What changed in this filing

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Item 1. Financial Statements

2022-08-09 compared with 2022-05-10 · 451 added, 244 removed, 1719 unchanged (29% of the section changed)

3 unchanged sentences

(Dollars in thousands)

Unrestricted cash and cash equivalents (including $ 211.6 million and $209.5 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively)

Unrestricted cash and cash equivalents (including $ 184.5 million and $ 209.5 million associated with variable interest entities at June 30, 2022 and December 31, 2021, respectively)

$ 316,331  

$ 409,660  

Restricted cash and cash equivalents (including $ 12.5 million and $ 75.9 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively)

Restricted cash and cash equivalents (including $ 25.0 million and $ 75.9 million associated with variable interest entities at June 30, 2022 and December 31, 2021, respectively)

49,989  

1 unchanged sentence

Loans, interest and fees receivable:

Loans, interest and fees receivable, at fair value (including $ 1,293.2 million and $ 925.5 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively)

Loans, interest and fees receivable, at fair value (including $ 1,461.3 million and $ 925.5 million associated with variable interest entities at June 30, 2022 and December 31, 2021, respectively)

1,616,875  

12 unchanged sentences

Operating lease right-of-use assets

12,264  

Prepaid expenses and other assets

7 unchanged sentences

Operating lease liabilities

Notes payable, net (including $ 1,206.6 million and $ 1,223.4 million associated with variable interest entities at March 31, 2022 and December 31, 2021, respectively)

19,764  

Notes payable, net (including $ 1,359.7 million and $ 1,223.4 million associated with variable interest entities at June 30, 2022 and December 31, 2021, respectively)

1,429,340  

1,278,864  

Senior notes, net

9 unchanged sentences

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

Series A preferred stock, 400,000 shares issued and outstanding at March 31, 2022 (liquidation preference - $ 40.0 million);

Series A preferred stock, 400,000 shares issued and outstanding at June 30, 2022 (liquidation preference - $ 40.0 million);

400,000 shares issued and outstanding at December 31, 2021 (Note 4) (1)

5 unchanged sentences

Shareholders' Equity

Series B preferred stock, no par value, 3,188,533 shares issued and outstanding at March 31, 2022 (liquidation preference - $ 79.7 million);

Series B preferred stock, no par value, 3,188,533 shares issued and outstanding at June 30, 2022 (liquidation preference - $ 79.7 million);

3,188,533 shares issued and outstanding at December 31, 2021 (1)

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

14,912,895 and 14,804,408 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively

14,561,078 and 14,804,408 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

Paid-in capital

20 unchanged sentences

For the Three Months Ended

For the Six Months Ended

Consumer loans, including past due fees

14 unchanged sentences

Income before income taxes

Income tax benefit (expense)

Income tax expense

Net loss attributable to noncontrolling interests

8 unchanged sentences

Equity (Unaudited)

For the Three Months Ended March 31, 2022 and March 31, 2021

For the Three and Six Months Ended June 30, 2022 and June 30, 2021

(Dollars in thousands)

18 unchanged sentences

Balance at March 31, 2022

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 June 30, 2022

Series B Preferred Stock

15 unchanged sentences

Balance at March 31, 2021

Accretion of discount associated with issuance of subsidiary equity

Preferred dividends

Stock option exercises and proceeds related thereto

Compensatory stock issuances, net of forfeitures

Issuance of series B preferred stock, net

Contributions by owners of noncontrolling interests

Deferred stock-based compensation costs

Redemption and retirement of shares

Balance at June 30, 2021

See accompanying notes.

2 unchanged sentences

(Dollars in thousands)

For the Three Months Ended March 31,

For the Six Months Ended June 30,

Operating activities

13 unchanged sentences

(Decrease) increase in income tax liability

Increase in accounts payable and accrued expenses

Increase (decrease) in accounts payable and accrued expenses

Net cash provided by operating activities

8 unchanged sentences

Noncontrolling interests contributions

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

Preferred dividends

3 unchanged sentences

Repayment of borrowings

Net cash used in financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents and restricted cash

Net (decrease) increase in cash and cash equivalents and restricted cash

Cash and cash equivalents and restricted cash at beginning of period

3 unchanged sentences

Net cash income tax payments

Increase (decrease) in accrued and unpaid preferred dividends

Decrease in accrued and unpaid preferred dividends

See accompanying notes.

1 unchanged sentence

Notes to Consolidated Financial Statements

March 31, 2022 and 2021

June 30, 2022 and 2021

Description of Our Business

12 unchanged sentences

The services of our bank partners are often extended to consumers who may not have access to financing options with larger financial institutions.

We specialize in supporting this “second-look”

credit service.

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.

11 unchanged sentences

In March 2020, a national emergency was declared under the National Emergencies Act due to a new strain of coronavirus ("COVID- 19" ).

The COVID- 19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods, which is being driven by low business inventories.

The COVID- 19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods.

In addition, rising inflation in 2021 and 2022 has resulted in increasing costs for many goods and services.

4 unchanged sentences

Russia’s invasion of Ukraine has intensified supply chain disruptions and heightened uncertainty surrounding the near-term outlook for the broader economy.

The impacts of new COVID- 19 variants, responses to the COVID- 19 pandemic by both consumers and governments, rising energy costs, inflation, rising interest rates, and the unresolved geopolitical tensions relating to Russia’s invasion of Ukraine could significantly affect the sustainability of current economic growth.

The duration and severity of the effects of COVID- 19 on our financial condition, results of operations and liquidity remain highly uncertain.

26 unchanged sentences

The ASU also allows for a one -time fair value election for receivables.

Upon adoption, we elected the fair value option for all remaining loans receivable associated with our private label credit and general purpose credit card platform previously measured at amortized cost and recorded an increase to our allowance for loan losses for our remaining Loans, interest and fees receivable associated with our Auto Finance Segment. 

The adoption of CECL resulted in an increase to our opening balance of retained earnings of $ 8.6 million.

Loans, Interest and Fees Receivable, at Fair Value.

2 unchanged sentences

Loans and finance receivables include accrued and unpaid interest and fees.

As discussed above, as of March 31, 2022 all receivables associated with our private label credit and general purpose credit cards are included within this category of receivables.

As discussed above, as of January 1, 2022 all receivables associated with our private label credit and general purpose credit cards are included within this category of receivables.

Under the fair value option, direct loan origination fees (such as annual and merchant fees) are taken into income when billed to the consumer or upon loan acquisition and direct loan origination costs are expensed in the period incurred.

6 unchanged sentences

Our loans, interest and fees receivable, gross, currently consist of receivables associated with our Auto Finance segment’s operations.

Prior to January 1, 2022 this category of receivable also included a portion (those which are not part of our Fair Value Receivables) of our private label credit and general purpose credit card receivables within our CaaS segment. Our CaaS 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 $ 56.5 million and $ 50.5 million for the three months ended March 31, 2022 

Prior to January 1, 2022 this category of receivable also included a portion (those which were not part of our Fair Value Receivables) of our private label credit and general purpose credit card receivables within our CaaS segment. Our CaaS 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 $ 52.8 million, $ 109.3 million, $ 47.8 million and $ 98.3 million for the three and six months ended June 30, 2022 

and 2021, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

14 unchanged sentences

We may individually evaluate a receivable or pool of receivables for impairment if circumstances indicate that the receivable or pool of receivables may be at higher risk for non-performance than other receivables (e.g., if a particular retail or auto-finance partner has indications of non-performance (such as a bankruptcy) that could impact the underlying pool of receivables we purchased from the partner).

Certain of our loans, interest and fees receivable (including those receivables associated with our private label credit and general purpose credit card receivables prior to their adoption of fair value accounting) also contain components of deferred revenue including merchant fees on the purchases of receivables for our private label credit receivables and annual fee billings for our general purpose credit card receivables.

Our private label credit and auto finance loans, interest and fees receivable include principal balances and associated fees and interest due from customers which are earned each period a loan is outstanding, net of the unearned portion of merchant fees and loan discounts.

Additionally, many of our general purpose credit card receivables have an annual membership fee that is billed to the consumer on card activation and on each anniversary of that date thereafter.

As of March 31, 2022 

and December 31, 2021, the weighted average remaining accretion period for the $ 15.9 million and $ 29.3 million of deferred revenue reflected in the consolidated balance sheets was 26  months and 15  months, respectively.

Included within deferred revenue, are merchant fees and discounts on purchased loans of $ 15.9 million and $ 20.4 million as of March 31, 2022 

and December 31, 2021, respectively.

