What changed in this filing

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Item 1. Financial Statements

2021-11-12 compared with 2021-08-13 · 646 added, 375 removed, 1580 unchanged (39% of the section changed)

3 unchanged sentences

(Dollars in thousands)

Unrestricted cash and cash equivalents (including $ 156.9 million and $ 96.6 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

September 30,

Unrestricted cash and cash equivalents (including $ 93.5 million and $ 96.6 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

$ 166,966  

$ 178,102  

Restricted cash and cash equivalents (including $ 49.8 million and $ 70.2 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

Restricted cash and cash equivalents (including $ 30.9 million and $ 70.2 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

47,808  

1 unchanged sentence

Loans, interest and fees receivable:

Loans, interest and fees receivable, at fair value (including $ 587.6 million and $ 374.2 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

Loans, interest and fees receivable, at fair value (including $ 753.8 million and $ 374.2 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

846,160  

417,098  

Loans, interest and fees receivable, gross (including $ 445.5 million and $ 560.2 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

Loans, interest and fees receivable, gross (including $ 404.1 million and $ 560.2 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

511,140  

667,556  

Allowances for uncollectible loans, interest and fees receivable (including $ 92.2 million and $ 120.9 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

Allowances for uncollectible loans, interest and fees receivable (including $ 76.8 million and $ 120.9 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

( 80,029 )  

Deferred revenue (including $ 6.7 million and $ 10.3 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

Deferred revenue (including $ 7.4 million and $ 10.3 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

( 29,824 )  

15 unchanged sentences

13,776  

Notes payable, net (including $ 911.8 million and $ 827.1 million associated with variable interest entities at June 30, 2021 and December 31, 2020, respectively)

Notes payable, net (including $ 944.5 million and $ 827.1 million associated with variable interest entities at September 30, 2021 and December 31, 2020, respectively)

995,322  

11 unchanged sentences

Preferred stock, no par value, 10,000,000 shares authorized:

Series A preferred stock, 400,000 shares issued and outstanding at June 30, 2021 (liquidation preference - $ 40.0 million);

Series A preferred stock, 400,000 shares issued and outstanding at September 30, 2021 (liquidation preference - $ 40.0 million);

400,000 shares issued and outstanding at December 31, 2020 (Note 4) (1)

5 unchanged sentences

Shareholders' Equity

Series B preferred stock, no par value, 2,800,000 shares issued and outstanding at June 30, 2021 and 0 shares issued and outstanding at December 31, 2020 (liquidation preference - $ 70.0 million) (1)

Series B preferred stock, no par value, 3,188,533 shares issued and outstanding at September 30, 2021 and 0 shares issued and outstanding at December 31, 2020 (liquidation preference - $79.7 million) (1)

Common stock, no par value, 150,000,000 shares authorized:

16,638,161 shares issued and outstanding (including 1,459,233 loaned shares to be returned) at June 30, 2021;

and 16,115,353 shares issued and outstanding (including 1,459,233 loaned shares to be returned) at December 31, 2020

16,553,615 and 16,115,353 shares issued at September 30, 2021 and December 31, 2020, respectively;

15,094,382 and 16,115,353 (including 1,459,233 loaned shares to be returned) shares outstanding at September 30, 2021 and December 31, 2020, respectively

Paid-in capital

1 unchanged sentence

194,950  

Retained deficit

Retained earnings (deficit )

10,259  

Treasury stock, 1,459,233 and 0 shares at September 30, 2021 and December 31, 2020, respectively, at cost

Total shareholders’

14 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Consumer loans, including past due fees

1 unchanged sentence

Other revenue

Total operating revenue

Total operating revenue, net

Other non-operating revenue

8 unchanged sentences

Total operating expense

Loss on repurchase of convertible senior notes

Loss on repurchase and redemption of convertible senior notes

Income before income taxes

Income tax expense

Net loss attributable to noncontrolling interests

Net (income) loss attributable to noncontrolling interests

Net income attributable to controlling interests

7 unchanged sentences

Equity (Deficit) (Unaudited)

For the Three and Six Months Ended June 30, 2021 and June 30, 2020

For the Three and Nine Months Ended September 30, 2021 and September 30, 2020

(Dollars in thousands)

4 unchanged sentences

Paid-In Capital

Retained Deficit

Retained Earnings (Deficit)

Noncontrolling Interests

Class B Preferred Units

Series A Preferred Stock

Balance at December 31, 2020

16,115,353  

$ 194,950  

$ ( 117,666 )  

$ ( 774 )  

$ 76,510  

$ 99,350  

$ 40,000  

Accretion of discount associated with issuance of subsidiary equity

( 75 )  

Preferred dividends

( 4,612 )  

Stock option exercises and proceeds related thereto

494,900  

Compensatory stock issuances, net of forfeitures

39,942  

Deferred stock-based compensation costs

Redemption and retirement of shares

( 9,928 )  

( 297 )  

44,075  

( 48 )  

44,027  

Balance at March 31, 2021

16,640,267  

$ 192,207  

$ ( 73,591 )  

$ ( 822 )  

$ 117,794  

$ 99,425  

$ 40,000  

Accretion of discount associated with issuance of subsidiary equity

( 75 )  

Preferred dividends

( 4,663 )  

Stock option exercises and proceeds related thereto

1 unchanged sentence

Issuance of series B preferred stock, net

2,800,000  

66,148  

Contributions by owners of noncontrolling interests

1 unchanged sentence

Redemption and retirement of shares

( 8,747 )  

( 304 )  

36,876  

( 50 )  

36,826  

Balance at June 30, 2021

2,800,000  

16,638,161  

$ 254,001  

$ ( 36,715 )  

$ ( 868 )  

$ 216,418  

$ 99,500  

$ 40,000  

Accretion of discount associated with issuance of subsidiary equity

( 75 )  

Preferred dividends

( 6,554 )  

Stock option exercises and proceeds related thereto

10,266  

Compensatory stock issuances, net of forfeitures

14,500  

Issuance of series B preferred stock, net

388,533  

Deferred stock-based compensation costs

Redemption and retirement of shares

( 109,312 )  

( 5,193 )  

46,974  

47,097  

Balance at September 30, 2021

3,188,533  

16,553,615  

$ 252,438  

$ 10,259  

$ ( 745 )  

$ 261,952  

$ 99,575  

$ 40,000  

Series B Preferred Stock

3 unchanged sentences

Paid-In Capital

Retained Deficit

Retained Earnings (Deficit)

Noncontrolling Interests

9 unchanged sentences

Redemption and retirement of shares

Comprehensive income

Balance at March 31, 2020

4 unchanged sentences

Redemption and retirement of shares

Comprehensive income

Balance at June 30, 2020

Accretion of discount associated with issuance of subsidiary equity

Preferred dividends

Stock option exercises and proceeds related thereto

Compensatory stock issuances, net of forfeitures

Deferred stock-based compensation costs

Redemption and retirement of shares

Balance at September 30, 2020

See accompanying notes.

2 unchanged sentences

(Dollars in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Operating activities

$ 127,950  

$ 67,286  

Adjustments to reconcile net income to net cash provided by operating activities:

1 unchanged sentence

Provision for losses on loans, interest and fees receivable

24,469  

116,894  

Interest expense from accretion of discount on notes

Income from accretion of merchant fees and discount associated with receivables purchases

( 130,166 )  

Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value

144,981  

73,156  

Amortization of deferred loan costs

Income from equity-method investments

Loss on repurchase of convertible senior notes

( 16 )  

Loss on repurchase and redemption of convertible senior notes

29,439  

Deferred stock-based compensation costs

Lease liability payments

( 7,837 )  

Changes in assets and liabilities:

Increase in uncollected fees on earning assets

( 70,980 )  

Increase in income tax liability

Decrease in accounts payable and accrued expenses

12,085  

15,905  

Increase (decrease) in accounts payable and accrued expenses

Net cash provided by operating activities

139,995  

147,774  

Investing activities

Investments in equity-method investee

( 398 )  

Proceeds from equity-method investee

Proceeds from recoveries on charged off receivables

11,773  

Investments in earning assets

( 1,432,768 )  

Proceeds from earning assets

1,128,653  

760,461  

Purchases and development of property, net of disposals

Net cash used in investing activities

( 294,486 )  

Financing activities

Noncontrolling interests contributions

50,000  

Proceeds from issuance of Series B preferred stock, net of issuance costs

75,270  

Preferred dividends

( 15,582 )  

Proceeds from exercise of stock options

Purchase and retirement of outstanding stock

( 5,794 )  

Proceeds from borrowings

507,227  

249,353  

Repayment of borrowings

Net cash provided by (used in) financing activities

( 452,554 )  

Net cash provided by financing activities

110,313  

33,641  

Effect of exchange rate changes on cash

Net increase in cash and cash equivalents

Net (decrease) increase in cash and cash equivalents

( 44,187 )  

Cash and cash equivalents and restricted cash at beginning of period

258,961  

176,394  

Cash and cash equivalents and restricted cash at end of period

$ 214,774  

$ 176,875  

Supplemental cash flow information

Cash paid for interest

Net cash income tax payments

(Decrease) increase in accrued and unpaid preferred dividends

$ 35,203  

$ 35,824  

Net cash income tax payments (refunds)

$ 16,584  

Increase (decrease) in accrued and unpaid preferred dividends

$ 3,203  

See accompanying notes.

1 unchanged sentence

Notes to Consolidated Financial Statements

June 30, 2021 and 2020

September 30, 2021 and 2020

Description of Our Business

Our accompanying consolidated financial statements include the accounts of Atlanticus Holdings Corporation (the “Company”) and those entities we control.

We are a purpose driven financial technology company.

We are primarily focused on facilitating consumer credit through the use of our financial technology and related services.

59 unchanged sentences

Our Credit and Other Investments segment loans, interest and fees receivable generally are unsecured, while our Auto Finance segment loans, interest and fees receivable generally are secured by the underlying automobiles for which we hold the vehicle title.

We purchased auto loans with outstanding principal of $ 47.8 million, $ 98.3 million, $ 45.2 million and $ 92.6 million for the three and six months ended June 30, 2021 

We purchased auto loans with outstanding principal of $ 47.8 million, $ 146.1 million, $ 47.1 million and $ 139.7 million for the three and nine months ended September 30, 2021 

and 2020, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

As of June 30, 2021 and 

December 31, 2020 , the weighted average remaining accretion period for the $ 31.3 million and $ 39.5 million of deferred revenue reflected in the consolidated balance sheets was 15  months and 14  months, respectively.

Included within deferred revenue, are merchant fees and discounts on purchased loans of $ 24.1 million and $ 28.2 million as of June 30, 2021 and 

As of September 30, 2021 and 

December 31, 2020 , the weighted average remaining accretion period for the $ 29.8  million and $ 39.5 million of deferred revenue reflected in the consolidated balance sheets was 15  months and 14  months, respectively.

Included within deferred revenue, are merchant fees and discounts on purchased loans of $ 22.0  million and $ 28.2 million as of September 30, 2021 and 

December 31, 2020 , respectively.

As a result of the recent COVID- 19 pandemic and subsequent declaration of a national emergency on March 13, 2020 under the National Emergencies Act, certain consumers have been offered the ability to defer their payment without penalty during the national emergency period.

On March 22, 2020, the federal bank regulatory agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus”, ("COVID- 19 Guidance").

As a result of the COVID- 19 pandemic and subsequent declaration of a national emergency on March 13, 2020 under the National Emergencies Act, certain consumers have been offered the ability to defer their payment without penalty during the national emergency period.

The COVID- 19 Guidance encourages financial institutions to work prudently with borrowers that may be unable to meet their contractual obligations because of the effects of COVID- 19.

1 unchanged sentence

Receivables enrolled in these short-term payment deferrals continue to accrue interest and their delinquency status will not change through the deferment period.

Through June 30, 2021 we continue to actively work with consumers that indicate hardship as a result of COVID- 19;

 however, the number of impacted consumers continues to be a diminishing part of our overall receivable base.

Through September 30, 2021 we continued to actively work with consumers that indicated hardship as a result of COVID- 19;

 however, the number of impacted consumers continued to be a diminishing part of our overall receivable base.

In order to establish appropriate reserves for this population, we considered various factors such as subsequent payment behavior and additional requests by the consumer for further deferrals or hardship claims.

A roll-forward (in millions) of our allowance for uncollectible loans, interest and fees receivable by class of receivable is as follows: 

For the Three Months Ended June 30, 2021

For the Three Months Ended September 30, 2021

Other Unsecured Lending Products

14 unchanged sentences

$ ( 19.6 )  

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Other Unsecured Lending Products

9 unchanged sentences

( 5.5 )  

( 4.3 )  

Balance at end of period

2 unchanged sentences

$ ( 19.6 )  

As of June 30, 2021

As of September 30, 2021

Other Unsecured Lending Products

18 unchanged sentences

$ 510.8  

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Other Unsecured Lending Products

15 unchanged sentences

$ ( 33.1 )  

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Other Unsecured Lending Products

37 unchanged sentences

Recoveries, noted above, consist of amounts received from the efforts of third -party collectors we employ and through the sale of charged-off accounts to unrelated third -parties. All proceeds received, associated with charged-off accounts, are credited to the allowance for uncollectible loans, interest and fees receivable and effectively offset our provision for losses on loans, interest and fees receivable recorded at net realizable value on our consolidated statements of operations.

For the three and six months ended June 30, 2021, $ 2.7 million and $ 5.1 million, respectively, of our recoveries noted above related to collections from third -party collectors we employ and $ 3.3 million and $ 4.6 million, respectively, related to sales of charged-off accounts to unrelated third -parties.

For the three and months ended June 30, 2020, $ 3.8 million and $ 7.0  million, respectively, of our recoveries noted above related to collections from third -party collectors we employ and $ 7.4 million and $ 8.9 million, respectively, related to sales of charged-off accounts to unrelated third -parties.

An aging of our delinquent loans, interest and fees receivable, gross (in millions) by class of receivable as of June 30, 2021 and 

For the three and nine months ended September 30, 2021, $ 1.8  million and $ 6.9  million, respectively, of our recoveries noted above related to collections from third -party collectors we employ and $ 1.1  million and $ 5.7  million, respectively, related to sales of charged-off accounts to unrelated third -parties.

For the three and months ended September 30, 2020, $ 2.8 million and $ 9.8  million, respectively, of our recoveries noted above related to collections from third -party collectors we employ and $ 2.9  million and $ 11.8  million, respectively, related to sales of charged-off accounts to unrelated third -parties.

