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___________________________________________________________________________________

(Mark One)

☒    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2024 or

☐    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________to__________.

COMMISSION FILE NUMBER: 000-26489

_______________________________________________________________

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (Section 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐    

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class						Outstanding at October 30, 2024
Common Stock, $0.01 par value						23,691,291 shares

 

			Page
PART I – FINANCIAL INFORMATION			3
Item 1— Condensed Consolidated Financial Statements (Unaudited)			3
Condensed Consolidated Statements of Financial Condition			3
Condensed Consolidated Statements of Income			4
Condensed Consolidated Statements of Comprehensive Income (Loss)			5
Condensed Consolidated Statements of Equity			6
Condensed Consolidated Statements of Cash Flows			8
Notes to Condensed Consolidated Financial Statements			9
Note 1: Ownership, Description of Business, and Summary of Significant Accounting Policies			9
Note 2: Earnings Per Share			10
Note 3: Fair Value Measurements			10
Note 4: Derivatives and Hedging Instruments			12
Note 5: Investment in Receivable Portfolios, Net			15
Note 6: Other Assets			17
Note 7: Borrowings			17
Note 8: Variable Interest Entities			21
Note 9: Accumulated Other Comprehensive Loss			22
Note 10: Income Taxes			22
Note 11: Commitments and Contingencies			23
Note 12: Segment and Geographic Information			24
Note 13: Goodwill and Identifiable Intangible Assets			24
Item 2 – Management’s Discussion and Analysis of Financial Condition and Results of Operations			26
Item 3 – Quantitative and Qualitative Disclosures About Market Risk			49
Item 4 – Controls and Procedures			49
PART II – OTHER INFORMATION			50
Item 1 – Legal Proceedings			50
Item 1A – Risk Factors			50
Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds			50
Item 5 – Other Information			50
Item 6 – Exhibits			51
SIGNATURES			52

(In Thousands, Except Par Value Amounts)

(Unaudited)

			September 30, 2024						December 31, 2023
Assets
Cash and cash equivalents			$	247,353					$	158,364
Investment in receivable portfolios, net			3,719,260						3,468,432
Property and equipment, net			103,550						103,959
Other assets			295,422						293,256
Goodwill			628,131						606,475
Total assets			$	4,993,716					$	4,630,486
Liabilities and Equity
Liabilities:
Accounts payable and accrued liabilities			$	222,841					$	189,928
Borrowings			3,550,574						3,318,031
Other liabilities			172,196						185,989
Total liabilities			3,945,611						3,693,948
Commitments and contingencies (Note 11)
Equity:
Convertible preferred stock, $0.01 par value, 5,000 shares authorized, no shares issued and outstanding			—						—
Common stock, $0.01 par value, 75,000 shares authorized, 23,691 and 23,545 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively			237						235
Additional paid-in capital			17,016						11,052
Accumulated earnings			1,135,234						1,049,171
Accumulated other comprehensive loss			(104,382)						(123,920)
Total stockholders’ equity			1,048,105						936,538
Total liabilities and stockholders’ equity			$	4,993,716					$	4,630,486

The following table presents certain assets and liabilities of consolidated variable interest entities (“VIEs”) included in the condensed consolidated statements of financial condition above. The liabilities in the table below can only be settled from assets in the respective VIEs. Creditors of the VIEs do not have recourse to the general credit of the Company. See “Note 8: Variable Interest Entities” for additional information on the Company’s VIEs.

			September 30, 2024						December 31, 2023
Assets
Cash and cash equivalents			$	28,740					$	24,472
Investment in receivable portfolios, net			818,540						717,556
Other assets			5,485						19,358
Liabilities
Accounts payable and accrued liabilities			2,129						1,854
Borrowings			484,105						494,925
Other liabilities			2,915						2,452

(In Thousands, Except Per Share Amounts)

