(1) The negative allowance balance includes certain portfolios of nonperforming loans for which the Company holds a beneficial interest representing approximately 1% of the balance.

Changes in the negative allowance for expected recoveries by portfolio segment for the three months ended June 30, 2020 were as follows (amounts in thousands):


	For the three months ended June 30, 2020
	Core		Insolvency		Total
Balance at beginning of period	$	2,949,384	$	458,690	$	3,408,074
Initial negative allowance for expected recoveries - portfolio acquisitions ⁽¹⁾	144,721		19,778		164,499
Foreign currency translation adjustment	24,215		(130)		24,085
Recoveries applied to negative allowance ⁽²⁾	(231,435)		(33,492)		(264,927)
Changes in expected recoveries ⁽³⁾	21,251		(1,450)		19,801
Balance at end of period	$	2,908,136	$	443,396	$	3,351,532


	For the three months ended June 30, 2020
	Core		Insolvency		Total
Face value	$	1,288,243	$	96,964	$	1,385,207
Noncredit discount	(160,409)		(7,979)		(168,388)
Allowance for credit losses at acquisition	(983,113)		(69,207)		(1,052,320)
Purchase price	$	144,721	$	19,778	$	164,499


	For the three months ended June 30, 2020
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(983,113)	$	(69,207)	$	(1,052,320)
Writeoffs, net	983,113		69,207		1,052,320
Expected recoveries	144,721		19,778		164,499
Initial negative allowance for expected recoveries	$	144,721	$	19,778	$	164,499


	For the three months ended June 30, 2020
	Core		Insolvency		Total
Recoveries^(a)	$	461,238	$	51,973	$	513,211
Less - amounts reclassified to portfolio income ^(b)	229,803		18,481		248,284
Recoveries applied to negative allowance	$	231,435	$	33,492	$	264,927

(b) The Company reported income on expected recoveries based on the constant effective interest rate in portfolio income on the Company's Consolidated Income Statements.


	For the three months ended June 30, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(97,910)	$	(1,788)	$	(99,698)
Recoveries received in excess of forecast	119,161		338		119,499
Changes in expected recoveries	$	21,251	$	(1,450)	$	19,801

Changes in the negative allowance for expected recoveries by portfolio segment for the six months ended June 30, 2020 were as follows (amounts in thousands):


	For the six months ended June 30, 2020
	Core		Insolvency		Total
Balance at beginning of period	$	3,051,426	$	462,739	$	3,514,165
Initial negative allowance for expected recoveries - portfolio acquisitions ⁽¹⁾	378,408		59,328		437,736
Foreign currency translation adjustment	(95,999)		(9,772)		(105,771)
Recoveries applied to negative allowance ⁽²⁾	(430,473)		(71,110)		(501,583)
Changes in expected recoveries ⁽³⁾	4,774		2,211		6,985
Balance at end of period	$	2,908,136	$	443,396	$	3,351,532


	For the six months ended June 30, 2020
	Core		Insolvency		Total
Face value	$	3,179,386	$	274,418	$	3,453,804
Noncredit discount	(373,699)		(21,011)		(394,710)
Allowance for credit losses at acquisition	(2,427,279)		(194,079)		(2,621,358)
Purchase price	$	378,408	$	59,328	$	437,736


	For the six months ended June 30, 2020
	Core		Insolvency		Total
Allowance for credit losses at acquisition	$	(2,427,279)	$	(194,079)	$	(2,621,358)
Writeoffs, net	2,427,279		194,079		2,621,358
Expected recoveries	378,408		59,328		437,736
Initial negative allowance for expected recoveries	$	378,408	$	59,328	$	437,736


	For the six months ended June 30, 2020
	Core		Insolvency		Total
Recoveries^(a)	$	901,932	$	109,957	$	1,011,889
Less - amounts reclassified to portfolio income ^(b)	471,459		38,847		510,306
Recoveries applied to negative allowance	$	430,473	$	71,110	$	501,583

(b) The Company reported income on expected recoveries based on the constant effective interest rate in portfolio income on the Company's Consolidated Income Statements.


	For the six months ended June 30, 2020
	Core		Insolvency		Total
Changes in expected future recoveries	$	(118,434)	$	(1,890)	$	(120,324)
Recoveries received in excess of forecast	123,208		4,101		127,309
Changes in expected recoveries	$	4,774	$	2,211	$	6,985

In order to evaluate the impact of the COVID-19 pandemic on expectations of future cash collections, the Company considered historical performance, current economic forecasts regarding the duration of the impact to short-term and long-term growth in the various geographies in which the Company operates, and evolving information regarding its effect on economic activity and consumer habits as reopening initiatives occur. The Company also considered current collection activity in its determination to adjust the estimated timing of near term ERC for certain pools. Based on these considerations, the Company’s estimates incorporate changes in the timing of expected cash collections over the next 6 to 18 months.