An aging of our delinquent loans, interest and fees receivable, gross (in millions) by class of receivable as of September 30, 2021 and 

December 31, 2020  is as follows:

As of June 30, 2021

As of September 30, 2021

Other Unsecured Lending Products

1 unchanged sentence

$ 16.8  

$ 21.0  

60-89 days past due

35 unchanged sentences

The following table details by class of receivable, the number and amount of modified loans, including TDRs that have been re-aged, as of 

June 30, 2021 and 

September 30, 2021 and 

December 31, 2020 :

June 30, 2021

September 30, 2021

December 31, 2020

38 unchanged sentences

We do not separately reserve or impair these receivables outside of our general reserve process.

The Company modified 52,686 and 62,040 accounts in the amount of $ 57.4 million and $ 74.4 million during the twelve month periods ended June 30, 2021  and June 30, 2020 , respectively, that qualified as TDRs.

The Company modified 57,142 and 66,667 accounts in the amount of $ 62.2 million and $ 78.2 million during the twelve month periods ended September 30, 2021  and September 30, 2020 , respectively, that qualified as TDRs.

The following table details by class of receivable, the number of accounts and balance of loans that completed a modification (including those that were classified as TDRs) within the prior twelve months and subsequently defaulted.

Twelve Months Ended

June 30, 2021

June 30, 2020

September 30, 2021

September 30, 2020

Point-of-sale

12 unchanged sentences

As a result of this agreement, we were able to extend the payment terms associated with our growing marketing spend between 10 - 37 months. 

We experienced effective tax rates of 21.6 % and 18.1 %, for the three and six months ended June 30, 2021, compared to 17.7 % and 18.0 % for the three and six months ended June 30, 2020. 

Our effective tax rate for the three months ended June 30, 2021, 

is above the statutory rate due to state and foreign income tax expense, significantly offset, however, by ( 1 ) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes, and ( 2 ) the exclusion from taxable income of benefits received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.

These same two items served to offset the effects of state and foreign income tax expense and executive compensation deduction limits experienced in the first quarter of 2021 under Section 162 (m) of the Internal Revenue Code of 1986 on our effective tax rate for the six months ended June 30, 2021.

Also offsetting such effects and thereby causing our effective tax rate to be below the statutory rate for the six months ended June 30, 2021, are ( 1 ) deductions in the first quarter of 2021 associated with the exercise of stock options and the vesting of restricted stock at stock fair values significantly exceeding such share-based awards’

grant date values;

and ( 2 ) our release of state tax valuation allowances in the first quarter of 2021.

Our effective tax rates for the three and six months ended June 30, 2020 

We experienced effective tax rates of 18.7 % and 18.3 %, for the three and nine months ended September 30, 2021, compared to 19.6 % and 18.9 % for the three and nine months ended September 30, 2020. 

Our effective tax rates for the three and nine months ended September 30, 2021, 

are below the statutory rate principally due to ( 1 ) deductions associated with the exercise of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’

grant date values and ( 2 ) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes. 

Offsetting these two items for the three and nine months ended September 30, 2021, are the effects on our effective tax rate of state and foreign income tax expense and executive compensation deduction limitations under Section 162 (m) of the Internal Revenue Code of 1986.

Additionally, certain state tax valuation allowance releases and benefits received under the Coronavirus Aid, Relief, and Economic Security (CARES) Act in prior quarters of 2021 contributed to our effective tax rate being lower than the statutory rate for the nine months ended September 30, 2021.

Our effective tax rates for the three and nine months ended September 30, 2020, 

were below the statutory rate principally due to ( 1 ) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and ( 2 ) deductions associated with the exercise of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’

3 unchanged sentences

We likewise report within such line item the reversal of interest expense associated with our accrued liabilities for uncertain tax positions to the extent we resolve such liabilities in a manner favorable to our accruals therefor.

We had de minimis interest expense or reversals thereof during the three and six months ended June 30, 2021, and 2020.

We had de minimis interest expense or reversals thereof during the three and nine months ended September 30, 2021, and 2020.

Revenue Recognition and Revenue from Contracts with Customers

8 unchanged sentences

Other revenue includes revenues associated with ancillary product offerings, interchange revenues and servicing income. We recognize these fees as income in the period earned.

Loss on repurchase of convertible senior notes

In periods where we repurchase outstanding 5.875 % convertible senior notes (“convertible senior notes”), we record any discount or premium paid for the repurchase (including accrued interest) relative to the amortized book value of the notes. In the three and six months ended June 30, 2021, we repurchased $ 6.4 million and $ 21.1 million, respectively, in face amount of our outstanding convertible senior notes for $ 10.2 million and $ 28.9 , respectively, million in cash (including accrued interest). The repurchase resulted in a loss of approximately $ 5.4 million and $ 13.3 million (including the convertible senior notes’

Loss on repurchase and redemption of convertible senior notes

In periods where we repurchased or redeemed outstanding 5.875 % convertible senior notes (“convertible senior notes”), we recorded any discount or premium paid for the repurchase or redemption (including accrued interest) relative to the amortized book value of the notes. In the three and nine months ended September 30, 2021, we repurchased or redeemed $ 12.7 million and $ 33.8 million, respectively, in face amount of our outstanding convertible senior notes for $ 25.4  million and $ 54.3 million, respectively, in cash (including accrued interest). The repurchase and redemption resulted in an aggregate loss of approximately $ 16.2  million and $ 29.4 million (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase), respectively.

Upon acquisition, the notes were retired.

See Note 10, "Convertible Senior Notes" for more information.

Other non-operating revenue

1 unchanged sentence

Revenue from Contracts with Customers

Components (in thousands) of our revenue from contracts with customers is as follows:

For the Three Months Ended June 30, 2021

Components (in thousands) of our revenue from contracts with customers are as follows:

For the Three Months Ended September 30, 2021

Other Investments

8 unchanged sentences

( 1 ) Interchange revenue is presented net of customer reward expense.

For the Six Months Ended June 30, 2021

For the Nine Months Ended September 30, 2021

Other Investments

8 unchanged sentences

( 1 ) Interchange revenue is presented net of customer reward expense.

For the Three Months Ended June 30, 2020

For the Three Months Ended September 30, 2020

Other Investments

8 unchanged sentences

( 1 ) Interchange revenue is presented net of customer reward expense.

For the Six Months Ended June 30, 2020

For the Nine Months Ended September 30, 2020

Other Investments

14 unchanged sentences

In May 2019, the FASB issued ASU 2019 - 05, which allows entities to measure assets in the scope of ASC 326 - 20, except held to maturity securities, using the fair value option when they adopt the new credit impairment standard.

The election can be made on an instrument by instrument basis.

The standard will be adopted on a prospective basis with a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective.

The election can be made on an instrument by instrument basis. 

ASU 2016 - 13 (and ASU 2019 - 05 ) was initially effective for annual and interim periods beginning after December 15, 2019, with early adoption permitted.

The FASB recently delayed the effective date of this standard until annual and interim periods beginning after December 15, 2022 for non-accelerated and smaller reporting company filers, with early adoption permitted for smaller reporting companies (among others).

We are currently in the process of reviewing accounting interpretations, including the recently added fair value option, expected data requirements and necessary changes to our loss estimation methods, processes and systems.

This standard is expected to result in an increase to our allowance for loan losses for our amortized cost receivables given the change to expected losses for the estimated life of the financial asset.

If the fair value option is elected for some or all of our eligible receivables, we would expect more potential volatility in the recorded value of the assets as these receivables are remeasured each period.

The FASB delayed the effective date of this standard until annual and interim periods beginning after December 15, 2022 for filers that qualified as smaller reporting companies at the time of the delay, with early adoption permitted.

We plan to adopt ASU 2016 - 13 beginning January 1, 2022 utilizing the fair value option for all receivables currently measured at amortized cost. 

This standard is expected to result in more potential volatility in the recorded value of the assets as these receivables are remeasured each period. 

The impact upon adoption is expected to result in an increase to our opening retained earnings.

The extent of the financial statement impact will depend on the asset quality of the portfolio, and economic conditions and forecasts at adoption.

8 unchanged sentences

and ( 2 ) nonrecognized, or those that provide evidence with respect to conditions that did not exist at the date of the balance sheet but arose subsequent to that date. 

As described in greater detail under Note 4, "Shareholders' Equity and Preferred Stock," the Company issued 388,533 shares of Series B Cumulative Perpetual Preferred Stock on July 8, 2021.

We have evaluated subsequent events occurring after June 30, 2021 , and based on our evaluation we did not identify any recognized or nonrecognized subsequent events that would have required further adjustments to our consolidated financial statements, other than those disclosed above.

We have evaluated subsequent events occurring after September 30, 2021 ,and based on our evaluation we did not identify any recognized or nonrecognized subsequent events that would have required further adjustments to our consolidated financial statements.

Segment Reporting

1 unchanged sentence

Summary operating segment information (in thousands) is as follows:

Three Months Ended June 30, 2021

Three Months Ended September 30, 2021

Credit and Other Investments

Consumer loans, including past due fees

$ 132,747  

$ 8,430  

$ 141,177  

Fees and related income on earning assets

54,065  

54,085  

Other revenue

1 unchanged sentence

Total revenue

195,127  

203,949  

Interest expense

( 12,109 )  

( 261 )  

Provision for losses on loans, interest and fees receivable recorded at net realizable value

( 9,192 )  

( 46 )  

Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value

( 58,727 )  

$ 115,099  

$ 8,515  

$ 123,614  

Income before income taxes

$ 55,134  

$ 2,744  

$ 57,878  

Income tax expense

Six Months Ended June 30, 2021

$ ( 10,117 )  

$ ( 664 )  

Nine Months Ended September 30, 2021

Credit and Other Investments

Consumer loans, including past due fees

$ 341,113  

$ 25,014  

$ 366,127  

Fees and related income on earning assets

140,603  

140,658  

Other revenue

19,552  

20,546  

Other non-operating revenue

Total revenue

504,672  

26,117  

530,789  

Interest expense

( 37,668 )  

( 790 )  

Provision for losses on loans, interest and fees receivable recorded at net realizable value

( 24,495 )  

Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value

( 144,981 )  

$ 297,528  

$ 25,353  

$ 322,881  

Income before income taxes

$ 148,410  

$ 8,208  

$ 156,618  

Income tax expense

Three Months Ended June 30, 2020

$ ( 26,670 )  

$ ( 1,998 )  

$ 1,400,701  

$ 82,243  

$ 1,482,944  

Three Months Ended September 30, 2020

Credit and Other Investments

Consumer loans, including past due fees

$ 95,684  

$ 7,959  

$ 103,643  

Fees and related income on earning assets

35,471  

35,488  

Other revenue

1 unchanged sentence

Total revenue

136,221  

144,488  

Interest expense

( 12,438 )  

( 240 )  

Provision for losses on loans, interest and fees receivable recorded at net realizable value

( 16,713 )  

( 315 )  

Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value

( 32,298 )  

$ 74,772  

$ 7,712  

$ 82,484  

Income before income taxes

$ 45,803  

$ 2,460  

$ 48,263  

Income tax expense

Six Months Ended June 30, 2020

$ ( 8,821 )  

$ ( 635 )  

Nine Months Ended September 30, 2020

Credit and Other Investments

Consumer loans, including past due fees

$ 283,143  

$ 23,759  

$ 306,902  

Fees and related income on earning assets

102,484  

102,532  

Other revenue

10,358  

Other non-operating revenue

Total revenue

396,130  

24,612  

420,742  

Interest expense

( 37,590 )  

( 924 )  

Provision for losses on loans, interest and fees receivable recorded at net realizable value

( 115,142 )  

( 1,752 )  

Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value

( 73,156 )  

$ 170,242  

$ 21,936  

$ 192,178  

Income before income taxes

$ 76,794  

$ 6,208  

$ 83,002  

Income tax expense

$ ( 14,100 )  

$ ( 1,616 )  

$ 960,527  

$ 80,048  

$ 1,040,575  

Shareholders’

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Hanna, III and members of his immediate family are the beneficiaries of these other two trusts.

During the three and six months ended June 30, 2021 , we repurchased and contemporaneously retired 8,747  and 18,675 shares of our common stock at an aggregate cost of $ 304,000  and $ 601,000 , respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations. During the three and six months ended June 30, 2020, we repurchased and contemporaneously retired 10,999 and 85,723 shares of our common stock at an aggregate cost of $ 112,000  and $ 671,000 , respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.

We had 1,459,233 loaned shares outstanding at June 30, 2021 and 

During the three and nine months ended September 30, 2021 , we repurchased and contemporaneously retired 109,312 and 127,987 shares of our common stock at an aggregate cost of $ 5,193,000  and $ 5,794,000 , respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations. During the three and nine months ended September 30, 2020, we repurchased and contemporaneously retired 48,275 and 133,998 shares of our common stock at an aggregate cost of $ 492,000  and $ 1,163,000 , respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.

We had 1,459,233 loaned shares outstanding at 

December 31, 2020 , which were originally lent in connection with our November 2005 issuance of convertible senior notes.

We retire lent shares as they are returned to us.

As of September 30, 2021, all loaned shares had been returned to us and are included as Treasury stock on our consolidated balance sheets. 

November 14, 2019, a wholly-owned subsidiary issued 50.5 million Class B preferred units at a purchase price of $ 1.00 per unit to an unrelated third party.

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The Company also granted the Underwriters an option to purchase additional shares of Series B Cumulative Perpetual Preferred Stock during the 30 days following the date of the Underwriting Agreement. The Company raised gross proceeds of $ 70.0 million before deducting underwriting discounts, the structuring fee and other offering expenses.

The Series B Cumulative Perpetual Preferred Stock may be redeemed at our election (after 5 years) in whole or from time to time in part, by paying $ 25.00 per share, plus any accumulated and unpaid dividends.

Dividends on the Series B Cumulative Perpetual Preferred Stock will be payable quarterly and are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders.

On July 8, 2021, the Company issued an additional 

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Upon the closing of the second issuance, the Company raised additional gross proceeds of $ 9.7 million before deducting underwriting discounts, the structuring fee and other offering expenses.

Investment in Equity-Method Investee

Our equity-method investment outstanding at June 30, 2021 consists of our 66.7 % interest in a joint venture formed to purchase a credit card receivable portfolio.

In the following tables, we summarize (in thousands) balance sheet and results of operations data for our equity-method investee:

June 30, 2021

December 31, 2020

Our equity-method investment outstanding at December 31, 2020 consisted of our 66.7 % interest in a joint venture formed to purchase a credit card receivable portfolio.

On September 30, 2021, we acquired the outstanding noncontrolling interest.