Certain of our loans, interest and fees receivable (including those receivables associated with our private label credit and general purpose credit card receivables prior to their adoption of fair value accounting) also contain components of deferred revenue including merchant fees on the purchases of receivables for our private label credit receivables, loan discounts on the purchase of our auto finance receivables and annual fee billings for our general purpose credit card receivables.

Our private label credit, general purpose credit card and auto finance loans, interest and fees receivable include principal balances and associated fees and interest due from customers which are earned each period a loan is outstanding, net of the unearned portion of merchant fees, annual fees and loan discounts.

As of June 30, 2022 

and December 31, 2021, the weighted average remaining accretion period for the $ 16.7  million and $ 29.3 million of deferred revenue reflected in the consolidated balance sheets was 27  months and 15  months, respectively.

Included within deferred revenue, are discounts on purchased auto loans of $ 16.7 million as of June 30, 2022 and merchant fees, annual fees and discounts of $ 20.4 million as of December 31, 2021.

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

4 unchanged sentences

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

Through March 31, 2022 

Through June 30, 2022 

we continued to actively work with consumers that indicated hardship as a result of COVID- 19;

however, the number of impacted consumers is a small and diminishing part of our overall receivable base.

however, the number of impacted consumers is a small 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.

2 unchanged sentences

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 March 31, 2022

Other Unsecured Lending Products

For the Three Months Ended June 30, 2022

Other Unsecured Lending Products  

Allowance for uncollectible loans, interest and fees receivable:

1 unchanged sentence

$ ( 1.6 )  

Provision for loan losses

( 0.2 )  

Balance at end of period

$ ( 1.6 )  

For the Six Months Ended June 30, 2022

Other Unsecured Lending Products  

Allowance for uncollectible loans, interest and fees receivable:

Balance at beginning of period

$ ( 43.4 )  

$ ( 1.4 )  

$ ( 12.4 )  

Cumulative effects from adoption of fair value under the CECL standard

6 unchanged sentences

$ ( 1.6 )  

As of March 31, 2022

Other Unsecured Lending Products

As of June 30, 2022

Other Unsecured Lending Products  

Allowance for uncollectible loans, interest and fees receivable:

10 unchanged sentences

$ 104.6  

For the Three Months Ended March 31, 2021

Other Unsecured Lending Products

For the Three Months Ended June 30, 2021

Other Unsecured Lending Products  

Allowance for uncollectible loans, interest and fees receivable:

13 unchanged sentences

$ ( 25.8 )  

For the Six Months Ended June 30, 2021

Other Unsecured Lending Products  

Allowance for uncollectible loans, interest and fees receivable:

Balance at beginning of period

$ ( 88.2 )  

$ ( 1.7 )  

$ ( 35.1 )  

Provision for loan losses

( 15.2 )  

( 0.1 )  

( 4.8 )  

( 0.6 )  

( 4.3 )  

Balance at end of period

$ ( 68.0 )  

$ ( 1.4 )  

$ ( 25.8 )  

As of December 31, 2021

Other Unsecured Lending Products

Allowance for uncollectible loans, interest and fees receivable:

19 unchanged sentences

Amounts we believe we will not ultimately collect are included as a component in our overall allowance for uncollectible loans, interest and fees receivable.

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.

Recoveries, noted above, consist of amounts received from the efforts of third -party collectors 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 income.

For the three months ended March 31, 2022, $ 0.3 million of our recoveries noted above related to collections from third -party collectors we employ and $ 0.0  million related to sales of charged-off accounts to unrelated third -parties.

For the three months ended March 31, 2021, $ 2.4 million of our recoveries noted above related to collections from third -party collectors we employ and $ 1.3 million related to sales of charged-off accounts to unrelated third -parties.

For the three and six months ended June 30, 2022, $ 0.2 million and $ 0.5 million, respectively, of our recoveries noted above related to collections from third -party collectors and $ 0.0 million and $ 0.0 million, respectively, related to sales of charged-off accounts to unrelated third -parties.

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 and $ 3.3 million and $ 4.6 million, respectively, related to sales of charged-off accounts to unrelated third -parties.

We consider loan delinquencies a key indicator of credit quality because this measure provides the best ongoing estimate of how a particular class of receivable is performing.

An aging of our delinquent loans, interest and fees receivable, gross (in millions) by class of receivable as of March 31, 2022 

An aging of our delinquent loans, interest and fees receivable, gross (in millions) by class of receivable as of June 30, 2022 

and December 31, 2021 

is as follows:

As of March 31, 2022

Other Unsecured Lending Products

As of June 30, 2022

Other Unsecured Lending Products  

30-59 days past due

8 unchanged sentences

As of December 31, 2021

Other Unsecured Lending Products

30-59 days past due

15 unchanged sentences

may be reduced or eliminated, or a certain amount of accrued fees is waived, provided a minimum number or amount of payments have been made.

Following this adjustment, if a customer demonstrates a willingness and ability to resume making monthly payments and meets certain additional criteria, we will re-age the customer’s account.

When we re-age an account, we adjust the status of the account to bring a delinquent account current, but generally do

not make any further modifications to the payment terms or amount owed.

Following this adjustment, if a customer we serve demonstrates a willingness and ability to resume making monthly payments and meets certain additional criteria, the customer’s account is re-aged.

When an account is re-aged, the status of the account is adjusted to bring a delinquent account current, but generally

no  further modifications to the payment terms or amounts owed are made.

Once an account is placed on a non-accrual status, it is closed for further purchases.

10 unchanged sentences

19 Guidance, we believe this constitutes an interpretation of GAAP and therefore should be applied to our accounting circumstances.

As a result, the below tables exclude certain accounts that are included under that

As a result, the below tables exclude certain accounts that are included under that guidance.

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

March 31, 2022 and 

June 30, 2022 and 

December 31, 2021 :

March 31, 2022

June 30, 2022

December 31, 2021

Private label credit

General purpose credit card

Private label credit

General purpose credit card

13 unchanged sentences

$ 2,467  

$ 1,205  

$ 1,553  

Carrying value of TDRs (in thousands)

17 unchanged sentences

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

The Company modified 84,878 and 51,424 accounts in the amount of $89.5 million and $ 59.2 million during the twelve month periods ended March 31, 2022  and March 31, 2021 , respectively, that qualified as TDRs.

The Company modified 98,880 and 52,686 accounts in the amount of $ 106.7 million and $ 57.4 million during the twelve month periods ended June 30, 2022  and June 30, 2021 , 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

March 31, 2022

March 31, 2021

Private label credit

June 30, 2022

June 30, 2021

Private label credit  

General purpose credit card

Private label credit

General purpose credit card

6 unchanged sentences

$ 4,847  

We experienced a negative effective tax rate of 18.8%  for the three months ended March 31, 2022, compared to an effective tax rate of 15.0 % for the three months ended March 31, 2021.

Our negative effective tax rate for the three months ended March 31, 2022 ( i.e., versus the statutory rate) resulted from ( 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’

We experienced effective tax rates of 20.4 % and 2.0 %, respectively, for the three and six months ended June 30, 2022, compared to 21.6 % and 18.1 %, respectively, for the three and six months ended June 30, 2021.

Our effective tax rates for the three and six months ended June 30, 2022 are below the statutory rate principally due to ( 1 ) deductions during such periods 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. Partially offsetting these two items are the effects of state and foreign income tax expense.

Our effective tax rate for the three months ended March 31, 2021 

was below the statutory rate 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, ( 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, and ( 3 ) our release of state tax valuation allowances.

Partially offsetting the foregoing items were the effects of ( 1 ) executive compensation deduction limits under Section 162 (m) of the Internal Revenue Code of 1986, as amended, and ( 2 ) state and foreign income tax expense.

We report interest expense associated with our income tax liabilities (including accrued liabilities for uncertain tax positions) within our income tax line item on our consolidated statements of operations.

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

was 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 various government stimulus programs.

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, were ( 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.

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 months ended March 31, 2022, and 2021.

We had de minimis interest expense or reversals thereof during the three and six months ended June 30, 2022, and 2021.

Revenue Recognition and Revenue from Contracts with Customers

2 unchanged sentences

Discounts received associated with auto loans that are not included as part of our Fair Value Receivables are deferred and amortized over the average life of the related loans using the effective interest method.

Premiums, discounts and merchant fees paid or received associated with Fair Value Receivables are recognized upon receivable acquisition.

Premiums, discounts, annual fees and merchant fees paid or received associated with Fair Value Receivables are recognized upon receivable acquisition.

Finance charges and fees, net of amounts that we consider uncollectible, are included in loans, interest and fees receivable and revenue when the fees are earned based upon the contractual terms of the loans.

Fees and Related Income on Earning Assets

Fees and related income on earning assets primarily include fees associated with the credit products, including the receivables underlying our private label credit and general purpose credit card platform, and our legacy credit card receivables which include the recognition of annual fee billings and cash advance fees among others.