For the three months ended June 30, 2020, changes in expected recoveries increased $19.8 million. This reflects $119.5 million in recoveries received during the quarter in excess of forecast, partially offset by a $99.7 million decrease to the present value of expected future recoveries. The majority of the decrease reflects the Company's assumption that the overperformance was acceleration in cash collections rather than an increase to total expected collections. Additionally, the Company made forecast adjustments deemed appropriate given the current environment in which the Company operates.

For the six months ended June 30, 2020, changes in expected recoveries increased $7.0 million. This reflects $127.3 million in recoveries in excess of forecast, which was largely due to significant cash collections overperformance during the most recent quarter. This was mostly offset by a $120.3 million decrease in the present value of expected future recoveries. The majority of the decrease reflects the Company's assumption that the current quarter overperformance was primarily due to acceleration in the timing of cash collections rather than an increase to total expected collections. Additionally, the Company made forecast adjustments in both quarters deemed appropriate given the current environment in which the Company operates.

Changes in the Company’s assumptions regarding the duration and impact of COVID-19 to cash collections could change significantly as conditions evolve.

The following information reflects finance receivables, net as previously disclosed in the Company's Quarterly Report on Form 10-Q for the three and six months ended June 30, 2019 which was under previous revenue recognition accounting standard ASC 310-30.


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019

Balance at beginning of period	$	3,177,229	$	3,084,777
Acquisitions of finance receivables ⁽¹⁾	284,448		597,894

Foreign currency translation adjustment	(8,477)		(1,041)
Cash collections	(470,274)		(931,445)
Income recognized on finance receivables	249,219		488,055
Net allowance charges	(1,196)		(7,291)

Balance at end of period	$	3,230,949	$	3,230,949

(1) Includes portfolio purchases adjusted for buybacks and acquisition related costs, and portfolios from the acquisition of a business in Canada made during the first quarter of 2019.

During the three months ended June 30, 2019, the Company acquired finance receivable portfolios with a face value of $1.8 billion for $289.2 million. During the six months ended June 30, 2019, the Company acquired finance receivables portfolios with a face value of $6.6 billion for $608.0 million. At June 30, 2019, the ERC on the receivables acquired during the three and six months ended June 30, 2019 were $513.0 million and $1.02 billion, respectively.

At the time of acquisition and each quarter thereafter, the life of each quarterly accounting pool was estimated based on projected amounts and timing of future cash collections using the proprietary models of the Company. Based upon projections, cash collections expected to be applied to principal were estimated to be as follows for the twelve-month periods ending June 30, (amounts in thousands):


2020	$	845,437
2021	694,169
2023	531,004
2024	393,087
2025	281,166
2026	173,283
2027	101,570
2028	77,943
2029	51,868
2030	35,070
Thereafter	46,352
Total ERC expected to be applied to principal	$	3,230,949

Accretable yield represented the amount of income on finance receivables the Company expected to recognize over the remaining life of its existing portfolios based on estimated future cash flows as of the balance sheet date. Additions represented the original expected accretable yield on portfolios acquired during the period. Net reclassifications from nonaccretable difference to accretable yield primarily resulted from the increase in the Company's estimate of future cash flows. When applicable, net reclassifications to nonaccretable difference from accretable yield resulted from the decrease in the Company's estimates of future cash flows and allowance charges that together exceeded the increase in the Company's estimate of future cash flows.


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Balance at beginning of period	$	3,080,168	$	3,058,445
Income recognized on finance receivables	(249,219)		(488,055)
Net allowance charges	1,196		7,291
Additions from portfolio acquisitions	228,796		464,610
Reclassifications from nonaccretable difference	112,901		132,062
Foreign currency translation adjustment	(829)		(1,340)
Balance at end of period	$	3,173,013	$	3,173,013

The following is a summary of activity within the Company's valuation allowance account, all of which relates to acquired finance receivables, for the three and six months ended June 30, 2019 (amounts in thousands):


	Three Months Ended June 30, 2019		Six Months Ended June 30, 2019
Beginning balance	$	263,324	$	257,148
Allowance charges	5,532		13,509
Reversal of previously recorded allowance charges	(4,336)		(6,218)
Net allowance charges	1,196		7,291
Foreign currency translation adjustment	71		152
Ending balance	$	264,591	$	264,591