PRA Group Reports Third Quarter 2016 Results

NORFOLK, Va., Nov. 07, 2016 -- PRA Group, Inc. (Nasdaq:PRAA), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the third quarter of 2016. The company reported diluted earnings per share of $0.74 versus $0.36 in the third quarter of 2015 and non-GAAP diluted earnings per share of $0.68 for the third quarter of 2016 compared to $0.85 for the year-ago quarter. Non-GAAP financial results are presented in constant currency with the third quarter of 2015 and exclude items unrelated to normal operations. A reconciliation of all non-GAAP financial measures to the most directly comparable GAAP financial measure can be found at the end of this press release.

Third Quarter Highlights

Estimated remaining collections of $5.25 billion.
Cash collections of $371.7 million, currency adjusted cash collections of $377.0 million.
Total revenues of $222.0 million, currency adjusted revenues of $224.2 million.
Income from operations of $67.5 million, non-GAAP income from operations of $69.8 million.
Net income of $34.3 million, non-GAAP net income of $31.7 million.
Return on average equity, annualized, of 15.1%, non-GAAP return on average equity, annualized, of 14.0%.
$161.3 million in investments.

"We continue to evolve the Company in a number of areas including normalizing operations in the U.S. legal collection channel despite increased documentation requirements. Italy is progressing well. We have significantly strengthened the leadership team there and we are beginning to see positive signs of return on our investment in the legal collection channel. Although we still have work to do, we are pleased with the progress the team has been able to achieve in 2016," said Steve Fredrickson, chairman and chief executive officer, PRA Group. "From an investment perspective, we also continue to deploy capital at good returns, especially in the US and Brazil, and maintain strong relationships with global sellers of nonperforming loans, providing them with a compliant and responsible global partner."

REVENUES AND CASH COLLECTIONS

Total revenues of $222.0 million in the third quarter included finance receivables income net of principal amortization and net allowance charges versus $229.4 million in the prior year period. For the nine months ended September 30, 2016, total revenues were $675.3 million versus $711.8 million in the prior year period.
Cash collections in the third quarter were $371.7 million versus $380.8 million in the prior year period. Cash collections for the first nine months of 2016 were $1,143.2 million versus $1,170.1 million in the prior year period. Both GAAP and currency adjusted cash collections are reported below and were comprised of collections from these finance receivables sources:


Cash Collection Source		2016						2015
($ in thousands)	Q3		Q2		Q1		Q4		Q3
Americas-Core	$	210,524	$	213,741	$	219,571	$	195,834	$	210,725
Americas-Insolvency		60,429		67,745		68,646		73,843		81,865
Europe-Core		96,028		102,972		94,091		97,149		85,635
Europe-Insolvency		4,719		2,744		2,025		2,545		2,528
Total Cash Collections	$	371,700	$	387,202	$	384,333	$	369,371	$	380,753

Cash Collection Source -
Constant Currency Adjusted		2016								2015
($ in thousands)	Q3								Q3
Americas-Core	$	208,962							$	210,725
Americas-Insolvency		60,445								81,865
Europe-Core		102,470								85,635
Europe-Insolvency		5,171								2,528
Total Cash Collections	$	377,048							$	380,753

Principal amortization of finance receivables in the third quarter was $169.1 million or 45.5% of cash collections, compared with $172.6 million or 45.3% in the prior year period. Principal amortization included a net allowance charge of $13.1 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $11.3 million recorded in the prior year period. Principal amortization of finance receivables for the first nine months of 2016 was $530.1 million or 46.4% of cash collections, including a net allowance charge of $36.0 million compared with $513.5 million or 43.9%, including a net allowance charge of $17.9 million in the prior year period.
Revenues for the third quarter were negatively impacted by two portfolios in Italy being on non-accrual which applied all cash collections of $6.1 million to principal amortization during this seasonally weak period.
Revenues in the third quarter also included income from PRA Group's fee-based businesses of $17.6 million, compared with $17.8 million in the prior year period, and other income of $1.7 million compared with $3.4 million in the prior year period. For the first nine months of 2016, fee income was $56.2 million compared with $44.7 million in the prior year period and other income was $6.0 million compared with $10.4 million in the prior year period.

