PRA Group | 2021 Annual Report

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$6,007

$6,455

$6,754

$6,143

$5,704

Estimated Remaining Collections ($M)

WHO WE ARE

Our vision is to be the trusted leader, changing the world’s perception of the nonperforming loan industry.

Our mission is to deliver nonperforming loan solutions that drive success through a long-term focus and customer care.

As a global leader in acquiring and collecting nonperforming loans, PRA Group, Inc. returns capital to banks and other creditors to help expand financial services for consumers.

Our Path to Success

2021 Financial Results

Our Employees

Letter to Stockholders

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2021 Annual Report

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Over 25 years of redefining the nonperforming loan industry.

Adding Value for Stockholders

Company Culture

Some Closing Thoughts

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To My Fellow Stockholders:

Table of contents

Our MISSION

Our VISION

When we closed the door on 2020, I was looking forward to 2021 because everything was supposed to return to normal. Like many of you, I was impatient to get back to the office, travel, and see friends and family, all without a global pandemic looming over my head. It did not take long to realize that new variants of the virus would enable COVID to continue its disruption. What is more, that disruption would be compounded by unprecedented supply chain issues, a surge in global inflation not seen since the 1970s, and continued political turbulence. Clearly, 2021 planned to follow in the footsteps of 2020. No one has been spared the consequences of this global upheaval, and yet, once again, our company rose to meet the challenges. Our employees did not just get through the hard times—they showed dedication and exceptional performance throughout them.

One Company, One Team, Worldwide

Our employees demonstrate their commitment to our mission and values every day and because of them, our business is strong. As one of the largest, and most successful purchasers of nonperforming loans in the world, we play an important role in the global economy. As many of our customers faced grave difficulties, I watched our employees embrace PRA’s commitment to customer care. Whether helping our customers understand our hardship policy or offering them flexible and affordable repayment options, our employees showed empathy and compassion along the way. Although the pandemic continues to keep us physically apart, I feel we are deeply united—one company, one team, worldwide.

2021 Financial Results

Despite its challenges, financially 2021 was one of the most successful years in PRA’s history. We set new records for cash collections, revenue, cash efficiency, and net income.

Dive DEEPER INTO FINANCIAL RESULTS

FY17

FY18

FY19

FY20

FY21

Total Revenues ($M)

$828

$908

$1,017

$1,065

$1,096

FY17

FY18

FY19

FY20

FY21

Cash Receipts ($M)

$1,538

$1,640

$1,857

$2,015

$2,076

FY17

FY18

FY19

FY20

FY21

Net Income ($M)

$164

$66

$86

$149

$183

FY17

FY18

FY19

FY20

FY21

Cash Collections Plus Fee Income

Attributable to PRA Group, Inc.

Our Path to Success

In 2019, we updated our strategic priorities, set multiyear goals, and took specific actions with measurable results to achieve those goals. The priorities included:

Click On the strategic priorities above to dive deeper

Adding Value for Stockholders

A key element of PRA’s strategy is efficient and thoughtful deployment of capital. Traditionally, we have done this by purchasing the right portfolios, at the right price, with the right risk profile, and investing in our core businesses.

because we work together as a team.

SUCCESSFUL

in every situation.

ETHICAL

in our interactions with each other.

RESPECTFUL

for our actions.

ACCOUNTABLE

to always doing our best work.

COMMITTED

Fostering a High-Performing Workforce

Being a Recognized & Trusted Brand

Expanding Products & Market Share

Improving Efficiency at All Levels

Modernizing Collections

Last year, we increased our investment in digital technologies, materially growing the number of customers globally who can access their accounts through our website. Customers like the convenience and flexibility that digital platforms provide, so we worked to meet that desire by, among other things, employing robust digital marketing campaigns that improved customer awareness of our websites. Since the first quarter of 2019, our global digital operations have increased by 83%. While we will always accommodate customers who want to speak directly with a person, we will continue to innovate our digital platforms, focusing on data protection, ease of use, and enhancement of customers’ ability to self-serve. The desire to continuously innovate drove our investment in data and analytics last year. Our data and analytics team has helped PRA become a global leader in our industry. We believe that these twin advantages drive our competitiveness, profitability, and market discipline in varying economic cycles, including this pandemic economy. From real-time dashboards that inform us about the health of our operations to the deployment of unique and timely collection strategies, our data and analytics activities are an integral part of modernizing PRA, increasing cash collections, and improving profitability.

