PRA GROUP INC

6. Derivatives:

The Company periodically enters into derivative financial instruments; typically interest rate swaps and foreign currency contracts, to reduce its exposure to fluctuations in interest rates on variable-rate debt and foreign currency exchange rates. Derivative financial instruments are recognized at fair value in the Company's Consolidated Balance Sheets. For further discussion of the Company's use of derivative instruments, refer to Note 8 to the Consolidated Financial Statements in the 2023 Form 10-K. The following table summarizes the fair value of derivative financial instruments as of September 30, 2024 and December 31, 2023 (amounts in thousands):

Derivatives Designated as Hedging Instruments:

Changes in the fair value of derivative contracts designated as cash flow hedging instruments are recognized in other comprehensive income ("OCI"). As of September 30, 2024 and December 31, 2023, the notional amount of interest rate contracts designated as cash flow hedging instruments was$827.9 million and $872.3 million, respectively. Derivatives designated as cash flow hedging instruments remained highly effective as of September 30, 2024, and have remaining terms from three months tofour years. As of September 30, 2024, the Company estimates that $5.7 million of net derivative gains included in OCI will be reclassified into earnings within the next 12 months.

The following tables summarize the effects of derivatives designated as cash flow hedging instruments for the three and nine months ended September 30, 2024 and 2023 (amounts in thousands):

During the three months ended September 30, 2024, the Company discontinued the optional expedients previously elected in accordance with ASU 2021-01, "Reference Rate Reform (Topic 848): Overall" ("ASU 2021-01"), and ASU 2022-06, "Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848" (“ASU 2022-06”).

Derivatives Not Designated as Hedging Instruments:

The Company enters into foreign currency contracts to economically hedge foreign currency remeasurement exposure related to certain balances denominated in currencies other than the functional currency of the Company or its international subsidiaries. Changes in fair value of derivative contracts not designated as hedging instruments are recognized in earnings. As of September 30, 2024 and December 31, 2023, the notional amount of foreign currency contracts was$316.0 million and$368.5 million, respectively.

The following table summarizes the effects of derivatives not designated as hedging instruments for the three and nine months ended September 30, 2024 and 2023 (amounts in thousands):