In the following tables, we summarize (in thousands) balance sheet and results of operations data for this equity-method investee:

September 30, 2021

December 31, 2020  

Loans, interest and fees receivables, at fair value

$ 1,994  

$ 2,105  

Total liabilities

Members’

Three Months Ended June 30,

Six Months Ended June 30,

Net income (loss)

Net income (loss) attributable to our equity investment investee

$ 2,095  

Three Months Ended September 30,

Nine Months Ended September 30,

Net income attributable to our equity investment investee

Fair Values of Assets and Liabilities

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Additionally, we may adjust our models to reflect macro events that we believe market participants would consider relevant.

With the aforementioned market impacts of COVID- 19 and related economic impacts, we included expected market degradation in our model to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in chargeoffs and decrease in payments) above the level that historical trends would suggest. 

We previously elected the fair value option with respect to our credit card loans, interest and fees receivable portfolios, the retained interests in which we historically recorded at fair value under securitization structures that were off balance sheet prior to accounting rules changes requiring their consolidation into our financial statements.

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The table below summarizes (in thousands) by fair value hierarchy the 

June 30, 2021 and 

September 30, 2021 and 

December 31, 2020 fair values and carrying amounts of ( 1 ) our assets that are required to be carried at fair value in our consolidated financial statements and ( 2 ) our assets not carried at fair value, but for which fair value disclosures are required:

Assets –

As of June 30, 2021 (1)

As of September 30, 2021 (1)

Quoted Prices in Active Markets for Identical Assets (Level 1)

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Loans, interest and fees receivable, net for which it is practicable to estimate fair value

$ 475,970  

$ 401,287  

Loans, interest and fees receivable, at fair value

$ 846,160  

Assets –

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Loans, interest and fees receivable, net for which it is practicable to estimate fair value

$ 586,908  

$ 503,139  

Loans, interest and fees receivable, at fair value

$ 417,098  

For cash, deposits and investments in equity securities, the carrying amount is a reasonable estimate of fair value.

For those asset classes above that are required to be carried at fair value in our consolidated financial statements, gains and losses associated with fair value changes are detailed on our consolidated statements of operations as a component of "Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value". For our loans, interest and fees receivable included in the above tables, we assess the fair value of these assets based on our estimate of future cash flows net of servicing costs, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk.

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the six months ended June 30, 2021  and 2020 :

Loans, Interest and Fees Receivables, at Fair Value

Balance at January 1,

Total gains—realized/unrealized:

Net revaluations of loans, interest and fees receivable, at fair value

Chargeoffs, net of recoveries

Finance and fees

Balance at June 30,

$ 417,098  

$ 4,386  

Net revaluations of loans, interest and fees receivable, at fair value, included in earnings

(83,052 )  

Chargeoffs, net of recoveries, included in earnings

( 62,627 )  

1,137,207  

481,212  

( 796,896 )  

Finance and fees, included in earnings

234,430  

62,487  

Balance at September 30,

$ 846,160  

$ 310,784  

The unrealized gains and losses for assets within the Level 3 category presented in the tables above include changes in fair value that are attributable to both observable and unobservable inputs.

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Interest income on receivables underlying our asset classes that are carried at fair value in our consolidated financial statements is recorded in Revenue - Consumer loans, including past due fees in our consolidated statements of operations.

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) quantitative information about the valuation techniques and the inputs used in the fair value measurement as of June 30, 2021 and 

December 31, 2020 :

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Fair Value Measurement

Fair Value at June 30, 2021 (in thousands)

Fair Value at September 30, 2021 (in thousands)  

Valuation Technique

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Loans, interest and fees receivable, at fair value

$ 846,160  

Discounted cash flows

Gross yield, net of finance charge charge-offs

22.9% to 54.1% (42.6%)

5.1% to 11.6% (9.4%)

21.3% to 47.3% (40.3%)  

5.1% to 12.5% (10.0%)  

Expected principal credit loss rate

5.3% to 31.7% (26.5%)

6.6% to 27.0% (23.7%)  

Servicing rate

3.2% to 11.3% (4.5%)

3.3% to 14.8% (4.4%)  

Discount rate

12.7% to 13.5% (13.2%)

12.4% to 13.5% (13.0%)  

Quantitative Information about Level 3 Fair Value Measurements

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Loans, interest and fees receivable, at fair value

$ 417,098  

Discounted cash flows

Gross yield, net of finance charge charge-offs

22.7% to 56.5% (43.3%)

3.9% to 11.4% (8.5%)

22.7% to 56.5% (43.3%)  

3.9% to 11.4% (8.5%)  

Expected principal credit loss rate

6.9% to 31.4% (24.8%)

Servicing rate

2.9% to 14.2% (4.3%)

Discount rate

12.8% to 13.5% (13.3%)

Valuations and Techniques for Liabilities

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the liability.

The table below summarizes (in thousands) by fair value hierarchy the June 30, 2021 and 

The table below summarizes (in thousands) by fair value hierarchy the September 30, 2021 and 

December 31, 2020 fair values and carrying amounts of ( 1 ) our liabilities that are required to be carried at fair value in our consolidated financial statements and ( 2 ) our liabilities not carried at fair value, but for which fair value disclosures are required:

Liabilities –

As of June 30, 2021

As of September 30, 2021

Quoted Prices in Active Markets for Identical Assets (Level 1)

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Revolving credit facilities

$ 977,901  

Amortizing debt facilities

$ 17,421  

Convertible senior notes

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Notes payable associated with structured financings, at fair value

$ 2,221  

Liabilities –

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Revolving credit facilities

$ 857,068  

Amortizing debt facilities

$ 25,542  

Convertible senior notes

$ 41,284  

$ 24,386  

Liabilities carried at fair value

Notes payable associated with structured financings, at fair value

$ 2,919  

For our notes payable, we assess the fair value of these liabilities based on our estimate of future cash flows generated from their underlying credit card receivables collateral, net of servicing compensation required under the note facilities, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk.

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for further discussion on our other notes payable.

For our material Level 3 liabilities carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the six months ended June 30, 2021 and 2020 .

Notes Payable Associated with Structured Financings, at Fair Value

Balance at January 1,

Total (gains) losses—realized/unrealized:

Net revaluations of notes payable associated with structured financings, at fair value

$ 2,919  

$ 3,920  

Net revaluations of notes payable associated with structured financings, at fair value, included in earnings

(698 )  

Repayments on outstanding notes payable, net

Balance at June 30,

Balance at September 30,

$ 2,221  

$ 3,367  

The unrealized gains and losses for liabilities within the Level 3 category presented in the table above include changes in fair value that are attributable to both observable and unobservable inputs.

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Accrued interest expense on notes payable underlying our notes payable associated with structured financings, at fair value is recorded in Interest expense in our consolidated statements of operations.

For material Level 3 liabilities carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) quantitative information about the valuation techniques and the inputs used in the fair value measurement as of June 30, 2021 and 

December 31, 2020 :

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Fair Value Measurement

Fair Value at June 30, 2021 (in thousands)

Fair Value at September 30, 2021 (in thousands)  

Valuation Technique

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Notes payable associated with structured financings, at fair value

$ 2,221  

Discounted cash flows

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Fair Value Measurement

Fair Value at December 31, 2020 (in thousands)

Valuation Technique

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Notes payable associated with structured financings, at fair value

$ 2,919  

Discounted cash flows

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Other Relevant Data

Other relevant data (in thousands) as of June 30, 2021 and 

Other relevant data (in thousands) as of September 30, 2021 and 

December 31, 2020 concerning certain assets and liabilities we carry at fair value are as follows:

As of June 30, 2021

Loans, Interest and Fees Receivable at Fair Value

Loans, Interest and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value

As of September 30, 2021

Loans, Interest and Fees Receivable at Fair Value  

Loans, Interest and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value  

Aggregate unpaid gross balance of loans, interest and fees receivable that are reported at fair value

$ 1,850  

$ 1,026,517  

Aggregate unpaid principal balance included within loans, interest and fees receivable that are reported at fair value

$ 1,774  

$ 951,905  

Aggregate fair value of loans, interest and fees receivable that are reported at fair value

$ 1,485  

$ 844,675  

Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)

$ 2,199  

Unpaid principal balance of receivables within loans, interest and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans, interest and fees receivable

$ 34,576  

As of December 31, 2020

Loans, Interest and Fees Receivable at Fair Value

Loans, Interest and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value

Loans, Interest and Fees Receivable at Fair Value  

Loans, Interest and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value  

Aggregate unpaid gross balance of loans, interest and fees receivable that are reported at fair value

$ 515,434  

Aggregate unpaid principal balance included within loans, interest and fees receivable that are reported at fair value

$ 487,779  

Aggregate fair value of loans, interest and fees receivable that are reported at fair value

$ 416,558  

Aggregate fair value of receivables carried at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies)

$ 1,847  

$ 12,972  

Notes Payable

Notes Payable Associated with Structured Financings, at Fair Value as of June 30, 2021

Notes Payable Associated with Structured Financings, at Fair Value as of September 30, 2021

Notes Payable Associated with Structured Financings, at Fair Value as of December 31, 2020

Aggregate unpaid principal balance of notes payable

$ 101,314  

Aggregate fair value of notes payable

$ 2,221  

$ 2,919  

Variable Interest Entities

The following table presents a summary of VIEs in which we had continuing involvement or held a variable interest (in millions):

June 30, 2021

September 30, 2021

December 31, 2020

Unrestricted cash and cash equivalents

$ 93.5  

$ 96.6  

Restricted cash and cash equivalents

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Allowances for uncollectible loans, interest and fees receivable

( 76.8 )  

Deferred revenue

( 7.4 )  

Total Assets held by VIEs

$ 1,198.1  

$ 970.0  

Notes Payable, net held by VIEs

$ 944.5  

$ 827.1  

Notes Payable, at fair value held by VIEs

Maximum exposure to loss due to involvement with VIEs

$ 1,086.5  

$ 864.4  

We have operating leases primarily associated with our corporate offices and regional service centers as well as for certain equipment.

Our leases have remaining lease terms of 1 to 5 years, some of which include options, at our discretion, to extend the leases for additional periods generally on one -year revolving periods.

Our leases have remaining lease terms of 1 to 5  years, some of which include options, at our discretion, to extend the leases for additional periods generally on one -year revolving periods.

Other leases allow for us to terminate the lease based on appropriate notification periods.

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The components of lease expense associated with our lease liabilities and supplemental cash flow information related to those leases were as follows (dollars in thousands):

For the Three Months Ended June 30,

For the Six Months Ended June 30,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Operating lease cost, gross

$ 1,740  

$ 1,710  

$ 5,187  

$ 5,155  

Sublease income

( 1,292 )  

( 1,334 )  

( 3,876 )  

Net Operating lease cost

$ 1,311  

$ 1,254  

Cash paid under operating leases, gross

$ 2,635  

$ 2,588  

$ 7,837  

$ 7,689  

Weighted average remaining lease term - months

Weighted average discount rate

As of June 30, 2021 , maturities of lease liabilities were as follows (in thousands):

As of September 30, 2021 , maturities of lease liabilities were as follows (in thousands):

Gross Lease Payment

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Net Lease Payment

2021 (excluding the six months ended June 30, 2021)

2021 (excluding the nine months ended September 30, 2021)

$ 2,633  

$ ( 1,855 )  

( 3,112 )  

Total lease payments

( 4,967 )  

Less imputed interest

( 1,075 )  

$ 7,231  

In addition, we occasionally lease certain equipment under cancelable and non-cancelable leases, which are accounted for as capital leases in our consolidated financial statements.

As of June 30, 2021 , we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

As of September 30, 2021 , we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

In August 2021, we entered into an operating lease agreement for our corporate headquarters in Atlanta, Georgia with an unaffiliated third party. 

The new lease covers approximately 73,000 square feet and commences in June 2022 for a 146  month term. The total commitment under the new lease is approximately $ 27.8 million and is not included in the table above.

A right-of-use asset and liability will be recorded at the commencement date of the lease. 

Notes Payable

Notes Payable, at Face Value and Notes Payable to Related Parties

Other notes payable outstanding as of June 30, 2021 and 

Notes Payable, at Face Value

Other notes payable outstanding as of September 30, 2021 and 

December 31, 2020 that are secured by the financial and operating assets of either the borrower, another of our subsidiaries or both, include the following, scheduled (in millions);

except as otherwise noted, the assets of our holding company (Atlanticus Holdings Corporation) are subject to creditor claims under these scheduled facilities:

June 30, 2021

September 30, 2021

December 31, 2020

Revolving credit facilities at a weighted average interest rate equal to 4.6 % as of June 30, 2021 ( 4.8 % as of December 31, 2020) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 1,063.7 million as of June 30, 2021 ($ 943.6 million as of December 31, 2020)

Revolving credit facilities at a weighted average interest rate equal to 4.5% as of September 30, 2021 ( 4.8% as of December 31, 2020) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 1,194.1 million as of September 30, 2021 ($ 943.6 million as of December 31, 2020)

Revolving credit facility, not to exceed $ 55.0 million (expiring November 1, 2023 ) (1) (2) (3)

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Revolving credit facility, not to exceed $ 300.0 million (expiring December 15, 2026 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 75.0 million (expiring March, 2025 ) (3) (4) (5) (6)

Other facilities

Other debt with a weighted average interest rate equal to 5.5 %

Unsecured term debt (expiring August 26, 2024 ) with a weighted average interest rate equal to 8.0 % (3)

Amortizing debt facility (expiring September 30, 2021 ) with a weighted average interest rate equal to 4.6 % (2) (3) (4) (5)

Amortizing debt facility (repaid in September 2021 ) (2) (3) (4) (5)

Total notes payable before unamortized debt issuance costs and discounts

1,003.4  

Unamortized debt issuance costs and discounts

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Creditors do not have recourse against the general assets of the Company but only to the collateral within the VIEs.

As of June 30, 2021 , the LIBOR rate was 0.10 % and the prime rate was 3.25 %.

October 2015, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 50.0 million revolving borrowing limit that can be drawn to the extent of outstanding eligible principal receivables (of which $ 23.6 million was drawn as of June 30, 2021).

* As of September 30, 2021 , the LIBOR rate was 0.08 % and the prime rate was 3.25 %.

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to LIBOR plus 3.0 %.

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The facility is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

October 2016, we (through a wholly owned subsidiary) entered a revolving credit facility with an initial $ 40.0 million borrowing limit available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $ 36.1  million was drawn as of June 30, 2021).

This facility is secured by the financial and operating assets of CAR and accrues interest at an annual rate equal to LIBOR plus a range between 2.4 % and 3.0 % based on certain ratios.

