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 PRA Group Reports Fourth Quarter and Full Year 2016 Results
   Tuesday, February 28, 2017 4:45:59 PM ET

PRA Group, Inc. (PRAA ), a global leader in acquiring and collecting nonperforming loans, today reported its financial results for the fourth quarter and full year of 2016. The company reported a net loss per share of $0.38. For the full year, the company reported diluted earnings per share of $1.83. Non-GAAP financial results are presented in constant currency with the corresponding period 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.

Fourth Quarter Highlights

-- Estimated remaining collections of $5.05 billion.

-- Cash collections of $348.8 million.

-- $199.8 million in investments.

Full Year 2016 Highlights

-- Cash collections of $1.5 billion.

-- Total revenues of $830.6 million.

-- $947.3 million in investments.

"While our fourth quarter GAAP earnings reflect a non-cash allowance charge, our economic performance remained solid and we made substantial progress resolving operational and regulatory challenges. PRA Group spent much of 2016 preparing for, and to the extent possible, attempting to influence, a number of evolving forces that we believe could ultimately be beneficial to our shareholders," said Steve Fredrickson, chairman and chief executive officer, PRA Group. "Relief from the antiquated interpretation of the Telephone Consumer Protection Act (TCPA), potential increases in domestic supply of nonperforming loans, the prospect of consolidating competition in Europe, and possible clarification of collection regulations are several of these potential tailwinds. We stand ready and waiting to capitalize on any of these events and are excited about what the future holds for PRA Group."

REVENUES AND CASH COLLECTIONS

-- Total revenues of $155.3 million in the fourth quarter included finance receivables income net of principal amortization and net allowance charges versus $230.2 million in the prior year period. For the year ended December 31, 2016, total revenues were $830.6 million versus $942.0 million in the prior year period.

-- Cash collections in the fourth quarter were $348.8 million versus $369.4 million in the prior year period. Cash collections for the full year of 2016 were $1.49 billion versus $1.54 billion 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)            Q4        Q3        Q2        Q1         Q4
 Americas-Core               $ 193,360 $ 210,524 $ 213,741 $ 219,571  $ 195,834
 Americas-Insolvency           52,988    60,429    67,745    68,646     73,843
 Europe-Core                   97,429    96,028    102,972   94,091     97,149
 Europe-Insolvency             4,974     4,719     2,744     2,025      2,545
 Total Cash Collections      $ 348,751 $ 371,700 $ 387,202 $ 384,333  $ 369,371
 Cash Collection Source -
 Constant Currency Adjusted    2016                                     2015
 ($ in thousands)            Q4                                       Q4
 Americas-Core               $ 190,534                                $ 195,834
 Americas-Insolvency           52,997                                   73,843
 Europe-Core                   106,573                                  97,149
 Europe-Insolvency             5,714                                    2,545
 Total Cash Collections      $ 355,818                                $ 369,371

-- Principal amortization of finance receivables in the fourth quarter was $216.8 million or 62.2% of cash collections, compared with $160.9 million or 43.6% in the prior year period. Principal amortization included a net allowance charge of $62.5 million recorded against certain pools of finance receivables in the quarter, compared with a net allowance charge of $11.5 million recorded in the prior year period. During the quarter, the Company made a change to its accounting estimates which generated an outsized allowance charge. Principal amortization of finance receivables for the full year of 2016 was $746.9 million or 50.1% of cash collections, including a net allowance charge of $98.5 million compared with $674.4 million or 43.8%, including a net allowance charge of $29.4 million in 2015.

-- Revenues in the fourth quarter also included income from PRA Group’s fee-based businesses of $21.2 million, compared with $19.6 million in the prior year period, and other income of $2.1 million, in-line with the prior year period. For the full year of 2016, fee income was $77.4 million compared with $64.4 million in 2015 and other income was $8.1 million compared with $12.5 million in 2015.

