2020 Annual Report
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As I write this letter to our stockholders, I can’t help but make the comparison between this past year and 1996, the year of our founding. Twenty-five years ago, sitting on folding chairs at an ancient card table, we thought of ourselves as innovators, determined to do things the right way, for the right reasons, for the long term. In particular, we would treat our customers and employees in a way that was different from the norm in our industry—we would treat them with professionalism, respect, and flexibility. That resolve to genuinely care for our customers and employees stayed at the forefront of our minds, despite all the uncertainty that surrounded our start-up. Of course, back then, we had far fewer of both, but somehow the remembered weight of that responsibility feels very similar to what we experienced in 2020, when taking care of customers and employees took on a whole new meaning.
Although the world around us changed drastically in 2020, we delivered financial results for the year that were among the best in our history, with record cash collections and a record cash efficiency ratio. We believe that record portfolio purchases in 2019, along with solid investment levels in 2020 and government actions during the pandemic, provided customers with the opportunity to resolve their debts with us.
Steve Fredrickson and Kevin Stevenson founded Portfolio Recovery Associates on March 20, 1996.
Established a new headquarters in Norfolk, Virginia.
PRA opened a regional office in Hutchinson, Kansas.
Launched an initial public offering (IPO) and went public in late 2002 (Nasdaq: PRAA)
Opened our third location in Hampton, Virginia.
BusinessWeek recognized PRA as a 100 Best Small Company.
Diversified U.S. portfolio into acquisition and servicing of bankruptcy claims.
PRA launched its Corporate Giving program and has since donated millions to charities around the world.
Opened our fourth regional office in Jackson, Tennessee.
Fortune Small Business named PRA one of America’s Fastest-Growing Small Companies.
PRA named one of Forbes’ Best Small Companies for eight consecutive years (2007-2014).
Diversified into class action claims servicing with the acquisition of Claims Compensation Bureau (CCB).
Opened Birmingham Regional Office in Birmingham, Alabama.
PRA was honored with the Hampton Roads Corporate Volunteer Excellence Award as an acknowledgment of the significant contribution PRA employees have made throughout the community.
Began to acquire and service secured bankruptcy claims with acquisition of National Capital Management.
Expanded into purchasing and servicing of consumer nonperforming loans in the UK with the acquisition of Mackenzie Hall.
PRA opened its Dallas Regional Office.
PRAA included in Barron’s 400 Index of most fundamentally sound and attractively priced stocks for second consecutive year.
Credit Collections & Risk awards PRA UK Credit Excellence Award in Compliance.
Named one of Fortune’s 100 Fastest-Growing Companies for third year (2006, 2007, 2014).
Acquired Aktiv Kapital AS, a leader in acquiring and servicing nonperforming consumer loans throughout Europe and Canada.
Acquired UK Individual Voluntary Arrangements platform and other assets from Pamplona Capital Management.
Portfolio Recovery Associates, Inc became PRA Group, Inc.
Expanded its Norfolk, Virginia headquarters to support long-term growth.
Purchased a majority position in RCB Investimentos, Brazil’s leading nonperforming loan master servicing platform.
Recognized for Global M&A Deal of the Year in the M&A Atlas Awards for acquisition of Aktiv Kapital AS.
PRA celebrated its 20th Anniversary in part by ringing the Nasdaq Stock Market opening bell.
Launched new volunteer program to give employees paid time off to give back to our communities.
PRA was named one of Forbes’ Best Midsize Employers in America.
PRA expanded its European footprint with the acquisition of Polish company DTP S.A. (DTP).
Launched a new and improved global corporate website to better serve PRA’s global reach.
PRA’s subsidiary, Portfolio Recovery Associates, LLC , launched two new customer websites, which provided enhanced functionality and services to customers.
PRA opened its North Carolina Regional Office in Burlington, North Carolina.
PRA Group was selected as an “Outstanding Corporation” by the Association of Fundraising Professionals VA, Hampton Roads Chapter.
PRA continued to grow with the acquisition of a Canadian business.
Opened its third location in Virginia with operations in Danville, Virginia. Investing in communities within which PRA operates has always been a commitment.
PRA reached a new continent with an office opening in Australia.
PRA received special recognition for Diversity & Inclusion at the Credit Awards, a leading United Kingdom awards program for the credit and financial services industry.
PRA Group President and Chief Executive Officer Kevin Stevenson was named to Virginia Business Magazine’s Virginia 500 list for 2020. The magazine’s inaugural VA 500 list includes the Commonwealth’s most influential leaders across 30 sectors.
PRA Group was recognized alongside Hampton Roads’ most dynamic businesses and their significant contributions to the local economy and community.
The GBAC STAR™ Facility Accreditation Program is the cleaning industry’s only outbreak prevention, response and recovery accreditation for facilities. PRA was the first call center to receive this accreditation.
Our employees are the heart of our company and one of the most important keys to our success. Since COVID-19 was declared a global pandemic, one of my main priorities has been to keep our employees safe, engaged, and productive. As the challenges of the pandemic became clear, we quickly shifted hundreds of our team members to working from home and invested in robust safety measures to protect those employees who were still working at a PRA location. In fact, the safety measures we implemented and our high standards for cleaning, disinfection, and infectious disease prevention earned our U.S. facilities the Global Biorisk Advisory Council’s STAR™ Facility Accreditation in 2020—making our facilities the first call centers in the nation to receive this accreditation.
Last year was defined by distancing, separation, and isolation, and yet we at PRA became more connected during this period than ever before. Interaction with our employees allowed for, and encouraged, an open and honest dialogue within our community. PRA deeply values the diverse experiences, perspectives, and abilities of our people, and we needed ways to continue making room for them to be heard. Through virtual town halls, video messages and communications, and small-group sessions, I was able to listen to our employees’ concerns, answer questions, share thoughts, and assure them that, together, we would come out of this challenging time stronger.