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In periods subsequent to October 2016, we amended the original agreement to either extend the maturity date and/or expand the capacity of this revolving credit facility.

As of June 30, 2021, the borrowing limit was $ 55.0  million and the facility matures on November 1, 2023.

As of September 30, 2021, the borrowing limit was $ 55.0  million and the facility matures on November 1, 2023.

There were no other material changes to the existing terms or conditions as a result of these amendments and the new maturity date and borrowing limit are reflected in the table above.

February 2017, we (through a wholly owned subsidiary) established a program under which we sell certain receivables to a consolidated trust in exchange for notes issued by the trust.

The notes are secured by the receivables and other assets of the trust.

The notes were secured by the receivables and other assets of the trust.

Simultaneously with the establishment of the program, the trust issued a series of variable funding notes and sold an aggregate amount of up to $ 90.0 million (subsequently reduced to $ 70.0 million) of such notes to an unaffiliated third party.

The facility was repaid in May 2021.

In connection with the repayment, we removed an accrual of $ 1.5 million, 

associated with a contingent liability incurred with the issuance of the notes. Removal of the contingent liability was recorded as a component of Other non-operating revenue on our consolidated statements of operations.

2018, we (through a wholly owned subsidiary) entered into two separate facilities associated with the above mentioned program to sell up to an aggregate $ 200.0 million of notes which are secured by the receivables and other assets of the trust (of which $ 12.5  million was outstanding as of June 30, 2021) to separate unaffiliated third parties pursuant to facilities that can be drawn upon to the extent of outstanding eligible receivables.

In connection with the repayment, we removed an accrual of $ 1.5 million associated with a contingent liability incurred with the issuance of the notes. Removal of the contingent liability was recorded as a component of Other non-operating revenue on our consolidated statements of operations.

2018, we (through a wholly owned subsidiary) entered into two separate facilities associated with the above mentioned program to sell up to an aggregate $ 200.0 million of notes which are secured by the receivables and other assets of the trust (of which $ 35.0  million was outstanding as of September 30, 2021) to separate unaffiliated third parties pursuant to facilities that can be drawn upon to the extent of outstanding eligible receivables.

Interest rates on the notes are based on commercial paper rates plus 3.15 % and LIBOR plus a range between 4.5 % and 6.5 %, respectively.

The facilities mature on October 15, 2022 

and August 15, 2022, respectively, and are subject to certain affirmative covenants and collateral performance tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance of notes.

The facilities also may be prepaid subject to payment of a prepayment or other fee.

In December 2017, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 25.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 18.0 million was drawn as of June 30, 2021).

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to LIBOR plus 3.5 %. The facility matures on April 21, 2023 

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The note is guaranteed by Atlanticus.

In June 2019, we (through a wholly owned subsidiary) entered a revolving credit facility with a $ 15.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 3.6  million was drawn as of June 30, 2021).

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the prime rate.

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See Note 10,  "Convertible Senior Notes" for additional information.

In September 2019, we (through a wholly owned subsidiary) entered a term facility with a $ 30.0 million revolving borrowing limit (of which $ 2.5  million was drawn as of June 30, 2021) that is available to the extent of outstanding eligible principal receivables.

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to LIBOR plus 4.5 %.

The facility matures on September 30, 2021 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance.

The note is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

In September 2019, we (through a wholly owned subsidiary) entered a term facility with a $ 30.0 million revolving borrowing limit. 

The facility was repaid in September 2021. 

In November 2019, we sold $ 200.0 million of ABS secured by certain credit card receivables (expiring May 15, 2024).

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In January 

2021, we (through a wholly owned subsidiary) entered a term facility with a $ 15.0 million revolving borrowing limit (of which $ 10.0 million was drawn as of June 30, 2021) that is available to the extent of outstanding eligible principal receivables.

2021, we (through a wholly owned subsidiary) entered a term facility with a $ 15.0 million revolving borrowing limit (of which $ 10.0 million was drawn as of September 30, 2021) that is available to the extent of outstanding eligible principal receivables.

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the greater of the prime rate or 4 %.

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The note is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

In June 2021, we sold $ 300.0 million of ABS secured by certain credit card receivables (expiring December 15, 2026).

A portion of the proceeds from the sale was used to pay-down our existing facilities associated with our credit card receivables.

In June 2021, we sold $ 300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026 through December 15, 2026).

The terms of the ABS allow for a four -year revolving structure with a subsequent 11 -month to 18 -month amortization period. The weighted average interest rate on the securities is fixed at 4.24 %.

As of June 30, 2021 , we were in compliance with the covenants underlying our various notes payable.

In September 2021, we entered a term facility with a $ 75 million limit (of which $ 0 was drawn as of September 30, 2021) 

that is available to the extent of outstanding eligible principal receivables.

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to 2.75 %. 

The terms of the facility allow for a 24  month revolving structure with an 18 -month amortization period and the security matures March 2025. 

As of September 30, 2021 , we were in compliance with the covenants underlying our various notes payable.

Notes Payable Associated with Structured Financings, at Fair Value

Scheduled (in millions) in the table below are ( 1 ) the carrying amount of our structured financing note secured by certain credit card receivables and reported at fair value as of June 30,  

Scheduled (in millions) in the table below are ( 1 ) the carrying amount of our structured financing note secured by certain credit card receivables and reported at fair value as of September 30,  

2021 and 

December 31, 2020 , ( 2 ) the outstanding face amount of our structured financing note secured by certain credit card receivables and reported at fair value as of June 30, 2021 and 

December 31, 2020 , and ( 3 ) the carrying amount of the credit card receivables and restricted cash that provide the exclusive means of repayment for the note (i.e., lenders have recourse only to the specific credit card receivables and restricted cash underlying each respective facility and cannot look to our general credit for repayment) as of June 30, 2021 and 

December 31, 2020 , ( 2 ) the outstanding face amount of our structured financing note secured by certain credit card receivables and reported at fair value as of September 30, 2021 and 

December 31, 2020 .

Carrying Amounts at Fair Value as of

June 30, 2021

September 30, 2021

December 31, 2020

Securitization facility (stated maturity of December 2021 ), outstanding face amount of $ 101.3 million as of June 30, 2021 ($ 101.3 million as of December 31, 2020) bearing interest at a weighted average 5.6 % interest rate, based upon LIBOR, at June 30, 2021 ( 5.7 % at December 31, 2020), which is secured by credit card receivables and restricted cash aggregating $ 2.6 million as of June 30, 2021 ($ 2.9 million as of December 31, 2020) in carrying amount

Securitization facility (stated maturity of December 2021 ), outstanding face amount of $101.3 million as of September 30, 2021 ($ 101.3 million as of December 31, 2020) bearing interest at a weighted average 5.6 % interest rate, based upon LIBOR, at September 30, 2021 (5.7 % at December 31, 2020), which is secured by credit card receivables and restricted cash aggregating $ 2.2 million as of September 30, 2021 ($ 2.9 million as of December 31, 2020) in carrying amount

Contractual payment allocations within this credit card receivables structured financing provide for a priority distribution of cash flows to us to service the credit card receivables, a distribution of cash flows to pay interest and principal due on the notes, and a distribution of all excess cash flows (if any) to us.

The structured financing facility included in the above table is amortizing down along with collections of the underlying receivables and there are no provisions within the debt agreement that allow for acceleration or bullet repayment of the facility prior to its scheduled expiration date.

The aggregate carrying amount of the credit card receivables and restricted cash that provide security for the $ 2.6  million in fair value of the structured financing facility indicated in the above table is $ 2.6  million, which means that we have no aggregate exposure to pre-tax equity loss associated with the above structured financing arrangement at June 30, 2021 .

The aggregate carrying amount of the credit card receivables and restricted cash that provide security for the $ 2.2  million in fair value of the structured financing facility indicated in the above table is $ 2.2  million, which means that we have no aggregate exposure to pre-tax equity loss associated with the above structured financing arrangement at September 30, 2021 .

As discussed elsewhere, the legal entity holding the securitization facility discussed in the table above, is a VIE. Beyond our role as servicer of the underlying assets within the credit cards receivables structured financing, we have provided no other financial or other support to the structure, and we have no explicit or implicit arrangements that could require us to provide financial support to the structure.

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2005, we issued $ 300.0 million aggregate principal amount of convertible senior notes.

The convertible senior notes are unsecured, subordinate to existing and future secured obligations and structurally subordinate to existing and future claims of our subsidiaries’

These notes (net of repurchases since the issuance date) are reflected within convertible senior notes on our consolidated balance sheets. 

In the three and six months ended June 30, 2021, we repurchased $ 6.4 million and $ 21.1 million, respectively, in face amount of our outstanding convertible senior notes for $ 10.2  million and $ 28.9  million, respectively, in cash (including accrued interest). The repurchase resulted in a loss of approximately $ 5.4 million and $ 13.3 million, respectively (including the convertible senior notes’

In the three and nine months ended September 30, 2021, we repurchased $ 0.9  million and $ 22.1 million, respectively, in face amount of our outstanding convertible senior notes for $ 1.6 million and $ 30.4  million, respectively, in cash (including accrued interest). The repurchase resulted in a loss of approximately $ 0.9 million and $ 14.1  million, respectively (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

Upon acquisition, the notes were retired.

On June 17, 2021, we provided notice of redemption of all outstanding convertible senior notes.

Upon final determination of the conversion consideration amount, we delivered to holders of the converting notes, cash of $1,000 per $ 1,000 aggregate principal amount of notes and $ 12.1 million of cash in respect of the remainder of the conversion obligation.

The redemption resulted in a loss of approximately $ 15.3 million (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

Upon redemption, the notes were retired.

The following summarizes (in thousands) components of our consolidated balance sheets associated with our convertible senior notes:

June 30, 2021

September 30, 2021

December 31, 2020

Face amount of convertible senior notes

$ 33,839  

Net carrying value

$ 24,386  

Carrying amount of equity component included in paid-in capital

$ 108,714  

Excess of instruments’

if-converted values over face principal amounts

On June 17, 2021, we provided notice of redemption of all outstanding convertible senior notes.

The convertible senior notes subject to the conversion election will be converted into cash and, if applicable, shares of our common stock based on a formula using an adjusted effective conversion rate of 40.63 shares of common stock per $1,000 principal amount of notes.

Upon the final determination of the amount of the conversion consideration, we will deliver to holders of the converting notes cash of $ 1,000 per $1,000 aggregate principal amount of notes and either cash or shares of our common stock in respect of the remainder of the conversion obligation, if any.

If required to issue shares of common stock in connection with the conversion obligation, we have a sufficient number of authorized shares of our common stock to do so. 

Commitments and Contingencies

Under finance products available in the point-of-sale and direct-to-consumer channels, consumers have the ability to borrow up to the maximum credit limit assigned to each individual’s account. Unfunded commitments under these products aggregated $ 2.0 billion at June 30, 2021 .

We have never experienced a situation in which all borrowers have exercised their entire available lines of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would be a concurrent increase in assets should there be any exercise of these lines of credit. We also have the effective right to reduce or cancel these available lines of credit at any time.

Additionally, our CAR operations provide floor-plan financing for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The floor plan financing allows dealers and finance companies to borrow up to the maximum pre-approved credit limit allowed in order to finance ongoing inventory needs. These loans are secured by the underlying auto inventory and, in certain cases where we have other lending products outstanding with the dealer, are secured by the collateral under those lending arrangements as well, including any outstanding dealer reserves.

As of June 30, 2021 , CAR had unfunded outstanding floor-plan financing commitments totaling $ 11.6  million. Each draw against unused commitments is reviewed for conformity to pre-established guidelines.

Under agreements with third -party originating and other financial institutions, we have pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $ 18.0  million remains pledged as of June 30, 2021 to support various ongoing contractual obligations. 

As of September 30, 2021 , CAR had unfunded outstanding floor-plan financing commitments totaling $ 12.8  million. Each draw against unused commitments is reviewed for conformity to pre-established guidelines.

Under agreements with third -party originating and other financial institutions, we have pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $ 16.9  million remains pledged as of September 30, 2021 to support various ongoing contractual obligations. 

Under agreements with third -party originating and other financial institutions, we have agreed to indemnify the financial institutions for certain liabilities associated with the services we provide on behalf of the financial institutions—such indemnification obligations generally being limited to instances in which we either (a) have been afforded the opportunity to defend against any potentially indemnifiable claims or (b) have reached agreement with the financial institutions regarding settlement of potentially indemnifiable claims.

As of June 30, 2021 , we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote.

As of September 30, 2021 , we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote.

We would accrue liabilities related to these contingencies in any future period if and in which we assess the likelihood of an estimable payment as probable.

Under the account terms, consumers have the option of enrolling in a credit protection program with our lending partner which would make the minimum payments owed on their accounts for a period of up to six months upon the occurrence of an eligible event. Eligible events typically include loss of life, job loss, disability, or hospitalization.

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 26.5 million as of June 30, 2021 ( of which we have accrued $ 0.3 million as of June 30, 2021 

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 50.8 million as of September 30, 2021 ( of which we have accrued $ 0.6  million as of September 30, 2021 

based on current claims). We have never experienced a situation in which all eligible participants have applied for this benefit at any given point in time, nor do we anticipate this will ever occur in the future. 

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Net income attributable to controlling interests

$ 36,876  

$ 23,165  

$ 80,951  

$ 28,590  

Preferred stock and preferred unit dividends and accretion

( 4,738 )  

( 4,736 )  

( 9,425 )  

Net income attributable to common shareholders—basic

32,138  

18,429  

71,526  

21,095  

Effect of dilutive preferred stock dividends and accretion

Net income attributable to common shareholders—diluted

$ 32,736  

$ 19,025  

$ 72,716  

$ 22,288  

Basic (including unvested share-based payment awards) (1)

15,182  

14,427  

15,097  

14,432  

Effect of dilutive stock compensation arrangements and exchange of preferred stock

Diluted (including unvested share-based payment awards) (1)

21,025  

20,348  

20,979  

19,892  

Net income attributable to common shareholders per share—basic

$ 2.12  

$ 1.28  

$ 4.74  

$ 1.46  

Net income attributable to common shareholders per share—diluted

$ 1.56  

$ 0.93  

$ 3.47  

$ 1.12  

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 430,413 and 426,050 for the three and six months ended June 30, 2021 ,  respectively, compared to 418,081 and 445,984 for the three and six months ended June 30, 2020

As their effects were anti-dilutive, we excluded stock options to purchase 0.0 shares and 0.1 million shares from our net income attributable to controlling interests per share of common stock calculations for the three and six months ended June 30, 2021, 

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 278,425 and 376,301 for the three and nine months ended September 30, 2021 , respectively, compared to 417,483 and 436,414 for the three and nine months ended September 30, 2020

respectively. 