EXPENSES AND OPERATING INCOME

-- Operating expenses were $148.2 million in the fourth quarter, compared with $159.0 million in the prior year period. Operating expenses include an accrual to reflect the fact that the company has reached an agreement in principle with the opposing party in the Mejia case. The fourth quarter of 2015 included an accrual for the settlement of the TCPA lawsuit. For the full year of 2016, operating expenses were $612.4 million, compared with $631.7 million in the prior year. The full year of 2015 included the settlement with the CFPB and an accrual for the settlement of the TCPA lawsuit.

-- Operating income in the fourth quarter was $7.1 million, compared with $71.2 million in the prior year period. For the full year of 2016, operating income was $218.2 million versus $310.3 million in 2015. The operating margin was 26.3% for the full year of 2016.

-- The provision for income taxes was $43.2 million for the full year of 2016, or 32.2% of income before taxes, compared to $89.4 million, or 34.7% of income before taxes, in 2015.

NET INCOME AND EPS

-- Net loss was $17.6 million in the fourth quarter, compared with net income of $41.0 million in the prior year period. For the full year of 2016, net income was $85.1 million, compared with $167.9 million in 2015. The net income margin for the full year of 2016 was 10.9%.

-- Loss per share in the fourth quarter was $0.38, compared with earnings per diluted share of $0.86 in the prior year period. For the full year of 2016, earnings per diluted share were $1.83 versus $3.47 in the prior year period.

PORTFOLIO ACQUISITIONS

-- PRA Group invested $199.8 million in new finance receivables in the fourth quarter of 2016. For the full year of 2016, PRA Group invested $947.3 million in new finance receivables.

 Portfolio Purchase Source     2016                                     2015
 ($ in thousands)            Q4        Q3        Q2        Q1         Q4
 Americas-Core               $ 91,800  $ 95,452  $ 130,529 $ 136,057  $ 120,554
 Americas-Insolvency           20,929    16,760    33,723    22,952     20,589
 Europe-Core                   80,129    34,240    68,835    171,038    79,735
 Europe-Insolvency             6,943     14,803    16,410    6,731      4,976
 Total Portfolio Purchasing  $ 199,801 $ 161,255 $ 249,497 $ 336,778  $ 225,854

BALANCE SHEET

-- Cash and cash equivalents were $94.3 million as of December 31, 2016, compared with $71.4 million as of December 31, 2015.

-- Net deferred tax liabilities were $258.3 million as of December 31, 2016, compared with $261.5 million as of December 31, 2015.

-- Borrowings totaled $1.78 billion as of December 31, 2016, compared with $1.72 billion as of December 31, 2015.

-- Equity attributable to PRA Group, Inc. was $864.3 million as of December 31, 2016, compared with $800.5 million as of December 31, 2015.

Conference Call Information

PRA Group will hold a conference call today at 5:00 p.m. ET to discuss the company’s fourth quarter and full year 2016 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 58396415. To listen to a replay of the call until March 7, 2017, call 855-859-2056 in the U.S. or 404-537-3406 outside the U.S. and use conference ID 58396415.