Fees and related income on earning assets primarily include fees associated with credit products, including the receivables underlying the private label and general purpose credit cards we service, and our legacy credit card receivables which include the recognition of annual fee billings and cash advance fees among others.

Fees are assessed on credit card accounts underlying our credit card receivables according to the terms of the related cardholder agreements and we recognize these fees as income when they are charged to the customers’

12 unchanged sentences

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

For the Three Months Ended March 31, 2022

For the Three Months Ended June 30, 2022

Interchange revenues, net (1)

7 unchanged sentences

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

For the Three Months Ended March 31, 2021

For the Six Months Ended June 30, 2022

Interchange revenues, net (1)

7 unchanged sentences

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

For the Three Months Ended June 30, 2021

Interchange revenues, net (1)

$ 4,269  

Servicing income

Service charges and other customer related fees

Total revenue from contracts with customers

$ 6,998  

$ 7,312  

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

For the Six Months Ended June 30, 2021

Interchange revenues, net (1)

$ 6,891  

Servicing income

Service charges and other customer related fees

Total revenue from contracts with customers

$ 11,237  

$ 11,891  

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

Loss on repurchase and redemption of convertible senior notes

In periods where we repurchased or redeemed 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 months ended March 31, 2021, we repurchased $ 14.7 million in face amount of our convertible senior notes for $ 18.6 million in cash (including accrued interest).

The repurchase resulted in a loss of approximately $ 7.8 million (including the convertible senior notes’

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

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 convertible senior notes for $ 10.2 million and $ 28.9  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’

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

Upon acquisition, the notes were retired. 

24 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.

We have evaluated subsequent events occurring after March 31, 2022.

Based on our evaluation, we included an accrual for a $ 8.5 million settlement associated with outstanding litigation related to our Auto Finance segment in our Other expense category on our consolidated statements of income . 

We have evaluated subsequent events occurring after June 30, 2022, 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

2 unchanged sentences

CaaS and Auto Finance.

As of both March 31, 2022 

As of both June 30, 2022 

and December 31, 2021, we did not have a material amount of long-lived assets located outside of the U.S.

3 unchanged sentences

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

Three Months Ended March 31, 2022

Three Months Ended June 30, 2022

Consumer loans, including past due fees

7 unchanged sentences

12,169  

12,410  

Other non-operating revenue

12 unchanged sentences

$ 104,369  

Income (loss) before income taxes

Income before income taxes

$ 39,979  

1 unchanged sentence

$ 42,540  

Income tax benefit

Income tax expense

$ ( 8,100 )  

$ ( 643 )  

Six Months Ended June 30, 2022

Consumer loans, including past due fees

$ 339,293  

1 unchanged sentence

$ 356,353  

Fees and related income on earning assets

120,499  

Three Months Ended March 31, 2021

120,537  

Other revenue

22,167  

22,676  

Other non-operating revenue

Total revenue

482,222  

17,644  

499,866  

Interest expense

( 35,715 )  

( 620 )  

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

( 329 )  

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

( 251,239 )  

$ 195,268  

$ 16,695  

$ 211,963  

Income (loss) before income taxes

$ 83,577  

$ ( 3,403 )  

$ 80,174  

Income tax (expense) benefit

$ ( 2,582 )  

$ 2,025,867  

$ 90,587  

$ 2,116,454  

Three Months Ended June 30, 2021

Consumer loans, including past due fees

15 unchanged sentences

( 11,296 )  

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

( 58,763 )  

$ 89,785  

$ 8,671  

$ 98,456  

Income before income taxes

$ 43,972  

$ 2,971  

$ 46,943  

Income tax expense

$ ( 9,390 )  

$ ( 727 )  

Six Months Ended June 30, 2021

Consumer loans, including past due fees

$ 208,366  

$ 16,584  

$ 224,950  

Fees and related income on earning assets

86,538  

86,573  

Other revenue

11,237  

11,891  

Other non-operating revenue

Total revenue

309,545  

17,295  

326,840  

Interest expense

( 25,559 )  

( 529 )  

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

( 15,303 )  

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

33 unchanged sentences

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

During the three months ended March 31, 2022 

and 2021, we repurchased and contemporaneously retired 1,005,212 and 9,928 shares of our common stock at an aggregate cost of $ 65,214,000 and $ 297,000 , 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, 2022, we repurchased and contemporaneously retired 355,036 and 1,360,248 shares of our common stock at an aggregate cost of $ 12,861,000 and $ 78,075,000 , 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, 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.

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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In the following table, we summarize (in thousands) results of operations data for our former equity-method investee:

Three Months Ended March 31,

Net income attributable to our equity investment investee

Three Months Ended June 30,

Six months ended June 30,

Net (loss) income

Net (loss) 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 macroeconomic events.

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

With the aforementioned market impacts of COVID- 19 and related economic impacts, we continue to include market degradation in our models to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that historical and current trends would suggest.

We update our fair value analysis each quarter, with changes since the prior reporting period reflected 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" in the consolidated statements of income.

Changes in interest rates, credit spreads, realized and projected credit losses and cash flow timing will lead to changes in the fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value and therefore impact earnings.

Changes in interest rates, credit spreads, discount rates, realized and projected credit losses and cash flow timing will lead to changes in the fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value and therefore impact earnings. 

Fair value differs from amortized cost accounting in the following ways:

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Net charge-offs are recognized as they occur rather than through the establishment of an allowance and provision for losses.

For all of our other receivables and debt (other than the notes payable underlying our formerly off-balance sheet credit card securitization structures), we have not elected the fair value option.

For all of our other receivables, we have not elected the fair value option.

Nevertheless, pursuant to applicable requirements, we include disclosures of the fair value of these other items to the extent practicable within the disclosures below.

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

March 31, 2022 and 

June 30, 2022 and 

December 31, 2021 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 March 31, 2022 (1)

As of June 30, 2022 (1)

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

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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 income 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 three months ended March 31, 2022  and 2021 :

For our loans, interest and fees receivable included in the above table, 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.

Loans, Interest and Fees Receivables, at Fair Value

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129,128  

Balance at March 31,

Balance at June 30,

$ 1,616,875  

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The net revaluation of loans, interest and fees receivable is based on the present value of future cash flows using a valuation model of expected cash flows and the estimated cost to service and collect those cash flows.

We estimate the present value of these future cash flows using a valuation model consisting of internally-developed estimates of assumptions third -party market participants would use in determining fair value, including estimates of net collected yield, principal payment rates, expected principal credit loss rates, costs of funds, discount rates and servicing costs.

We estimate the present value of these future cash flows using internally-developed estimates of assumptions third -party market participants would use in determining fair value, including estimates of net collected yield, principal payment rates, expected principal credit loss rates, costs of funds, discount rates and servicing costs.

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 income.

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 March 31, 2022 

and December 31, 2021:

and December 31, 2021. 

As discussed above, our fair value models include market degradation to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that historical and current trends would suggest. 

This market degradation is included in the below quantitative information:

Quantitative Information about Level 3 Fair Value Measurements

Fair Value Measurement

Fair Value at March 31, 2022 (in thousands)  

Fair Value at June 30, 2022 (in thousands)  

Valuation Technique

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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 March 31, 2022 

The table below summarizes (in thousands) by fair value hierarchy the June 30, 2022 

and December 31, 2021 

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Liabilities –

As of March 31, 2022

As of June 30, 2022

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

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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 three months ended March 31, 2021 ( no amounts were outstanding as of March 31, 2022):

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 ( no amounts were outstanding as of June 30, 2022):

Notes Payable Associated with Structured Financings, at Fair Value

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

Balance at March 31,

Balance at June 30,

$ 2,562  

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The net revaluation of these notes is based on the present value of future cash flows utilized in repayment of the outstanding principal and interest under the facilities using a valuation model of expected cash flows net of the contractual service expenses within the facilities.