No stock options were excluded for either the three or six months ended June 30, 2020.

For the three and six months ended 

June 30, 2021 and 2020, we included 4,000,000 , 4,000,000 , 4,000,000 and 3,587,737 shares, respectively, in our outstanding diluted share counts associated with our Series A Preferred Stock.

No stock options were excluded for either the three or nine months ended September 30, 2020.

For the three and nine months ended 

September 30, 2021 and 2020, we included 4,000,000 , 4,000,000 , 4,000,000 and 3,725,158 shares, respectively, in our outstanding diluted share counts associated with our Series A Preferred Stock.

See Note 4, "Shareholders' Equity and Preferred Stock", for a further discussion of these convertible securities.

For the three and six months ended June 30, 2021 and 2020 , we included 0.2  million, 0.2 million, 0.0 and 0.0  dilutive shares, respectively, in the diluted net income attributable to controlling interests per share of common stock calculations pursuant to our convertible senior notes.

See Note 10, “Convertible Senior Notes,”

for a further discussion of these convertible securities.

Stock-Based Compensation

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Among other things, the Fourth Amended 2014 Plan (i) increased the number of shares of Common Stock available for issuance under the plan by 2,000,000 shares and (ii) extended the term of the plan by approximately two years.

As of June 30, 2021, 55,133 shares remained available for issuance under the ESPP and 1,592,070 shares remained available for issuance under the Fourth Amended 2014 Plan.

Exercises and vestings under our stock-based compensation plans resulted in no income tax-related charges to paid-in capital during the three and six months ended June 30, 2021 and 2020 .

As of September 30, 2021, 54,734 shares remained available for issuance under the ESPP and 1,613,958 shares remained available for issuance under the Fourth Amended 2014 Plan.

Exercises and vestings under our stock-based compensation plans resulted in no income tax-related charges to paid-in capital during the three and nine months ended September 30, 2021 and 2020 .

Restricted Stock and Restricted Stock Units

During the six  

months ended June 30, 2021 

and 2020, we granted 39,084 and 58,248 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 1.1 million and $ 0.6  million, respectively.

We incurred expenses of $ 0.5 million and $ 0.4  million during the six months ended June 30, 2021 

During the nine  months ended September 30, 2021 

and 2020, we granted 53,584 and 61,373 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 1.7  million and $ 0.6  million, respectively.

We incurred expenses of $ 0.9  million and $ 0.7  million during the nine months ended September 30, 2021 

and 2020, respectively, related to restricted stock awards.

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Our restricted stock awards typically vest over a range of 12 to 60 months (or other term as specified in the grant which may include the achievement of performance measures) and are amortized to salaries and benefits expense ratably over applicable vesting periods.

As of June 30, 2021, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 1.0 million with a weighted-average remaining amortization period of 1.2 years.

As of September 30, 2021, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 1.3  million with a weighted-average remaining amortization period of 1.5  years.

No forfeitures have been included in our compensation cost estimates based on historical forfeiture rates.

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Options granted during 2021  were valued using the Black-Scholes-Merton option pricing model with the following assumptions:

a dividend yield of 

zero , years to maturity of 

a dividend yield of zero, years to maturity of 

5  years (which equals the expected term), volatility of 80.9 % (based on the average of daily historical volatility using the expected term), and a risk-free rate of 0.86 % (based on 5 year US Treasury securities).

All options granted during the year vest ratably over a 3 year period conditioned upon continued employment with the Company. We had expense of $ 0.7  million, 

$ 0.7 million, $ 0.1 million and $ 0.2 million related to stock option-related compensation costs during the three and six months ended June 30, 2021 

$ 1.4 million, $ 0.1 million and $ 0.3  million related to stock option-related compensation costs during the three and nine months ended September 30, 2021 

and 2020, respectively.

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Outstanding at December 31, 2020

2,423,466  

$ 4.41  

55,000  

$ 31.22  

( 495,733 )  

$ 3.42  

Expired/Forfeited

( 6,000 )  

$ 15.30  

Outstanding at June 30, 2021

1,976,733  

$ 5.38  

$ 67,851,195  

Exercisable at June 30, 2021

1,541,401  

$ 3.50  

$ 55,805,456  

Options issued during the three and six months ended June 30, 2021 had an aggregate grant-date fair value of $ 90 thousand and $ 1.1 million, respectively.

Outstanding at September 30, 2021

Exercisable at September 30, 2021

Options issued during the three and nine months ended September 30, 2021 had an aggregate grant-date fair value of $ 2.1 million and $ 3.2 million, respectively.

No options were issued during the corresponding periods in 2020.

 We had $ 1.7  million and $ 1.4  million of unamortized deferred compensation costs associated with unvested stock options as of June 30, 2021 and 

 We had $ 3.1  million and $ 1.4  million of unamortized deferred compensation costs associated with unvested stock options as of September 30, 2021 and 

December 31, 2020 , respectively.

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in Part II, Item 1A and elsewhere in this Report, that our actual experience will differ materially from these expectations. For more information, see “Forward-Looking Information”

In this Report, except as the context suggests otherwise, the words “Company,”

In this Report, except as the context suggests otherwise, “Company,”

“Atlanticus Holdings Corporation,”

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refer to Atlanticus Holdings Corporation and its subsidiaries and predecessors.

We utilize proprietary analytics and a flexible technology platform to enable financial institutions to provide various credit and related financial services and products to everyday Americans.

According to data published by Experian, 41% of Americans had FICO®

scores of less than 700 as of the second quarter of 2019. A recent survey conducted by Highland Solutions found that 63% of Americans lived “paycheck to paycheck”

and 82% of people do not have access to an emergency fund.

We believe this equates to a population of over 100 million everyday Americans in need of additional access to credit. These consumers often have financial needs that are not effectively met by larger financial institutions. By facilitating fairly priced consumer credit and financial service alternatives with value added features and benefits specifically curated for the unique needs of these consumers, we endeavor to empower everyday Americans on a path to improved financial well-being.

Currently, within our Credit and Other Investments segment, we are applying the experiences gained and infrastructure built from servicing over $26 billion in consumer loans over our 24-year operating history to support lenders who originate a range of consumer loan products.

We utilize technology, proprietary analytics and a flexible technology platform to enable financial institutions to provide various credit and related financial services and products to everyday Americans.

According to data published by FICO, 37% of Americans had FICO®

scores of less than 700 as of the second quarter of 2021.

We believe this equates to a population of over 100 million everyday Americans in need of additional access to credit. These consumers often have financial needs that are not effectively met by larger financial institutions. By facilitating fairly priced consumer credit and financial service alternatives with value added features and benefits curated for the unique needs of these consumers, we endeavor to empower everyday Americans on a path to improved financial well-being.

Currently, within our Credit and Other Investments segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $26 billion in consumer loans over our 25-year operating history, to support lenders who originate a range of consumer loan products.

These products include private label and general purpose credit cards originated by lenders through multiple channels, including retail and healthcare point-of-sale (collectively "point-of-sale"), direct mail solicitation, online and partnerships with third parties.

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credit service.

Our flexible technology platform allows our bank partners to integrate our paperless process and instant decisioning platform with the technology infrastructure of participating retailers and service providers.

Using this technology platform and proprietary analytics, lenders can make instant credit decisions utilizing hundreds of inputs from multiple sources and thereby offer credit to consumers overlooked by many providers of financing who focus exclusively on consumers with higher FICO scores.

Our flexible technology solutions allow our bank partners to integrate our paperless process and instant decisioning platform with the existing infrastructure of participating retailers and service providers.

Using our technology and proprietary predictive analytics, lenders can make instant credit decisions utilizing hundreds of inputs from multiple sources and thereby offer credit to consumers overlooked by many providers of financing who focus exclusively on consumers with higher FICO scores.

By supporting a range of products through a multitude of channels, we enable lenders to provide the right type of credit, whenever and wherever the consumer has a need.

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typically refer to receivables we have purchased from our bank partners or from third parties.

Using our infrastructure and technology platform, we also provide loan servicing, including risk management and customer service outsourcing, for third parties.

Using our infrastructure and technology, we also provide loan servicing, including risk management and customer service outsourcing, for third parties.

Also through our Credit and Other Investments segment, we engage in testing and limited investment in consumer finance technology platforms as we seek to capitalize on our expertise and infrastructure.

Additionally, we report within our Credit and Other Investments segment:

(1) the income earned from an investment in an equity-method investee that holds credit card receivables for which we are the servicer;

1) the servicing income from our legacy credit card receivables, 2) the income earned from an investment in an equity-method investee that holds credit card receivables for which we are the servicer;

and 3) gains or losses associated with investments previously made in consumer finance technology platforms.

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The recurring cash flows we receive within our Credit and Other Investments segment principally include those associated with (1) point-of-sale and direct-to-consumer receivables, (2) servicing compensation and (3) credit card receivables portfolios that are unencumbered or where we own a portion of the underlying structured financing facility (such as those associated with our legacy credit card operations).

Subject to potential disruptions caused by COVID-19, we believe that our point-of-sale and direct-to-consumer receivables are generating, and will continue to generate, attractive returns on assets, thereby facilitating debt financing under terms and conditions (including advance rates and pricing) that will support attractive returns on equity, and we continue to pursue growth in this area.

Subject to possible disruptions caused by COVID-19 and disruptions in supply chains, we believe that our point-of-sale and direct-to-consumer receivables are generating, and will continue to generate, attractive returns on assets, thereby facilitating debt financing under terms and conditions (including advance rates and pricing) that will support attractive returns on equity, and we continue to pursue growth in this area.

Beyond these activities within our Credit and Other Investments segment, we invest in and service portfolios of credit card receivables.

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Also within our Auto Finance segment, we are providing certain installment lending products in addition to our traditional loans secured by automobiles.

Subject to the availability of capital at attractive terms and pricing, we plan to continue to evaluate and pursue a variety of activities, including: (1) investments in additional financial assets associated with point-of-sale and direct-to-consumer finance and credit activities as well as the acquisition of interests in receivables portfolios; (2) investments in other assets or businesses that are not necessarily financial services assets or businesses and (3) the repurchase of our convertible senior notes and other debt and our outstanding common stock.

We elected the fair value option to account for certain loans receivable associated with our point-of-sale and direct-to-consumer platform that are acquired on or after January 1, 2020.

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We reevaluate the fair value of our Fair Value Receivables at the end of each quarter.

As discussed elsewhere in this Report we plan to adopt ASU 2016-13 beginning January 1, 2022 utilizing the fair value option for all receivables currently measured at amortized cost. 

COVID-19 Pandemic  

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The following are anticipated key impacts on our business and response initiatives taken by the Company, in coordination with our partners, to mitigate such impacts:

Consumer spending behavior has been significantly impacted by the COVID-19 pandemic, principally due to restrictions on “non-essential”

businesses, issuances of stay-at-home orders, and uncertainties about the extent and duration of the pandemic.

Additionally, government stimulus programs have decreased consumer need for credit products and generally led to an increase in customer payments. While we have seen some improvements in this area, to the extent this change in consumer spending behavior continues, receivables purchases could decline relative to the prior year.

The extent to which our merchants have remained open for business has varied across merchant category and geographic location within the U.S. 

Consumer spending behavior has been significantly impacted by the COVID-19 pandemic, principally due to social distancing and uncertainties about the extent and duration of the pandemic.

Additionally, earlier government stimulus programs decreased consumer need for credit products and generally led to an increase in customer payments. While we have seen some improvements in this area, to the extent this change in consumer spending behavior continues, receivables purchases could decline relative to the prior year.

The extent to which our merchants have remained open for business has varied across merchant category and geographic location within the U.S.

Furthermore, a number of our merchants have recently experienced labor shortages and supply chain disruptions.

These trends could decrease consumer spending and our receivables growth.

Borrowers impacted by COVID-19 requesting hardship assistance have been receiving temporary relief from payments.

While we expect these measures to mitigate credit losses, we anticipate that the elevated unemployment rate, while partially mitigated by the effects of government stimulus and relief measures (such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the American Rescue Plan), may result in increased portfolio credit losses in the future.

While we expect these measures to mitigate credit losses, related economic disruptions could result in increased portfolio credit losses in the future.

As the impact of COVID-19 continues to evolve, the Company remains committed to serving our bank partner, merchants and consumers, while caring for the safety of our employees and their families.

The potential impact that COVID-19 and related government stimulus and relief measures could have on our financial condition and results of operations remains highly uncertain.

The potential impact that COVID-19, related economic impacts, and labor shortages and supply chain disruptions could have on our financial condition and results of operations remains highly uncertain.

For more information, refer to Part II, Item 1A “Risk Factors”

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CONSOLIDATED RESULTS OF OPERATIONS

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Increases (Decreases)

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Total operating expenses:

Loss on repurchase of convertible senior notes

Net loss attributable to noncontrolling interests

Loss on repurchase and redemption of convertible senior notes

Net (income) loss attributable to noncontrolling interests

Net income attributable to controlling interests

Net income attributable to controlling interests to common shareholders

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Increases (Decreases)

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Total operating expenses:

Loss on repurchase of convertible senior notes

Net loss attributable to noncontrolling interests

Loss on repurchase and redemption of convertible senior notes

Net (income) loss attributable to noncontrolling interests

Net income attributable to controlling interests

Net income attributable to controlling interests to common shareholders

Three and Six Months Ended June 30, 2021, Compared to Three and Six Months Ended June 30, 2020

Three and Nine Months Ended September 30, 2021, Compared to Three and Nine Months Ended September 30, 2020

Total operating revenue.

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1) interest income, finance charges and late fees on consumer loans, 2) other fees on credit products including annual and merchant fees and 3) ancillary, interchange and servicing income on loan portfolios.

Period-over-period results primarily relate to growth in point-of-sale finance and direct-to-consumer products, the receivables of which increased from $895.1 million as of June 30, 2020 to $1,243.9 million as of June 30, 2021.

While we noted some disruptions in consumer spending behavior due to the COVID-19 pandemic and the related economic impacts, we are currently experiencing continued period-over-period growth in point-of-sale and direct-to-consumer receivables and to a lesser extent in our CAR receivables—growth which we expect to result in net period-over-period growth in our total interest income and related fees for these operations throughout 2021.

Period-over-period results primarily relate to growth in point-of-sale finance and direct-to-consumer products, the receivables of which increased from $982.5 million as of September 30, 2020 to $1,441.5 million as of September 30, 2021.