About PRA Group

As a global leader in acquiring and collecting nonperforming loans, PRA Group (PRAA ) returns capital to banks and other creditors to help expand financial services for consumers in the Americas and Europe. With over 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 businesses. 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            Twelve Months Ended
                                                                                                          December 31,                  December 31,
                                                                                                             2016           2015           2016           2015
Revenues:
          Income recognized on finance receivables, net                                                   $  131,965        208,471     $  745,119     $  865,122
          Fee income                                                                                         21,171         19,649         77,381         64,383
          Other revenue                                                                                      2,122          2,065          8,080          12,513
                      Total revenues                                                                         155,258        230,185        830,580        942,018
Operating expenses:
          Compensation and employee services                                                                 61,390         68,670         258,846        268,345
          Legal collection expenses                                                                          34,726         28,647         132,202        129,456
          Agency fees                                                                                        10,695         8,182          44,922         32,188
          Outside fees and services                                                                          16,683         27,309         63,098         65,155
          Communication                                                                                      7,652          6,601          33,771         33,113
          Rent and occupancy                                                                                 4,001          3,991          15,710         14,714
          Depreciation and amortization                                                                      6,020          4,935          24,359         19,874
          Other operating expenses                                                                           7,023          10,678         39,466         68,829
                      Total operating expenses                                                               148,190        159,013        612,374        631,674
                      Income from operations                                                                 7,068          71,172         218,206        310,344
Other income and (expense):
          Interest expense                                                                                   (21,026 )      (15,321 )      (80,864 )      (60,336 )
          Impairment of investments                                                                          (5,823  )      -              (5,823  )      -
          Foreign exchange (loss)/gain                                                                       (2,619  )      301            2,564          7,514
                      (Loss)/Income before income taxes                                                      (22,400 )      56,152         134,083        257,522
                      Provision for income taxes                                                             (7,053  )      15,164         43,191         89,391
                      Net (loss)/income                                                                   $  (15,347 )   $  40,988      $  90,892      $  168,131
                                       Adjustment for net income attributable to noncontrolling interests    2,301          18             5,795          205
                      Net (loss)/income attributable to PRA Group, Inc.                                   $  (17,648 )   $  40,970      $  85,097      $  167,926
Net (loss)/income per common share attributable to PRA Group, Inc.:
          Basic                                                                                           $  (0.38   )   $  0.87        $  1.84        $  3.49
          Diluted                                                                                         $  (0.38   )   $  0.86        $  1.83        $  3.47
Weighted average number of shares outstanding:
          Basic                                                                                              46,346         47,197         46,316         48,128
          Diluted                                                                                            46,346         47,539         46,388         48,405
PRA Group, Inc.
Unaudited Consolidated Balance Sheets
(in thousands)
                                                                                     December 31,         December 31,
ASSETS                                                                                    2016                 2015
Cash and cash equivalents                                                            $    94,287          $    71,372
Investments                                                                               68,543               73,799
Finance receivables, net                                                                  2,307,969            2,202,113
Other receivables, net                                                                    11,650               30,771
Income taxes receivable                                                                   9,427                1,717
Net deferred tax asset                                                                    28,482               13,068
Property and equipment, net                                                               38,744               45,394
Goodwill                                                                                  499,911              495,156
Intangible assets, net                                                                    27,935               23,788
Other assets                                                                              33,808               33,389
Assets held for sale                                                                      43,243               -
                                                        Total assets                 $    3,163,999       $    2,990,567
LIABILITIES AND EQUITY
Liabilities:
     Accounts payable                                                                $    2,459           $    4,190
     Accrued expenses                                                                     82,699               95,380
     Income taxes payable                                                                 19,631               21,236
     Net deferred tax liability                                                           258,344              261,498