(Unaudited)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Revenues
Revenue from receivable portfolios			$	328,119					$	302,687					$	965,901					$	899,545
Changes in recoveries			12,675						(17,067)						6,020						(30,054)
Total debt purchasing revenue			340,794						285,620						971,921						869,491
Servicing revenue			22,772						19,893						64,258						63,486
Other revenues			3,505						4,106						14,563						12,316
Total revenues			367,071						309,619						1,050,742						945,293
Operating expenses
Salaries and employee benefits			107,502						95,067						318,294						294,772
Cost of legal collections			67,339						56,274						190,309						167,525
General and administrative expenses			38,808						35,559						111,828						108,053
Other operating expenses			31,804						27,959						93,016						81,864
Collection agency commissions			7,370						8,046						22,308						26,583
Depreciation and amortization			8,158						11,196						23,467						32,768
Total operating expenses			260,981						234,101						759,222						711,565
Income from operations			106,090						75,518						291,520						233,728
Other expense
Interest expense			(66,906)						(50,558)						(184,047)						(147,376)
Other income			1,578						5,103						6,291						5,080
Total other expense			(65,328)						(45,455)						(177,756)						(142,296)
Income before income taxes			40,762						30,063						113,764						91,432
Provision for income taxes			(10,119)						(10,724)						(27,701)						(27,162)
Net income			$	30,643					$	19,339					$	86,063					$	64,270
Earnings per share:
Basic			$	1.28					$	0.82					$	3.61					$	2.72
Diluted			$	1.26					$	0.79					$	3.54					$	2.62
Weighted average shares outstanding:
Basic			23,912						23,712						23,859						23,644
Diluted			24,407						24,382						24,324						24,535

Encore Capital Group, Inc. (“Encore”), through its subsidiaries (collectively with Encore, the “Company”), is an international specialty finance company providing debt recovery solutions and other related services for consumers across a broad range of financial assets. The Company purchases portfolios of defaulted consumer receivables at deep discounts to face value and manages them by working with individuals as they repay their obligations and work toward financial recovery. Defaulted receivables are consumers’ unpaid financial obligations to credit originators, including banks, credit unions, consumer finance companies and commercial retailers. Defaulted receivables may also include receivables subject to bankruptcy proceedings. The Company also provides debt servicing and other portfolio management services to credit originators for non-performing loans in Europe.

Through Midland Credit Management, Inc. and its domestic affiliates (collectively, “MCM”), the Company is a market leader in portfolio purchasing and recovery in the United States. Through Cabot Credit Management Limited (“CCM”) and its subsidiaries and European affiliates (collectively, “Cabot”), the Company is one of the largest credit management services providers in Europe and the United Kingdom. These are the Company’s primary operations.

The Company also has investments and operations in Latin America and Asia-Pacific, which the Company refers to as “LAAP.”

The accompanying interim condensed consolidated financial statements have been prepared by the Company, without audit, in accordance with the instructions to the Quarterly Report on Form 10-Q, and Rule 10-01 of Regulation S-X promulgated by the United States Securities and Exchange Commission (the “SEC”) and, therefore, do not include all information and footnotes necessary for a fair presentation of its condensed consolidated financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).

In the opinion of management, the unaudited financial information for the interim periods presented reflects all adjustments, consisting of only normal and recurring adjustments, necessary for a fair statement of the Company’s condensed consolidated financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2023. Operating results for interim periods are not necessarily indicative of operating results for an entire fiscal year.

The preparation of condensed financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts and the disclosure of contingent amounts in the Company’s condensed financial statements and the accompanying notes. Actual results could materially differ from those estimates.

The condensed consolidated financial statements have been prepared in conformity with GAAP and reflect the accounts and operations of the Company and those of its subsidiaries in which the Company has a controlling financial interest. The Company also consolidates variable interest entities (“VIEs”) for which it is the primary beneficiary. The primary beneficiary has both (a) the power to direct the activities of the VIE that most significantly affect the entity’s economic performance, and (b) either the obligation to absorb losses or the right to receive benefits. Refer to “Note 8: Variable Interest Entities” for further details. All intercompany transactions and balances have been eliminated in consolidation.