We estimate the present value of these future cash flows using internally-developed estimates of assumptions third -party market participants would use in determining fair value, including:

estimates of gross yield, payment rates, expected credit loss rates, servicing costs, and discount rates on the credit card receivables that secure the non-recourse notes payable;

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Other Relevant Data

Other relevant data (in thousands) as of March 31, 2022 and 

Other relevant data (in thousands) as of June 30, 2022 and 

December 31, 2021 concerning certain assets and liabilities we carry at fair value are as follows:

As of March 31, 2022

As of June 30, 2022

Loans, Interest and Fees Receivable at Fair Value  

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$ 1,908,884  

$ 1,677,610  

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

$ 1,734,918  

$ 1,530,777  

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

$ 1,615,890  

$ 1,404,700  

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)

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

March 31, 2022

June 30, 2022

December 31, 2021

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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 (dollar amounts in thousands):

For the Three Months Ended March 31,

For the Three Months Ended June 30,

For the Six Months Ended June 30,

Operating lease cost, gross

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$ 1,721  

$ 3,097  

$ 3,447  

Sublease income

( 807 )  

( 1,291 )  

( 2,109 )  

Net Operating lease cost

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$ 2,618  

$ 3,635  

$ 5,202  

Weighted average remaining lease term - months

Weighted average discount rate

As of March 31, 2022 , maturities of lease liabilities were as follows (in thousands):

As of June 30, 2022 , maturities of lease liabilities were as follows (in thousands):

Gross Lease Payment

Payments received from Sublease

Net Lease Payment

2022 (excluding the three months ended March 31, 2022)

2022 (excluding the six months ended June 30, 2022)

$ ( 47 )  

( 39 )  

19,805  

Total lease payments

29,623  

( 86 )  

29,537  

Less imputed interest

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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.

The new lease covers approximately 73,000 square feet and commenced in June 2022 for a 146 month term.

The total commitment under the new lease is approximately $ 27.8 million and is included in the table above.

In connection with the commencement of this new lease, we discontinued most of the subleasing arrangements with third parties for space at our corporate headquarters. A right-of-use asset and liability was recorded at the commencement date of the lease.

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 March 31, 2022 , we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

As of June 30, 2022 , we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

Notes Payable

Notes Payable, at Face Value

Other notes payable outstanding as of March 31, 2022 and 

Other notes payable outstanding as of June 30, 2022 and 

December 31, 2021 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:

March 31, 2022

June 30, 2022

December 31, 2021

Revolving credit facilities at a weighted average interest rate equal to 4.3 % as of March 31, 2022 ( 4.3 % as of December 31, 2021) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 1,392.2 million as of March 31, 2022 ($ 1,391.6 million as of December 31, 2021)

Revolving credit facilities at a weighted average interest rate equal to 4.6% as of June 30, 2022 (4.3% as of December 31, 2021) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $1,576.9 million as of June 30, 2022 ($1,391.6 million as of December 31, 2021)

Revolving credit facility, not to exceed $ 55.0 million (expiring November 1, 2024 ) (1) (2) (3)

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Revolving credit facility, not to exceed $ 250.0 million (expiring October 15, 2025 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 15.0 million (expiring February 15, 2024 ) (3) (4) (5)

Revolving credit facility, not to exceed $ 25.0 million (expiring June 16, 2025 ) (3) (4) (5)

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

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

Revolving credit facility, not to exceed $ 250.0 million (expiring May 15, 2030 ) (3) (4) (5) (6)

Other facilities

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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 March 31, 2022 , the LIBOR rate was 0.45 % and the prime rate was 3.50 %.

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 $ 36.9  million was drawn as of March 31, 2022).

* As of June 30, 2022 , the LIBOR rate was 1.79 % and the prime rate was 4.75 %.

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 available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $ 38.9  million was drawn as of March 31, 2022).

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 March 31, 2022, the borrowing limit was $ 55.0 million and the maturity is November 1, 2024.

As of June 30, 2022, the borrowing limit was $ 55.0 million and the maturity is November 1, 2024.

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.

31, 2022 ) to separate unaffiliated third parties pursuant to facilities that can be drawn upon to the extent of outstanding eligible receivables.

In 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 $ 0.0 million was outstanding as of June 30, 2022) 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 Secured Overnight Financing Rate ("SOFR") plus a range between 4.5 % and 6.5 %, respectively.

The facilities mature on October 15, 2022 and March 15, 2024, 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.

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 $ 14.8 million was drawn as of March 31, 2022).

As of June 30, 2022, the aggregate borrowing limit was $ 110.0 million.

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 %.

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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 $ 4.8 million was drawn as of March 31, 2022).

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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The weighted average interest rate on the securities is fixed at 4.1 %.

In January 2021, we (through a wholly owned subsidiary) entered a revolving credit facility with a $ 15.0 million borrowing limit (of which $ 10.0 million was drawn as of March 31, 2022) that is available to the extent of outstanding eligible principal receivables.

In January 2021, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 25.0 million borrowing limit (of which $ 25.0 million was drawn as of June 30, 2022) 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 %.

The facility matures on February 15, 2024 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 facility matures on June 16, 2025 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.

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The weighted average interest rate on the securities is fixed at 4.24 %.

In September 2021, we entered a term facility with a $ 75 million limit (of which $ 0 was drawn as of March 31, 2022) 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 %.

In September 2021, we entered a term facility with a $ 75.0 million limit (of which $ 0 was drawn as of June 30, 2022) 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 

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

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The weighted average interest rate on the securities is fixed at 3.53 %.

As of March 31, 2022, we were in compliance with the covenants underlying our various notes payable and credit facilities.

In May 2022, we entered a $ 250.0 million ABS agreement (of which $ 150.0 million was outstanding as of June 30, 2022) 

secured by certain credit card receivables (expiring May 15, 2030).

The terms of the ABS allow for a five -year revolving structure with a subsequent 18 -month amortization period.

The weighted average interest rate on the securities is fixed at 6.33 %. 

As of June 30, 2022, we were in compliance with the covenants underlying our various notes payable and credit facilities.

Senior Notes, net

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We are amortizing fees associated with the issuance of the senior notes into interest expense over the expected life of the notes.

Amortization of these fees for the three months ended March 31, 2022 

totaled $ 0.4  million.

Amortization of these fees for the three and six months ended June 30, 2022 

totaled $ 0.4  million and $ 0.7  million, respectively.

Commitments and Contingencies

Under finance products available in the private label credit and general purpose credit card 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 $ 2.1 billion at March 31, 2022.

Unfunded commitments under these products aggregated $ 2.2  billion at June 30, 2022.

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.

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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 March 31, 2022, CAR had unfunded outstanding floor-plan financing commitments totaling $ 12.8  million.

As of June 30, 2022, CAR had unfunded outstanding floor-plan financing commitments totaling $ 12.6  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 $ 19.5 million remains pledged as of March 31, 2022 

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 March 31, 2022, we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote.

As of June 30, 2022, 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.

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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 $ 63.8 million as of March 31, 2022.

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 73.3 million as of June 30, 2022.

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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We are involved in various legal proceedings that are incidental to the conduct of our business.

In the first quarter of 2022, we accrued $ 8.5 million related to a settlement of outstanding litigation associated with our Auto Finance segment. There are currently no other pending legal proceedings that are expected to be material to us.

There are currently no pending legal proceedings that are expected to be material to us.

Net Income Attributable to Controlling Interests Per Common Share

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For the Three Months Ended

For the Six Months Ended

Net income attributable to controlling interests

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$ 36,876  

$ 79,035  

$ 80,951  

Preferred stock and preferred unit dividends and accretion

( 6,257 )  

( 4,738 )  

( 12,463 )  

Net income attributable to common shareholders—basic

1 unchanged sentence

32,138  

66,572  

71,526  

Effect of dilutive preferred stock dividends and accretion

2 unchanged sentences

$ 32,736  

$ 67,762  

$ 72,716  

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

1 unchanged sentence

15,182  

14,783  

15,097  

Effect of dilutive stock compensation arrangements and exchange of preferred stock

2 unchanged sentences

21,025  

19,769  

20,979  

Net income attributable to common shareholders per share—basic

1 unchanged sentence

$ 2.12  

$ 4.50  

$ 4.74  

Net income attributable to common shareholders per share—diluted

1 unchanged sentence

$ 1.56  

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 100,331  for the three months ended March 31, 2022 , compared to 421,639 for the three months ended March 31, 2021

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 months ended March 31, 2022 and 2021, respectively.

For both of the three months ended March 31, 2022 

and 2021, we included 4,000,000 shares in our outstanding diluted share counts associated with our Series A Preferred Stock.

$ 3.43  

$ 3.47  

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 153,650 and 127,138 for the three and six months ended June 30, 2022 , respectively, compared to 430,413 and 426,050 for the three and six months ended June 30, 2021, respectively

As their effects were anti-dilutive, we excluded stock options to purchase 0.1  million shares and 0.0  shares from our net income attributable to controlling interests per share of common stock calculations for the three and six months ended June 30, 2022, respectively, and 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, respectively.

For the three months and six months ended June 30, 2022 

and 2021, we included 4.0 million shares of common stock for each period 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, we included 0.2 million shares of common stock for both periods in the diluted net income attributable to controlling interests per share of common stock calculations associated with our convertible senior notes.

Stock-Based Compensation

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The Fourth Amended 2014 Plan was approved by our shareholders in May 2019.