     Interest-bearing deposits                                                            76,113               46,991
     Borrowings                                                                           1,784,101            1,717,129
     Other liabilities                                                                    10,821               4,396
     Liabilities held for sale                                                            4,220                -
                                                        Total liabilities                 2,238,388            2,150,820
Redeemable noncontrolling interest                                                        8,448                -
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, 46,356 at December 31, 2016; 100,000
                        authorized shares, 46,173 issued and outstanding shares at        464                  462
                        December 31, 2015
          Additional paid-in capital                                                      66,414               64,622
          Retained earnings                                                               1,049,367            964,270
          Accumulated other comprehensive loss                                            (251,944  )          (228,861  )
                        Total stockholders’ equity - PRA Group, Inc.                      864,301              800,493
                                        Noncontrolling interest                           52,862               39,254
                                        Total equity                                      917,163              839,747
                                                        Total liabilities and equity $    3,163,999       $    2,990,567
PRA Group, Inc.
Financial Highlights
                                                                        As of and for the                                As of and for the
                                                                        Three Months Ended December 31,                  Twelve Months Ended December 31,
                                                                                  2016          2015        Change                 2016          2015        Change
EARNINGS (in thousands)
Income recognized on finance receivables, net                           $         131,965     $ 208,471     -37       %  $         745,119     $ 865,122     -14       %
Fee income                                                                        21,171        19,649      8         %            77,381        64,383      20        %
Other revenue                                                                     2,122         2,065       3         %            8,080         12,513      -35       %
Total revenues                                                                    155,258       230,185     -33       %            830,580       942,018     -12       %
Operating expenses                                                                148,190       159,013     -7        %            612,374       631,674     -3        %
Income from operations                                                            7,068         71,172      -90       %            218,206       310,344     -30       %
Net interest expense                                                              21,026        15,321      37        %            80,864        60,336      34        %
Net (loss)/income                                                                 (15,347   )   40,988      -137      %            90,892        168,131     -46       %
Net (loss)/income attributable to PRA Group, Inc.                                 (17,648   )   40,970      -143      %            85,097        167,926     -49       %
PERIOD-END BALANCES (in thousands)
Cash and cash equivalents                                               $         94,287      $ 71,372      32        %  $         94,287      $ 71,372      32        %
Finance receivables, net                                                          2,307,969     2,202,113   5         %            2,307,969     2,202,113   5         %
Goodwill and intangible assets, net                                               527,846       518,944     2         %            527,846       518,944     2         %
Total assets                                                                      3,163,999     2,990,567   6         %            3,163,999     2,990,567   6         %
Borrowings                                                                        1,784,101     1,717,129   4         %            1,784,101     1,717,129   4         %
Total liabilities                                                                 2,238,388     2,150,820   4         %            2,238,388     2,150,820   4         %
Total equity - PRA Group, Inc.                                                    864,301       800,493     8         %            864,301       800,493     8         %
FINANCE RECEIVABLE INCOME (dollars in thousands)
Cash collections                                                        $         348,751     $ 369,371     -6        %  $         1,491,986   $ 1,539,495   -3        %
Cash collections on fully amortized pools                                         9,041         8,280       9         %            34,185        51,900      -34       %
Principal amortization without allowance charges                                  154,271       149,381     3         %            648,388       645,004     1         %
Allowance charges                                                                 62,515        11,519      443       %            98,479        29,369      235       %
Principal amortization with allowance charges                                     216,786       160,900     35        %            746,867       674,373     11        %
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools                                                   62.2      %   43.6      % 43        %            50.1      %   43.8      % 14        %
Excluding fully amortized pools                                                   63.8      %   44.6      % 43        %            51.2      %   45.3      % 13        %
Allowance charges to period-end net finance receivables                           2.7       %   0.5       % 418       %            4.3       %   1.3       % 220       %
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - Americas core                                          $         91,800      $ 120,554     -24       %  $         453,838     $ 448,281     1         %
Purchase price - Americas insolvency                                              20,929        20,589      2         %            94,364        65,437      44        %
Purchase price - Europe core                                                      80,129        79,735      0         %            354,242       430,198     -18       %
Purchase price - Europe insolvency                                                6,943         4,976       40        %            44,887        19,895      126       %