EXPENSES AND OPERATING INCOME

Operating expenses were $154.5 million in the third quarter, compared with $175.3 million in the prior year period. Non-GAAP operating expenses were $154.4 million, compared with $144.4 million in the prior year period. For the first nine months of 2016, operating expenses were $464.2 million, compared with $472.7 million in the prior year period and non-GAAP operating expenses were $463.5 million, compared with $438.2 million in the prior year period.
Operating income in the third quarter was $67.5 million, compared with $54.1 million in the prior year period. Non-GAAP operating income was $69.8 million, compared with $85.0 million in the prior year period. For the first nine months of 2016, operating income was $211.1 million versus $239.2 million in the prior year period and non-GAAP operating income was $219.3 million, compared with $273.6 million in the prior year period. The operating margin was 30.4% in the third quarter and 31.3% for the first nine months of 2016.
The provision for income taxes was $16.7 million in the third quarter compared to $16.6 million in the prior year period. For the first nine months of 2016, the provision for income taxes was $50.2 million, or 32.1% of income before taxes, compared to $74.2 million, or 36.9% of income before taxes, in the prior year period.

NET INCOME AND EPS

Net income was $34.3 million in the third quarter, compared with $17.4 million in the prior year period. The net income margin in the third quarter of 2016 was 16.5%. Non-GAAP net income was $31.7 million, compared with $41.4 million in the prior year period. For the first nine months of 2016, net income was $102.7 million, compared with $127.0 million in the prior year period and non-GAAP net income was $109.5 million, compared with $153.6 million in the prior year period. The net income margin for the first nine months of 2016 was 15.7%.
Earnings per diluted share in the third quarter were $0.74, compared with $0.36 in the prior year period. Non-GAAP earnings per diluted share were $0.68, compared with $0.85 in the prior year period. For the first nine months of 2016, earnings per diluted share were $2.21 versus $2.61 in the prior year period and non-GAAP earnings per diluted share were $2.36, compared with $3.15 in the prior year period.

PORTFOLIO ACQUISITIONS

PRA Group invested $161.3 million in new finance receivables in the third quarter of 2016.


Portfolio Purchase Source		2016						2015
($ in thousands)	Q3		Q2		Q1		Q4		Q3
Americas-Core	$	95,452	$	130,529	$	136,057	$	120,554	$	90,912
Americas-Insolvency		16,760		33,723		22,952		20,589		9,300
Europe-Core		34,240		68,835		171,038		79,735		240,385
Europe-Insolvency		14,803		16,410		6,731		4,976		3,959
Total Portfolio Purchasing	$	161,255	$	249,497	$	336,778	$	225,854	$	344,556

BALANCE SHEET

Cash and cash equivalents were $91.8 million as of September 30, 2016, compared with $69.1 million as of September 30, 2015.
Net deferred tax liabilities were $271.2 million as of September 30, 2016, compared with $267.6 million as of September 30, 2015.
Borrowings totaled $1.82 billion as of September 30, 2016, compared with $1.65 billion as of September 30, 2015.
Equity attributable to PRA Group, Inc. was $937.7 million as of September 30, 2016, compared with $863.5 million as of September 30, 2015.

Conference Call Information
PRA Group will hold a conference call today at 5:00 p.m. ET to discuss the company's third quarter results. To listen to a webcast of the call, visit http://ir.pragroup.com/events.cfm. To listen by phone, call 888-695-7639 in the U.S. or 970-315-0482 outside the U.S. The conference ID is 7245944. To listen to a replay of the call until November 14, 2016, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 7245944.

