137,556		129	%	128	%
2020	20,772		25,768		27,344		25,768		132	%	132	%
Subtotal	2,086,073		386,612		3,584,227		386,291
Total Americas	7,262,793		3,841,441		16,370,085		3,772,107
Europe Core
2012	20,409		533		40,607		406		199	%	187	%
2013	20,334		262		25,056		196		123	%	119	%
2014	773,811		759,304		2,202,629		640,238		285	%	208	%
2015	411,340		323,139		734,838		285,151		179	%	160	%
2016	333,090		310,630		557,579		291,054		167	%	167	%
2017	252,174		229,143		361,268		204,423		143	%	144	%
2018	341,775		385,373		518,022		369,842		152	%	148	%
2019	518,610		706,719		790,270		665,335		152	%	152	%
2020	60,990		105,783		108,540		105,783		178	%	178	%
Subtotal	2,732,533		2,820,886		5,338,809		2,562,428
Europe Insolvency
2014	10,876		798		18,164		678		167	%	129	%
2015	18,973		4,969		29,054		4,162		153	%	139	%
2016	39,338		14,946		56,971		15,133		145	%	130	%
2017	39,235		27,096		48,706		24,854		124	%	128	%
2018	44,908		43,766		55,331		42,403		123	%	123	%
2019	77,218		91,096		102,236		85,535		132	%	130	%
2020	18,778		23,947		24,090		23,947		128	%	128	%
Subtotal	249,326		206,618		334,552		196,712
Total Europe	2,981,859		3,027,504		5,673,361		2,759,140
Total PRA Group	$	10,244,652	$	6,868,945	$	22,043,446	$	6,531,247

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

	Call center and other cash collections ⁽¹⁾
	2020		2019		2018		2017		2016
First Quarter	$	172	$	139	$	121	$	161	$	168
Second Quarter	—		139		101		129		167
Third Quarter	—		124		107		125		177
Fourth Quarter	—		128		104		112		153