As of March 31, 2022, 53,724 shares remained available for issuance under the ESPP and 1,996,953 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 months ended March 31, 2022 

As of June 30, 2022, 52,842 shares remained available for issuance under the ESPP and 1,997,750 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 months and six months ended June 30, 2022 

Restricted Stock and Restricted Stock Units

During the three months ended March 31, 2022 

During the six months ended June 30, 2022 

and 2021, we granted 106,315 and 39,084 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 5.0  million and $ 1.1 million, respectively.

We incurred expenses of $ 0.6 million and $ 0.2  million during the three months ended March 31, 2022 

We incurred expenses of $ 1.3  million and $ 0.5  million during the six months ended June 30, 2022 

and 2021, 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 March 31, 2022, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 5.4 million with a weighted-average remaining amortization period of 3.0 years.

As of June 30, 2022, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 4.7 million with a weighted-average remaining amortization period of 3.0 years.

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

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The exercise price per share of the options awarded under the Fourth Amended 2014 Plan must be equal to or greater than the market price on the date the option is granted.

The option period may not exceed 10 years from the date of grant. We had expense of $ 0.5 million and $ 0.3  million related to stock option-related compensation costs during the three months ended March 31, 2022 

The option period may not exceed 10 years from the date of grant. We had expense of $ 0.5 million, $ 1.0 million, $ 0.4  million and $ 0.7  million related to stock option-related compensation costs during the three and six  months ended June 30, 2022 

and 2021, respectively.

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$ 15.30  

Outstanding at March 31, 2022

Outstanding at June 30, 2022

1,013,033  

1 unchanged sentence

$ 25,366,627  

Exercisable at March 31, 2022

Exercisable at June 30, 2022

814,597  

1 unchanged sentence

$ 23,574,045  

Options issued during the three months ended March 31, 

2021  had an aggregate grant-date fair value of $ 0.1 million.

No options were issued during the three months ended March 31, 2022. 

We had $ 1.9 million and $ 2.4 million of unamortized deferred compensation costs associated with non-vested stock options as of March 31, 2022 

and December 31, 2021, respectively, with a weighted average remaining amortization period of 1.5  years as of March 31, 2022.

Options issued during the three and six months ended June 30, 

2021  had an aggregate grant-date fair value of $ 90 thousand and $ 0.1 million, respectively.

No options were issued during the three months and six months ended June 30, 2022. 

We had $ 1.4  million and $ 2.4 million of unamortized deferred compensation costs associated with non-vested stock options as of June 30, 2022 

and December 31, 2021, respectively, with a weighted average remaining amortization period of 1.4  years as of June 30, 2022.

Upon exercise of outstanding options, the Company issues new shares.

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We leverage data, analytics, and innovative technology to unlock access to financial solutions for the millions of Americans who would otherwise be underserved.

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

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

According to data published by Experian, 40% of Americans had FICO®

scores of less than 700.

We believe this equates to a population of over 100 million everyday Americans in need of access to credit.

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The services of our bank partners are often extended to consumers who may not have access to financing options with larger financial institutions.

We specialize in supporting this “second-look”

credit service.

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Subject to possible disruptions caused by COVID-19, supply chain interruptions, or inflation, we believe that our private label credit and general purpose credit card 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.

Within our Auto Finance segment, our CAR subsidiary operations 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.

Within our Auto Finance segment, our CAR subsidiary operations principally purchase and/or service loans secured by automobiles from or for, and also 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.

We generate revenues on purchased loans through interest earned on the face value of the installment agreements combined with the accretion of discounts on loans purchased.

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We offer a number of other products to our network of buy-here, pay-here dealers (including our floor-plan financing offering), but the majority of our activities are represented by our purchases of auto loans at discounts and our servicing of auto loans for a fee.

As of March 31, 2021, our CAR operations served more than 600 dealers in 33 states, the District of Columbia and two U.S.

These operations continue to perform well (achieving consistent profitability and generating positive cash flows and growth).

As of June 30, 2022, our CAR operations served more than 590 dealers in 33 states and two U.S.

The core operations continue to perform well, absent the recent settlement of outstanding litigation (achieving consistent profitability and generating positive cash flows and growth).

Fair Value Election

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Impact of the COVID-19 Pandemic on Atlanticus and our Markets

In March 2020, a national emergency was declared under the National Emergencies Act due to the COVID-19 pandemic.  The COVID-19 pandemic has negatively impacted global supply chains and business operations as suppliers continue to experience difficulties keeping up with strong demand for factory goods, which is being driven by low business inventories.

In addition, rising inflation in 2021 and 2022 has resulted in increasing costs for many goods and services.

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Russia’s invasion of Ukraine has intensified supply chain disruptions and heightened uncertainty surrounding the near-term outlook for the broader economy.

The impacts of new COVID-19 variants, responses to the COVID-19 pandemic by both consumers and governments, rising energy costs, inflation, rising interest rates, and the unresolved geopolitical tensions relating to Russia’s invasion of Ukraine could significantly affect the sustainability of current economic growth.

The impacts of new COVID-19 variants, responses to the COVID-19 pandemic by both consumers and governments, rising energy costs, inflation, rising interest rates, and the unresolved geopolitical tensions relating to Russia’s invasion of Ukraine could significantly affect the economic outlook.

As of the date of filing this Quarterly Report on Form 10-Q, the duration and severity of the effects of the COVID-19 pandemic and resulting government stimulus programs remain unknown.

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At the onset of the COVID-19 pandemic, Atlanticus instituted a company-wide distributed work program to promote the safety of all employees and their families.

Once COVID-19 cases declined, Atlanticus transitioned to a hybrid distributed work model.

Once the severity of the pandemic declined, Atlanticus transitioned to a hybrid distributed work model.

Appropriate safety measures continue to be followed to protect employees working on site.

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These trends could decrease or delay consumer spending and our receivables growth.

Borrowers impacted by COVID-19 requesting hardship assistance received temporary relief from payments.

Borrowers impacted by COVID-19 requesting hardship assistance may receive temporary relief from payments.

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

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CONSOLIDATED RESULTS OF OPERATIONS

For the Three Months Ended March 31,

For the Three Months Ended June 30,

Increases (Decreases)

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Net income attributable to controlling interests to common shareholders

Three Months Ended March 31, 2022, Compared to Three Months Ended March 31, 2021

For the Six Months Ended June 30,

Increases (Decreases)

(In Thousands)

from 2021 to 2022

Total operating revenue

Other non-operating revenue

Interest expense

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

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

Operating expenses:

Salaries and benefits

Card and loan servicing

Marketing and solicitation

Total operating expenses:

Loss on repurchase and redemption of convertible senior notes

Net 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, 2022, Compared to Three and Six Months Ended June 30, 2021

Total operating revenue.

 Total operating revenue consists of:

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 private label credit and general purpose credit card products, the receivables of which increased from $1,088.5 million as of March 31, 2021 to $1,677.6 million as of March 31, 2022.

Period-over-period results primarily relate to growth in private label credit and general purpose credit card products, the receivables of which increased from $1,243.9 million as of June 30, 2021 to $1,908.9 million as of June 30, 2022.

We experienced higher growth in our acquisitions of general purpose credit card receivables (which tend to have higher yields and corresponding charge-offs) than in our acquisitions of private label credit receivables. This relative mix of receivable acquisitions led to an increase in our Total managed yield ratio, annualized and our corresponding revenue. While we noted some disruptions in consumer spending behavior due to the COVID-19 pandemic and related economic impacts, including inflation, labor shortages and supply chain disruptions, we are currently experiencing continued period-over-period growth in private label credit and general purpose credit card 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 2022.

Future periods’

growth is also dependent on the addition of new retail partners to expand the reach of private label credit operations as well as growth within existing partnerships and continued growth and marketing within the general purpose credit card receivables.

growth is also dependent on the addition of new retail partners to expand the reach of private label credit operations as well as growth within existing partnerships and effective marketing for the general purpose credit card operations.

Other revenue on our consolidated statements of income consists of ancillary, interchange and servicing income.

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As discussed elsewhere in this Report we adopted the fair value option under ASU 2016-13, beginning January 1, 2022, for all remaining loans receivable associated with our private label credit and general purpose credit card platform previously measured at amortized cost.

The impact of this adoption, for those accounts that elected the fair value option, resulted in an increase in the recognition of certain fee categories with future changes in the fair value associated with the associated 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 income.

The impact of this adoption, for those accounts that elected the fair value option, resulted in an increase in the recognition of certain fee categories with future changes in the fair value of the 

associated 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 income.

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.

While we expect continued period over period growth in the receivable loan balances, as noted above, we do expect that the pace of growth in these receivable loan balances will slow. 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.