About PRA Group
As a global leader in acquiring and collecting nonperforming loans, PRA Group (Nasdaq:PRAA) returns capital to banks and other creditors to help expand financial services for consumers in the Americas and Europe. With almost 4,000 employees worldwide, PRA Group companies collaborate with customers to help them resolve their debt and provide a broad range of additional revenue and recovery services to business and government clients. For more information, please visit www.pragroup.com.

About Forward Looking Statements
Statements made herein which are not historical in nature, including PRA Group's or its management's intentions, beliefs, expectations, projections, plans or predictions of the future, are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended.

The forward-looking statements in this press release are based upon management's current beliefs, estimates, assumptions and expectations of PRA Group's future operations and financial and economic performance, taking into account currently available information. These statements are not statements of historical fact or guarantees of future performance, and there can be no assurance that anticipated events will transpire or that our expectations will prove to be correct. Forward-looking statements involve risks and uncertainties, some of which are not currently known to PRA Group. Actual events or results may differ materially from those expressed or implied in any such forward-looking statements as a result of various factors, including risk factors and other risks that are described from time to time in PRA Group's filings with the Securities and Exchange Commission including but not limited to PRA Group's annual reports on Form 10-K, its quarterly reports on Form 10-Q and its current reports on Form 8-K, which are available through PRA Group's website and contain a detailed discussion of PRA Group's business, including risks and uncertainties that may affect future results.

Due to such uncertainties and risks, you are cautioned not to place undue reliance on such forward-looking statements, which speak only as of today. Information in this press release may be superseded by recent information or statements, which may be disclosed in later press releases, subsequent filings with the Securities and Exchange Commission or otherwise. Except as required by law, PRA Group assumes no obligation to publicly update or revise its forward-looking statements contained herein to reflect any change in PRA Group's expectations with regard thereto or to reflect any change in events, conditions or circumstances on which any such forward-looking statements are based, in whole or in part.


PRA Group, Inc.
Unaudited Consolidated Income Statements
(in thousands, except per share amounts)

				Three Months Ended						Nine Months Ended
				September 30,						September 30,
					2016			2015			2016			2015

Revenues:
	Income recognized on finance receivables, net			$	202,639			208,184		$	613,154		$	656,651
	Fee income				17,597			17,803			56,210			44,734
	Other revenue				1,748			3,443			5,958			10,448
		Total revenues			221,984			229,430			675,322			711,833

Operating expenses:
	Compensation and employee services				65,898			66,084			197,456			199,675
	Legal collection fees				9,309			13,715			37,357			41,520
	Legal collection costs				24,137			18,879			60,118			59,289
	Agency fees				12,034			7,961			34,227			24,006
	Outside fees and services				14,731			12,583			46,415			37,846
	Communication				7,814			8,021			26,119			26,512
	Rent and occupancy				3,875			3,684			11,709			10,723
	Depreciation and amortization				6,184			5,413			18,339			14,939
	Other operating expenses				10,514			38,963			32,444			58,151
		Total operating expenses			154,496			175,303			464,184			472,661
		Income from operations			67,488			54,127			211,138			239,172

Other income and (expense):
	Interest expense				(19,310	)		(16,787	)		(59,838	)		(45,015	)
	Foreign exchange gain/(loss)				5,004			(3,160	)		5,183			7,213
		Income before income taxes			53,182			34,180			156,483			201,370

		Provision for income taxes			16,664			16,597			50,244			74,227
		Net income		$	36,518		$	17,583		$	106,239		$	127,143
			Adjustment for net income attributable to noncontrolling interest		2,212			187			3,494			187
		Net income attributable to PRA Group, Inc.		$	34,306		$	17,396		$	102,745		$	126,956

Net income per common share attributable to PRA Group, Inc.:
	Basic			$	0.74		$	0.36		$	2.22		$	2.62
	Diluted			$	0.74		$	0.36		$	2.21		$	2.61