The discussions we had revealed many great ideas, one of them being an avid interest in accelerating our diversity, equity, and inclusion plan. We are working hard to answer that call, including welcoming our first diversity and inclusion leader. I am eager for what 2021 will bring in this regard.
“With the audacity that youth often allows, we believed that we would immediately transform this industry into one that consumers, regulators, legislators, and the media would trust.”
– Kevin Stevenson, President & CEOI am grateful for our employees’ dedication—during a very stressful year—to staying true to our mission and values by supporting our customers, each other, and the communities we serve. I have never been prouder of them.
We value our employees’ diverse experiences, perspectives, and abilities. We continue our commitment to foster a sense of belonging by working together to build an equitable and inclusive culture— where you are free to be yourself and be your best.
When I joined PRA in 2018, it was clear to me that the organization valued the diversity among its thousands of employees, all bringing their unique perspectives and life experiences to the table.
Samantha, CommmunicationsI appreciate working for a company that strives to have equality for all.
April, OperationsThe founders lead by example and purpose.
Mildred E., Account Manager-Legal, USAfter just a few days, I felt like I was part of a great group of close-knit people.
Christian R., IT Strategy Analyst, ItalyI fell in love with the company and the job and it became my career.
Christine P., Senior Operations Manager, USWhat I love most about working at PRA is the wonderful people I have come in contact with.
Lanita Crest, Manager-Operations Legal, USEverybody here treats you with respect and makes you feel like you are somebody.
Cecile C., Account Representative, USI enjoy the opportunity to help support so many causes in my community. Not many companies are willing to give funds to help support local charities, but PRA goes above and beyond to help communities around the world.
April C., Operations Coach, KansasWe work together as a team, sharing best practices and ideas from all employee levels.
Magdalena P., Head of Voluntary Collections, PolandWe value our employees’ diverse experiences, perspectives, and abilities. We continue our commitment to foster a sense of belonging by working together to build an equitable and inclusive culture— where you are free to be yourself and be your best.
When I joined PRA in 2018, it was clear to me that the organization valued the diversity among its thousands of employees, all bringing their unique perspectives and life experiences to the table.
Samantha, CommmunicationsI appreciate working for a company that strives to have equality for all.
April, OperationsThe founders lead by example and purpose.
Mildred E., Account Manager-Legal, USAfter just a few days, I felt like I was part of a great group of close-knit people.
Christian R., IT Strategy Analyst, ItalyI fell in love with the company and the job and it became my career.
Christine P., Senior Operations Manager, USWhat I love most about working at PRA is the wonderful people I have come in contact with.
Lanita Crest, Manager-Operations Legal, USEverybody here treats you with respect and makes you feel like you are somebody.
Cecile C., Account Representative, USI enjoy the opportunity to help support so many causes in my community. Not many companies are willing to give funds to help support local charities, but PRA goes above and beyond to help communities around the world.
April C., Operations Coach, KansasWe work together as a team, sharing best practices and ideas from all employee levels.
Magdalena P., Head of Voluntary Collections, PolandCollaborating with our customers and doing things the right way for the long term has been our guiding principle since our inception. As many consumers were enduring adversity in the face of COVID-19, it was incumbent upon us to listen to the needs of our customers and to remain flexible as we navigated this uncharted territory together.
We relied heavily on our existing policies to ensure we were not seeking repayment from those financially impacted by the pandemic, and we provided accommodating repayment options for others with the ability and desire to financially recover. Globally, we significantly reduced legal filings and enforcements, including garnishments or liens on judgment accounts in the U.S., during this period, completely halting these actions for a period in markets hardest-hit by the pandemic. In the United States we proactively used geographic and other metrics to determine areas where we should pause collection activity. Our preference during the pandemic was to rely on voluntary payments.
Even before COVID-19 struck, we had begun conducting consumer research studies to help us provide our customers with better tools and flexibility. We used the results of the research to improve our online platforms:
Having built PRA on the customer-centric premise that we could change the industry by doing right by our customers, I firmly believe that the creation of the Consumer Financial Protection Bureau (CFPB) as our regulatory agency in 2011 was necessary for both the industry and consumers. It might seem counterintuitive to some for me to say so, but regulation helps level the playing field for the entire industry by providing a set of rules by which we all must abide. Going forward, I hope that the CFPB will foster a collaborative environment in which industry participants can openly share ideas and solutions, without fear of reprisals. After all, our priorities should be the same―to help consumers repay their debt and recover financially in a way that is manageable, transparent, and respectful.
Whether it’s supporting financial literacy programs, youth development, or local food pantries, service to our communities has been a hallmark of our company’s history. Never has that priority been more important for us to continue than now.
In 2020, we steered our efforts toward addressing the COVID-19 pandemic, working with relief organizations to help those in need. The circumstances required us to approach giving back in a new way, through virtual events and contact-less donation drives, enabling us to further develop our community engagement programs.
We admire our employees’ unwavering dedication to making a lasting difference in our communities, and we continue searching for creative ways to volunteer our time while keeping safety top-of-mind.
As I think about the future, we intend to continue to rely on the long-term approach that has guided our success for more than two decades. Our company has been built on the understanding that our customers deserve to be treated with respect, professionalism, and compassion, and we have strived to align our operating processes with these values. Our employees have proven their dedication time and again, and I am equal parts grateful for and proud of their perseverance and commitment to our mission. And while it’s no secret that our industry is not perceived positively by some, part of the work of improving this perception is to simply, but continuously, share our story. I hope regulators and legislators are willing to listen to it. Like most enduring stories, it’s sometimes complicated, but it’s a story I am proud to tell.
Kevin Stevenson, President & 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.