Purchase price - total                                                            199,801       225,854     -12       %            947,331       963,811     -2        %
Number of portfolios - total                                                      126           139         -9        %            523           542         -4        %
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - Americas core                         $         2,571,887   $ 2,558,529   1         %  $         2,571,887   $ 2,558,529   1         %
Estimated remaining collections - Americas insolvency                             331,371       448,652     -26       %            331,371       448,652     -26       %
Estimated remaining collections - Europe core                                     2,072,936     1,964,763   6         %            2,072,936     1,964,763   6         %
Estimated remaining collections - Europe insolvency                               71,810        34,878      106       %            71,810        34,878      106       %
Estimated remaining collections - total                                           5,048,004     5,006,822   1         %            5,048,004     5,006,822   1         %
Adjusted estimated remaining collections (7)                                      5,109,404     5,114,923   0         %            5,109,404     5,114,923   0         %
SHARE DATA (share amounts in thousands)
Net (loss)/income per common share - diluted                            $         (0.38     ) $ 0.86        -144      %  $         1.83        $ 3.47        -47       %
Weighted average number of shares outstanding - diluted                           46,346        47,539      -3        %            46,388        48,405      -4        %
Shares repurchased                                                                -             2,072       -100      %            -             3,683       -100      %
Average price paid per share repurchased (including acquisitions costs) $         -             38.60       -100      %            -             44.94       -100      %
Closing market price                                                    $         39.10       $ 34.69       13        %  $         39.10       $ 34.69       13        %
RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1)                                                      -7.9      %   19.8      % -140      %            9.7       %   19.9      % -51       %
Return on revenue (2)                                                             -9.9      %   17.8      % -156      %            10.9      %   17.8      % -39       %
Return on average assets (3)                                                      -2.2      %   5.5       % -140      %            2.6       %   5.9       % -56       %
Operating margin (4)                                                              4.6       %   30.9      % -85       %            26.3      %   32.9      % -20       %
Operating expense to cash receipts (5)                                            40.1      %   40.9      % -2        %            39.0      %   39.4      % -1        %
Debt to total equity - PRA Group, Inc. (6)                                        206.4     %   214.5     % -4        %            206.4     %   214.5     % -4        %
Number of full-time equivalent collectors                                         1,906         2,029       -6        %            1,906         2,029       -6        %
Number of full-time equivalent employees                                          4,019         3,799       6         %            4,019         3,799       6         %
Cash receipts (5)                                                       $         369,922     $ 389,020     -5        %  $         1,569,367   $ 1,603,878   -2        %
Lines of credit - unused portion at period end                                    641,132       446,769     44        %            641,132       446,769     44        %
(1)  Calculated as annualized or annual net income divided by average equity for the period
(2)  Calculated as net income divided by total revenues
(3)  Calculated as annualized or annual 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
                                                                        December 31             September 30            June 30                 March 31                December 31
                                                                                   2016                    2016                    2016                    2016                    2015
EARNINGS (in thousands)
Income recognized on finance receivables, net                           $          131,965      $          202,639      $          204,008      $          206,507      $          208,471
Fee income                                                                         21,171                  17,597                  22,347                  16,266                  19,649
Other revenue                                                                      2,122                   1,748                   2,101                   2,109                   2,065
Total revenues                                                                     155,258                 221,984                 228,456                 224,882                 230,185
Operating expenses                                                                 148,190                 154,496                 155,700                 153,988                 159,013
Income from operations                                                             7,068                   67,488                  72,756                  70,894                  71,172
Net interest expense                                                               21,026                  19,310                  20,569                  19,959                  15,321
Net (loss)/income                                                                  (15,347    )            36,518                  36,868                  32,853                  40,988
Net (loss)/income attributable to PRA Group, Inc.                                  (17,648    )            34,306                  36,456                  31,983                  40,970
PERIOD-END BALANCES (in thousands)
Cash and cash equivalents                                               $          94,287       $          91,791       $          117,071      $          79,442       $          71,372
Finance receivables, net                                                           2,307,969               2,392,408               2,399,949               2,377,077               2,202,113
Goodwill and intangible assets, net                                                527,846                 592,044                 576,992                 557,024                 518,944
Total assets                                                                       3,163,999               3,279,347               3,305,596               3,268,833               2,990,567
Borrowings                                                                         1,784,101               1,816,600               1,912,283               1,896,424               1,717,129