Weighted average number of shares outstanding:
	Basic				46,343			48,265			46,307			48,438
	Diluted				46,434			48,498			46,403			48,693

PRA Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands)

						September 30,			December 31,
ASSETS							2016			2015

Cash and cash equivalents						$	91,791		$	71,372
Investments							67,050			73,799
Finance receivables, net							2,392,408			2,202,113
Other receivables, net							24,299			30,771
Income taxes receivable							10,673			1,717
Net deferred tax asset							19,453			13,068
Property and equipment, net							44,354			45,394
Goodwill							560,505			495,156
Intangible assets, net							31,539			23,788
Other assets							37,275			33,389

					Total assets	$	3,279,347		$	2,990,567

LIABILITIES AND EQUITY

Liabilities:
	Accounts payable					$	2,808		$	4,190
	Accrued expenses						86,531			95,380
	Income taxes payable						20,242			21,236
	Net deferred tax liability						271,152			261,498
	Interest-bearing deposits						88,719			46,991
	Borrowings						1,816,600			1,717,129
	Other liabilities						5,317			4,396

					Total liabilities		2,291,369			2,150,820

Equity:
		Preferred stock, par value $0.01, authorized shares, 2,000,
			issued and outstanding shares, 0				-			-
		Common stock, par value $0.01, authorized shares, 100,000, issued
			and outstanding shares, 46,344 at September 30, 2016; 100,000
			authorized shares, 46,173 issued and outstanding shares at				463			462
			December 31, 2015
		Additional paid-in capital					70,112			64,622
		Retained earnings					1,067,015			964,270
		Accumulated other comprehensive loss					(199,888	)		(228,861	)
			Total stockholders' equity - PRA Group, Inc.				937,702			800,493
				Noncontrolling interest			50,276			39,254
				Total equity			987,978			839,747
					Total liabilities and total equity	$	3,279,347		$	2,990,567

PRA Group, Inc.
FINANCIAL HIGHLIGHTS
	As of and for the									As of and for the
	Three Months Ended September 30,									Nine Months Ended September 30,
		2016			2015		Change				2016			2015		Change
EARNINGS (in thousands)
Income recognized on finance receivables, net	$	202,639		$	208,184			-3	%	$	613,154		$	656,651			-7	%
Fee income		17,597			17,803			-1	%		56,210			44,734			26	%
Other revenue		1,748			3,443			-49	%		5,958			10,448			-43	%
Total revenues		221,984			229,430			-3	%		675,322			711,833			-5	%
Operating expenses		154,496			175,303			-12	%		464,184			472,661			-2	%
Income from operations		67,488			54,127			25	%		211,138			239,172			-12	%
Net interest expense		19,310			16,787			15	%		59,838			45,015			33	%
Net income		36,518			17,583			108	%		106,239			127,143			-16	%
Net income attributable to PRA Group, Inc.		34,306			17,396			97	%		102,745			126,956			-19	%

PERIOD-END BALANCES (in thousands)
Cash and cash equivalents	$	91,791		$	69,111			33	%	$	91,791		$	69,111			33	%
Finance receivables, net		2,392,408			2,167,178			10	%		2,392,408			2,167,178			10	%
Goodwill and intangible assets, net		592,044			526,841			12	%		592,044			526,841			12	%
Total assets		3,279,347			2,984,550			10	%		3,279,347			2,984,550			10	%
Borrowings		1,816,600			1,654,457			10	%		1,816,600			1,654,457			10	%
Total liabilities		2,291,369			2,083,131			10	%		2,291,369			2,083,131			10	%
Total equity - PRA Group, Inc.		937,702			863,517			9	%		937,702			863,517			9	%

