Investment in Receivable Portfolios, Net

12 Months Ended

Dec. 31, 2023

Investment in Receivable Portfolios, Net

Note 4: Investment in Receivable Portfolios, Net

Investment in receivable portfolios, net consist of the following as of the dates presented (in thousands):


	Year Ended December 31,
	2023		2022
Amortized cost	$	—	$	—
Negative allowance for expected recoveries	3,468,432		3,088,261
Balance, end of period	$	3,468,432	$	3,088,261

The following table summarizes the changes in the balance of investment in receivable portfolios, net during the periods presented (in thousands):


	Year Ended December 31,
	2023		2022		2021
Balance, beginning of period	$	3,088,261	$	3,065,553	$	3,291,918
Negative allowance for expected recoveries - current period purchases(1)	1,073,812		800,507		664,529
Collections applied to investment in receivable portfolios, net(2)	(658,130)		(709,176)		(1,019,629)
Changes in recoveries(3)	(82,530)		93,145		199,136
Put-backs and Recalls	(13,606)		(9,938)		(7,249)
Deconsolidation of receivable portfolios	—		—		(9,352)
Disposals and transfers to real estate owned	(7,957)		(8,335)		(8,071)
Foreign currency translation adjustments	68,582		(143,495)		(45,729)
Balance, end of period	$	3,468,432	$	3,088,261	$	3,065,553

_______________________

(1)The table below provides the detail on the establishment of negative allowance for expected recoveries of portfolios purchased during the periods presented:


	Year Ended December 31,
	2023		2022		2021
Purchase price	$	1,073,812	$	800,507	$	664,529
Allowance for credit losses	3,430,036		2,332,112		1,823,582
Amortized cost	4,503,848		3,132,619		2,488,111
Noncredit discount	5,333,109		3,216,500		3,284,369
Face value	9,836,957		6,349,119		5,772,480
Write-off of amortized cost	(4,503,848)		(3,132,619)		(2,488,111)
Write-off of noncredit discount	(5,333,109)		(3,216,500)		(3,284,369)
Negative allowance	1,073,812		800,507		664,529
Negative allowance for expected recoveries - current period purchases	$	1,073,812	$	800,507	$	664,529

(2)Collections applied to investment in receivable portfolios, net, is calculated as follows during the periods presented:


	Year Ended December 31,
	2023		2022		2021
Cash Collections	$	1,862,567	$	1,911,537	$	2,307,359
Less - amounts classified to revenue from receivable portfolios	(1,204,437)		(1,202,361)		(1,287,730)
Collections applied to investment in receivable portfolios, net	$	658,130	$	709,176	$	1,019,629

(3)Changes in recoveries is calculated as follows during the periods presented, where recoveries include cash collections, put-backs and recalls, and other cash-based adjustments:


	Year Ended December 31,
	2023		2022		2021
Recoveries (below) above forecast	$	(33,405)	$	29,253	$	326,006
Changes in expected future recoveries	(49,125)		63,892		(126,870)
Changes in recoveries	$	(82,530)	$	93,145	$	199,136

Recoveries above or below forecast represent over and under-performance in the reporting period, respectively. Collections during the year ended December 31, 2023, under-performed the projected cash flows by approximately $33.4 million.

Changes in expected future recoveries are reassessed each quarter, the Company considers, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment when updating the forecasts of expected lifetime recoveries. As a result, the Company has updated its forecast, including reducing expected future recoveries for certain static pools, primarily the 2022 and 2021 U.S. vintages, where the initial cash flow forecasts were established during a period marked by changed consumer behavior, which caused challenges in forecasting. The changes to the forecast, when discounted to present value, resulted in a net negative change in expected future period recoveries of approximately $49.1 million during the year ended December 31, 2023.