Total liabilities                                                                  2,238,388               2,291,369               2,370,415               2,360,091               2,150,820
Total equity - PRA Group, Inc.                                                     864,301                 937,702                 886,077                 864,868                 800,493
FINANCE RECEIVABLE COLLECTIONS (dollars in thousands)
Cash collections                                                        $          348,751      $          371,700      $          387,202      $          384,333      $          369,371
Cash collections on fully amortized pools                                          9,041                   7,744                   8,124                   9,276                   8,280
Principal amortization without allowance charges                                   154,271                 155,915                 170,274                 167,928                 149,381
Allowance charges                                                                  62,515                  13,146                  12,920                  9,898                   11,519
Principal amortization with allowance charges                                      216,786                 169,061                 183,194                 177,826                 160,900
Principal amortization w/ allowance charges as % of cash collections:
Including fully amortized pools                                                    62.2       %            45.5       %            47.3       %            46.3       %            43.6       %
Excluding fully amortized pools                                                    63.8       %            46.5       %            48.3       %            47.4       %            44.6       %
Allowance charges to period-end net finance receivables                            2.7        %            0.5        %            0.5        %            0.4        %            0.5        %
PURCHASES OF FINANCE RECEIVABLES (dollars in thousands)
Purchase price - North America core                                     $          91,800       $          95,452       $          130,529      $          136,057      $          120,554
Purchase price - North America insolvency                                          20,929                  16,760                  33,723                  22,952                  20,589
Purchase price - Europe core                                                       80,129                  34,240                  68,835                  171,038                 79,735
Purchase price - Europe insolvency                                                 6,943                   14,803                  16,410                  6,731                   4,976
Purchase price - total                                                             199,801                 161,255                 249,497                 336,778                 225,854
Number of portfolios - total                                                       126                     122                     136                     139                     139
ESTIMATED REMAINING COLLECTIONS (in thousands)
Estimated remaining collections - Americas core                         $          2,571,887    $          2,672,427    $          2,705,781    $          2,643,410    $          2,558,529
Estimated remaining collections - Americas insolvency                              331,371                 356,363                 396,667                 421,866                 448,652
Estimated remaining collections - Europe core                                      2,072,936               2,148,230               2,171,542               2,152,403               1,964,763
Estimated remaining collections - Europe insolvency                                71,810                  72,919                  59,107                  40,938                  34,878
Estimated remaining collections - total                                            5,048,004               5,249,939               5,333,097               5,258,617               5,006,822
Adjusted estimated remaining collections (7)                                       5,109,404               5,345,657               5,430,192               5,366,417               5,114,923
SHARE DATA (share amounts in thousands)
Net (loss)/income per common share - diluted                            $          (0.38      ) $          0.74         $          0.79         $          0.69         $          0.86
Weighted average number of shares outstanding - diluted                            46,346                  46,434                  46,402                  46,372                  47,539
Shares repurchased                                                                 -                       -                       -                       -                       2,072
Average price paid per share repurchased (including acquisitions costs) $          -            $          -            $          -            $          -            $          38.60
Closing market price                                                    $          39.10        $          34.54        $          24.14        $          29.39        $          34.69
RATIOS AND OTHER DATA (dollars in thousands)
Return on average equity (1)                                                       -7.9       %            15.1       %            16.4       %            15.4       %            19.8       %
Return on revenue (2)                                                              -9.9       %            16.5       %            16.1       %            14.6       %            17.8       %
Return on average assets (3)                                                       -2.2       %            4.2        %            4.4        %            4.1        %            5.5        %
Operating margin (4)                                                               4.6        %            30.4       %            31.8       %            31.5       %            30.9       %
Operating expense to cash receipts (5)                                             40.1       %            39.7       %            38.0       %            38.4       %            40.9       %
Debt to total equity - PRA Group, Inc. (6)                                         206.4      %            193.7      %            215.8      %            219.3      %            214.5      %
Number of full-time equivalent collectors                                          1,906                   1,859                   1,804                   1,881                   2,029
Number of full-time equivalent employees                                           4,019                   3,859                   3,816                   3,748                   3,799
Cash receipts (5)                                                       $          369,922      $          389,297      $          409,549      $          400,599      $          389,020
Lines of credit - unused portion at period end                                     641,132                 630,775                 430,651                 435,709                 446,769