FINANCE RECEIVABLE INCOME (dollars in thousands)
Cash collections	$	371,700		$	380,753			-2	%	$	1,143,235		$	1,170,124			-2	%
Cash collections on fully amortized pools		7,744			11,453			-32	%		25,144			43,620			-42	%
Principal amortization without allowance (reversals)/charges		155,915			161,234			-3	%		494,117			495,623			0	%
Allowance (reversal)/charge		13,146			11,335			16	%		35,964			17,850			101	%
Principal amortization with allowance (reversals)/charges		169,061			172,569			-2	%		530,081			513,473			3	%
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools		45.5	%		45.3	%		0	%		46.4	%		43.9	%		6	%
Excluding fully amortized pools		46.5	%		46.7	%		-1	%		47.4	%		45.6	%		4	%
Allowance (reversal)/charge to period-end net finance receivables		0.5	%		0.5	%		5	%		1.5	%		0.8	%		83	%

PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - Americas core	$	95,452		$	90,912			5	%	$	362,038		$	327,727			10	%
Purchase price - Americas insolvency		16,760			9,300			80	%		73,435			44,848			64	%
Purchase price - Europe core		34,240			240,385			-86	%		274,113			350,463			-22	%
Purchase price - Europe insolvency		14,803			3,959			274	%		37,944			14,919			154	%
Purchase price - total		161,255			344,556			-53	%		747,530			737,957			1	%
Number of portfolios - total		122			128			-5	%		397			403			-1	%
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - Americas core	$	2,672,427		$	2,421,506			10	%	$	2,672,427		$	2,421,506			10	%
Estimated remaining collections - Americas insolvency		356,363			474,097			-25	%		356,363			474,097			-25	%
Estimated remaining collections - Europe core		2,148,230			1,903,226			13	%		2,148,230			1,903,226			13	%
Estimated remaining collections - Europe insolvency		72,919			30,081			142	%		72,919			30,081			142	%
Estimated remaining collections - total		5,249,939			4,828,910			9	%		5,249,939			4,828,910			9	%
Adjusted estimated remaining collections (7)		5,345,657			4,945,609			8	%		5,345,657			4,945,609			8	%

SHARE DATA (share amounts in thousands)
Net income per common share - diluted	$	0.74		$	0.36			106	%	$	2.21		$	2.61			-15	%
Weighted average number of shares outstanding - diluted		46,434			48,498			-4	%		46,403			48,693			-5	%
Shares repurchased		-			133			-100	%		-			1,611			-100	%
Average price paid per share repurchased (including acquisitions costs)	$	-			58.08			-100	%	$	-			53.10			-100	%
Closing market price	$	34.54		$	52.92			-35	%	$	34.54		$	52.92			-35	%

RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1)		15.1	%		7.8	%		95	%		15.6	%		19.9	%		-22	%
Return on revenue (2)		16.5	%		7.7	%		115	%		15.7	%		17.9	%		-12	%
Return on average assets (3)		4.2	%		2.3	%		81	%		4.2	%		6.0	%		-31	%
Operating margin (4)		30.4	%		23.6	%		29	%		31.3	%		33.6	%		-7	%
Operating expense to cash receipts (5)		39.7	%		44.0	%		-10	%		38.7	%		38.9	%		-1	%
Debt to stockholders'equity (6)		193.7	%		191.6	%		1	%		193.7	%		191.6	%		1	%
Number of full-time equivalent collectors		2,083			2,159			-4	%		2,083			2,159			-4	%
Number of full-time equivalent employees		3,859			3,715			4	%		3,859			3,715			4	%
Cash receipts (5)	$	389,297		$	398,556			-2	%	$	1,199,445		$	1,214,858			-1	%
Lines of credit - unused portion at period end		630,775			393,246			60	%		630,775			393,246			60	%

(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as annualized net income divided by average assets for the period
(4) Calculated as income from operations divided by total revenues
(5) "Cash receipts" is defined as cash collections plus fee income
(6) For purposes of this ratio, "debt" equals borrowings
(7) Equals total estimated remaining collections on our owned finance receivable
portfolios plus the estimated remaining collections on certain of our other investments.