Modernizing Collections

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Company Culture

PRA’s core values of being committed, accountable, responsible, ethical, and successful are summed up in the acronym PRA CARES. For us, this simple phrase means holding ourselves to a higher standard, treating our customers with fairness and dignity, and treating our employees with respect. It also means giving back to the communities where we work and live.

Kevin Stevenson President & CEO

We always keep our eyes on efficiency, looking for operational improvements and opportunities to reduce operating costs. We improved efficiency last year, and our digital expansion was a large part of this success. In addition, we were able to leverage our data to develop unique customer insights and improve account scoring. These enhancements assisted us in refining our digital, legal, letter, and dialing strategies to contact the right customers at the right time with the right offers, enabling customers to engage with us through the channel they prefer. Further improving efficiency, we continued to build our internal legal capabilities and moved more legal accounts from external attorneys to our internal legal team, which positively impacted our profitability.

Improving Efficiency at All Levels

The purchasing environment was challenging due to a variety of factors primarily related to the continued pandemic. We believe stimulus checks from the government, enhanced unemployment benefits, and continued restrictions on travel and entertainment helped consumers make timely payments or pay off debts, reducing the supply of nonperforming loans. At the same time, the industry saw increasing competition for the limited supply. I am impressed with our business development team and their accomplishments in 2021. We improved our geographic diversity and achieved a near 50:50 balance of investment between the U.S. and Europe while increasing our presence in Northern Europe and South America. Our operations in Australia grew throughout 2021, securing forward flows that provide reliable streams of data and cash flow that we believe will help us responsibly scale our business and prepare it for further growth. We also purchased test portfolios of new products, giving us valuable information that we believe will allow us to make more substantial purchases in the future. Looking ahead, we believe that increased volumes are likely on the horizon after consumer balance sheets return to pre-pandemic conditions. We will lean into trusted relationships to ensure that PRA maintains its presence in the global markets in which it operates.

Expanding Products & Market Share

Trust is foundational with all key stakeholders. We cannot underestimate its value, assume that we have it, or take it for granted. Our commitment to being a recognized and trusted brand has given us tangible success in being sought after for our insights, privately negotiating deals, and receiving positive customer reviews. Relationship building with politicians and their staffs gives us the opportunity to tell them who we are, what we do, and how we do it. I hope our efforts make us a resource for them as they navigate through countless voices and legislation. I have gone from believing that the “tallest nail gets the hammer” to believing that if we tell our story often and well, we will be a trusted source for all important constituencies. Employees at all levels are powerful and important advocates of our brand and company, which is why I maintain a consistent and open line of communication with them. Throughout the year, I held twice-weekly meetings with employees from every department around the globe. These interactions provided an opportunity for employees to talk and for me to listen, hearing their feedback, answering their questions, and celebrating their accomplishments.

Being a Recognized & Trusted Brand

At PRA care of employees is a priority. Over the past two years, we have not been untouched by the difficulty of coming to work amidst the added stresses of the pandemic, nor have we entirely avoided the “Great Resignation.” Like many other companies, we saw an increase in attrition during 2021, but our attrition rates remained below pre-pandemic levels. I believe this was because we focus on talent development, retention, and company culture. To this end, we enhanced our benefits and rewards, worked to further develop our top performers, and adopted hybrid and remote work arrangements globally to help attract and retain employees. We also deployed creative personal and professional development opportunities. For instance, we launched an IT apprenticeship program for employees to develop their skills and explore career paths in IT. This program has been incredibly successful in launching new careers for participants at all levels of the company, including our collector team members throughout the U.S. Additionally, we introduced new mental well-being courses to help employees navigate the stresses of daily life during the pandemic. To promote the health and safety of our employees, we held COVID-19 vaccine, flu shot, and mobile mammography clinics; hosted a COVID-19 vaccine lottery; and provided paid time off for employees around the world who received their vaccination.

Fostering a High-Performing Workforce

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Some Closing Thoughts

PRA has come far in 25 years, but there is more work to do. We will continue to deliver on our strategic objectives, deploy capital profitably, efficiently collect on our portfolios, and deliver value to stockholders. We will also continue to forge a path forward to advance diversity and inclusion, focus on compliance excellence, environmental sustainability, and exceptional customer care. Looking ahead, I will not make the mistake of expecting 2022 to bring about normalcy. Instead, I will prepare for the trials the coming year undoubtedly has in store. If our performance last year is any indication, adversity will drive us to new levels of innovation and opportunity. Having closed the door on our first 25 years, I believe our next 25 will see us continuing to lead with the values and strategies that have brought PRA Group its current success—doing what is right for our customers, strengthening communities worldwide, and playing a critical role in the global economy.