(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 December 31, 2016
            Net (Loss)       Average Equity   Return on Average
                                              Equity, Annualized
As Reported $   (17,648 )    $       894,821  -7.9      %
Adjustments     2,210                738      1.0       %
As Adjusted     (15,438 )            895,559  -6.9      %
Twelve Months Ended December 31, 2016
            Net Income       Average Equity   Return on Average
                                              Equity
As Reported $   85,097       $       880,394  9.7       %
Adjustments     8,900                745      1.0       %
As Adjusted     93,997               881,139  10.7      %
Three Months Ended December 31, 2015
            Net Income       Average Equity   Return on Average
                                              Equity, Annualized
As Reported $   40,970       $       826,853  19.8      %
Adjustments     8,455                2,818    4.0       %
As Adjusted     49,425               829,671  23.8      %
Twelve Months Ended December 31, 2015
            Net Income       Average Equity   Return on Average
                                              Equity
As Reported $   167,926      $       843,164  19.9      %
Adjustments     34,930               2,926    4.1       %
As Adjusted     202,856              846,090  24.0      %
 Three Months Ended December 31, 2016
                                                   Total         Total            Income         Provision for      Net Loss         Diluted
                                                   Revenues      Operating        from           Income Taxes       attributable to  EPS
                                                                 Expenses         Operations                        PRA Group, Inc.
 As Reported                                       $    155,258  $   148,190      $     7,068    $    (7,053  )     $     (17,648 )  $  (0.38 )
 Adjustments:
 Acquisition-related expenses                           -            (458    )          458           168                 290           0.01
 One-time tax items                                     -            -                  -             (461    )           461           0.01
 Legal costs not associated with normal operations      -            (3,741  )          3,741         1,459               2,282         0.05
 Constant currency adjustments                          1,998        1,941              57            706                 (823    )     (0.02 )
 Subtotal of adjustments                                1,998        (2,258  )          4,256         1,872               2,210         0.05
 As Adjusted                                            157,256      145,932            11,324        (5,181  )           (15,438 )     (0.33 )
 Twelve Months Ended December 31, 2016
                                                   Total         Total            Income         Provision for      Net Income       Diluted
                                                   Revenues      Operating        from           Income Taxes       attributable to  EPS
                                                                 Expenses         Operations                        PRA Group, Inc.
 As Reported                                       $    830,580  $   612,374      $     218,206  $    43,191        $     85,097     $  1.83
 Adjustments:
 CFPB expenses including penalty and redress            -            (93     )          93            35                  58            0.00
 Acquisition-related expenses                           -            (2,265  )          2,265         850                 1,415         0.03
 One-time tax items                                     -            -                  -             (1,844  )           1,844         0.04
 Legal costs not associated with normal operations      -            (7,310  )          7,310         2,742               4,568         0.10
 Constant currency adjustments                          9,485        6,698              2,787         (272    )           1,015         0.03
 Subtotal of adjustments                                9,485        (2,970  )          12,455        1,511               8,900         0.20
 As Adjusted                                            840,065      609,404            230,661       44,702              93,997        2.03
 Three Months Ended December 31, 2015
                                                   Total         Total            Income         Provision for      Net Income       Diluted
                                                   Revenues      Operating        from           Income Taxes       attributable to  EPS
                                                                 Expenses         Operations                        PRA Group, Inc.
 As Reported                                       $    230,185  $   159,013      $     71,172   $    15,164        $     40,970     $  0.86
 Adjustments:
 CFPB expenses including penalty and redress            -            (111    )          111           43                  68            0.00
 Acquisition-related expenses                           -            (1,639  )          1,639         634                 1,005         0.02
 Legal costs not associated with normal operations      -            (12,045 )          12,045        4,663               7,382         0.16
 Subtotal of adjustments                                -            (13,795 )          13,795        5,340               8,455         0.18
 As Adjusted                                            230,185      145,218            84,967        20,504              49,425        1.04
 Twelve Months Ended December 31, 2015
                                                   Total         Total            Income         Provision for      Net Income       Diluted
                                                   Revenues      Operating        from           Income Taxes       attributable to  EPS
                                                                 Expenses         Operations                        PRA Group, Inc.
 As Reported                                       $    942,018  $   631,674      $     310,344  $    89,391        $     167,926    $  3.47
 Adjustments:
 CFPB expenses including penalty and redress            -            (28,917 )          28,917        8,158               20,759        0.43
 Acquisition-related expenses                           -            (5,627  )          5,627         1,668               3,959         0.08
 One-time tax items                                     -            -                  -             (1,846  )           1,846         0.04
 Legal costs not associated with normal operations      -            (13,714 )          13,714        5,348               8,366         0.17
 Subtotal of adjustments                                -            (48,258 )          48,258        13,328              34,930        0.72
 As Adjusted                                            942,018      583,416            358,602       102,719             202,856       4.19
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

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