PRA Group, Inc.
FINANCIAL HIGHLIGHTS
	For the Quarter Ended
	September 30			June 30			March 31			December 31			September 30
		2016			2016			2016			2015			2015
EARNINGS (in thousands)
Income recognized on finance receivables, net	$	202,639		$	204,008		$	206,507		$	208,471		$	208,184
Fee income		17,597			22,347			16,266			19,649			17,803
Other revenue		1,748			2,101			2,109			2,065			3,443
Total revenues		221,984			228,456			224,882			230,185			229,430
Operating expenses		154,496			155,700			153,988			159,013			175,303
Income from operations		67,488			72,756			70,894			71,172			54,127
Net interest expense		19,310			20,569			19,959			15,321			16,787
Net income		36,518			36,868			32,853			40,988			17,583
Net income attributable to PRA Group, Inc.		34,306			36,456			31,983			40,970			17,396

PERIOD-END BALANCES (in thousands)
Cash and cash equivalents	$	91,791		$	117,071		$	79,442		$	71,372		$	69,111
Finance receivables, net		2,392,408			2,399,949			2,377,077			2,202,113			2,167,178
Goodwill and intangible assets, net		592,044			576,992			557,024			518,944			526,841
Total assets		3,279,347			3,305,596			3,268,833			2,990,567			2,984,550
Borrowings		1,816,600			1,912,283			1,896,424			1,717,129			1,654,457
Total liabilities		2,291,369			2,370,415			2,360,091			2,150,820			2,083,131
Total equity - PRA Group, Inc.		937,702			886,077			864,868			800,493			863,517

FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)
Cash collections	$	371,700		$	387,202		$	384,333		$	369,371		$	380,753
Cash collections on fully amortized pools		7,744			8,124			9,276			8,280			11,453
Principal amortization without allowance (reversals)/charges		155,915			170,274			167,928			149,381			161,234
Allowance (reversal)/charge		13,146			12,920			9,898			11,519			11,335
Principal amortization with allowance (reversals)/charges		169,061			183,194			177,826			160,900			172,569
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools		45.5	%		47.3	%		46.3	%		43.6	%		45.3	%
Excluding fully amortized pools		46.5	%		48.3	%		47.4	%		44.6	%		46.7	%
Allowance (reversal)/charge to period-end net finance receivables		0.5	%		0.5	%		0.4	%		0.5	%		0.5	%

PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - North America core	$	95,452		$	130,529		$	136,057		$	120,554		$	90,912
Purchase price - North America insolvency		16,760			33,723			22,952			20,589			9,300
Purchase price - Europe core		34,240			68,835			171,038			79,735			240,385
Purchase price - Europe insolvency		14,803			16,410			6,731			4,976			3,959
Purchase price - total		161,255			249,497			336,778			225,854			344,556
Number of portfolios - total		122			136			139			139			128

ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - Americas core	$	2,672,427		$	2,705,781		$	2,643,410		$	2,558,529		$	2,421,506
Estimated remaining collections - Americas insolvency		356,363			396,667			421,866			448,652			474,097
Estimated remaining collections - Europe core		2,148,230			2,171,542			2,152,403			1,964,763			1,903,226
Estimated remaining collections - Europe insolvency		72,919			59,107			40,938			34,878			30,081
Estimated remaining collections - total		5,249,939			5,333,097			5,258,617			5,006,822			4,828,910
Adjusted estimated remaining collections (7)		5,345,657			5,430,192			5,366,417			5,114,923			4,945,609

SHARE DATA (share amounts in thousands)
Net income per common share - diluted	$	0.74		$	0.79		$	0.69		$	0.86		$	0.36
Weighted average number of shares outstanding - diluted		46,434			46,402			46,372			47,539			48,498
Shares repurchased		-			-			-			2,072			133
Average price paid per share repurchased (including acquisitions costs)	$	-		$	-		$	-		$	38.60		$	58.08
Closing market price	$	34.54		$	24.14		$	29.39		$	34.69		$	52.92

RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1)		15.1	%		16.4	%		15.4	%		19.8	%		7.8	%
Return on revenue (2)		16.5	%		16.1	%		14.6	%		17.8	%		7.7	%
Return on average assets (3)		4.2	%		4.4	%		4.1	%		5.5	%		2.3	%
Operating margin (4)		30.4	%		31.8	%		31.5	%		30.9	%		23.6	%
Operating expense to cash receipts (5)		39.7	%		38.0	%		38.4	%		40.9	%		44.0	%
Debt to stockholders'equity (6)		193.7	%		215.8	%		219.3	%		214.5	%		191.6	%
Number of collectors		2,083			2,023			2,103			2,173			2,159
Number of full-time equivalent employees		3,859			3,816			3,748			3,799			3,715
Cash receipts (5)	$	389,297		$	409,549		$	400,599		$	389,020		$	398,556
Lines of credit - unused portion at period end		630,775			430,651			435,709			446,769			393,246

(1) Calculated as annualized net income divided by average equity for the period
(2) Calculated as net income divided by total revenues
(3) Calculated as annualized net income divided by average assets for the period
(4) Calculated as income from operations divided by total revenues
(5) "Cash receipts" is defined as cash collections plus fee income
(6) For purposes of this ratio, "debt" equals borrowings
(7) Equals total estimated remaining collections on our owned finance receivable
portfolios plus the estimated remaining collections on certain of our other investments.

Use of Non-GAAP Financial Measures
PRA Group, Inc. reports financial results in accordance with U.S. generally accepted accounting principles (GAAP). However, the Company believes certain non-GAAP financial measures and ratios, which exclude penalty and redress associated with the Consumer Financial Protection Bureau consent order, expenses associated with acquisitions, legal costs not associated with normal operations, one-time tax items and constant currency adjustments, improve comparability between current year results and prior periods and better reflect the Company's operational performance. In all periods presented, the Company adjusted the income tax provision by excluding the tax impact of the non-GAAP adjustments discussed above in non-GAAP financial measures. Management uses non-GAAP financial measures internally to evaluate the Company's performance and to set performance goals. Reconciliations from non-GAAP to the most directly comparable GAAP financial measures are provided below. These non-GAAP financial measures should be viewed in addition to, not as an alternative for reported GAAP results.

The constant currency results assume that foreign revenues and expenses are translated from foreign currencies to the U.S. Dollar at rates consistent with the prior year, and that any benefit or loss caused by foreign currency fluctuations would be consistent with the prior year. To do this the Company translates the current year's income statements into U.S. Dollars using the prior year's average exchange rates and then replaces the foreign exchange gain or loss for the current year with the balance from the prior year. Finally, the Company calculates the tax impact of the constant currency results to reflect the current effective tax rate of the reporting period.


Three Months Ended September 30, 2016
	Net Income			Average Equity			Return on Average Equity, Annualized
As Reported	$	34,306		$	907,797			15.1	%
Adjustments		(2,653	)		(884	)		-1.1	%
As Adjusted		31,653			906,913			14.0	%

Nine Months Ended September 30, 2016
	Net Income			Average Equity			Return on Average Equity, Annualized
As Reported	$	102,745		$	875,585			15.6	%
Adjustments		6,735			748			1.1	%
As Adjusted		109,480			876,333			16.7	%

Three Months Ended September 30, 2015
	Net Income			Average Equity			Return on Average Equity, Annualized
As Reported	$	17,396		$	897,043			7.8	%
Adjustments		24,042			8,014			10.5	%
As Adjusted		41,438			905,057			18.3	%

Nine Months Ended September 30, 2015
	Net Income			Average Equity			Return on Average Equity, Annualized
As Reported	$	126,956		$	848,602			19.9	%
Adjustments		26,655			2,961			4.1	%
As Adjusted		153,611			851,563			24.1	%