The condensed financial statements of certain of the Company’s foreign subsidiaries are measured using their local currency as the functional currency. Assets and liabilities of foreign operations are translated into U.S. dollars using period-end exchange rates, and revenues and expenses are translated into U.S. dollars using average exchange rates in effect during each period. The resulting translation adjustments are recorded as a component of other comprehensive income or loss. Equity accounts are translated at historical rates, except for the change in retained earnings during the year which is the result of the income statement translation process. Intercompany transaction gains or losses at each period end arising from subsequent measurement of balances for which settlement is not planned or anticipated in the foreseeable future are included as translation adjustments and recorded within other comprehensive income or loss. Translation gains or losses are the material components of accumulated other comprehensive income or loss and are reclassified to earnings upon the substantial sale or liquidation of investments in foreign operations.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures (“ASU 2023-07”). ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within the segment measure of profit or loss. This guidance will be applied retrospectively and is effective for annual reporting periods in fiscal years beginning after December 15, 2023, and interim reporting periods in fiscal years beginning after December 31, 2024. This ASU may result in additional required disclosures when adopted. The Company is currently evaluating the provisions of this ASU and the impact on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as information on income taxes paid. The standard is intended to benefit investors by providing more detailed income tax disclosures that would be useful in making capital allocation decisions and applies to all entities subject to income taxes. The new standard is effective for annual periods beginning after December 15, 2024. This ASU may result in additional required disclosures when adopted. The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

Basic earnings per share is calculated by dividing net income by the weighted average number of shares of common stock outstanding during the period.

The number of shares used to calculate the diluted earnings per share is computed by using the basic weighted-average number of common shares outstanding plus any dilutive potential common shares outstanding during the period, except when their effect is anti-dilutive. Dilutive potential common shares include outstanding stock based awards, and the dilutive effect of the convertible and exchangeable senior notes, if applicable.

A reconciliation of shares used in calculating earnings per basic and diluted shares follows (in thousands, except per share amounts):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Net income			$	30,643					$	19,339					$	86,063					$	64,270
Shares:
Total weighted-average basic shares outstanding			23,912						23,712						23,859						23,644
Dilutive effect of stock-based awards			89						165						103						191
Dilutive effect of convertible and exchangeable senior notes			406						505						362						700
Total weighted-average dilutive shares outstanding			24,407						24,382						24,324						24,535
Basic earnings per share			$	1.28					$	0.82					$	3.61					$	2.72
Diluted earnings per share			$	1.26					$	0.79					$	3.54					$	2.62

There were no anti-dilutive employee stock options outstanding during the three and nine months ended September 30, 2024 and 2023.

Fair value is defined as the price that would be received upon sale of an asset or the price paid to transfer a liability, in an orderly transaction between market participants at the measurement date (i.e., the “exit price”). The Company uses a fair value hierarchy that prioritizes the inputs used in valuation techniques to measure fair value into three broad levels. The following is a brief description of each level:

•Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

•Level 2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

•Level 3: Unobservable inputs, including inputs that reflect the reporting entity’s own assumptions.

The Company’s cash and cash equivalents, certain other assets, accounts payable and accrued liabilities, and other liabilities approximate their fair values due to their short-term nature, which are determined to be a Level 1 measurement.

Financial assets and liabilities measured at fair value on a recurring basis are summarized below (in thousands):

The Company uses derivative instruments to manage its exposure to fluctuations in interest rates and foreign currency exchange rates. Fair values of these derivative instruments are estimated using industry standard valuation models. These models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign currency exchange rates, and forward and spot prices for currencies. The Company’s derivative agreements are subject to underlying agreements with master netting arrangements, which provide for the right of offset in the event of default or in the event of bankruptcy of either party to the transactions. The Company reports its assets and liabilities subject to these arrangements on a gross basis for certain derivative agreements.

Certain assets are measured at fair value on a nonrecurring basis. These assets include real estate-owned assets classified as held for sale at the lower of their carrying value or fair value less cost to sell. The fair value of the assets held for sale and estimated selling expenses were determined at the time of initial recognition and in each reporting period using Level 3 measurements based on appraised values using market comparables. The fair value estimate of the assets held for sale was approximately $49.7 million and $70.6 million as of September 30, 2024 and December 31, 2023, respectively.

The table below summarizes fair value estimates for the Company's financial instruments that are not required to be carried at fair value. The total of the fair value calculations presented does not represent, and should not be construed to represent, the underlying value of the Company.