Kevin Stevenson, President and CEO

This Annual Report contains forward-looking statements within the meaning of the federal securities laws. These forward-looking statements involve risks, uncertainties and assumptions that could cause our actual results to differ materially from those expressed or implied by such forward-looking statements. See “Cautionary Statements Pursuant to Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995” in the attached Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of the risks, uncertainties and assumptions that could cause our actual results to differ from those contained in our forward-looking statements.

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ESG Intiatives

Environmental

Environmental, Social, and Governance Initiatives

Efforts to create a long-term roadmap for environmental, social, and governance (ESG) initiatives made great headway last year. We successfully incorporated ESG into our company’s enterprise risk management program, and the Board formally delegated oversight of significant ESG matters to its Nominating and Corporate Governance Committee. We formed an ESG Steering Committee that reports directly to our senior leadership team, with a charter that provides a framework for ESG oversight. Under the Steering Committee’s direction, we established an ESG Working Group to gather the necessary data to support ESG disclosures and initiatives. We recently hired a Director of ESG, who will support the development and implementation of an ESG strategy that is consistent with the company’s overall strategic plan and PRA’s culture of making an impact.

Environmental Activities

Last year, our UK team began work to relocate their operational hub to The HALO Enterprise and Innovation Centre in Kilmarnock, Scotland, a sustainable, collaborative business community that will support our company’s growth. This location, powered by renewable energy, is one of the most environmentally friendly developments in the UK. The move entails a 15-year commitment to strengthen the Kilmarnock community and foster a robust local economy, and I cannot wait to visit Scotland soon to see the center for myself. While I am there, I will also visit the PRA Group Forest, launched last year in partnership with Tree-Nation (a worldwide platform for supporting reforestation projects). Our European offices planted over 300 trees in honor of employees who participated in community impact initiatives.

Making an Impact

Diversity & Inclusion

Financial Literacy

Making an Impact

We give back where we can make the biggest impact. Over the past three years, we have donated nearly $4 million to charitable causes, but 2021 was record-breaking for us. We gave over $1.6 million to communities around the world through more than 100 nonprofit local, national, and global organizations. In celebration of our 25th anniversary, we launched $250,000 for 25 Years, a giving initiative based entirely on employee feedback. Employees voted on a variety of nonprofits and identified 10 organizations to receive $25,000 each. Beyond corporate giving, our employees took the initiative to develop strong relationships in our local communities. For instance, our Tennessee Regional Office earned the Dream Builder of 2021 Award from Habitat for Humanity of Jackson, Tennessee Area Inc. Likewise, our European offices united to enter 95 five-person teams in a Coast-to-Coast Pedometer Challenge, working together virtually to walk 12 different coastal routes across Europe to raise money for 13 charities while also promoting physical activity.

Diversity and Inclusion

Last year, we announced a new Diversity and Inclusion (D&I) program, our first Director of D&I, and a Diversity and Inclusion Steering Committee. The foundation they built over the course of 2021 was remarkable. We launched unconscious bias training globally and encouraged employees to share their stories on our D&I Dimensions page. We held a company-wide recognition of Pride Month, and during Global Inclusion Week, we met for virtual Coffee Roulette with fellow employees we had never spoken to, in a different department and different country. In Australia, our employees embarked on a Reconciliation Action Plan, helping other employees to learn about indigenous cultures and to make a meaningful impact on advancing reconciliation. We conducted our first Global D&I Survey with very favorable results. Importantly, employees provided us with insights into future areas of focus. As I connect with various groups of our employees each week, it is clear to me that we have so much to learn from each other, and the D&I program is helping us all to do that.

Financial Literacy

In our line of business, we work with people who are struggling with debt. Our company is passionate about financial literacy education because it helps consumers avoid some of the financial challenges we witness daily. The pathway to financial health begins with education. In 2020, we began a partnership with the Finance University program at the John Chambers College of Business and Economics at West Virginia University, and last year we participated in the program’s offerings to its community. In the UK, PRA Group partnered with The Money Charity to celebrate Talk Money Week, helping to promote educational materials and provide advice to guide consumers of all ages toward financial well-being.