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

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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 private label credit and general purpose credit card platform increased from $781.1 million as of March 31, 2021 to $1,206.6 million as of March 31, 2022.

Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform increased from $911.9 million as of June 30, 2021 to $1,359.7 million as of June 30, 2022.

The majority of this increase in outstanding debt relates to the addition of multiple revolving credit facilities during 2021.

Additionally, the issuance of $150.0 million of Senior notes in November 2021 (included on our consolidated balance sheet as "Senior notes, net") will also serve to increase interest expense in future periods.

Additionally, the issuance of $150.0 million of senior notes in November 2021 (included on our consolidated balance sheet as "Senior notes, net") will also serve to increase interest expense over prior periods.

Offsetting these increases in interest expense is an overall decrease in the weighted average cost of funds, coupled with the repurchase and redemption of our convertible senior notes.

We anticipate additional debt financing over the next few quarters as we continue to grow coupled with increased effective interest rates resulting from anticipated federal funds rate increases, and as such, we expect our quarterly interest expense to be above that experienced in the prior periods for these operations.

Recent increases in the federal funds rate have thus far had a minimal impact on our interest expense as over 90% of interest rates on our outstanding debt are fixed. 

We anticipate additional debt financing over the next few quarters as we continue to grow coupled with increased effective interest rates resulting from recent and additional anticipated federal funds rate increases.

As such we expect our quarterly interest expense to be above that experienced in the prior periods for these operations.

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

 Our provision for losses on loans, interest and fees receivable recorded at net realizable value covers, with respect to such receivables, changes in estimates regarding our aggregate loss exposures on (1) principal receivable balances, (2) finance charges and late fees receivable underlying income amounts included within our total interest income category, and (3) other fees receivable. Recoveries of charged off receivables, 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.

 Our provision for losses on loans, interest and fees receivable recorded at net realizable value covers, with respect to such receivables, changes in estimates regarding our aggregate loss exposures on (1) principal receivable balances, (2) finance charges and late fees receivable underlying income amounts included within our total interest income category, and (3) other fees receivable. Recoveries of charged off receivables, consist of amounts received from the efforts of third-party collectors 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.

We have experienced a period-over-period decrease in this category between the three months ended March 31, 2021 and March 31, 2022 primarily reflecting:

We have experienced a period-over-period decrease in this category between the three and six months ended June 30, 2021 and June 30, 2022 primarily reflecting:

1) the effects of our adoption of the fair value option under ASU 2016-13 on January 1, 2022, which has resulted in a significant 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 have served to increase payments on outstanding receivables.

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to our consolidated financial statements and the discussions of our CaaS and Auto Finance segments for further credit quality statistics and analysis.

Given our adoption of fair value accounting under ASU 2016-13 on January 1, 2022 for our private label credit and general purpose credit card products, and absent the unknown impacts COVID-19, related government stimulus and relief measures and related economic impacts 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 when compared to similar periods in 2021 as the underlying receivables that continue to be recorded at net realizable value has been significantly reduced.

Given our adoption of fair value accounting under ASU 2016-13 on January 1, 2022 for our private label credit and general purpose credit card products, and absent the unknown impacts COVID-19, related government stimulus and relief measures and related economic impacts 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 when compared to similar periods in 2021 as the amount of underlying receivables that continue to be recorded at net realizable value has been significantly reduced.

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

 The increase in Changes in fair value of loans, interest and fees receivable and notes payable associated with structured financings recorded at fair value was largely driven by growth in the underlying receivables (as noted above), coupled with increased fee billings on those receivables.

Fee billings on our fair value receivables increased from $52.6 million for the three months ended March 31, 2021 to $194.6 million for the three months ended March 31, 2022. 

For both periods presented, 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 charge-offs and decrease in payments) above the level that historical trends would suggest. 

Fee billings on our fair value receivables increased from $129.1 million for the six months ended June 30, 2021 to $412.4 million for the six months ended June 30, 2022. 

For both periods presented, we included expected market degradation in our forecasts to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that historical and current trends would suggest. 

Offsetting this increase in Changes in fair value of loans, interest and fees receivable  

and notes payable associated with structured financings recorded at fair value was a reduction in the discount rate applied to the net cash flows associated with these investments.

The applied discount rate represents estimates third-party market participants could use in determining fair value. The reduction in this discount rate for the period ended June 30, 2022 reflects the asset level returns we believe would be required by market participants.

See Note 6 "Fair Values of Assets and Liabilities" included herein for further discussion of assumptions underlying this calculation.

For credit card receivables for which we use fair value accounting (including those for which we elected the fair value option on January 1, 2022), we expect our change in fair value of credit card receivables recorded at fair value to increase throughout 2022 commensurate with growth in these receivables.

We may adjust our models to reflect macroeconomic events.

We may adjust our forecasts to reflect macroeconomic events.

Thus, the fair values 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 months ended March 31, 2022, relative to the three months ended March 31, 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 2022 when compared to 2021 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 private label credit and general purpose credit card receivables, which grew from $1,088.5 million outstanding to $1,677.6 million outstanding at March 31, 2021 and March 31, 2022, respectively.

Total operating expense variances for the three and six months ended June 30, 2022, relative to the three and six months ended June 30, 2021, reflect the following:

increases in salaries reflecting growth in both the number of employees and increases in related benefit costs.

Recent nationwide increases in labor costs have correspondingly resulted in increased compensation costs associated with retaining and recruiting employees. We expect some continued increase in this cost for the remainder of 2022 when compared to 2021 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 private label credit and general purpose credit card receivables, which grew from $1,243.9 million outstanding to $1,908.9 million outstanding at June 30, 2021 and June 30, 2022, 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 the remainder of 2022.

Offsetting some of this increase, we have significantly reduced our servicing costs per account, realizing greater economies of scale as our receivables have grown.

Offsetting a portion of this increase are significant reductions in our servicing costs per account, resulting from the realization of greater economies of scale as our receivables have grown.

increases in marketing and solicitation costs primarily due to increased origination and brand marketing support;

we expect these efforts to result in increases in marketing and solicitation costs during the remainder of 2022 although the frequency and timing of marketing efforts could result in reductions in quarter-over-quarter marketing costs;

we expect these efforts to result in slight increases in marketing and solicitation costs during the remainder of 2022 although the frequency and timing of marketing efforts could result in reductions in quarter-over-quarter marketing costs;

other expenses primarily relate to 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.

Included in the first quarter of 2022 is an $8.5 million accrual related to a settlement of outstanding litigation associated with our Auto Finance segment. While we expect some increase in these costs (excluding the accrued litigation costs) as we continue to grow our receivable portfolios, we do not anticipate the increases to be meaningful.

Included in the first quarter of 2022 was an $8.5 million accrual related to a settlement of outstanding litigation associated with our Auto Finance segment. While we expect some increase in these costs (excluding the accrued litigation costs) as we continue to grow our receivable portfolios, we do not anticipate the increases to be meaningful.

Certain operating costs are variable based on the levels of accounts and receivables we service (both for our own receivables and for others) and the pace and breadth of our growth in receivables.

However, a number of our operating costs are fixed and until recently have comprised a larger percentage of our total costs.

This trend is reversing as we continue to grow our earning assets (including loans, interest and fees receivable) based principally on growth of private label credit and general purpose credit card receivables and to a lesser extent, growth within our CAR operations.

This is evidenced by the growth we experienced in our managed receivables levels over the past two years with minimal growth in the fixed portion of our card and loan servicing expenses as well as our salaries and benefits costs as we were able to better utilize our fixed costs to grow our asset base.

Notwithstanding our cost-management efforts, we expect increased levels of expenditures associated with anticipated growth in private label credit and general purpose credit card operations.

However, a number of our operating costs are fixed.

As we have significantly grown our managed receivables levels over the past two years with minimal increase in the fixed portion of our card and loan servicing expenses as well as our salaries and benefits costs , we have realized greater operating efficiency.

Notwithstanding our cost management, we expect increased levels of expenditures associated with anticipated growth in private label credit and general purpose credit card operations.

These expenses will primarily relate to the variable costs of marketing efforts and card and loan servicing expenses associated with new receivable acquisitions.

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Loss on repurchase and redemption of convertible senior notes. 

In the three months ended March 31, 2021, we repurchased $14.7 million in face amount of our convertible senior notes for $18.6 million in cash (including accrued interest). The repurchase resulted in a loss of approximately $7.8 million (including the convertible senior notes’

In the three and six months ended June 30, 2021, we repurchased $6.4 and $21.1 million, respectively, in face amount of our 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’

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

All remaining convertible senior notes were retired during 2021.

All remaining convertible senior notes were retired in 2021.

Noncontrolling interests.

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Income Taxes.