The carrying amounts in the following table are included in the condensed consolidated statements of financial condition as of September 30, 2024 and December 31, 2023 (in thousands):

			September 30, 2024												December 31, 2023
			Carrying Amount						Estimated Fair Value						Carrying Amount						Estimated Fair Value
Financial Assets
Investment in receivable portfolios, net			$	3,719,260					$	3,753,299					$	3,468,432					$	3,515,651
Financial Liabilities
Global senior secured revolving credit facility			7,000						7,000						816,880						816,880
Encore private placement notes			—						—						29,310						28,922
Senior secured notes(1)			2,694,757						2,740,267						1,649,621						1,598,636
Convertible senior notes due October 2025			100,000						128,748						100,000						136,403
Convertible senior notes due March 2029			230,000						231,990						230,000						226,794
Cabot securitisation senior facility			341,041						341,041						324,646						324,646
U.S. facility			150,000						150,000						175,000						175,000
Other borrowings			68,946						68,946						24,904						24,904

_______________________

(1)Carrying amount represents historical cost, adjusted for any related debt discount.

The fair value of investment in receivable portfolios is measured using Level 3 inputs by discounting the estimated future cash flows generated by the Company’s proprietary forecasting models. The key inputs include the estimated future gross cash flow, average cost to collect, and discount rate. The determination of such inputs requires significant judgment, including assessing the assumed market participant’s cost structure, its determination of whether to include fixed costs in its valuation, its collection strategies, and determining the appropriate weighted average cost of capital. The Company evaluates the use of these key inputs on an ongoing basis and refines the data as it continues to obtain better information from market participants in the debt recovery and purchasing business.

The Company’s convertible notes, senior secured notes and private placement notes are carried at historical cost, adjusted for the applicable debt discount. The fair value estimate for the convertible notes incorporates quoted market prices using Level 2 inputs. The fair value of the senior secured notes and private placement notes is estimated using widely accepted valuation techniques, including discounted cash flow analyses using available market information on discount and borrowing rates with similar terms, maturities, and credit ratings. Accordingly, the Company used Level 2 inputs for these debt instrument fair value estimates.

The carrying value of the Company’s senior secured revolving credit facility, securitisation senior facility, U.S. facility, and other borrowings approximates fair value due to the use of current market rates that are repriced frequently, which are determined to be a Level 2 measurement.

The Company may periodically enter into derivative financial instruments to manage risks related to interest rates and foreign currency. Certain of the Company’s derivative financial instruments qualify for hedge accounting treatment.

The following table summarizes the fair value of derivative instruments as recorded in the Company’s condensed consolidated statements of financial condition (in thousands):

			September 30, 2024												December 31, 2023
			Balance Sheet Location						Fair Value						Balance Sheet Location						Fair Value
Derivatives designated as hedging instruments:
Interest rate cap contracts			Other assets						$	286					Other assets						$	14,564
Interest rate swap agreements			Other liabilities						(22,782)						Other liabilities						(22,510)
Cross-currency swap agreements			Other assets						15,090						Other assets						361
Cross-currency swap agreements			Other liabilities						(26,103)						Other liabilities						(28,039)
Derivatives not designated as hedging instruments:
Interest rate cap contracts			—						—						Other assets						2,386
Foreign currency exchange contracts			Other liabilities						(7,225)						—						—

The Company may periodically enter into interest rate swap agreements and interest rate cap contracts to reduce its exposure to fluctuations in interest rates on variable interest rate debt and their impact on earnings and cash flows. Under the swap agreements, the Company receives floating interest rate payments and makes interest payments based on fixed interest rates. Under the cap contracts, the Company receives floating interest rate payments and makes interest payments based on capped interest rates. The Company designates its interest rate swap and interest rate cap instruments as cash flow hedges at inception.

The Company uses cross-currency swap agreements to manage foreign currency exchange risk by converting fixed-rate Euro-denominated borrowings and fixed-rate GBP-denominated borrowings including periodic interest payments and the payment of principal at maturity to fixed-rate USD debt. The cross-currency swap agreements are accounted for as fair value hedges.