While we noted some disruptions in consumer spending behavior due to the COVID-19 pandemic and labor shortages, supply chain disruptions and other related economic impacts, we are currently experiencing continued period-over-period growth in point-of-sale and direct-to-consumer receivables and to a lesser extent in our CAR receivables—growth which we expect to result in net period-over-period growth in our total interest income and related fees for these operations for the remainder of 2021 and into 2022.

Future periods’

growth is also dependent on the addition of new retail partners to expand the reach of point-of-sale operations as well as growth within existing partnerships and continued growth and marketing within the direct-to-consumer receivables. As discussed elsewhere in this Report, we have elected the fair value option to account for certain loan receivables associated with our point-of-sale and direct-to-consumer platform that are originated on or after January 1, 2020. As a result, annual fees and merchant fees that are charged upon the acquisition of the receivable will no longer be deferred and will be recognized in the loan acquisition period. This difference in recognition also served to increase our other fees on credit products (included as a component of "Fees and related income on earning assets" on our consolidated statements of operations).

Other revenue on our Consolidated Statements of Operations consists of ancillary, interchange and servicing income. Ancillary and interchange revenues are largely impacted by growth in our receivables as discussed above. These fees are earned when our customer's cards are used over established card networks.

Other revenue on our consolidated statements of operations consists of ancillary, interchange and servicing income. Ancillary and interchange revenues are largely impacted by growth in our receivables as discussed above. These fees are earned when customers we serve use their cards over established card networks.

We earn a portion of the interchange fee the card networks charge merchants for the transaction.

We earn servicing income by servicing loan portfolios for third parties (including our equity-method investee).

Unless and/or until we grow the number of contractual servicing relationships we have with third parties or our current relationships grow their loan portfolios, we will not experience significant growth and income within this category, and we currently expect to experience continued declines in this category of revenue relative to revenue earned in prior periods.

The above discussions on expectations for finance, fee and other income are based on our current expectations. The unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable could result in changes in these assumptions in the near term.

We earn servicing income by servicing loan portfolios for third parties.

As discussed elsewhere in this Report, we plan to adopt ASU 2016-13 beginning January 1, 2022 utilizing the fair value option for all receivables currently measured at amortized cost.

The impact of this adoption will result in an adjustment to our opening retained earnings with future changes in the fair value associated with these receivables being included as part of our "Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value" on our consolidated statements of operations. The above discussions on expectations for finance, fee and other income are based on our current expectations. The potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable could result in changes in these assumptions in the near term.

Other non-operating revenue.

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to our consolidated financial statements, offset by our debt facilities being repaid commensurate with net liquidations of the underlying credit card, auto finance and installment loan receivables that serve as collateral for the facilities.

Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our point-of-sale and direct-to-consumer platform increased from $643.2 million as of June 30, 2020 to $911.9 million as of June 30, 2021.

Despite, this increase, an overall decrease in the weighted average cost of funds, coupled with repurchases of our convertible senior notes, resulted in a year over year decline in interest expense. We anticipate additional debt financing over the next few quarters as we continue to grow, and as such, we expect our quarterly interest expense to be above that experienced in the prior periods for these operations.

Loss on repurchase of convertible senior notes. 

In the three and six months ended June 30, 2021, we repurchased $6.4 million and $21.1 million, respectively, in face amount of our outstanding convertible senior notes for $10.2 million and $28.9 million, respectively, in cash (including accrued interest). The repurchase resulted in a loss of approximately $5.4 million and $13.3 million, respectively, (including the convertible senior notes’

Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our point-of-sale and direct-to-consumer platform increased from $696.8 million as of September 30, 2020 to $944.5 million as of September 30, 2021.

The majority of this increase in outstanding debt relates to the $300 million revolving credit facility that was established in June 2021. Despite this period over period increase, an overall decrease in the weighted average cost of funds, coupled with repurchases an redemptions of our convertible senior notes and the timing of the increases in debt balances, resulted in a year over year decline in interest expense. We anticipate additional debt financing over the next few quarters as we continue to grow, and as such, we expect our quarterly interest expense to be above that experienced in the prior periods for these operations.

Loss on repurchase and redemption of convertible senior notes. 

In the three and nine months ended September 30, 2021, we repurchased $0.9 million and $22.1 million, respectively, in face amount of our outstanding convertible senior notes for $1.6 million and $30.4 million, respectively, in cash (including accrued interest). The repurchase resulted in a loss of approximately $0.9 million and $14.1 million, respectively (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

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On June 17, 2021, we provided notice of redemption of all outstanding convertible senior notes.

Upon the redemption notice, holders were allowed to convert the convertible senior notes in lieu of the redemption consideration. At the expiration of the conversion option, holders with $11.8 million in principal amount of the convertible senior notes had elected to convert. The remaining $0.9 million of convertible senior notes were redeemed on July 19, 2021. The convertible senior notes subject to the conversion election will be converted into cash and, if applicable, shares of our common stock based on a formula using an adjusted effective conversion rate of 40.63 shares of common stock per $1,000 principal amount of notes.

Upon the final determination of the amount of the conversion consideration, we will deliver to holders of the converting notes cash of $1,000 per $1,000 aggregate principal amount of notes and either cash or shares of our common stock in respect of the remainder of the conversion obligation, if any.

If required to issue shares of common stock in connection with the conversion obligation, we have a sufficient number of authorized shares of our common stock to do so. 

Upon final determination of the conversion consideration amount, we delivered to holders of the converting notes, cash of $1,000 per $1,000 aggregate principal amount of notes and $12.1 million of cash in respect of the remainder of the conversion obligation.

The redemption resulted in a loss of approximately $15.3 million (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

Upon redemption, the notes were retired.

In conjunction with the original offering of the convertible senior notes, we entered into a share lending agreement with JPMorgan Chase & Co.

(as successor to Bear, Stearns International Limited and Bear, Stearns & Co.

Pursuant to the share lending agreement, we lent JPMorgan Chase & Co.

(“JPMorgan”) 5,677,950 shares of our common stock. 

JPMorgan agreed to use the loaned shares for the purpose of directly or indirectly facilitating the hedging of the convertible senior notes by the holders thereof or for such other purpose as reasonably determined by us. 

At the retirement of the convertible senior notes, 1,459,233 shares of common stock remained outstanding under the share lending agreement. 

In September 2021, JPMorgan returned the outstanding loaned shares, without consideration being payable in respect thereof. 

As of September 30, 2021, these shares were held in treasury.  

Provision for losses on loans, interest and fees receivable recorded at net realizable value.

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All proceeds received associated with charged-off accounts, are credited to the allowance for uncollectible loans, interest and fees receivable and effectively offset our provision for losses on loans, interest and fees receivable recorded at net realizable value.

We have experienced a period-over-period decrease in this category between the years ended June 30, 2020 and June 30, 2021 primarily reflecting:

1) the effects of our adoption of the fair value option to account for certain loans receivable that are acquired on or after January 1, 2020 which has resulted in a decline in the outstanding receivables subject to this provision and 2) the overall reduction in delinquencies associated with these receivables in part due to recent government stimulus programs, which have served to increase payments on outstanding receivables. This reduction in provision has been offset somewhat due to additional reserves associated with accounts that have been impacted due to COVID-19.

We have experienced a period-over-period decrease in this category between the years ended September 30, 2020 and September 30, 2021 primarily reflecting:

1) the effects of our adoption of the fair value option to account for certain loans receivable that are acquired on or after January 1, 2020 which has resulted in a decline in the outstanding receivables subject to this provision and 2) the overall reduction in delinquencies associated with these receivables in part due to government stimulus programs, which served to increase payments on outstanding receivables. This reduction in provision has been offset somewhat due to additional reserves associated with accounts that have been impacted due to COVID-19.

See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,”

to our consolidated financial statements and the discussions of our Credit and Other Investments and Auto Finance segments for further credit quality statistics and analysis. Given our adoption of fair value accounting for certain receivables acquired on or after January 1, 2020, and absent the unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on our customers' ability to make payments on outstanding loans and fees receivable, we expect that our provision for losses on loans will continue to diminish, relative to levels experienced in prior periods, as the underlying receivables that continue to be recorded at net realizable value liquidate.

to our consolidated financial statements and the discussions of our Credit and Other Investments and Auto Finance segments for further credit quality statistics and analysis. Given our adoption of fair value accounting for certain receivables acquired on or after January 1, 2020, and absent the potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on the ability of a consumer to make payments on outstanding loans and fees receivable, we expect that our provision for losses on loans will continue to diminish, relative to levels experienced in prior periods, as the underlying receivables that continue to be recorded at net realizable value liquidate.

Further, with the aforementioned adoption of fair value for all receivables currently accounted for at amortized cost, this category of expense will not be present in 2022, being replaced by changes in fair value recorded as a component of "Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value" on our consolidated statements of operations.

Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value.

For credit card receivables for which we use fair value accounting (including those for which we elected the fair value option on January 1, 2020), we expect our change in fair value of credit card receivables recorded at fair value to increase throughout 2021 commensurate with growth in these receivables. Inversely (and to a lesser degree), we expect our change in fair value of notes payable associated with structured financings for our legacy credit card receivables recorded at fair value amounts to gradually diminish (absent significant changes in the assumptions used to determine these fair values) in the future.

For credit card receivables for which we use fair value accounting (including those for which we elected the fair value option on January 1, 2020), we expect our change in fair value of credit card receivables recorded at fair value to increase throughout the remainder of 2021 and into 2022 commensurate with growth in these receivables. Inversely (and to a lesser degree), we expect our change in fair value of notes payable associated with structured financings for our legacy credit card receivables recorded at fair value amounts to gradually diminish (absent significant changes in the assumptions used to determine these fair values) in the future.

We may adjust our models to reflect macro events that we believe market participants would consider relevant.

With the aforementioned market impacts of COVID-19 and related government stimulus and relief measures, we have included some expected market degradation in our model to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in chargeoffs and decrease in payments) above the level that historical trends would suggest. These amounts, however, are subject to potentially high levels of volatility if we experience changes in the quality of our credit card receivables or if there are significant changes in market valuation factors (e.g., interest rates and spreads) in the future. 

With the aforementioned market impacts of COVID-19 and related economic impacts, we have included some expected market degradation in our model to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in chargeoffs and decrease in payments) above the level that historical trends would suggest. These amounts, however, are subject to potentially high levels of volatility if we experience changes in the quality of our credit card receivables or if there are significant changes in market valuation factors (e.g., interest rates and spreads) in the future. 

Total operating expense.

Total operating expense variances for the three and six months ended June 30, 2020, relative to the three and six months ended June 30, 2021, reflect the following:

increases in salaries reflecting marginal growth in both the number of employees and increases in related benefit costs. We expect some marginal increase in this cost for 2021 when compared to 2020 as we expect our receivables to continue to grow and as a result we expect to modestly increase our number of employees;

increases in card and loan servicing expenses in the three and six months ended June 30, 2021 when compared to the three and six months ended June 30, 2020 due to growth in receivables associated with our investments in point-of-sale and direct-to-consumer receivables, which grew from $895.1 million outstanding to $1,243.9 million outstanding at June 30, 2020 and June 30, 2021, respectively.

As many of the expenses associated with our card and loan servicing efforts are now variable based on the amount of underlying receivables, we would expect this number to continue to grow throughout 2021.

Total operating expense variances for the three and nine months ended September 30, 2020, relative to the three and nine months ended September 30, 2021, reflect the following:

increases in salaries reflecting marginal growth in both the number of employees and increases in related benefit costs. We expect some marginal increase in this cost for the remainder of 2021 when compared to 2020 as we expect our receivables to continue to grow and as a result we expect to modestly increase our number of employees;

increases in card and loan servicing expenses due to growth in receivables associated with our investments in point-of-sale and direct-to-consumer receivables, which grew from $982.5 million outstanding to $1,441.5 million outstanding at September 30, 2020 and September 30, 2021, respectively.

As our receivables have grown, we have significantly reduced our servicing costs per account, realizing greater economies of scale.

increases in marketing and solicitation costs for the three and six months ended June 30, 2021 primarily due to receivables growth associated with our direct-to-consumer and retail point-of-sale portfolios.

We expect that increased origination and brand marketing support will result in overall increases in year-over-year costs during 2021 although the frequency and timing of marketing efforts could result in reductions in quarter-over-quarter marketing costs;

increases in marketing and solicitation costs primarily due to receivables growth associated with our direct-to-consumer and retail point-of-sale portfolios.

We expect that increased origination and brand marketing support will result in overall increases in year-over-year costs during the remainder of 2021 although the frequency and timing of marketing efforts could result in reductions in quarter-over-quarter marketing costs;

other expenses primarily relate to fixed costs associated with occupancy or other third party expenses that are largely fixed in nature.

Some costs including legal expenses and travel expenses are variable based on growth.

While we expect some increase in these costs as we continue to grow our receivable portfolios, we do not anticipate the increases to be meaningful.

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On March 30, 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms.

The proceeds from the transaction are being used for general corporate purposes. We have included the issuance of these Class B preferred units as temporary noncontrolling interests on the consolidated balance sheets and the associated dividends are included as a reduction of our net income attributable to common shareholders on the consolidated statements of operations.

The proceeds from the transaction were used for general corporate purposes. We have included the issuance of these Class B preferred units as temporary noncontrolling interests on the consolidated balance sheets and the associated dividends are included as a reduction of our net income attributable to common shareholders on the consolidated statements of operations.

Income Taxes.

We experienced effective tax rates of 21.6% and 18.1%, for the three and six months ended June 30, 2021, compared to 17.7% and 18.0% for the three and six months ended June 30, 2020. 

Our effective tax rate for the three months ended June 30, 2021, is above the statutory rate due to state and foreign income tax expense, significantly offset, however, by (1) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes, and (2) the exclusion from taxable income of benefits received under the CARES Act.

These same two items served to offset the effects of state and foreign income tax expense and executive compensation deduction limits experienced in the first quarter of 2021 under Section 162(m) of the Internal Revenue Code of 1986 on our effective tax rate for the six months ended June 30, 2021.

Also offsetting such effects and thereby causing our effective tax rate to be below the statutory rate for the six months ended June 30, 2021, are (1) deductions in the first quarter of 2021 associated with the exercise of stock options and the vesting of restricted stock at stock fair values significantly exceeding such share-based awards’

grant date values;

and (2) our release of state tax valuation allowances in the first quarter of 2021.