Three Months Ended September 30, 2016
	Total Revenues		Total Operating Expenses			Income from Operations		Provision for Income Taxes			Net Income attributable to PRA Group, Inc.			Diluted EPS
As Reported	$	221,984	$	154,496		$	67,488	$	16,664		$	34,306		$	0.74
Adjustments:
CFPB expenses including penalty and redress		-		(20	)		20		8			12			-
Acquisition-related expenses		-		(216	)		216		84			132			-
One-time tax items		-		-			-		(1,383	)		1,383			0.03
Legal costs not associated with normal operations		-		(1,511	)		1,511		584			927			0.02
Constant currency adjustments		2,216		1,620			596		(4,597	)		(5,107	)		(0.11	)
Subtotal of adjustments		2,216		(127	)		2,343		(5,304	)		(2,653	)		(0.06	)
As Adjusted		224,200		154,369			69,831		11,360			31,653			0.68

Nine Months Ended September 30, 2016
	Total Revenues		Total Operating Expenses			Income from Operations		Provision for Income Taxes			Net Income attributable to PRA Group, Inc.			Diluted EPS
As Reported	$	675,322	$	464,184		$	211,138	$	50,244		$	102,745		$	2.21
Adjustments:
CFPB expenses including penalty and redress		-		(93	)		93		34			59			-
Acquisition-related expenses		-		(1,807	)		1,807		661			1,146			0.03
One-time tax items		-		-			-		(1,383	)		1,383			0.03
Legal costs not associated with normal operations		-		(3,569	)		3,569		1,305			2,264			0.05
Constant currency adjustments		7,487		4,749			2,738		(957	)		1,882			0.04
Subtotal of adjustments		7,487		(720	)		8,207		(340	)		6,734			0.15
As Adjusted		682,809		463,464			219,345		49,904			109,479			2.36

Three Months Ended September 30, 2015
	Total Revenues		Total Operating Expenses			Income from Operations		Provision for Income Taxes			Net Income attributable to PRA Group, Inc.			Diluted EPS
As Reported	$	229,430	$	175,303		$	54,127	$	16,597		$	17,396		$	0.36
Adjustments:
CFPB expenses including penalty and redress		-		(28,806	)		28,806		8,262			20,544			0.42
Acquisition-related expenses		-		(802	)		802		230			572			0.01
One-time tax items		-		-			-		(2,026	)		2,026			0.04
Legal costs not associated with normal operations		-		(1,262	)		1,262		362			900			0.02
Subtotal of adjustments		-		(30,870	)		30,870		6,828			24,042			0.49
As Adjusted		229,430		144,433			84,997		23,425			41,438			0.85


Nine Months Ended September 30, 2015
	Total Revenues		Total Operating Expenses			Income from Operations		Provision for Income Taxes			Net Income attributable to PRA Group, Inc.			Diluted EPS
As Reported	$	711,833	$	472,661		$	239,172	$	74,227		$	126,956		$	2.61
Adjustments:
CFPB expenses including penalty and redress		-		(28,806	)		28,806		8,220			20,586			0.42
Acquisition-related expenses		-		(3,988	)		3,988		1,138			2,850			0.06
One-time tax items		-		-			-		(2,026	)		2,026			0.04
Legal costs not associated with normal operations		-		(1,669	)		1,669		476			1,193			0.02
Subtotal of adjustments		-		(34,463	)		34,463		7,808			26,655			0.54
As Adjusted		711,833		438,198			273,635		82,035			153,611			3.15

Investor Contact:
Darby Schoenfeld
Director of Investor Relations
(757) 431-7913
DCSchoenfeld@PRAGroup.com

News Media Contact:
Nancy Porter
Vice President, Corporate Communications
(757) 431-7950
NAPorter@PRAGroup.com