The following tables summarize the terms of the derivative instruments designated as hedging instruments as recorded in the Company’s consolidated statements of financial condition:

December 31, 2023

Effective date

Maturity Date

Hedge Designation

Notional Amount

Receive Floating Rate Index

Interest rate cap contracts

2019 Cap

January 2020

June 2024

Cash flow hedge

$441.5 million

3-month EURIBOR

2021 Cap(1)

November 2021

September 2024

Cash flow hedge

$318.3 million

SONIA

2024 Cap

September 2024

September 2026

Cash flow hedge

$324.6 million

SONIA

Interest rate swap agreements

2023 Euro IR Swap

October 2023

January 2028

Cash flow hedge

$110.4 million

3-month EURIBOR

2024 Euro IR Swaps

June 2024

January 2028

Cash flow hedge

$458.1 million

3-month EURIBOR

2023 SOFR IR Swaps

November 2023

October 2026

Cash flow hedge

$150.0 million

1-month SOFR CME Term

Cross-currency swap agreements

2020 Euro Swaps

September 2020

October 2025

Fair value hedge

$386.3 million

—

2023 GBP Swaps

July 2023

February 2026

Fair value hedge

$381.9 million

—

_______________________

(1)The total notional amount of the 2021 Cap was $445.6 million, of which $318.3 million was hedge designated and $127.3 million was not hedge designated as of December 31, 2023.

As discussed in “Note 7: Borrowings,” on October 15, 2024, the Company fully redeemed its Senior Secured Notes due October 2025 (the “2025 Notes”). In connection with the early redemption of the 2025 Notes, the Company settled the corresponding 2020 Euro Swaps on the same date for approximately $33.8 million. As a result of the early settlement, the Company reclassed the remaining OCI balance associated with the 2020 Euro Swaps of approximately $0.8 million into interest expense during the fourth quarter of 2024. Other than stated above, the settlement payment of the 2020 Euro Swaps will not result in any income statement recognition during the fourth quarter of 2024.

The Company expects to reclassify approximately $5.7 million of net derivative loss from OCI into earnings relating to its cash flow designated derivatives within the next 12 months. This amount will vary due to fluctuations in benchmark interest rates.

The following tables summarize the effects of derivatives designated as hedging instruments in the Company’s condensed consolidated financial statements (in thousands):

Derivatives Designated as Hedging Instruments						(Loss) Gain Recognized in OCI												Location of Gain (Loss) Reclassified from OCI into Income (Loss)						Gain (Loss) Reclassified from OCI into Income
						Three Months Ended September 30,																		Three Months Ended September 30,
						2024						2023												2024						2023
Interest rate swap agreements						$	(15,272)					$	—					Interest expense						$	1,078					$	—
Interest rate cap contracts						(2,460)						(9,578)						Interest expense						(382)						(424)
Cross-currency swap agreements						29,718						(26,811)						Interest expense						(997)						(925)
																		Other income (expense)						35,602						(32,401)

From time to time, the Company enters into currency exchange forward contracts to reduce the effects of currency exchange rate fluctuations. These derivative contracts generally mature within one to six months and are not designated as hedge instruments for accounting purposes.

The gains or losses on these unhedged derivative contracts are recognized in other income or expense based on the changes in fair value.

The following table summarizes the effects of derivatives not designated as hedging instruments on the Company’s condensed consolidated statements of income for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Derivatives Not Designated as Hedging Instruments						Location of (Loss) Gain Recognized in Income on Derivative						Amount of (Loss) Gain Recognized in Income
												Three Months Ended September 30,												Nine Months Ended September 30,
												2024						2023						2024						2023
Interest rate cap contract						Other (expense) income						$	(7)					$	(215)					$	267					$	(215)
Foreign currency exchange contract						Other expense						(8,098)						—						(7,225)						—

The Company’s purchased portfolios of loans are grossed-up to their face value with an offsetting allowance and noncredit discount allocated to the individual receivables as the unit of account is at the individual loan level. Since each loan is deeply delinquent and deemed uncollectible at the individual loan level, the Company applies its charge-off policy and fully writes-off the amortized costs (i.e., face value net of noncredit discount) of the individual receivables immediately after purchasing the portfolio. The Company then records a negative allowance that represents the present value of all expected future recoveries for pools of receivables that share similar risk characteristics using a discounted cash flow approach, which ultimately equals the amount paid for a portfolio purchase and presented as “Investment in receivable portfolios, net” in the Company’s condensed consolidated statements of financial condition. The discount rate is an effective interest rate (or “purchase EIR”) based on the purchase price of the portfolio and the expected future cash flows at the time of purchase.