Our effective tax rates for the three and six months ended June 30, 2020 were below the statutory rate principally due to (1) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and (2) deductions associated with the exercise of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’

We experienced effective tax rates of 18.7% and 18.3%, for the three and nine months ended September 30, 2021, compared to 19.6% and 18.9% for the three and nine months ended September 30, 2020. 

Our effective tax rates for the three and nine months ended September 30, 2021, are below the statutory rate principally due to (1) deductions associated with the exercise of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’

grant date values and (2) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes. 

Our effective tax rates for the three and nine months ended September 30, 2020, were below the statutory rate principally due to (1) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and (2) deductions associated with the exercise of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’

grant date values.

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We had de minimis interest expense or reversals thereof during the three and six months ended June 30, 2021, and 2020.

We had de minimis interest expense or reversals thereof during the three and nine months ended September 30, 2021, and 2020.

Credit and Other Investments Segment

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These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies.

A reconciliation of each of these non-GAAP financial measures to the most directly comparable GAAP financial measure is provided below for each of the fiscal periods indicated. 

These non-GAAP financial measures include only the performance of those receivables underlying consolidated subsidiaries (for receivables carried at amortized cost basis and fair value) and exclude the performance of receivables held by our equity method investee.

As the receivables underlying our equity method investee reflect a small and diminishing portion of our overall receivables base, we do not believe their inclusion or exclusion in the overall results is material.

A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures or the calculation of the non-GAAP financial measures are provided below for each of the fiscal periods indicated. 

As the receivables underlying our former equity method investee reflect a small and diminishing portion of our overall receivables base, we do not believe their inclusion or exclusion in the overall results is material.

Additionally, we calculate average managed receivables based on the quarter-end balances. 

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See Note 6, “Fair Value of Assets and Liabilities”

to our consolidated financial statements included herein for further discussion on assumptions underlying this calculation.

to our consolidated financial statements included herein for further discussion of assumptions underlying this calculation.

At or for the Three Months Ended

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Managed receivables levels.

 We have continued to experience overall period-over-period quarterly receivables growth with over $348.8 million in net receivables growth associated with the point-of-sale and direct-to-consumer products offered by our bank partners between June 2020 and June 2021.

The addition of large point-of-sale retail partners and ongoing purchases of receivables arising in accounts issued by our bank partners to customers of our existing retail partners helped net growth in our point-of-sale receivables by $196.1 million and $122.7 million in the twelve months ended June 30, 2021 and 2020, respectively.

Our direct-to-consumer receivables experienced net growth of over $152.7 million and $170.0 million, net during the twelve months ended June 30, 2021 and 2020, respectively.

The decline in the pace of receivables growth for our direct-to-consumer receivables was largely driven by reduced consumer demand for general-purpose card products coupled with higher payments on outstanding amounts largely as a result of the various government stimulus programs in effect.

We have noted recent recoveries in consumer spending behavior and increased demand for general-purpose credit products, that have helped to increase the overall combined managed receivables levels, and we currently expect this trend to continue through the remainder of the year (absent further unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable). Growth in future periods largely is dependent on the addition of new retail partners to the point-of-sale origination platform, the timing and size of solicitations within the direct-to-consumer platform by our bank partner, as well as purchase activity of consumers.

Further, the loss of existing retail partner relationships could adversely affect new loan acquisition levels. Our top five retail partnerships accounted for over 65% of the above referenced Retail period-end managed receivables outstanding as of June 30, 2021. 

 We have continued to experience overall period-over-period quarterly receivables growth with over $459.0 million in net receivables growth associated with the point-of-sale and direct-to-consumer products offered by our bank partners between September 2020 and September 2021.

The addition of large point-of-sale retail partners and ongoing purchases of receivables arising in accounts issued by our bank partners to customers of our existing retail partners helped net growth in our point-of-sale receivables by $194.6 million and $128.3 million in the twelve months ended September 30, 2021 and 2020, respectively.

Our direct-to-consumer receivables experienced net growth of over $264.4 million and $85.2 million, net during the twelve months ended September 30, 2021 and 2020, respectively.

The decline in the pace of receivables growth for our direct-to-consumer receivables in 2020 and through the second quarter of 2021 was largely driven by reduced consumer demand for general-purpose card products coupled with higher payments on outstanding amounts largely as a result of the various government stimulus programs in effect.

We have noted recent recoveries in consumer spending behavior and increased demand for general-purpose credit products, that have helped to increase the overall combined managed receivables levels, and we currently expect this trend to continue through the remainder of the year (absent further potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable). Growth in future periods largely is dependent on the addition of new retail partners to the point-of-sale origination platform, the timing and size of solicitations within the direct-to-consumer platform by our bank partner, as well as purchase activity of consumers.

Delinquencies.

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As we continue to acquire newer point-of-sale and direct-to-consumer receivables, we expect our delinquency rates to increase when compared to the same periods in prior years.

Our delinquency rates have continued to be somewhat lower than what we ultimately expect for our new point-of-sale and direct-to-consumer receivables given the continued growth and age of the related accounts as well as recent government stimulus efforts. The aforementioned positive impacts related to recent government stimulus programs have served to increase consumer payment rates beyond expectations.

Our delinquency rates have continued to be somewhat lower than what we ultimately expect for our new point-of-sale and direct-to-consumer receivables given the continued growth and age of the related accounts as well as government stimulus efforts. The aforementioned positive impacts related to government stimulus programs have served to increase consumer payment rates beyond expectations.

The impact due to growth in the receivable base can be seen in periods of large growth in the charts above which result in lower delinquency rates.

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Receivables enrolled in these short-term payment deferrals continue to accrue interest and their delinquency status will not change through the deferment period.

Through June 30, 2021 we continue to actively work with consumers that indicate hardship as a result of COVID-19, however, the number of impacted consumers continues to be a diminishing part of our overall receivable base.

We continue to actively work with consumers that indicate hardship as a result of COVID-19, however, the number of impacted consumers continues to be a diminishing part of our overall receivable base.

In order to establish appropriate reserves for this population we considered various factors such as subsequent payment behavior and additional requests by the consumer for further deferrals or hardship claims.

Nearly all of these customers are considered current and thus not included as delinquent receivables. The exclusion of these accounts has resulted in lower delinquency rates than we would otherwise expect. Given this, and absent the unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable and the corresponding impact on our delinquency rates, we expect to continue to see seasonal payment patterns on these receivables that impact our delinquencies in line with prior periods.

In 2020 and early 2021, nearly all of these customers were considered current and thus not included as delinquent receivables. The exclusion of these accounts resulted in lower delinquency rates for those periods than we would have otherwise expected.

Given this, and absent the potential impacts COVID-19 and related economic impacts, may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable and the corresponding impact on our delinquency rates, we expect to continue to see seasonal payment patterns on these receivables that impact our delinquencies in line with prior periods.

For example, delinquency rates historically are lower in the first quarter of each year due to the benefits of seasonally strong payment patterns associated with year-end tax refunds for most consumers.

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 We continue to experience growth in newer, higher yielding receivables, including direct-to-consumer receivables and our point-of-sale receivables.

While this growth has contributed to consistently higher total managed yield ratios, we expect this growth also will continue to (absent the beneficial impacts of recent government stimulus programs discussed elsewhere) result in higher charge-off and delinquency rates than those experienced historically.

Direct-to-consumer receivables tend to have higher total yields than point-of-sale receivables, so declines in the growth of our managed receivables that includes direct-to-consumer receivables has contributed to slightly lower total managed yield ratios for 2021 and 2020 when compared to comparable periods in 2019.

Additionally, lower delinquencies (and thus associated fee billings) noted during 2020 (and continuing in 2021), in addition to reductions in the prime rate that corresponds to lower yields charged on credit card receivables, contributed to an overall lower total managed yield ratio.

Our fourth and third quarter 2019 total managed yield ratios exclude the impacts of $37.8 million and $26.7 million, respectively, associated with reductions in reserves associated with one of our portfolios.

Absent the unknown impacts COVID-19 may have on our ability to acquire new receivables or the impact it may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect total managed yield ratios to continue to fluctuate somewhat based on the relative mix of growth in point-of-sale receivables and higher yielding direct-to-consumer credit card receivables. 

While this growth has contributed to consistently higher total managed yield ratios, we expect this growth also will continue to (absent the beneficial impacts of government stimulus programs discussed elsewhere) result in higher charge-off and delinquency rates than those experienced historically.

Direct-to-consumer receivables tend to have higher total yields than point-of-sale receivables, so declines in the growth of our managed receivables that includes direct-to-consumer receivables in periods noted above, contributed to slightly lower total managed yield ratios for those periods in 2021 and 2020.

Additionally, lower delinquencies (and thus associated fee billings) noted during 2020 and 2021, in addition to reductions in the prime rate that corresponds to lower yields charged on credit card receivables, contributed to an overall lower total managed yield ratio.

Recent growth in our direct-to-consumer receivables in excess of the growth experienced in our point-of-sale receivables, along with expected increased delinquency rates associated with those receivables, has resulted in an increase in our total managed yield ratio. We currently expect continued higher growth rates for our direct-to consumer receivables when compared to growth rates for our point-of-sale receivables and, as such, expect to see continued managed yield ratios similar to those experienced in the third quarter of 2021. Our fourth quarter 2019 total managed yield ratio excludes the impact of $37.8 million associated with reductions in reserves associated with one of our portfolios.

Absent the potential impacts COVID-19 may have on our ability to acquire new receivables or the impact it may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect total managed yield ratios to continue to fluctuate somewhat based on the relative mix of growth in point-of-sale receivables and higher yielding direct-to-consumer credit card receivables. 

Combined net charge-off ratio, annualized.

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Growth within our direct-to-consumer receivables (as a percent of outstanding receivables) has resulted in increases in our charge-off rates over time.

The combined net charge-off ratio in the third quarter of 2019 reflects the positive impacts of a bulk sale of charged off receivables.

Absent this sale, the combined net charge-off ratio would have been 18.6%.

The first and second quarters 2020 combined net charge-off ratios reflect receivable growth during 2019 reaching peak charge-off during those periods.

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Absent this sale, the combined net charge-off ratio would have been 29.1%.

Improvements in our delinquency rates throughout 2020 and continuing into 2021 as a result of the increases in customer payments noted above have resulted in lower charge-offs than we would have otherwise expected.

As we continue to experience lower than expected delinquency rates, we expect these improvements will continue to result in lower combined net charge-off rates for the remainder of 2021, when compared to comparable prior periods (those periods prior to COVID-19 and the resulting government stimulus programs).

Notwithstanding the improvements we expect to see in the next few quarters due to recent improvements in delinquency rates, we expect the growth in point-of-sale and direct-to-consumer receivables to result in higher charge-offs than those experienced in 2020.

Improvements in our delinquency rates throughout 2020 and continuing throughout 2021 as a result of the increases in customer payments noted above have resulted in lower charge-offs than we would have otherwise expected.

As we continue to experience lower than expected delinquency rates, we expect these improvements will continue to result in lower combined net charge-off rates for the remainder of 2021 and early 2022 (with some increases expected over current ratios), when compared to comparable prior periods (i.e., those periods prior to COVID-19 and the resulting government stimulus programs).

Notwithstanding the improvements we have recently experienced in delinquency rates, we expect the continued growth in point-of-sale and direct-to-consumer receivables to result in higher charge-offs than those experienced in 2020.

This expectation is based on the following:

(1) higher expected charge off rates on the point-of-sale and direct-to-consumer receivables corresponding with higher yields on these receivables, (2) continued testing of receivables with higher risk profiles, which could lead to periodic increases in combined net charge-offs, (3) recent vintages reaching peak charge-off periods, (4) our current expectation for receivables growth during 2021 and (5) negative impacts on some consumers' ability to make payments on outstanding loans and fees receivable as a result of COVID-19.

(1) higher expected charge off rates on the point-of-sale and direct-to-consumer receivables corresponding with higher yields on these receivables, (2) continued testing of receivables with higher risk profiles, which could lead to periodic increases in combined net charge-offs, (3) recent vintages reaching peak charge-off periods, (4) our receivables growth during 2021 and (5) negative impacts on some consumers' ability to make payments on outstanding loans and fees receivable as a result of COVID-19 and the related economic impacts.

Further impacting our charge-off rates are the timing and size of solicitations that serve to minimize charge off rates in periods of high receivable acquisitions but also exacerbate charge-off rates in periods of lower receivable acquisitions.

The unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable could lead to changes in these expectations.

The potential impacts COVID-19 and related economic impacts, government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable could lead to changes in these expectations.

We previously referred to this financial measure as "combined gross charge-off ratio." We have renamed this financial measure to more accurately describe its content and have not changed the calculation of this measure. 

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We have experienced minor fluctuations in our average APR based on the relative product mix of receivables purchased during a period.

We currently expect our average APRs in 2021 to remain consistent with average APRs over the past several quarters;

We currently expect our average APRs in the remainder of 2021 and early 2022 to remain consistent with average APRs over the past several quarters;

however, the timing and relative mix of receivables acquired could cause some minor fluctuations.

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Receivables purchased during the period reflect the gross amount of investments we have made in a given period, net of any credits issued to consumers during that same period.

For most periods presented, our point-of-sale receivable purchases experienced overall growth throughout the periods presented largely based on the addition of new point-of-sale retail partners, as previously discussed.

For most periods presented, our point-of-sale receivable purchases experienced overall growth largely based on the addition of new point-of-sale retail partners, as previously discussed.

We may experience periodic declines in these acquisitions due to:

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seasonal purchase activity by consumers;

labor shortages and supply chain disruptions;

or the timing of new customer originations by our lending partners. We currently expect to see increases in receivable acquisitions when compared to the same period in prior years.

Our direct-to-consumer receivable acquisitions tend to have more volatility based on the issuance of new credit card accounts by our lending partner and the availability of capital to fund new purchases.

Nonetheless, absent the unknown impacts COVID-19 may have on our ability to acquire new receivables or the impact it may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect continued growth in the acquisition of these receivables throughout 2021.

Nonetheless, absent the potential impacts COVID-19 may have on our ability to acquire new receivables or the impact it may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect continued growth in the acquisition of these receivables for the remainder of 2021 and 2022.

Auto Finance Segment

CAR, our auto finance platform acquired in April 2005, principally purchases and/or services loans secured by automobiles from or for, and also provides floor-plan financing for, a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. We have expanded these operations to also include certain installment lending products in addition to our traditional loans secured by automobiles both in the U.S.

Collectively, as of June 30, 2021, we served more than 600 dealers through our Auto Finance segment in 33 states, the District of Columbia and two U.S.

Collectively, as of September 30, 2021, we served more than 600 dealers through our Auto Finance segment in 33 states, the District of Columbia and two U.S.

