Finance Receivables, net

3 Months Ended

Mar. 31, 2025

Finance receivables, net consisted of the following as of March 31, 2025 and December 31, 2024 (in thousands):


	March 31, 2025		December 31, 2024
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	4,308,334		4,140,742
Balance as of end of period	$	4,308,334	$	4,140,742

Changes in Finance receivables, net by portfolio type for the three months ended March 31, 2025 and 2024 were as follows (in thousands):


	Three Months Ended March 31,
	2025						2024
	Core		Insolvency		Total		Core		Insolvency		Total
Balance as of beginning of period	$	3,809,723	$	331,019	$	4,140,742	$	3,295,214	$	361,384	$	3,656,598
Initial negative allowance for expected recoveries on current period purchases (1)	273,893		17,809		291,702		218,657		27,160		245,817
Recoveries collected and applied to Finance receivables, net (2)	(231,483)		(33,635)		(265,118)		(215,216)		(36,444)		(251,660)
Changes in expected recoveries (3)	26,325		1,597		27,922		49,564		2,110		51,674
Foreign currency translation adjustment	108,406		4,680		113,086		(50,127)		(2,107)		(52,234)
Balance as of end of period	$	3,986,864	$	321,470	$	4,308,334	$	3,298,092	$	352,103	$	3,650,195

(1) Initial negative allowance for expected recoveries on current period purchases

The initial negative allowance for expected recoveries on current period purchases for the three months ended March 31, 2025 and 2024 was as follows (in thousands):


	Three Months Ended March 31,
	2025						2024
	Core		Insolvency		Total		Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(1,417,971)	$	(73,592)	$	(1,491,563)	$	(1,258,589)	$	(73,614)	$	(1,332,203)
Writeoffs, net	1,417,971		73,592		1,491,563		1,258,589		73,614		1,332,203
Expected recoveries	273,893		17,809		291,702		218,657		27,160		245,817
Initial negative allowance for expected recoveries on current period purchases	$	273,893	$	17,809	$	291,702	$	218,657	$	27,160	$	245,817

The purchase price on current period purchases for the three months ended March 31, 2025 and 2024 was as follows (in thousands):


	Three Months Ended March 31,
	2025						2024
	Core		Insolvency		Total		Core		Insolvency		Total
Face value	$	1,966,064	$	101,474	$	2,067,538	$	1,708,631	$	114,216	$	1,822,847
Noncredit discount	(274,200)		(10,073)		(284,273)		(231,385)		(13,442)		(244,827)
Allowance for credit losses at acquisition	(1,417,971)		(73,592)		(1,491,563)		(1,258,589)		(73,614)		(1,332,203)
Purchase price	$	273,893	$	17,809	$	291,702	$	218,657	$	27,160	$	245,817

(2) Recoveries collected and applied to Finance receivables, net

Recoveries collected and applied to Finance receivables, net for the three months ended March 31, 2025 and 2024 were as follows (in thousands):


	Three Months Ended March 31,
	2025						2024
	Core		Insolvency		Total		Core		Insolvency		Total
Recoveries collected (a)	$	460,969	$	45,107	$	506,076	$	406,313	$	47,403	$	453,716
Amounts reclassified to portfolio income (b)	(229,486)		(11,472)		(240,958)		(191,097)		(10,959)		(202,056)
Recoveries collected and applied to Finance receivables, net	$	231,483	$	33,635	$	265,118	$	215,216	$	36,444	$	251,660

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

(b)Reclassifications from Finance receivables, net to Portfolio income based on the effective interest rate of the underlying account pools.

(3) Changes in expected recoveries

Changes in expected recoveries for the three months ended March 31, 2025 and 2024 were as follows (in thousands):


	Three Months Ended March 31,
	2025						2024
	Core		Insolvency		Total		Core		Insolvency		Total
Recoveries collected in excess of forecast	$	14,290	$	2,210	$	16,500	$	33,919	$	1,919	$	35,838
Changes in expected future recoveries	12,035		(613)		11,422		15,646		190		15,836
Changes in expected recoveries	$	26,325	$	1,597	$	27,922	$	49,565	$	2,109	$	51,674

Expected recoveries are calculated by applying discounted cash flow methodologies to estimated remaining collections ("ERC"), with income recognized over the estimated life of each pool at the constant effective interest rate. For additional information about these methodologies, refer to Note 1 to the Consolidated Financial Statements in the 2024 Form 10-K.

Changes in expected recoveries for the three months ended March 31, 2025 were $27.9 million, which included $16.5 million in recoveries collected in excess of forecast (cash collections overperformance) and $11.4 million in changes in expected future recoveries. Recoveries collected in excess of forecast were largely due to cash collections overperformance in Europe and Brazil, partially offset by underperformance in the Americas. Changes in expected future recoveries were primarily due to the impact of increases to the Company's collections forecasts on certain U.S. Core and European pools.

Changes in expected recoveries for the three months ended March 31, 2024 were $51.7 million. This increase was primarily due to $35.8 million in recoveries collected in excess of forecast (cash collections overperformance), due largely to collections performance in the U.S., driven by the impact of the Company's cash-generating initiatives and supplemented by tax refund seasonality, as well as collections performance in Brazil and Europe. The changes in expected future recoveries of $15.8 million reflect the Company's assessment of certain pools in Europe, Brazil and the U.S., resulting in increases to the expected cash flows.

PRA GROUP INC 10-Q