We experienced a negative effective tax rate of 18.8% for the three months ended March 31, 2022, compared to an effective tax rate of 15.0% for the three months ended March 31, 2021.

Our negative effective tax rate for the three months ended March 31, 2022 (i.e., versus the statutory rate) resulted from (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’

We experienced effective tax rates of 20.4% and 2.0%, respectively, for the three and six months ended June 30, 2022, compared to 21.6% and 18.1%, respectively, for the three and six months ended June 30, 2021.

Our effective tax rates for the three and six months ended June 30, 2022 are below the statutory rate principally due to (1) deductions during such periods 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. Partially offsetting these two items are the effects of state and foreign income tax expense.

Our effective tax rate for the three months ended March 31, 2021 was below the statutory rate 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, (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, and (3) our release of state tax valuation allowances.

Partially offsetting the foregoing items were the effects of (1) executive compensation deduction limits under Section 162(m) of the Internal Revenue Code of 1986, as amended, and (2) state and foreign income tax expense.

Our effective tax rate for the three months ended June 30, 2021 was 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 various government stimulus programs.

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, were (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.

We had de minimis interest expense or reversals thereof during the three months ended March 31, 2022, and 2021.

We had de minimis interest expense or reversals thereof during the three and six months ended June 30, 2022, and 2021.

Our CaaS segment includes our activities relating to our servicing of and our investments in the private label credit and general purpose credit card operations, our various credit card receivables portfolios, as well as other product testing and investments that generally utilize much of the same infrastructure.

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(1) As discussed in more detail above in "—Overview," on January 1, 2022, we elected the fair value option under ASU 2016-13 for those private label credit and general purpose credit card receivables that were accounted for under the amortized cost method.

As discussed above, our managed receivables data differ in certain aspects from our GAAP data. First, managed receivables data are based on billings and actual charge-offs as they occur without regard to any changes in our allowance for uncollectible loans, interest and fees receivable (in periods where applicable). Second, for managed receivables data, we amortize certain fees (such as annual and merchant fees) associated with our Fair Value Receivables over the expected life of the corresponding receivable and recognize certain costs, such as claims made under credit deferral programs, when paid. Under fair value accounting, these fees are recognized when billed or upon receivable acquisition. Third, managed receivables data excludes the impacts of equity in income of equity method investees.

As discussed above, our managed receivables data differ in certain aspects from our GAAP data. First, managed receivables data are based on billings and actual charge-offs as they occur without regard to any changes in our allowance for uncollectible loans, interest and fees receivable (in periods where applicable). Second, for managed receivables data, we amortize certain fees (such as annual and merchant fees) and expenses (such as marketing expenses) associated with our Fair Value Receivables over the expected life of the corresponding receivable and recognize other costs, such as claims made under credit deferral programs, when paid. Under fair value accounting, these fees are recognized when billed or upon receivable acquisition and marketing expenses are recognized when incurred. Third, managed receivables data excludes the impacts of equity in income of equity method investees.

As of January 1, 2022, we changed the name of combined net charge-offs to combined principal net charge-offs and the combined net charge-off ratio, annualized to combined principal net charge-off ratio, annualized. 

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All prior periods have been restated to reflect this new methodology.

A reconciliation of our operating revenues, net of finance and fee charge-offs, to comparable amounts used in our calculation of Total managed yield ratios are as follows:

A reconciliation of our operating revenues, net of finance and fee charge-offs, to comparable amounts used in our calculation of Total managed yield ratios is as follows:

At or for the Three Months Ended

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Combined principal net charge-off ratio, annualized (3)

Interest expense ratio, annualized (4)

Net interest margin ratio, annualized (5)

At or for the Three Months Ended

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Combined principal net charge-off ratio, annualized (3)

Interest expense ratio, annualized (4)

Net interest margin ratio, annualized (5)

(1) As discussed in more detail above in "—Overview," on January 1, 2022, we implemented the fair value method under ASU 2016-13 for those private label credit and general purpose credit card receivables that were previously accounted for under the amortized cost method.

(2) The Total managed yield ratio, annualized is calculated using the annualized total managed yield as the numerator and period-end average managed receivables as the denominator.

(2) The Total managed yield ratio, annualized is calculated using the annualized total managed yield as the numerator and period-end average managed receivables as the denominator.

(3) The Combined principal net charge-off ratio, annualized is calculated using the annualized combined principal net charge-offs as the numerator and period-end average managed receivables as the denominator.

(4) Interest expense ratio, annualized is calculated using the annualized interest expense associated with the CaaS segment (See Note 3, "Segment Reporting" to our consolidated financial statements) as the numerator and period-end average managed receivables as the denominator.

(5) Net interest margin ratio, annualized is calculated using the Total managed yield ratio, annualized less the Combined principal net charge-off ratio, annualized less the Interest expense ratio, annualized.

The following table presents additional trends and data with respect to our private label credit and general purpose credit card receivables (dollars in thousands).

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Managed receivables levels.

 We have continued to experience overall period-over-period quarterly receivables growth with over $589.1 million in net receivables growth associated with the private label credit and general purpose credit card products offered by our bank partners from March 31, 2021 to March 31, 2022.

The addition of large private label credit retail partners and ongoing purchases of receivables arising in accounts issued by our bank partners to customers of our existing retail partners helped grow our private label credit receivables by $142.4 million in the twelve months ended March 31, 2022.

Our general purpose credit card receivables grew by $446.7 million, net during the twelve months ended March 31, 2022.

We have noted recent recoveries in consumer spending behavior that have helped to increase the overall combined managed receivables levels, and we currently expect this trend to continue into 2022 (absent further unknown impacts COVID-19, related government stimulus and relief measures 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 private label credit origination platform, the timing and size of solicitations within the general purpose credit card 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 March 31, 2022. 

 We have continued to experience overall period-over-period quarterly receivables growth with over $665.0 million in net receivables growth associated with the private label credit and general purpose credit card products offered by our bank partners from June 30, 2021 to June 

The addition of large private label credit retail partners and ongoing purchases of receivables arising in accounts issued by our bank partners to customers of our existing retail partners helped grow our private label credit receivables by $135.0 million in the twelve months ended June 30, 2022.

Our general purpose credit card receivables grew by $529.9 million, net during the twelve months ended June 30, 2022.

We have noted recent recoveries in consumer spending behavior that have helped to increase the overall combined managed receivables levels, and we currently expect this trend to continue into 2022, although we expect the pace of growth to slow when compared to earlier periods (further unknown impacts of COVID-19, related government stimulus and relief measures and related economic consequences may impact 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 private label credit origination platform, the timing and size of solicitations within the general purpose credit card platform by our bank partner, as well as purchase activity of consumers.

Delinquencies.

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As we continue to acquire newer private label credit and general purpose credit card 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 private label credit and general purpose credit card 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.

Our delinquency rates have continued to be somewhat lower than what we ultimately expect for our new private label credit and general purpose credit card 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 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.

If and when growth for these product lines moderate, with no further government stimulus programs or other interventions, we expect increased overall delinquency rates when compared to prior periods, as the existing receivables mature through their peak charge-off periods.

We have started to experience increased delinquency rates, in line with historical norms as the effects of government stimulus wanes and market inflation negatively impacts our customer base. We expect this increase in delinquencies to continue throughout the remainder of 2022 and then return to levels similar to those experienced in periods prior to COVID-19 and the related government stimulus programs.

Additionally, in accordance with prescribed guidance discussed elsewhere in this Report, certain consumers negatively impacted by COVID-19 have been provided short-term payment deferrals and fee waivers.

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

We continue to actively work with consumers that indicate hardship as a result of COVID-19, however, the number of impacted consumers is a small and 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 is a small 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.

In 2020 and early 2021, nearly all of these customers were considered current and thus the receivables underlying their accounts were not considered delinquent. 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 private label credit and general purpose 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.

While this growth has contributed to 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.

General purpose credit card receivables tend to have higher total yields than private label credit receivables, so declines in the growth of our managed receivables that includes general purpose credit card receivables in periods noted above, contributed to slightly lower total managed yield ratios for those periods in 2021 and 2020.

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Growth within our general purpose credit card receivables (as a percent of outstanding receivables) has resulted in increases in our charge-off rates over time.

The second quarter 2020 combined principal net charge-off ratio reflects receivable growth during 2019 reaching peak charge-off during that period.

Slightly offsetting the combined principal net charge-off ratio in the second quarter of 2020 are the positive impacts of a bulk sale of charged-off receivables in that period.

Absent this sale, the combined principal net charge-off ratio would have been 20.5%.

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

The recent increase in the combined principal net charge-off ratio, net is a reflection of the increased delinquencies noted in the latter part of 2021, as we continue to see receivables return to historically normalized levels. 