Receivable portfolio purchases are aggregated into pools based on similar risk characteristics. Examples of risk characteristics include financial asset type, collateral type, size, interest rate, date of origination, term, and geographic location. The Company’s static pools are typically grouped into credit card, purchased consumer bankruptcy, and mortgage portfolios. The Company further groups these static pools by geographic location. Once a pool is established, the portfolios will remain in the designated pool unless the underlying risk characteristics change. The purchase EIR of a pool will not change over the life of the pool even if expected future cash flows change.

Revenue is recognized for each static pool over the economic life of the pool. Debt purchasing revenue includes two components:

(1)     Revenue from receivable portfolios, which is the accretion of the discount on the negative allowance due to the passage of time (generally the portfolio balance multiplied by the EIR) and also includes all revenue from zero basis portfolio (“ZBA”) collections, and

The Company measures expected future recoveries based on historical experience, current conditions, reasonable and supportable forecasts, and other quantitative and qualitative factors. Factors that may change the expected future recoveries may include both internal as well as external factors. Internal factors include operational performance, such as capacity and the productivity of the Company’s collection staff. External factors include new laws or regulations, new interpretations of existing laws or regulations, and macroeconomic conditions. The Company continues to reassess its expected future recoveries in each reporting period.

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

			September 30, 2024						December 31, 2023
Amortized cost			$	—					$	—
Negative allowance for expected recoveries			3,719,260						3,468,432
Balance, end of period			$	3,719,260					$	3,468,432

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

			Three Months Ended September 30,												Nine Months Ended September 30,
			2024						2023						2024						2023
Balance, beginning of period			$	3,583,322					$	3,330,986					$	3,468,432					$	3,088,261
Negative allowance for expected recoveries - current period purchases (1)			282,485						230,559						856,891						781,315
Collections applied to investment in receivable portfolios, net (2)			(222,149)						(162,652)						(641,982)						(504,672)
Changes in recoveries (3)			12,675						(17,067)						6,020						(30,054)
Put-backs and recalls			(4,577)						(3,179)						(12,023)						(9,214)
Disposals and transfers to real estate owned			(7,055)						(3,314)						(10,153)						(9,558)
Foreign currency translation adjustments			74,559						(54,789)						52,075						4,466
Balance, end of period			$	3,719,260					$	3,320,544					$	3,719,260					$	3,320,544

_______________________

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

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

(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:

When reassessing the forecasts of expected lifetime recoveries during the three months ended September 30, 2024, management considered, among other factors, historical and current collection performance, changes in consumer behavior, and the macroeconomic environment. Most of the current period collections over-performance was from recent vintages acquired in 2023 and 2024 and did not trigger any significant forecasting adjustments to the estimated remaining collections. Therefore, no significant changes in future expected recoveries were recognized as a result of the recurring forecasting process. The Company recognized approximately $7.8 million of negative changes in expected future recoveries during the three and nine months ended September 30, 2024 resulting from the sale of certain secured mortgage portfolios in September 2024. As a result of the above, the Company recorded net negative changes in expected future recoveries of approximately $10.3 million, and $45.2 million during the three and nine months ended September 30, 2024, respectively. During the three and nine months ended September 30, 2023, the Company recorded approximately $12.8 million and $9.9 million in net negative changes in expected future recoveries, respectively.

Other assets consist of the following (in thousands):

			September 30, 2024						December 31, 2023
Operating lease right-of-use assets			$	61,063					$	67,019
Real estate owned			49,727						70,590
Income tax deposits			44,600						8,735
Prepaid expenses			37,269						32,910
Derivative instruments			15,376						17,311
Deferred tax assets, net			15,149						17,277
Service fee receivables			11,014						9,080
Other			61,224						70,334
Total			$	295,422					$	293,256