PRA GROUP INC
For the period ended Dec 31, 2023. Filed Feb 29, 2024.
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FY2023 · Filed Feb 29, 2024
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2 – Finance Receivables, net
- Finance Receivables, net:
Finance receivables, net consisted of the following as of December 31, 2023 and 2022 (amounts in thousands):
| 2023 | 2022 | |
|---|---|---|
| Amortized cost | $— | $— |
| Negative allowance for expected recoveries | 3,656,598 | 3,295,008 |
| Balance at end of year | $3,656,598 | $3,295,008 |
Changes in the negative allowance for expected recoveries by portfolio segment for the years ended December 31, 2023 and 2022 were as follows (amounts in thousands):
| 2023 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Balance at beginning of year | $2,936,207 | $358,801 | $3,295,008 |
| Initial negative allowance for expected recoveries - portfolio acquisitions (1) | 1,017,609 | 136,474 | 1,154,083 |
| Foreign currency translation adjustment | 86,047 | 9,351 | 95,398 |
| Recoveries applied to negative allowance (2) | (758,547) | (158,478) | (917,025) |
| Changes in expected recoveries (3) | 13,898 | 15,236 | 29,134 |
| Balance at end of year | $3,295,214 | $361,384 | $3,656,598 |
| 2022 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Balance at beginning of year | $2,989,932 | $438,353 | $3,428,285 |
| Initial negative allowance for expected recoveries - portfolio acquisitions (1) | 771,977 | 78,019 | 849,996 |
| Foreign currency translation adjustment | (156,795) | (20,536) | (177,331) |
| Recoveries applied to negative allowance (2) | (795,489) | (179,357) | (974,846) |
| Changes in expected recoveries (3) | 126,582 | 42,322 | 168,904 |
| Balance at end of year | $2,936,207 | $358,801 | $3,295,008 |
(1) Initial negative allowance for expected recoveries - portfolio acquisitions
Portfolio acquisitions for the years ended December 31, 2023 and 2022 were as follows (amounts in thousands):
| 2023 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Face value | $7,637,744 | $747,192 | $8,384,936 |
| Noncredit discount | (843,375) | (51,259) | (894,634) |
| Allowance for credit losses at acquisition | (5,776,760) | (559,459) | (6,336,219) |
| Purchase price | $1,017,609 | $136,474 | $1,154,083 |
| 2022 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Face value | $5,174,974 | $455,644 | $5,630,618 |
| Noncredit discount | (541,686) | (28,279) | (569,965) |
| Allowance for credit losses at acquisition | (3,861,311) | (349,346) | (4,210,657) |
| Purchase price | $771,977 | $78,019 | $849,996 |
The initial negative allowance recorded on portfolio acquisitions for the years ended December 31, 2023 and 2022 were as follows (amounts in thousands):
| 2023 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Allowance for credit losses at acquisition | $(5,776,760) | $(559,459) | $(6,336,219) |
| Writeoffs, net | 5,776,760 | 559,459 | 6,336,219 |
| Expected recoveries | 1,017,609 | 136,474 | 1,154,083 |
| Initial negative allowance for expected recoveries | $1,017,609 | $136,474 | $1,154,083 |
| 2022 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Allowance for credit losses at acquisition | $(3,861,311) | $(349,346) | $(4,210,657) |
| Writeoffs, net | 3,861,311 | 349,346 | 4,210,657 |
| Expected recoveries | 771,977 | 78,019 | 849,996 |
| Initial negative allowance for expected recoveries | $771,977 | $78,019 | $849,996 |
(2) Recoveries applied to negative allowance
Recoveries applied to the negative allowance for the years ended December 31, 2023 and 2022 were as follows (amounts in thousands):
| 2023 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Recoveries (a) | $1,474,009 | $200,144 | $1,674,153 |
| Less - amounts reclassified to portfolio income | 715,462 | 41,666 | 757,128 |
| Recoveries applied to negative allowance | $758,547 | $158,478 | $917,025 |
| 2022 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Recoveries (a) | $1,521,504 | $225,657 | $1,747,161 |
| Less - amounts reclassified to portfolio income | 726,015 | 46,300 | 772,315 |
| Recoveries applied to negative allowance | $795,489 | $179,357 | $974,846 |
(a) Recoveries includes cash collections, buybacks and other cash-based adjustments.
(3) Changes in expected recoveries
Changes in expected recoveries for the years ended December 31, 2023 and 2022 were as follows (amounts in thousands):
| 2023 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Changes in expected future recoveries | $(34,394) | $(1,604) | $(35,998) |
| Recoveries received in excess of forecast | 48,292 | 16,840 | 65,132 |
| Changes in expected recoveries | $13,898 | $15,236 | $29,134 |
| 2022 | |||
|---|---|---|---|
| Core | Insolvency | Total | |
| Changes in expected future recoveries | $48,806 | $13,405 | $62,211 |
| Recoveries received in excess of forecast | 77,776 | 28,917 | 106,693 |
| Changes in expected recoveries | $126,582 | $42,322 | $168,904 |
In order to estimate future cash collections, the Company considers historical collections performance and its view of current and future economic conditions and consumer habits in the various geographies in which the Company operates. Based on these considerations, the Company’s estimates of ERC incorporate changes in both the amounts and the timing of expected cash collections over the forecast period.
Changes in expected recoveries for the year ended December 31, 2023 were a net positive $29.1 million. This was comprised of $65.1 million in recoveries received in excess of forecast (cash collections overperformance), due in large part to collections performance in Europe, and a $36.0 million negative adjustment to changes in expected future recoveries, primarily due to adjustments made in certain U.S. pools.
For the year ended December 31, 2022, changes in expected recoveries were a net positive $168.9 million. The changes were the net result of $106.7 million in recoveries received in excess of forecast, reflecting cash collections overperformance during the year, and a $62.2 million net positive adjustment to changes in expected future recoveries. The changes in expected future recoveries reflect the Company's assessment of certain pools, where continued strong performance resulted in a net increase to the Company's ERC.
The text of this filing, as the company filed it with the SEC, without its images or exhibits. This is not investment advice.