As delinquency rates return to historically normalized levels (i.e., those periods prior to COVID-19 and the related government stimulus programs), we expect combined principal net charge-off rates for the remainder of 2022 to continue to increase, when compared to comparable prior periods.

The recent increase in the combined principal net charge-off ratio, net is a reflection of the increased delinquencies noted in the latter part of 2021 and first quarter of 2022, as we continue to see receivables return to historically normalized levels. 

As delinquency rates continue to return to historically normalized levels (i.e., those periods prior to COVID-19 and the related government stimulus programs), we expect combined principal net charge-off rates for the remainder of 2022 to continue to increase, when compared to comparable prior periods since the onset of COVID-19.

This expectation is based on the following:

(1) higher expected charge off rates on the private label credit and general purpose credit card 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 principal 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.

(1) higher expected charge off rates on the private label credit and general purpose credit card 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 principal net charge-offs, (3) recent vintages reaching peak charge-off periods, (4) our receivables growth during 2021, (5) a slower pace of growth in receivable loan balances expected for the remainder of 2022 and (6) 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 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.

Interest expense ratio, annualized.

Our interest expense ratio, annualized reflects interest costs associated with our CaaS segment. 

This includes both direct receivables funding costs as well as general unsecured lending.

Recent impacts to this ratio primarily relate to the timing and size of outstanding debt. 

In general, we have obtained lower cost financing with fixed interest rates which has led to lower interest expense ratios when compared to corresponding prior periods.

Recent increases in the federal funds borrowing rate has led to an increase in spreads for newly originated debt. 

As such, upon the completion of future capital raises, we expect the interest expense ratio to increase when compared to prior quarters.

Net interest margin ratio, annualized.

Our Net interest margin ratio, annualized represents the difference between our Total managed yield ratio, annualized, our Combined principal net charge-off ratio annualized and our Interest expense ratio, annualized. 

Recent declines in this ratio when compared to corresponding prior periods relate primarily to recent increases in our principal net charge-offs as noted above. 

Given recent increases in delinquency rates, we expect this ratio to continue to fall relative to corresponding prior periods for the remainder of 2022.

The average annual percentage rate (“APR”) charged to customers varies by receivable type, credit history and other factors.

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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.

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, although we expect the pace of acquisitions to slow.

Our general purpose credit card 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.

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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 March 31, 2022, we served more than 600 dealers through our Auto Finance segment in 33 states, the District of Columbia and two U.S.

CAR, our auto finance platform acquired in April 2005, principally purchase and/or service loans secured by automobiles from or for, and also 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. 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, 2022, we served more than 590 dealers through our Auto Finance segment in 33 states and two U.S.

Non-GAAP Financial Measures

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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.

As discussed, elsewhere in this Report, recent delinquency rates have benefitted from government stimulus programs that have resulted in customer payments in excess of historical experience.

As discussed elsewhere in this Report, 2020 and 2021 delinquency rates benefitted from government stimulus programs that resulted in customer payments in excess of historical experience.

We are not concerned with modest fluctuations in delinquency rates and do not believe they will have a significantly positive or adverse impact on our results of operations;

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Recoveries typically have represented less than 2% of average managed receivables. 

Interest expense ratio, annualized .

Represents an annualized fraction, the numerator of which is the annualized interest expense associated with the CaaS segment (See Note 3, "Segment Reporting" to our consolidated financial statements) as the numerator and the denominator of which is average managed receivables.

Net interest margin ratio, annualized .

Represents an annualized fraction, using the Total managed yield ratio, annualized less the Combined principal net charge-off ratio, annualized less the Interest expense ratio, annualized.

LIQUIDITY, FUNDING AND CAPITAL RESOURCES

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All of our CaaS 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 March 31, 2022 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 June 30, 2022 are those associated with the following notes payable in the amounts indicated (in millions):

Revolving credit facility (expiring July 15, 2023) that is secured by certain receivables and restricted cash

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Revolving credit facility (expiring October 30, 2023) that is secured by certain receivables and restricted cash

Revolving credit facility (expiring February 15, 2024) 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 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.

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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).

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

Upon redemption, the notes were retired.

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In any event, the majority of our revolving credit facilities mature prior to the expected phase out of LIBOR.

Recently, we replaced LIBOR with SOFR for one of our facilities. We will work with our lenders to use suitable alternative reference rates for our financial instruments.

Recently, we replaced LIBOR with Secured Overnight Financing Rate ("SOFR") for one of our facilities. We will work with our lenders to use suitable alternative reference rates for our financial instruments.

We will continue to monitor, assess and plan for the phase out of LIBOR;

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

At March 31, 2022, we had $373.5 million in unrestricted cash held by our various business subsidiaries.

At June 30, 2022, we had $316.3 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 three months ending March 31, 2022 and 2021 are as follows:

During the three months ended March 31, 2022, we generated $80.7 million of cash flows from operations compared to our generating $52.8 million of cash flows from operations during the three months ended March 31, 2021.

Details concerning our cash flows for the three months ended June 30, 2022 and 2021 are as follows:

During the six months ended June 30, 2022, we generated $152.6 million of cash flows from operations compared to our generating $124.5 million of cash flows from operations during the six months ended June 30, 2021.

The increase in cash provided by operating activities was principally related to an increase in finance and fee collections associated with growing private label credit and general purpose credit card receivables and increased recoveries on charged-off receivables.

Offsetting these collections were increased year-over-year payments made to pay federal and state taxes.

Collections on receivables have generally benefited from increased consumer payments as a result of government stimulus payments. As these stimulus payments decrease, we expect consumer payments to return to historical levels. 

During the three months ended March 31, 2022, we used $102.6 million of cash in our investing activities, compared to use of $2.2 million of cash in investing activities during the three months ended March 31, 2021. This increase in cash used is primarily due to significant increases in the level of net investments in the private label credit and general purpose credit card receivables relative to the same period in 2021. While we continue to see 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 three months ended March 31, 2022, we used $79.3 million of cash in financing activities, compared to our use of $66.1 million of cash in financing activities during the three months ended March 31, 2021.

In both periods, the data reflect borrowings associated with private label credit and general purpose credit card receivables offset by net repayments of amortizing debt facilities as payments are made on the underlying receivables that serve as collateral. Further, during the first quarter of 2022, we repurchased (and subsequently retired) $65.2 million of our outstanding common stock pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations. 

Collections on receivables have generally benefited from increased consumer payments as a result of government stimulus payments. As the impact of these stimulus payments declines, we expect consumer payments to return to historical levels. 

During the six months ended June 30, 2022, we used $354.1 million of cash in our investing activities, compared to use of $159.8 million of cash in investing activities during the six months ended June 30, 2021. This increase in cash used is primarily due to significant increases in the level of net investments in the private label credit and general purpose credit card receivables relative to the same period in 2021. While we continue to see 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 six months ended June 30, 2022, we generated $61.2 million of cash in financing activities, compared to our generating $110.1 million of cash in financing activities during the six months ended June 30, 2021.

Additionally, we purchased and retired $78.1 million of our common stock pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.  

Beyond our immediate financing efforts discussed throughout this Report, we will continue to evaluate debt and equity issuances as a means to fund our investment opportunities.

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Similarly, our valuation of notes payable associated with structured financings, at fair value is based on the present value of future cash flows utilized in repayment of the outstanding principal and interest under the facilities using a valuation model of expected cash flows net of the contractual service expenses within the facilities.

We estimate the present value of these future cash flows using internally-developed estimates of assumptions third-party market participants would use in determining fair value, including:

estimates of gross yield, payment rates, expected credit loss rates, servicing costs, and discount rates.

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Under the sublease, HBR paid us $17,299 and $16,960 for 2021 and 2020, respectively.

The aggregate amount of payments required under the sublease from January 1, 2022 to the expiration of the sublease in May 2022 is $7,267.

The aggregate amount of payments required under the sublease from January 1, 2022 to the expiration of the sublease in May 2023 is $0.1 million. 

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 three months ended March 31, 2022 and 2021, we received $101,236 and $96,781, respectively, of reimbursed costs from HBR associated with these leased employees.

In the six months ended June 30, 2022 and 2021, we received $197,623 and $191,788, 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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Statements with respect to the macroeconomic environment;

monetary policy by the Federal Reserve;

expected revenue;

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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, labor markets, supply chain, legal and regulatory matters, borrower payment patterns, information security and consumer privacy, the developing metaverse, capital markets, the economy in general and changes in the U.S.

the developing metaverse;

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, labor markets, supply chain, legal and regulatory matters, borrower payment patterns, information security and consumer privacy, capital markets, the economy in general and changes in the U.S.

economy that could materially impact consumer spending behavior, unemployment and demand for the products we support;

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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