Non-GAAP Financial Measures

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Managed receivables.

 Absent the unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect modest growth in the level of our managed receivables for 2021 when compared to the same periods in prior years as CAR expands within its current geographic footprint and continues plans for service area expansion.

 Absent the potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect modest growth in the level of our managed receivables for the remainder of 2021 and early 2022 when compared to the same periods in prior years as CAR expands within its current geographic footprint and continues plans for service area expansion.

Although we are expanding our CAR operations, the Auto Finance segment faces strong competition from other specialty finance lenders, as well as the indirect effects on us of our buy-here, pay-here dealership partners’

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Delinquencies.

 Current delinquency levels are consistent with our expectations for levels in the near term with some improvement noted in the first quarter of 2021 and in 2020 periods (when compared to the same periods in 2019) due to stronger than anticipated customer payment behavior.

 Current delinquency levels are consistent with our expectations for levels in the near term with some improvement noted in the first quarter of 2021 and in 2020 periods due to stronger than anticipated customer payment behavior.

Delinquency rates also tend to fluctuate based on seasonal trends and historically are lower in the first quarter of each year as seen above due to the benefits of strong payment patterns associated with year-end tax refunds for most consumers.

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While we anticipate our charge-offs to be incurred ratably across our portfolio of dealers, specific dealer-related losses are difficult to predict and can negatively influence our combined net charge-off ratio.

This is evidenced by the slightly elevated combined net charge-off rate we experienced during 2019.

This is evidenced by the slightly elevated combined net charge-off rate we experienced during the fourth quarter of 2019.

We continually re-assess our dealers and will take appropriate action if we believe a particular dealer’s risk characteristics adversely change.

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We also expect our recovery rate to fluctuate modestly from quarter to quarter due to the timing of the sale of repossessed autos.

Given the unknown impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable, we could experience variation in these expectations.

Given the potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable, we could experience variation in these expectations.

Definitions of Certain Non-GAAP Financial Measures

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LIQUIDITY, FUNDING AND CAPITAL RESOURCES

As discussed elsewhere in this Report, we are closely monitoring the impacts of the COVID-19 pandemic across our business, including the resulting uncertainties around consumer spending, credit quality and levels of liquidity.

The ultimate impact of COVID-19 on our business, financial condition, liquidity and results of operations is dependent on future developments, which are highly uncertain.

We believe that our actions taken to date, future cash provided by operating activities, availability under our debt facilities, and access to the capital markets will provide adequate resources to fund our operating and financing needs.

Our primary focus is growing the point-of-sale and direct-to-consumer credit card receivables so that our revenues from these investments will help us maintain consistent profitability.

Our primary focus is expanding the reach of our financial technology so that we grow our point-of-sale and direct-to-consumer credit card receivables and generate revenues from these investments that will allow us to maintain consistent profitability.

Increases in new and existing retail partnerships and the expansion of our investments in direct-to-consumer finance products have resulted in year-over-year growth of total managed receivables levels, and we expect growth to continue in the coming quarters.

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All of our Credit and Other Investments segment’s structured financing facilities are expected to amortize down with collections on the receivables within their underlying trusts and should not represent significant refunding or refinancing risks to our consolidated balance sheets.

Facilities that could represent near-term significant refunding or refinancing needs (within the next 24 months) as of June 30, 2021 are those associated with the following notes payable in the amounts indicated (in millions):

Facilities that could represent near-term significant refunding or refinancing needs (within the next 24 months) as of September 30, 2021 are those associated with the following notes payable in the amounts indicated (in millions):

Revolving credit facility (expiring July 15, 2022) that is secured by certain receivables and restricted cash

Revolving credit facility (expiring August 15, 2022) that is secured by certain receivables and restricted cash

Amortizing debt facility (expiring September 30, 2021) that is secured by certain receivables and restricted cash

Revolving credit facility (expiring October 15, 2022) that is secured by certain receivables and restricted cash

Revolving credit facility (expiring April 21, 2023) that is secured by certain receivables and restricted cash

Based on the state of the debt capital markets, the performance of our assets that serve as security for the above facilities, and our relationships with lenders, we view imminent refunding or refinancing risks with respect to the above facilities as low in the current environment, and we believe that the quality of our new receivables should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attracting new lending relationships. Further details concerning the above debt facilities, other debt facilities we use to fund the acquisition of receivables and our convertible senior notes are provided in Note 9, “Notes Payable,”

and Note 10, “Convertible Senior Notes,”

to our consolidated financial statements included herein.

In the three and six months ended June 30, 2021, we repurchased $6.4 million and $21.1 million, respectively, in face amount of our outstanding convertible senior notes for $10.2 million and $28.9 million, respectively, in cash (including accrued interest), respectively. The repurchase resulted in a loss of approximately $5.4 million and $13.3 million, respectively (including the convertible senior notes’

Based on the state of the debt capital markets, the performance of our assets that serve as security for the above facilities, and our relationships with lenders, we view imminent refunding or refinancing risks with respect to the above facilities as low in the current environment, and we believe that the quality of our new receivables should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attracting new lending relationships. Further details concerning the above debt facilities and other debt facilities we use to fund the acquisition of receivables are provided in Note 9, “Notes Payable,” to our consolidated financial statements included herein.

In the three and nine months ended September 30, 2021, we repurchased $0.9 million and $22.1 million, respectively, in face amount of our outstanding convertible senior notes for $1.6 million and $30.4 million, respectively, in cash (including accrued interest). The repurchase resulted in a loss of approximately $0.9 million and $14.1 million, respectively (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

Upon acquisition, the notes were retired.

On June 17, 2021, we provided notice of redemption of all outstanding convertible senior notes (the “convertible senior notes”).

Upon the final determination of the amount of the conversion consideration, we will deliver to holders of the converting notes cash of $1,000 per $1,000 aggregate principal amount of notes and either cash or shares of our common stock in respect of the remainder of the conversion obligation, if any.

We have sufficient cash to meet this obligation. 

If required to issue shares of common stock in connection with the conversion obligation, we have a sufficient number of authorized shares of our common stock to do so. 

On June 17, 2021, we provided notice of redemption of all outstanding convertible senior notes.

Upon final determination of the conversion consideration amount, we delivered to holders of the converting notes, cash of $1,000 per $1,000 aggregate principal amount of notes and $12.1 million of cash in respect of the remainder of the conversion obligation.

The redemption resulted in a loss of approximately $15.3 million (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

Upon redemption, the notes were retired.

On November 14, 2019, a wholly-owned subsidiary issued 50.5 million Class B preferred units at a purchase price of $1.00 per unit to an unrelated third party.

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On March 30, 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms.

The proceeds from the transaction are being used for general corporate purposes.

The proceeds from the transaction were used for general corporate purposes.

We have included the issuance of these Class B preferred units as temporary noncontrolling interest on the consolidated balance sheets.

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At the request of the holders of a majority of the shares of the Series A Preferred Stock, the Company is required to offer to redeem all of the Series A Preferred Stock at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends, at the option of the holders thereof, on or after January 1, 2024. Upon the election by the holders of a majority of the shares of Series A Preferred Stock, each share of the Series A Preferred Stock is convertible into the number of shares of the Company’s common stock as is determined by dividing (i) the sum of (a) $100 and (b) any accumulated and unpaid dividends on such share by (ii) an initial conversion price equal to $10 per share, subject to adjustment in certain circumstances to prevent dilution.

In June and July 2021, we issued an aggregate of 3,188,533 shares of 7.625% Series B Cumulative Perpetual Preferred Stock, liquidation preference of $25.00 per share (the “Series B Preferred Stock”) for net proceeds of approximately $76.5 million after deducting underwriting discounts and commissions, but before deducting expenses and the structuring fee. 

We pay cumulative cash dividends on the Series B Preferred Stock, when and as declared by our Board of Directors, in the amount of $1.90625 per share each year, which is equivalent to 7.625% of the $25.00 liquidation preference per share.

The use of the London Interbank Offered Rate (“LIBOR”) is expected to be phased out by mid-2023.

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however, we currently do not expect the impact to be material to the Company.

At June 30, 2021, we had $265.9 million in unrestricted cash held by our various business subsidiaries.

At September 30, 2021, we had $167.0 million in unrestricted cash held by our various business subsidiaries.

Because the characteristics of our assets and liabilities change, liquidity management has been a dynamic process for us, driven by the pricing and maturity of our assets and liabilities.

We historically have financed our business through cash flows from operations, asset-backed structured financings and the issuance of debt and equity.

Details concerning our cash flows for the six months ended June 30, 2021 and 2020 are as follows:

During the six months ended June 30, 2021, we generated $124.5 million of cash flows from operations compared to our generating $84.0 million of cash flows from operations during the six months ended June 30, 2020.

The increase in cash provided by operating activities was principally related to increases in finance and fee collections associated with growing point-of-sale and direct-to-consumer receivables. 

During the six months ended June 30, 2021, we used $159.8 million of cash in our investing activities, compared to use of $67.5 million of cash in investing activities during the six months ended June 30, 2020. This increase in cash used is primarily due to significant increases in the level of net investments in the point-of-sale and direct-to-consumer receivables relative to the same period in 2020 primarily due to increased consumer spending offset by continued strong customer payments noted in the first and second quarters of 2021.

While we are now seeing some increases in consumer spending behavior, the impacts COVID-19 and related government stimulus and relief measures may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable are unknown. 

During the six months ended June 30, 2021, we generated $110.1 million of cash in financing activities, compared to the use of $14.8 million of cash in financing activities during the six months ended June 30, 2020.

Details concerning our cash flows for the nine months ended September 30, 2021 and 2020 are as follows:

During the nine months ended September 30, 2021, we generated $140.0 million of cash flows from operations compared to our generating $147.8 million of cash flows from operations during the nine months ended September 30, 2020.

The decrease in cash provided by operating activities was principally related to slight decreases in finance and fee collections associated with point-of-sale and direct-to-consumer receivables as government stimulus payments declined and consumer payments return to normalized levels as well as a bulk sale of charge-off accounts in the nine months ended September 30, 2020 which resulted in proceeds of $5.0 million. 

During the nine months ended September 30, 2021, we used $294.5 million of cash in our investing activities, compared to use of $180.9 million of cash in investing activities during the nine months ended September 30, 2020. This increase in cash used is primarily due to significant increases in the level of net investments in the point-of-sale and direct-to-consumer receivables relative to the same period in 2020 primarily due to increased consumer spending offset by strong customer payments noted in the first and second quarters of 2021.

While we are now seeing some increases in consumer spending behavior, the impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable are unknown. 

During the nine months ended September 30, 2021, we generated $110.3 million of cash in financing activities, compared to our generating of $33.6 million of cash in financing activities during the nine months ended September 30, 2020.

In both periods, the data reflect borrowings associated with point-of-sale and direct-to-consumer receivables offset by net repayments of amortizing debt facilities as payments are made on the underlying receivables that serve as collateral.

Further, during the second quarter of 2021, we issued Series B Cumulative Perpetual Preferred Stock, which resulted in net proceeds (after associated expenses) of $66.1 million. Offsetting capital raised through the preferred stock issuance was the repurchase of $21.1 million in face amount of our outstanding convertible senior notes for $28.9 million in cash (including accrued interest). The repurchase resulted in a loss of approximately $13.3 million (including the convertible senior notes’

Further, during the second and third quarters of 2021, we issued Series B Preferred Stock, which resulted in net proceeds (after associated expenses) of $75.3 million. Offsetting capital raised through the preferred stock issuance was the repurchase and redemption of $33.8 million in face amount of our outstanding convertible senior notes for $54.3 million in cash (including accrued interest). The repurchase and redemption resulted in an aggregate loss of approximately $29.4 million (including the convertible senior notes’

applicable share of deferred costs, which were written off in connection with the repurchase).

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We expect to take advantage of any opportunities to raise additional capital if terms and pricing are attractive to us.

Any proceeds raised under these efforts or additional liquidity available to us could be used to fund (1) additional investments in point-of-sale and direct-to-consumer finance receivables as well as the acquisition of credit card receivables portfolios and (2) further repurchases of our common stock.

Pursuant to a share repurchase plan authorized by our Board of Directors on May 7, 2020, we are authorized to repurchase up to 5,000,000 shares of our common stock through June 30, 2022. As of June 30, 2021, we were authorized to repurchase a remaining 4,911,080 shares under this share repurchase plan.

Any proceeds raised under these efforts or additional liquidity available to us could be used to fund additional investments in point-of-sale and direct-to-consumer finance receivables as well as the acquisition of credit card receivables portfolios.

Pursuant to a share repurchase plan authorized by our Board of Directors on May 7, 2020, we are authorized to repurchase up to 5,000,000 shares of our common stock through June 30, 2022. As of September 30, 2021, we were authorized to repurchase a remaining 4,911,080 shares under this share repurchase plan.

CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE-SHEET ARRANGEMENTS

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In January 2013, HBR began leasing the services of four employees from us. HBR reimburses us for the full cost of the employees, based on the amount of time devoted to HBR.

In the six months ended June 30, 2021 and 2020, we received $191,788 and $144,138, respectively, of reimbursed costs from HBR associated with these leased employees.

In the nine months ended September 30, 2021 and 2020, we received $286,048 and $225,003, respectively, of reimbursed costs from HBR associated with these leased employees.

On November 26, 2014, we and certain of our subsidiaries entered into a Loan and Security Agreement with Dove.

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delinquency and charge-off rates;

the extent and duration of the COVID-19 pandemic and its impact on the Company, our bank partners, merchant network, financing sources, borrowers, loan demand, legal and regulatory matters, borrower payment patterns, information security and consumer privacy, the capital markets, the economy in general and changes in the U.S.

the extent and duration of the COVID-19 pandemic and its impact on the Company, our bank partners, merchant network, financing sources, borrowers, loan demand, the labor market supply chain, legal and regulatory matters, borrower payment patterns, information security and consumer privacy, the capital markets, the economy in general and changes in the U.S.

economy that could materially impact consumer spending behavior, unemployment and demand for our products;

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debt retirement;

the results associated with our equity-method investee;

our servicing income levels;

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set forth in Part II, Item 1A, and the risk factors and other cautionary statements in other documents we file with the SEC, including the following:

our reliance on proprietary and third-party technology;

the availability of adequate financing to support growth;

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competition from various sources providing similar financial products, or other alternative sources of credit, to consumers;

impacts due to delays or interruptions associated with ongoing system conversions; 

the adequacy of our allowances for uncollectible loans, interest and fees receivable and estimates of loan losses used within our risk management and analyses;

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements