Atlanticus Holdings Corp 10-Q

ITEM 1. FINANCIAL STATEMENTS       Atlanticus Holdings Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Dollars in thousands)       June 30,     December 31,       2023     2022                     Assets                 Unrestricted cash and cash equivalents (including $ 172.1 million and $ 202.2 million associated with variable interest entities at June 30, 2023 and December 31, 2022, respectively)   $ 342,616     $ 384,984   Restricted cash and cash equivalents (including $ 30.3 million and $ 27.6 million associated with variable interest entities at June 30, 2023 and December 31, 2022, respectively)     51,791       48,208   Loans, interest and fees receivable:                 Loans, interest and fees receivable, at fair value (including $ 1,868.3 million and $ 1,735.9 million associated with variable interest entities at June 30, 2023 and December 31, 2022, respectively)     1,916,063       1,817,976   Loans, interest and fees receivable, gross     115,055       105,267   Allowances for uncollectible loans, interest and fees receivable     ( 1,700 )     ( 1,643 ) Deferred revenue     ( 18,863 )     ( 16,190 ) Net loans, interest and fees receivable     2,010,555       1,905,410   Property at cost, net of depreciation     12,549       10,013   Operating lease right-of-use assets     11,373       11,782   Prepaid expenses and other assets     25,818       27,417   Total assets   $ 2,454,702     $ 2,387,814   Liabilities                 Accounts payable and accrued expenses   $ 47,468     $ 44,332   Operating lease liabilities     20,543       20,112   Notes payable, net (including $ 1,595.8 million and $ 1,586.0 million associated with variable interest entities at June 30, 2023 and December 31, 2022, respectively)     1,665,246       1,653,306   Senior notes, net     144,316       144,385   Income tax liability     75,640       60,689   Total liabilities     1,953,213       1,922,824                     Commitments and contingencies (Note 10)                                       Preferred stock, no par value, 10,000,000 shares authorized:                 Series A preferred stock, 400,000 shares issued and outstanding at June 30, 2023 (liquidation preference - $ 40.0 million); 400,000 shares issued and outstanding at December 31, 2022 (Note 5) (1)     40,000       40,000   Class B preferred units issued to noncontrolling interests (Note 5)     100,100       99,950                     Shareholders' Equity                 Series B preferred stock, no par value, 3,256,261 shares issued and outstanding at June 30, 2023 (liquidation preference - $ 81.4 million); 3,204,640 shares issued and outstanding at December 31, 2022 (1)     —       —   Common stock, no par value, 150,000,000 shares authorized: 14,428,039 and 14,453,415 shares issued and outstanding at June 30, 2023 and December 31, 2022, respectively     —       —   Paid-in capital     107,633       121,996   Retained earnings     255,716       204,415   Total shareholders’ equity     363,349       326,411   Noncontrolling interests     ( 1,960 )     ( 1,371 ) Total equity     361,389       325,040   Total liabilities, preferred stock and equity   $ 2,454,702     $ 2,387,814     (1) Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized.   See accompanying notes.     1 Table of Contents     Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data)       For the Three Months Ended     For the Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Revenue:                                 Consumer loans, including past due fees   $ 220,042     $ 191,547     $ 429,743     $ 356,353   Fees and related income on earning assets     62,874       65,839       107,231       120,537   Other revenue     7,835       12,410       14,759       22,676   Total operating revenue, net     290,751       269,796       551,733       499,566   Other non-operating revenue     87       239       146       300   Total revenue     290,838       270,035       551,879       499,866                                     Interest expense     ( 24,215 )     ( 18,925 )     ( 48,449 )     ( 36,335 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     ( 309 )     ( 182 )     ( 1,013 )     ( 329 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     ( 177,829 )     ( 146,559 )     ( 327,651 )     ( 251,239 ) Net margin     88,485       104,369       174,766       211,963                                     Operating expenses:                                 Salaries and benefits     10,629       10,099       21,233       21,525   Card and loan servicing     23,814       23,997       48,149       46,672   Marketing and solicitation     14,486       20,231       24,892       40,804   Depreciation     643       549       1,261       1,142   Other     6,900       6,953       13,136       21,646   Total operating expenses     56,472       61,829       108,671       131,789   Income before income taxes     32,013       42,540       66,095       80,174   Income tax expense     ( 7,199 )     ( 8,743 )     ( 15,387 )     ( 1,622 ) Net income     24,814       33,797       50,708       78,552   Net loss attributable to noncontrolling interests     275       228       593       483   Net income attributable to controlling interests     25,089       34,025       51,301       79,035   Preferred dividends and discount accretion     ( 6,289 )     ( 6,257 )     ( 12,516 )     ( 12,463 ) Net income attributable to common shareholders   $ 18,800     $ 27,768     $ 38,785     $ 66,572   Net income attributable to common shareholders per common share—basic   $ 1.30     $ 1.88     $ 2.68     $ 4.50   Net income attributable to common shareholders per common share—diluted   $ 1.02     $ 1.46     $ 2.11     $ 3.43     See accompanying notes.   2 Table of Contents     Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Shareholders’ Equity and Temporary Equity (Unaudited) For the Three and Six Months Ended June 30, 2023 and June 30, 2022 (Dollars in thousands)         Series B Preferred Stock     Common Stock                                     Temporary Equity       Shares Issued     Amount     Shares Issued     Amount     Paid-In Capital     Retained Earnings     Noncontrolling Interests     Total Equity     Class B Preferred Units     Series A Preferred Stock   Balance at December 31, 2022     3,204,640     $ —       14,453,415     $ —     $ 121,996     $ 204,415     $ ( 1,371 )   $ 325,040     $ 99,950     $ 40,000   Accretion of discount associated with issuance of subsidiary equity     —       —       —       —       ( 75 )     —       —       ( 75 )     75       —   Discount associated with repurchase of preferred stock     —       —       —       —       16       —       —       16       —       —   Preferred dividends     —       —       —       —       ( 6,168 )     —       —       ( 6,168 )     —       —   Stock option exercises and proceeds related thereto     —       —       1,258       —       19       —       —       19       —       —   Compensatory stock issuances, net of forfeitures     —       —       146,227       —       —       —       —       —       —       —   Issuance of series B preferred stock, net     51,327       —       —       —       1,069       —       —       1,069       —       —   Contributions by owners of noncontrolling interests     —       —       —       —       —       —       4       4       —       —   Stock-based compensation costs     —       —       —       —       931       —       —       931       —       —   Redemption and retirement of preferred shares     ( 1,806 )     —       —       —       ( 45 )     —       —       ( 45 )     —       —   Redemption and retirement of common shares     —       —       ( 72,354 )     —       ( 1,947 )     —       —       ( 1,947 )     —       —   Net income (loss)     —       —       —       —       —       26,212       ( 318 )     25,894       —       —   Balance at March 31, 2023     3,254,161     $ —       14,528,546     $ —     $ 115,796     $ 230,627     $ ( 1,685 )   $ 344,738     $ 100,025     $ 40,000   Accretion of discount associated with issuance of subsidiary equity     —       —       —       —       ( 75 )     —       —       ( 75 )     75       —   Preferred dividends     —       —       —       —       ( 6,214 )     —       —       ( 6,214 )     —       —   Stock option exercises and proceeds related thereto     —       —       5,160       —       40       —       —       40       —       —   Compensatory stock issuances, net of forfeitures     —       —       ( 220 )     —       —       —       —       —       —       —   Issuance of series B preferred stock, net     2,100       —       —       —       43       —       —       43       —       —   Stock-based compensation costs     —       —       —       —       1,031       —       —       1,031       —       —   Redemption and retirement of common shares     —       —       ( 105,447 )     —       ( 2,988 )     —       —       ( 2,988 )     —       —   Net income (loss)     —       —       —       —       —       25,089       ( 275 )     24,814       —       —   Balance at June 30, 2023     3,256,261     $ —       14,428,039     $ —     $ 107,633     $ 255,716     $ ( 1,960 )   $ 361,389     $ 100,100     $ 40,000         Series B Preferred Stock     Common Stock                                     Temporary Equity       Shares Issued     Amount     Shares Issued     Amount     Paid-In Capital     Retained Earnings     Noncontrolling Interests     Total Equity     Class B Preferred Units     Series A Preferred Stock   Balance at December 31, 2021     3,188,533     $ —       14,804,408     $ —     $ 227,763     $ 60,236     $ ( 500 )   $ 287,499     $ 99,650     $ 40,000   Cumulative effects from adoption of the CECL standard     —       —       —       —       —       8,582       —       8,582       —       —   Accretion of discount associated with issuance of subsidiary equity     —       —       —       —       ( 75 )     —       —       ( 75 )     75       —   Preferred dividends     —       —       —       —       ( 6,131 )     —       —       ( 6,131 )     —       —   Stock option exercises and proceeds related thereto     —       —       1,000,534       —       2,788       —       —       2,788       —       —   Compensatory stock issuances, net of forfeitures     —       —       113,165       —       —       —       —       —       —       —   Contributions by owners of noncontrolling interests     —       —       —       —       —       —       4       4       —       —   Stock-based compensation costs     —       —       —       —       1,111       —       —       1,111       —       —   Redemption and retirement of shares     —       —       ( 1,005,212 )     —       ( 65,214 )     —       —       ( 65,214 )     —       —   Net income (loss)     —       —       —       —       —       45,010       ( 255 )     44,755       —       —   Balance at March 31, 2022     3,188,533     $ —       14,912,895     $ —     $ 160,242     $ 113,828     $ ( 751 )   $ 273,319     $ 99,725     $ 40,000   Accretion of discount associated with issuance of subsidiary equity     —       —       —       —       ( 75 )     —       —       ( 75 )     75       —   Preferred dividends     —       —       —       —       ( 6,182 )     —       —       ( 6,182 )     —       —   Stock option exercises and proceeds related thereto     —       —       3,402       —       33       —       —       33       —       —   Compensatory stock issuances, net of forfeitures     —       —       ( 183 )     —       —       —       —       —       —       —   Stock-based compensation costs     —       —       —       —       1,186       —       —       1,186       —       —   Redemption and retirement of shares     —       —       ( 355,036 )     —       ( 12,861 )     —       —       ( 12,861 )     —       —   Net income (loss)     —       —       —       —       —       34,025       ( 228 )     33,797       —       —   Balance at June 30, 2022     3,188,533     $ —       14,561,078     $ —     $ 142,343     $ 147,853     $ ( 979 )   $ 289,217     $ 99,800     $ 40,000     See accompanying notes.   3 Table of Contents     Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Cash Flows (Unaudited) (Dollars in thousands)       For the Six Months Ended June 30,       2023     2022   Operating activities                 Net income   $ 50,708     $ 78,552   Adjustments to reconcile net income to net cash provided by operating activities:                 Depreciation, amortization and accretion, net     1,696       3,400   Provision for losses on loans, interest and fees receivable     1,013       329   Income from accretion of merchant fees and discount associated with receivables purchases     ( 82,680 )     ( 69,417 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     327,651       251,239   Amortization of deferred loan costs     2,904       2,345   Stock-based compensation costs     1,962       2,297   Lease liability payments     ( 361 )     ( 3,635 ) Changes in assets and liabilities:                 Increase in uncollected fees on earning assets     ( 113,268 )     ( 113,786 ) Increase (decrease) in income tax liability     14,951       ( 2,583 ) Increase in accounts payable and accrued expenses     3,950       6,117   Other     1,261       ( 2,252 ) Net cash provided by operating activities     209,787       152,606                     Investing activities                 Proceeds from recoveries on charged off receivables     30,101       12,847   Investments in earning assets     ( 1,192,213 )     ( 1,293,526 ) Proceeds from earning assets     924,499       927,169   Purchases and development of property, net of disposals     ( 3,798 )     ( 601 ) Net cash used in investing activities     ( 241,411 )     ( 354,111 )                   Financing activities                 Noncontrolling interests contributions     4       4   Proceeds from issuance of Series B preferred stock, net of issuance costs     1,112       —   Preferred dividends     ( 12,429 )     ( 12,365 ) Proceeds from exercise of stock options     59       2,821   Purchase and retirement of outstanding common and preferred stock     ( 4,964 )     ( 78,075 ) Proceeds from borrowings     252,212       249,762   Repayment of borrowings     ( 243,159 )     ( 100,914 ) Net cash (used in) provided by financing activities     ( 7,165 )     61,233   Effect of exchange rate changes on cash and cash equivalents and restricted cash     4       ( 36 ) Net decrease in cash and cash equivalents and restricted cash     ( 38,785 )     ( 140,308 ) Cash and cash equivalents and restricted cash at beginning of period     433,192       506,628   Cash and cash equivalents and restricted cash at end of period   $ 394,407     $ 366,320   Supplemental cash flow information                 Cash paid for interest   $ 45,501     $ 33,162   Net cash income tax payments   $ 436     $ 4,205   Decrease in accrued and unpaid preferred dividends   $ ( 47 )   $ ( 52 )   See accompanying notes.   4 Table of Contents   Atlanticus Holdings Corporation and Subsidiaries Notes to Consolidated Financial Statements June 30, 2023 and 2022     1. Description of Our Business   Our accompanying consolidated financial statements include the accounts of Atlanticus Holdings Corporation (the “Company”) and those entities we control. We are a purpose driven financial technology company. We are primarily focused on facilitating consumer credit through the use of our financial technology and related services. Through our subsidiaries, we provide technology and other support services to lenders who offer an array of financial products and services to consumers who may have been declined by other providers of credit.   We are principally engaged in providing products and services to lenders in the U.S. and, in most cases, we invest in the receivables originated by lenders who utilize our technology platform and other related services. From time to time, we also purchase receivables portfolios from third parties. In these Notes to Consolidated Financial Statements, “receivables” or “loans” typically refer to receivables we have purchased from our bank partners or from third parties.   Within our Credit as a Service (“CaaS”) segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $37 billion in consumer loans over more than 25  years of operating history, to support lenders in offering more inclusive financial services. These products include private label credit and general purpose credit cards originated by lenders through multiple channels, including retailers and healthcare providers, direct mail solicitation, digital marketing and partnerships with third parties. The services of our bank partners are often extended to consumers who may not have access to financing options with larger financial institutions. Our flexible technology solutions allow our bank partners to integrate our paperless process and instant decisioning platform with the existing infrastructure of participating retailers, healthcare providers and other 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. Atlanticus’ underwriting process is enhanced by artificial intelligence and machine learning, enabling fast, sound decision-making when it matters most.   We also report within our CaaS segment: 1 ) servicing income; and 2 ) gains or losses associated with investments previously made in consumer finance technology platforms. These include investments in companies engaged in mobile technologies, marketplace lending and other financial technologies. None of these companies are publicly-traded and the carrying values of our investments in these companies are not material.   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 purchase auto loans at a discount and with dealer retentions or holdbacks that provide risk protection. Also within our Auto Finance segment, we are providing certain installment lending products in addition to our traditional loans secured by automobiles.   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. In addition, rising inflation in 2021 and 2022 resulted in increased costs for many goods and services. As a result of persistently high inflation, interest rates have been on the rise. 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 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. The duration and severity of the effects of these impacts on our financial condition, results of operations and liquidity remain uncertain.    As a result of the COVID- 19 pandemic and subsequent declaration of a national emergency and the associated government policy responses and corresponding inflation, certain consumers were previously offered the ability to defer their payment without penalty during the national emergency period. In March 2020, the federal bank regulatory agencies issued an “Interagency Statement on Loan Modifications and Reporting for Financial Institutions Working with Customers Affected by the Coronavirus” ("COVID- 19 Guidance"). The COVID- 19 Guidance encouraged financial institutions to work prudently with borrowers that were unable to meet their contractual obligations because of the effects of COVID- 19. In accordance with the COVID- 19 Guidance, certain consumers negatively impacted by COVID- 19 were provided short-term payment deferrals and fee waivers. Receivables enrolled in these short-term payment deferrals continued to accrue interest and their delinquency status was not changed through the deferment period. The Biden administration ended the COVID- 19 national and public health emergencies on May 11, 2023. This action ended the flexibility provided under the COVID- 19 Guidance.  The long-term impact that the cessation of certain benefits provided under emergency relief programs will have on our consumers is uncertain although the remaining financial statement impact for those customers previously provided the aforementioned short-term payment deferrals and fee waivers is not material.    5 Table of Contents      2. Significant Accounting Policies and Consolidated Financial Statement Components   The following is a summary of significant accounting policies we follow in preparing our consolidated financial statements, as well as a description of significant components of our consolidated financial statements.   Basis of Presentation and Use of Estimates   We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the U.S. (“GAAP”). The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period. We base these estimates on information available to us as of the date of the financial statements. Actual results could differ materially from these estimates. Certain estimates, such as credit losses, payment rates, costs of funds, discount rates and the yields earned on credit card receivables, significantly affect the reported amount (and changes thereon) of our Loans, interest and fees receivables, at fair value on our consolidated balance sheets and consolidated statements of income. Additionally, estimates of credit losses have a significant effect on loans, interest and fees receivable, net, as shown on our consolidated balance sheets, as well as on the provision for losses on loans, interest and fees receivable within our consolidated statements of income.   We have eliminated all significant intercompany balances and transactions for financial reporting purposes.     Unrestricted Cash and Cash Equivalents   Unrestricted cash and cash equivalents consist of cash, money market investments and overnight deposits. We consider all highly liquid cash investments with low interest rate risk and original maturities of three months or less to be cash equivalents. Cash equivalents are carried at cost, which approximates market. We maintain unrestricted cash and cash equivalents for general operating purposes. We maintain our cash and cash equivalents in accounts at regulated domestic financial institutions in amounts that exceed FDIC insured amounts which aggregated approximately $3.0 million based on our current banking relationships.      Loans, Interest and Fees Receivable   We maintain two categories of Loans, Interest and Fees Receivable on our consolidated balance sheets: those that are carried at fair value (Loans, interest and fees receivable, at fair value) and those that are carried at net amortized cost (Loans, interest and fees receivable, gross). For both categories of loans, interest and fees receivable, other than our Auto Finance receivables, interest and fees are discontinued when loans, interest and fees receivable become contractually 90 or more days past due. We charge off our CaaS receivables, against our Changes in fair value of loans, interest and fees receivable recorded at fair value, when they become contractually more than 180 days past due. We charge off our Auto Finance segment receivables, against our Allowance for uncollectible loans, interest and fees receivable, when they become contractually more than 180 days past due. For all of our receivables portfolios, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death. However, in some cases of death, we do not charge off receivables if there is a surviving, contractually liable individual or estate large enough to pay the debt in full.   We adopted Accounting Standards Update ("ASU") 2016 - 13, Measurement of Credit Losses on Financial Instruments on January 1, 2022. This ASU requires the use of an impairment model (the current expected credit loss (“CECL”) model) that is based on expected rather than incurred losses. 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 Allowances for uncollectible loans, interest and fees receivable 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.  Loans, interest and fees receivable held at fair value represent receivables for which we have elected the fair value option (the "Fair Value Receivables"). The Fair Value Receivables are held by entities that qualify as variable interest entities ("VIE"), and are consolidated onto our consolidated balance sheets, some portfolios of which are unencumbered and some of which are still encumbered under structured or other financing facilities. Loans and finance receivables include accrued and unpaid interest and fees. 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. The Company estimates the fair value of the loans using a discounted cash flow model, which considers various unobservable inputs such as remaining cumulative charge-offs, remaining cumulative prepayments, average life and discount rate. The Company re-evaluates the fair value of loans receivable at the close of each measurement period. Changes in the fair value of loans, interest and fees receivable are recorded as a component of “Changes in fair value of loans, interest and fees receivable recorded at fair value” in the consolidated statements of income in the period of the fair value changes. Changes in the fair value of loans, interest and fees receivable recorded at fair value include the impact of current period charge-offs associated with these receivables.   Further details concerning our loans, interest and fees receivable held at fair value are presented within Note 6, “Fair Values of Assets and Liabilities.”   6 Table of Contents   Loans, Interest and Fees Receivable, Gross. Our loans, interest and fees receivable, gross, currently consist of receivables associated with our Auto Finance segment’s operations. We purchased auto loans with outstanding principal of $ 55.3 million, $ 120.3 million,  $ 52.8 million and $ 109.3 million for the three and six months ended June 30, 2023  and 2022, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.   We show both an allowance for uncollectible loans, interest and fees receivable and for unearned fees (or “deferred revenue”) for our loans, interest and fees receivable that are not carried at fair value. A considerable amount of judgment is required to assess the ultimate amount of uncollectible loans, interest and fees receivable, and we regularly evaluate and update our methodologies to determine the most appropriate allowance necessary. 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 also contain components of deferred revenue related to loan discounts on the purchase of our auto finance receivables. As of June 30, 2023  and December 31, 2022, the weighted average remaining accretion period for the $ 18.9 million and $ 16.2 million of deferred revenue reflected in the consolidated balance sheets was 27  months for both periods.   7 Table of Contents   A roll-forward (in millions) of our allowance for uncollectible loans, interest and fees receivable by class of receivable is as follows:   For the Three Months Ended June 30, 2023   Auto Finance   Allowance for uncollectible loans, interest and fees receivable:         Balance at beginning of period   $ ( 1.7 ) Provision for credit losses     ( 0.3 ) Charge-offs     0.8   Recoveries     ( 0.5 ) Balance at end of period   $ ( 1.7 )   For the Six Months Ended June 30, 2023   Auto Finance   Allowance for uncollectible loans, interest and fees receivable:         Balance at beginning of period   $ ( 1.6 ) Provision for credit losses     ( 1.0 ) Charge-offs     1.8   Recoveries     ( 0.9 ) Balance at end of period   $ ( 1.7 )   As of June 30, 2023   Auto Finance   Allowance for uncollectible loans, interest and fees receivable:         Balance at end of period individually evaluated for impairment   $ —   Balance at end of period collectively evaluated for impairment   $ ( 1.7 ) Loans, interest and fees receivable:         Loans, interest and fees receivable, gross   $ 115.1   Loans, interest and fees receivable individually evaluated for impairment   $ —   Loans, interest and fees receivable collectively evaluated for impairment   $ 115.1     8 Table of Contents   For the Three Months Ended June 30, 2022 Credit Cards   Auto Finance   Other Unsecured Lending Products   Total   Allowance for uncollectible loans, interest and fees receivable:                         Balance at beginning of period $ —   $ ( 1.6 ) $ —   $ ( 1.6 ) Provision for credit losses   —     ( 0.2 )   —     ( 0.2 ) Charge-offs   —     0.4     —     0.4   Recoveries   —     ( 0.2 )   —     ( 0.2 ) Balance at end of period $ —   $ ( 1.6 ) $ —   $ ( 1.6 )   For the Six Months Ended June 30, 2022   Credit Cards     Auto Finance     Other Unsecured Lending Products     Total   Allowance for uncollectible loans, interest and fees receivable:                                 Balance at beginning of period   $ ( 43.4 )   $ ( 1.4 )   $ ( 12.4 )   $ ( 57.2 ) Cumulative effects from adoption of fair value under the CECL standard     43.4       —       12.4       55.8   Cumulative effects from adoption of the CECL standard     —       ( 0.2 )           ( 0.2 ) Provision for credit losses     —       ( 0.3 )     —       ( 0.3 ) Charge-offs     —       0.8       —       0.8   Recoveries     —       ( 0.5 )     —       ( 0.5 ) Balance at end of period   $ —     $ ( 1.6 )   $ —     $ ( 1.6 )   As of December 31, 2022   Auto Finance   Allowance for uncollectible loans, interest and fees receivable:         Balance at end of period individually evaluated for impairment   $ —   Balance at end of period collectively evaluated for impairment   $ ( 1.6 ) Loans, interest and fees receivable:         Loans, interest and fees receivable, gross   $ 105.3   Loans, interest and fees receivable individually evaluated for impairment   $ —   Loans, interest and fees receivable collectively evaluated for impairment   $ 105.3     Delinquent loans, interest and fees receivable reflect the principal, fee and interest components of loans we did not collect on or prior to the contractual due date. 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. 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 amortized cost on our consolidated statements of income.    9 Table of Contents   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 June 30, 2023  and December 31, 2022  is as follows:   As of June 30, 2023   Auto Finance   30-59 days past due   $ 8.1   60-89 days past due     3.0   90 or more days past due     1.7   Delinquent loans, interest and fees receivable, gross     12.8   Current loans, interest and fees receivable, gross     102.3   Total loans, interest and fees receivable, gross   $ 115.1   Balance of loans greater than 90-days delinquent still accruing interest and fees   $ 1.3     As of December 31, 2022   Auto Finance   30-59 days past due   $ 8.5   60-89 days past due     3.0   90 or more days past due     2.1   Delinquent loans, interest and fees receivable, gross     13.6   Current loans, interest and fees receivable, gross     91.7   Total loans, interest and fees receivable, gross   $ 105.3   Balance of loans greater than 90-days delinquent still accruing interest and fees   $ 1.7     Troubled Debt Restructurings   As part of ongoing collection efforts, once an account, the receivable of which is included in our CaaS segment, becomes 90 days or more past due, the related receivable is placed on a non-accrual status. Placement on a non-accrual status results in the use of programs under which the contractual interest associated with a receivable 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 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. Accounts that are placed on a non-accrual status and thereafter make at least one payment qualify as troubled debt restructurings (“TDRs”). The above referenced COVID- 19 Guidance issued by federal bank regulatory agencies, in consultation with the Financial Accounting Standards Board (“FASB”) staff, concluded that short-term modifications (e.g., six months) made on a good faith basis to borrowers who were impacted by COVID- 19 and whose accounts were less than 30 days past due as of the implementation date of a relief program are not TDRs. Although we are not a financial institution and therefore not directly subject to the COVID- 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 guidance. As of January 1, 2023, receivables accounted for using fair value are not included in our disclosure of TDRs.   The following table details by class of receivable, the number and amount of modified loans, including TDRs that have been re-aged, as of  December 31, 2022         As of       December 31, 2022       Private label credit     General purpose credit card   Number of TDRs     24,594       171,729   Number of TDRs that have been re-aged     2,499       28,598   Amount of TDRs on non-accrual status (in thousands)   $ 31,350     $ 119,785   Amount of TDRs on non-accrual status above that have been re-aged (in thousands)   $ 4,606     $ 24,440   Carrying value of TDRs (in thousands)   $ 18,827     $ 70,519   TDRs - Performing (carrying value, in thousands)*   $ 15,001     $ 59,735   TDRs - Nonperforming (carrying value, in thousands)*   $ 3,826     $ 10,784   *“TDRs - Performing” include accounts that are current on all amounts owed, while “TDRs - Nonperforming” include all accounts with past due amounts owed. We do not separately reserve or impair these receivables outside of our general reserve process.   The Company modified 98,880 accounts in the amount of $ 106.7 million during the twelve month period ended June 30, 2022  that qualified as TDRs. As of January 1, 2023, receivables accounted for using fair value are not included in our disclosure of TDRs. The following table details by class of receivable, the number of accounts and balance of loans that completed a modification (including those that were classified as TDRs) within the prior twelve months and subsequently defaulted.       Twelve Months Ended       June 30, 2022       Private label credit     General purpose credit card   Number of accounts     4,971       14,991   Loan balance at time of charge off (in thousands)   $ 7,983     $ 12,358     Income Taxes   We experienced effective tax rates of 22.3 % and 23.1 % for the three and six months ended June 30, 2023, compared to 20.4 % and 2.0 % for the three and six months ended June 30, 2022.   Our effective tax rates for the three and six months ended June 30, 2023,  are above the statutory rate principally due to ( 1 ) state and foreign income tax expense, ( 2 ) interest accrued on uncertain tax positions, ( 3 ) taxes on global intangible low-taxed income, and ( 4 ) deduction disallowance under Section 162 (m) of the Internal Revenue Code of 1986, as amended, with respect to compensation paid to our covered employees. Partially offsetting the foregoing items was our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes.   Our effective tax rates for the three and six months ended June 30, 2022,  were 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 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 were the effects of 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 income. 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. On the basis described above, we reported interest expense of $ 1.1 million for the six months ended June 30, 2023, and de minimis interest expense for the six months ended June 30, 2022.   10 Table of Contents   Revenue from Contracts with Customers   The majority of our revenue is earned from financial instruments and is not included within the scope of Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers". We have determined that revenue from contracts with customers would primarily consist of interchange revenues in our CaaS segment and servicing revenue and other customer-related fees in both our CaaS segment and our Auto Finance segment. Interchange fees are earned when our customers’ cards are used over established card networks. We earn a portion of the interchange fee the card networks charge merchants for the transaction. Servicing revenue is generated by meeting contractual performance obligations related to the collection of amounts due on receivables, and is settled with the customer net of our fee. Service charges and other customer related fees are earned from customers based on the occurrence of specific services. None of these revenue streams result in an ongoing obligation beyond what has already been rendered. Revenue from these contracts with customers is included as a component of Other revenue on our consolidated statements of income. Components (in thousands) of our revenue from contracts with customers is as follows:   For the Three Months Ended June 30, 2023   CaaS     Auto Finance     Total   Interchange revenues, net (1)   $ 5,003     $ —     $ 5,003   Servicing income     636       189       825   Service charges and other customer related fees     1,989       18       2,007   Total revenue from contracts with customers   $ 7,628     $ 207     $ 7,835   ( 1 ) Interchange revenue is presented net of customer reward expense.                             For the Six Months Ended June 30, 2023   CaaS     Auto Finance     Total   Interchange revenues, net (1)   $ 9,619     $ —     $ 9,619   Servicing income     1,341       380       1,721   Service charges and other customer related fees     3,382       37       3,419   Total revenue from contracts with customers   $ 14,342     $ 417     $ 14,759   ( 1 ) Interchange revenue is presented net of customer reward expense.                             For the Three Months Ended June 30, 2022   CaaS     Auto Finance     Total   Interchange revenues, net (1)   $ 7,381     $ —     $ 7,381   Servicing income     804       225       1,029   Service charges and other customer related fees     3,984       16       4,000   Total revenue from contracts with customers   $ 12,169     $ 241     $ 12,410   ( 1 ) Interchange revenue is presented net of customer reward expense.                             For the Six Months Ended June 30, 2022   CaaS     Auto Finance     Total   Interchange revenues, net (1)   $ 13,079     $ —     $ 13,079   Servicing income     1,634       477       2,111   Service charges and other customer related fees     7,454       32       7,486   Total revenue from contracts with customers   $ 22,167     $ 509     $ 22,676   ( 1 ) Interchange revenue is presented net of customer reward expense.   11 Table of Contents   Recent Accounting Pronouncements   In  June 2016, the FASB issued ASU 2016 - 13, Measurement of Credit Losses on Financial Instruments. The guidance requires an assessment of credit losses based on expected rather than incurred losses (known as the current expected credit loss model). This generally will result in the recognition of allowances for losses earlier than under current accounting guidance for trade and other receivables, held to maturity debt securities and other instruments. The FASB has added several technical amendments (ASU 2018 - 19, 2019 - 04, 2019 - 10 and 2019 - 11 ) to clarify technical aspects of the guidance and applicability to specific financial instruments or transactions. In May 2019, the FASB issued ASU 2019 - 05, which allows entities to measure assets in the scope of ASC 326 - 20, except held to maturity securities, using the fair value option when they adopt the new credit impairment standard. The election can be made on an instrument by instrument basis. We adopted ASU 2016 - 13 beginning January 1, 2022, using the modified retrospective method of adoption. We elected the fair value option for all receivables in our CaaS segment previously measured at amortized cost. For all other receivables, we recorded an increase to our Allowances for uncollectible loans, interest and fees receivable using the current expected credit loss model. As a result of our adoption, we increased our Loans, interest and fees receivable (net of the related revaluation), at fair value by $ 315.0 million (with a corresponding decrease to Loans, interest and fees receivable, gross of $ 375.7 million), a decrease to our Allowances for uncollectible loans, interest and fees receivable of $ 55.6 million, a decrease to our Deferred revenue of $ 15.6 million, a decrease to Accounts payable and accrued expenses of $ 600 thousand, an increase to our deferred tax liability of $ 2.5 million, and an increase to our retained earnings of $ 8.6 million. The aforementioned impacts associated with our adoption of ASU 2016 - 13 primarily relate to those assets within our CaaS segment with an immaterial impact to our Auto Finance segment receivables.   In March 2020, the FASB issued ASU No. 2020 - 04, Reference Rate Reform (Topic 848 ), Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The guidance provides an optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU 2021 - 01, Reference Rate Reform (Topic 848 ): Scope, which refines the scope of ASC 848 and clarifies some of its guidance as part of the FASB’s monitoring of global reference rate reform. In December 2022, the FASB issued ASU 2022 - 06, “Reference Rate Reform (Topic 848 ): Deferral of the Sunset Date of Topic 848”, to extend the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024. These ASUs are effective for all entities upon their respective issuance dates through December 31, 2024. We have reviewed all outstanding financial agreements, noting none utilize London Interbank Offered Rate ("LIBOR") as the reference rate and, as such, determined there is no impact to our consolidated financial statements. Throughout the remaining effective period for ASU 2020 - 04, ASU 2021 - 01 and ASU 2022 - 06, we will continue to evaluate the available relief measures within each of these amendments and will determine any impact on our consolidated financial statements and disclosures, as applicable.    On March 31, 2022, the FASB issued ASU 2022 - 02, Financial Instruments - Credit Losses (Topic 326 ): Troubled Debt Restructurings and Vintage Disclosures. The ASU eliminates the accounting guidance for troubled debt restructurings by creditors while adding disclosures for certain loan restructurings by creditors when a borrower is experiencing financial difficulty. This guidance requires an entity to determine whether a modification results in a new loan or a continuation of an existing loan. Additionally, the ASU requires disclosure of current period gross write-offs by year of origination for financing receivables. The disclosures required by this ASU are required for receivables held at amortized cost and exclude those accounted for using fair value. The Company adopted this ASU on January 1, 2023.  As the significant majority of the Company's receivables are held at fair value, the adoption of this ASU did not have a material impact on the Company's financial results and accompanying disclosures.   12 Table of Contents     3. Segment Reporting   We operate primarily within one industry consisting of two reportable segments by which we manage our business. Our two reportable segments are: CaaS and Auto Finance.   As of both June 30, 2023  and December 31, 2022, we did not have a material amount of long-lived assets located outside of the U.S.   We measure the profitability of our reportable segments based on their income after allocation of specific costs and corporate overhead; however, our segment results do not reflect any charges for internal capital allocations among our segments. Overhead costs are allocated based on headcounts and other applicable measures to better align costs with the associated revenues.   Summary operating segment information (in thousands) is as follows:    Three Months Ended June 30, 2023   CaaS     Auto Finance     Total   Revenue:                         Consumer loans, including past due fees   $ 210,268     $ 9,774     $ 220,042   Fees and related income on earning assets     62,852       22       62,874   Other revenue     7,627       208       7,835   Other non-operating revenue     89       ( 2 )     87   Total revenue     280,836       10,002       290,838   Interest expense     ( 23,363 )     ( 852 )     ( 24,215 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     —       ( 309 )     ( 309 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     ( 177,829 )     —       ( 177,829 ) Net margin   $ 79,644     $ 8,841     $ 88,485   Income before income taxes   $ 28,883     $ 3,130     $ 32,013   Income tax expense   $ ( 6,346 )   $ ( 853 )   $ ( 7,199 )   Six Months Ended June 30, 2023   CaaS     Auto Finance     Total   Revenue:                         Consumer loans, including past due fees   $ 410,797     $ 18,946     $ 429,743   Fees and related income on earning assets     107,191       40       107,231   Other revenue     14,342       417       14,759   Other non-operating revenue     103       43       146   Total revenue     532,433       19,446       551,879   Interest expense     ( 46,823 )     ( 1,626 )     ( 48,449 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     —       ( 1,013 )     ( 1,013 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     ( 327,651 )     —       ( 327,651 ) Net margin   $ 157,959     $ 16,807     $ 174,766   Income before income taxes   $ 60,736     $ 5,359     $ 66,095   Income tax expense   $ ( 13,913 )   $ ( 1,474 )   $ ( 15,387 ) Total assets   $ 2,355,177     $ 99,525     $ 2,454,702     13 Table of Contents   Three Months Ended June 30, 2022   CaaS     Auto Finance     Total   Revenue:                         Consumer loans, including past due fees   $ 182,828     $ 8,719     $ 191,547   Fees and related income on earning assets     65,819       20       65,839   Other revenue     12,169       241       12,410   Other non-operating revenue     228       11       239   Total revenue     261,044       8,991       270,035   Interest expense     ( 18,552 )     ( 373 )     ( 18,925 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     —       ( 182 )     ( 182 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     ( 146,559 )     —       ( 146,559 ) Net margin   $ 95,933     $ 8,436     $ 104,369   Income before income taxes   $ 39,979     $ 2,561     $ 42,540   Income tax expense   $ ( 8,100 )   $ ( 643 )   $ ( 8,743 )   Six Months Ended June 30, 2022   CaaS     Auto Finance     Total   Revenue:                         Consumer loans, including past due fees   $ 339,293     $ 17,060     $ 356,353   Fees and related income on earning assets     120,499       38       120,537   Other revenue     22,167       509       22,676   Other non-operating revenue     263       37       300   Total revenue     482,222       17,644       499,866   Interest expense     ( 35,715 )     ( 620 )     ( 36,335 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     —       ( 329 )     ( 329 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     ( 251,239 )     —       ( 251,239 ) Net margin   $ 195,268     $ 16,695     $ 211,963   Income before income taxes   $ 83,577     $ ( 3,403 )   $ 80,174   Income tax (expense) benefit   $ ( 2,582 )   $ 960     $ ( 1,622 ) Total assets   $ 2,025,867     $ 90,587     $ 2,116,454       14 Table of Contents     4. Shareholders’ Equity and Preferred Stock   During the three and six months ended June 30, 2023  and 2022, we repurchased and contemporaneously retired 105,447 shares, 177,801 shares, 355,036 shares and 1,360,248 shares of our common stock at an aggregate cost of $ 2,988,000 , $ 4,935,000 , $ 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,  2023 and 2022, we sold 2,100 shares, 53,427 shares, 0 shares and 0  shares of our Series B Preferred Stock under our “at-the-market” offering program (the “ATM Program”) for net proceeds of $ 0.0 million, $ 1.1 million, $ 0.0 million and $ 0.0  million, respectively. During the three and six months ended June 30, 2023 and 2022, we repurchased and contemporaneously retired 0 shares, 1,806 shares, 0 shares and 0  shares of Series B Preferred Stock at an aggregate cost of $ 0 , $ 29,000 , $ 0 and $ 0 , respectively. For further information regarding the ATM Program, see Note 13  “ATM Program.”   5. Redeemable Preferred Stock   On November 26, 2014, we and certain of our subsidiaries entered into a Loan and Security Agreement with Dove Ventures, LLC, a Nevada limited liability company (“Dove”). The agreement provided for a senior secured term loan facility in an amount of up to $ 40.0 million at any time outstanding. On December 27, 2019, the Company issued 400,000 shares of its Series A Preferred Stock with an aggregate initial liquidation preference of $ 40.0 million, in exchange for full satisfaction of the $ 40.0 million that the Company owed Dove under the Loan and Security Agreement. Dividends on the preferred stock are 6 % per annum (cumulative, noncompounding) and are payable as declared, and in preference to any common stock dividends, in cash. The Series A Preferred Stock is perpetual and has no maturity date. The Company may, at its option, redeem the shares of Series A Preferred Stock on or after January 1, 2025 at a redemption price equal to $ 100 per share, plus any accumulated and unpaid dividends. At the request of holders of a majority of the shares of Series A Preferred Stock, the Company shall offer to redeem all of the Series A Preferred Stock at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends, at the option of the holders thereof, on or after January 1, 2024. Upon the election by the holders of a majority of the shares of Series A Preferred Stock, each share of the Series A Preferred Stock is convertible into the number of shares of the Company’s common stock as is determined by dividing (i) the sum of (a) $100 and (b) any accumulated and unpaid dividends on such share by (ii) an initial conversion price equal to $ 10 per share, subject to certain adjustment in certain circumstances to prevent dilution. Given the redemption rights contained within the Series A Preferred Stock, we account for the outstanding preferred stock as temporary equity in the consolidated balance sheets. Dividends paid on the Series A Preferred Stock are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. The common stock issuable upon conversion of Series A Preferred Stock is included in our calculation of Net income attributable to common shareholders per share—diluted. See Note 11, “Net Income Attributable to Controlling Interests Per Common Share” for more information.   Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts.   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. The units carry a 16 % preferred return to be paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional units or cash, at our election. The units have both call and put rights and are also subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the subsidiary. A holder of the Class B Preferred Units may, at its election, require the Company to redeem part or all of such holder’s Class B Preferred Units for cash on or after October 14, 2024. In March 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms. The proceeds from the transaction are being used for general corporate purposes. The Company has the right to redeem the Class B Preferred Units at any time with notice. We have included the issuance of these Class B preferred units as temporary noncontrolling interest on the consolidated balance sheets. Dividends paid on the Class B preferred units are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. See Note 11, “Net Income Attributable to Controlling Interests Per Common Share” for more information.   15 Table of Contents     6. Fair Values of Assets and Liabilities   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 recorded at fair value" in the consolidated statements of income. 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 recorded at fair value and therefore impact earnings.    Fair value differs from amortized cost accounting in the following ways:   • Receivables are recorded at their fair value, not their principal and fee balance or cost basis;   • The fair value of the loans takes into consideration net charge-offs for the remaining life of the loans with no separate allowance for credit loss calculation;   • Certain fee billings (such as annual or merchant fees) and expenses of loans and notes are no longer deferred but recognized (when billed or incurred) in income or expense, respectively;   • The net present value of cash flows associated with future fee billings on existing receivables are included in fair value;    • Changes in the fair value of loans impact recorded revenues; and   • Net charge-offs are recognized as they occur rather than through the establishment of an allowance and provision for losses for those loans, interest and fees receivable carried at amortized cost.   For receivables that are carried at net amortized cost, we include disclosures of the fair value of such receivables to the extent practicable within the disclosures below.    Where applicable, we account for our financial assets and liabilities at fair value based upon a three -tiered valuation system. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Where inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input that is significant to the fair value measurement in its entirety.   Valuations and Techniques for Assets   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 asset or liability. The table below summarizes (in thousands) by fair value hierarchy the  June 30, 2023 and  December 31, 2022 fair values and carrying amounts of ( 1 ) our assets that are required to be carried at fair value in our consolidated financial statements and ( 2 ) our assets not carried at fair value, but for which fair value disclosures are required:   Assets – As of June 30, 2023 (1)   Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)     Carrying Amount of Assets   Loans, interest and fees receivable, net for which it is practicable to estimate fair value and which are carried at net amortized cost   $ —     $ —     $ 102,066     $ 94,492   Loans, interest and fees receivable, at fair value   $ —     $ —     $ 1,916,063     $ 1,916,063     Assets – As of December 31, 2022 (1)   Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)     Carrying Amount of Assets   Loans, interest and fees receivable, net for which it is practicable to estimate fair value and which are carried at net amortized cost   $ —     $ —     $ 94,968     $ 87,434   Loans, interest and fees receivable, at fair value   $ —     $ —     $ 1,817,976     $ 1,817,976       ( 1 ) For cash, deposits and investments in equity securities, the carrying amount is a reasonable estimate of fair value.   For those asset classes above that are required to be carried at fair value in our consolidated financial statements, gains and losses associated with fair value changes are detailed on our consolidated statements of income as a component of "Changes in fair value of loans, interest and fees receivable recorded at fair value". 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.   16 Table of Contents   For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the six months ended June 30, 2023  and 2022 :       Loans, Interest and Fees Receivables, at Fair Value       2023     2022   Balance at January 1,   $ 1,817,976     $ 1,026,424   Cumulative effects from adoption of fair value under the CECL standard     —       314,985   Net revaluations of loans, interest and fees receivable, at fair value, included in earnings     44,212       ( 23,409 ) Principal charge-offs, net of recoveries, included in earnings     ( 256,000 )     ( 154,162 ) Finance and fees, included in earnings     453,766       412,436   Finance charge-offs, included in earnings     ( 115,863 )     ( 73,668 ) Purchases     1,157,313       1,253,916   Settlements     ( 1,185,341 )     ( 1,139,647 ) Balance at June 30,   $ 1,916,063     $ 1,616,875     The unrealized gains and losses for assets within the Level 3 category presented in the tables above include changes in fair value that are attributable to both observable and unobservable inputs.   Net Revaluation of Loans, Interest and Fees Receivable. We record the net revaluation of loans, interest and fees receivable (including those pledged as collateral) in the Changes in fair value of loans, interest and fees receivable recorded at fair value category in our consolidated statements of income. 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 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   June 30, 2023 and December 31, 2022. 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 June 30, 2023 (in thousands)   Valuation Technique   Unobservable Input   Range (Weighted Average)   Loans, interest and fees receivable, at fair value   $ 1,916,063   Discounted cash flows   Gross yield, net of finance charge charge-offs     25.3% to 37.0% (32.2%)                 Payment rate     9.0% to 10.3% (9.7%)                 Expected principal credit loss rate     30.4% to 33.2% (31.5%)                 Servicing rate     2.9% to 3.1% (3.0%)                 Discount rate     10.2% to 10.5% (10.3%)     Quantitative Information about Level 3 Fair Value Measurements   Fair Value Measurement   Fair Value at December 31, 2022 (in thousands)   Valuation Technique   Unobservable Input   Range (Weighted Average)   Loans, interest and fees receivable, at fair value   $ 1,817,976   Discounted cash flows   Gross yield, net of finance charge charge-offs     24.7% to 36.1% (31.4%)                 Payment rate     5.0% to 11.4% (10.3%)                 Expected principal credit loss rate     9.2% to 30.3% (30.2%)                 Servicing rate     3.5% to 6.4% (3.6%)                 Discount rate     9.8% to 10.5% (10.1%)     17 Table of Contents   Valuations and Techniques for Liabilities   Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the liability. The table below summarizes (in thousands) by fair value hierarchy the June 30, 2023  and December 31, 2022  fair values and carrying amounts of our liabilities not carried at fair value, but for which fair value disclosures are required:   Liabilities – As of June 30, 2023   Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)     Carrying Amount of Liabilities   Liabilities not carried at fair value                                 Revolving credit facilities   $ —     $ —     $ 1,642,129     $ 1,642,129   Amortizing debt facilities   $ —     $ —     $ 23,117     $ 23,117   Senior notes, net   $ 137,874     $ —     $ —     $ 144,316     Liabilities – As of December 31, 2022   Quoted Prices in Active Markets for Identical Assets (Level 1)     Significant Other Observable Inputs (Level 2)     Significant Unobservable Inputs (Level 3)     Carrying Amount of Liabilities   Liabilities not carried at fair value                                 Revolving credit facilities   $ —     $ —     $ 1,630,111     $ 1,630,111   Amortizing debt facilities   $ —     $ —     $ 23,195     $ 23,195   Senior notes, net   $ 125,640     $ —     $ —     $ 144,385     18 Table of Contents   For our notes payable where market prices are not available, we assess the fair value of these liabilities based on our estimate of future cash flows generated from their underlying credit card receivables collateral, net of servicing compensation required under the note facilities, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk. We have evaluated the fair value of our third party debt by analyzing the expected repayment terms and credit spreads included in our recent financing arrangements obtained with similar terms. These recent financing arrangements provide positive evidence that the underlying data used in our assessment of fair value has not changed relative to the general market and therefore the fair value of our debt continues to be the same as the carrying value. See Note 9, “Notes Payable,” for further discussion on our other notes payable.   Other Relevant Data   Other relevant data (in thousands) as of June 30, 2023 and  December 31, 2022 concerning certain assets we carry at fair value are as follows:   As of June 30, 2023   Loans, Interest and Fees Receivable at Fair Value     Loans, Interest and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value   Aggregate unpaid gross balance of loans, interest and fees receivable that are reported at fair value   $ 635     $ 2,173,366   Aggregate unpaid principal balance included within loans, interest and fees receivable that are reported at fair value   $ 614     $ 1,966,732   Aggregate fair value of loans, interest and fees receivable that are reported at fair value   $ 635     $ 1,915,428   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)   $ —     $ 21,419   Unpaid principal balance of receivables within loans, interest and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans, interest and fees receivable   $ 16     $ 100,417       19 Table of Contents   As of December 31, 2022   Loans, Interest and Fees Receivable at Fair Value     Loans, Interest and Fees Receivable Pledged as Collateral under Structured Financings at Fair Value   Aggregate unpaid gross balance of loans, interest and fees receivable that are reported at fair value   $ 786     $ 2,119,340   Aggregate unpaid principal balance included within loans, interest and fees receivable that are reported at fair value   $ 760     $ 1,910,090   Aggregate fair value of loans, interest and fees receivable that are reported at fair value   $ 765     $ 1,817,211   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)   $ 3     $ 8,362   Unpaid principal balance of receivables within loans, interest and fees receivable that are reported at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans, interest and fees receivable   $ 4     $ 144,767         7. Variable Interest Entities   The Company contributes the vast majority of receivables to VIEs. These entities are sometimes established to facilitate third party financing. When assets are contributed to a VIE, they serve as collateral for the debt securities issued by that VIE. The evaluation of whether the entity qualifies as a VIE is based upon the sufficiency of the equity at risk in the legal entity. This evaluation is generally a function of the level of excess collateral in the legal entity. We consolidate VIEs when we hold a variable interest and we retain significant exposure to certain receivables and therefore, are the primary beneficiary. Through our role as servicer, we are the primary beneficiary when we have the power to direct activities that most significantly affect the economic performance and have the obligation to absorb the majority of the losses or benefits. In all of our VIEs, we continue to service the receivables (in accordance with defined servicing procedures), and as such, have the ability to significantly impact the economic performance of those VIEs. In certain circumstances we guarantee the performance of the underlying debt or agree to contribute additional collateral when necessary. When collateral is pledged, it is not available for the general use of the Company and can only be used to satisfy the related debt obligation. The results of operations and financial position of consolidated VIEs are included in our consolidated financial statements.   The following table presents a summary of VIEs in which we had continuing involvement and held a variable interest (in millions):       As of       June 30, 2023     December 31, 2022   Unrestricted cash and cash equivalents   $ 172.1     $ 202.2   Restricted cash and cash equivalents     30.3       27.6   Loans, interest and fees receivable, at fair value     1,868.3       1,735.9   Total Assets held by VIEs   $ 2,070.7     $ 1,965.7   Notes Payable, net held by VIEs   $ 1,595.8     $ 1,586.0   Maximum exposure to loss due to involvement with VIEs   $ 1,815.4     $ 1,756.0     20 Table of Contents     8. Leases   We have operating leases primarily associated with our corporate offices and regional service centers as well as for certain equipment. Our leases have remaining lease terms of 1 to 12 years, some of which include options, at our discretion, to extend the leases for additional periods generally on one -year revolving periods. Other leases allow for us to terminate the lease based on appropriate notification periods. For certain of our leased offices, we sublease a portion of the unoccupied space. The terms of the sublease arrangement generally coincide with the underlying lease. 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 June 30,     For the Six Months Ended June 30,       2023     2022     2023     2022   Operating lease cost, gross   $ 637     $ 1,373     $ 1,276     $ 3,097   Sublease income     ( 23 )     ( 807 )     ( 47 )     ( 2,109 ) Net Operating lease cost   $ 614     $ 566     $ 1,229     $ 988   Cash paid under operating leases, gross   $ 181     $ 1,000     $ 361     $ 3,635                                     Weighted average remaining lease term - months     128                           Weighted average discount rate     6.6 %                             As of June 30, 2023 , maturities of lease liabilities were as follows (in thousands):     Gross Lease Payment     Payments received from Sublease     Net Lease Payment   2023 (excluding the six months ended June 30, 2023)   $ 1,315     $ ( 48 )   $ 1,267   2024     2,813       ( 40 )     2,773   2025     2,652       —       2,652   2026     2,512       —       2,512   2027     2,476       —       2,476   Thereafter     17,338       —       17,338   Total lease payments     29,106       ( 88 )     29,018   Less imputed interest     ( 8,563 )                 Total   $ 20,543                       In August 2021, we entered into an operating lease agreement for our corporate headquarters in Atlanta, Georgia with an unaffiliated third party. The new lease covers approximately 73,000 square feet and 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 June 30, 2023, we had no material non-cancelable capital leases with initial or remaining terms of more than one year.   21 Table of Contents     9. Notes Payable   Notes Payable, at Face Value   Other notes payable outstanding as of June 30, 2023 and  December 31, 2022 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:       As of       June 30, 2023     December 31, 2022   Revolving credit facilities at a weighted average interest rate equal to 5.3 % as of June 30, 2023 ( 5.1 % as of December 31, 2022) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 1,998.2 million as of June 30, 2023 ($ 1,856.2 million as of December 31, 2022)                 Revolving credit facility, not to exceed $ 65.0 million (expiring November 1, 2025 ) (1) (2) (3)   $ 46.3     $ 44.1   Revolving credit facility, not to exceed $ 50.0 million (expiring October 30, 2024 ) (2) (3) (4) (5)     49.9       50.0   Revolving credit facility, not to exceed $ 100.0 million (expiring March 15, 2024 ) (2) (3) (4) (5) (6)     80.0       —   Revolving credit facility, not to exceed $ 50.0 million (expiring July 20, 2025 ) (2) (3) (4) (5)     12.8       24.6   Revolving credit facility, not to exceed $ 20.0 million (expiring September 15, 2023 ) (2) (3) (4) (5)     7.4       11.1   Revolving credit facility, not to exceed $ 200.0 million (expiring May 15, 2024 ) (3) (4) (5) (6)     122.2       188.9   Revolving credit facility, not to exceed $ 100.0 million (expiring January 15, 2025 ) (3) (4) (5) (6)   100.0       100.0   Revolving credit facility, not to exceed $ 250.0 million (expiring October 15, 2025 ) (3) (4) (5) (6)     250.0       250.0   Revolving credit facility, not to exceed $ 25.0 million (expiring June 16, 2025 ) (3) (4) (5)     25.0       25.0   Revolving credit facility, not to exceed $ 300.0 million (expiring December 15, 2026 ) (3) (4) (5) (6)     300.0       300.0   Revolving credit facility, not to exceed $ 75.0 million (expiring March 15, 2025 ) (3) (4) (5) (6)     —       —   Revolving credit facility, not to exceed $ 300.0 million (expiring May 15, 2026 ) (3) (4) (5) (6)     300.0       300.0   Revolving credit facility, not to exceed $ 250.0 million (expiring May 15, 2030 ) (3) (4) (5) (6)     250.0       250.0   Revolving credit facility, not to exceed $ 100.0 million (expiring August 5, 2024 ) (3) (4) (5) (6)     —       —   Revolving credit facility, not to exceed $ 100.0 million (expiring March 15, 2028 ) (3) (4) (5) (6)     100.0       100.0   Revolving credit facility, not to exceed $ 20.0 million (expiring May 26, 2026 ) (3) (4) (5)     10.0       —   Other facilities                 Other debt     5.7       5.8   Unsecured term debt (expiring August 26, 2024 ) with a weighted average interest rate equal to 8.0 % (3)     17.4       17.4   Total notes payable before unamortized debt issuance costs and discounts     1,676.7       1,666.9   Unamortized debt issuance costs and discounts     ( 11.5 )     ( 13.6 ) Total notes payable outstanding, net   $ 1,665.2     $ 1,653.3     ( 1 ) Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations. ( 2 ) These notes reflect modifications to either extend the maturity date, increase the loan amount or both, and are treated as accounting modifications. ( 3 ) See below for additional information. ( 4 ) Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes.   ( 5 ) Loans are associated with VIEs. See Note 7, "Variable Interest Entities" for more information. ( 6 ) Creditors do not have recourse against the general assets of the Company but only to the collateral within the VIEs. * As of June 30, 2023 , the Prime Rate was 8.25 % and the Secured Overnight Financing Rate ("SOFR") was 5.09 %.   22 Table of Contents   In  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 $ 49.9  million was drawn as of June 30, 2023). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to SOFR plus 3.0 %. The facility matures on October 30, 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 is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.   In  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 $ 46.3 million was drawn as of June 30, 2023). This facility is secured by the financial and operating assets of CAR and accrues interest at an annual rate equal to SOFR plus a range between 2.25 % and 2.6 % based on certain ratios. The loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. In periods subsequent to October 2016, we amended the original agreement to either extend the maturity date and/or expand the capacity of this revolving credit facility. As of June 30, 2023, the facility's borrowing limit was $ 65.0 million and the facility matures on November 1, 2025. 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.   In December 2017, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 50.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 12.8  million was drawn as of June 30, 2023). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to Term Secured Overnight Financing Rate ("Term SOFR") plus 3.6 %. An amendment was completed in July 2023 that extended the maturity to July 20, 2025. There were no other material changes to the existing terms. The facility is subject to certain affirmative covenants, including payment, delinquency and charge-off tests, 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.   In  2018, we (through a wholly owned subsidiary) entered a revolving credit facility to sell up to an aggregate $ 100.0 million of notes that are secured by the receivables and other assets of the trust (of which $ 80.0 million was outstanding as of June 30, 2023) that can be drawn upon to the extent of outstanding eligible receivables. The interest rate on the notes equals the SOFR plus 3.1 %. The facility matures on March 15, 2024, and is 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. As of June 30, 2023, the aggregate borrowing limit was $ 100.0 million.   In June 2019, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 20.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 7.4  million was drawn as of June 30, 2023). 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. The note is guaranteed by Atlanticus.   In August 2019, Atlanticus Holdings Corporation issued a $ 17.4 million term note, which bears interest at a fixed rate of 8.0 % and is due in August 2024.   In November 2019, we (through a wholly owned subsidiary) sold $ 200.0 million of ABS secured by certain credit card receivables (expiring May 15, 2024). A portion of the proceeds from the sale was used to pay down our existing facilities associated with our credit card receivables and the remaining proceeds were used to fund the acquisition of future receivables. The terms of the ABS allow for a three -year revolving structure with a subsequent 12 -month to 18 -month amortization period. The weighted average interest rate on the securities is fixed at 4.91 %. This facility is currently in contractual scheduled amortization.   In July 2020, we (through a wholly owned subsidiary) sold $ 100.0 million of ABS secured by certain private label credit receivables. A portion of the proceeds from the sale were used to pay down some of our existing revolving facilities associated with our private label credit receivables, and the remaining proceeds were used to fund the acquisition of receivables. The terms of the ABS allow for a three -year revolving structure with a subsequent 18 -month amortization period. The weighted average interest rate on the securities is fixed at 5.47 %.   In October 2020, we (through a wholly owned subsidiary) sold $ 250.0 million of ABS secured by certain private label credit receivables. A portion of the proceeds from the sale was used to pay down our existing term ABS associated with our private label credit receivables, noted above, and the remaining proceeds were used to fund the acquisition of receivables. The terms of the ABS allow for a 41 -month revolving structure with an 18 -month amortization period, and the securities mature between August 2025 and October 2025. 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 (as subsequently amended) $ 25.0 million borrowing limit (of which $ 25.0 million was drawn as of June 30, 2023) 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 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.   23 Table of Contents   In June 2021, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026 through December 15, 2026). The terms of the ABS allow for a four -year revolving structure with a subsequent 11 -month to 18 -month amortization period. The weighted average interest rate on the securities is fixed at 4.24 %.   In September 2021, we (through a wholly owned subsidiary) entered a term facility with a $ 75.0 million limit (of which $ 0.0 million was outstanding as of June 30, 2023) 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 Term SOFR plus 2.75 %. 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.   In November 2021, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026). The terms of the ABS allow for a three -year revolving structure with a subsequent 18 -month amortization period. The weighted average interest rate on the securities is fixed at 3.53 %.   In May 2022, we (through a wholly owned subsidiary) entered a $ 250.0 million ABS agreement (of which $ 250.0 million was drawn as of June 30, 2023) 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 %.   In August 2022, we (through a wholly owned subsidiary) entered a $ 100.0 million ABS agreement secured by certain credit card receivables (of which $ 0.0 million was outstanding as of June 30, 2023) that can be drawn upon to the extent of outstanding eligible receivables. The interest rate on the notes is based on the Term SOFR plus 1.8 %. The facility matures on August 5, 2024.   In September 2022, we (through a wholly owned subsidiary) sold $ 100.0 million of ABS secured by certain private label credit receivables. A portion of the proceeds from the sale was used to pay down other revolving facilities associated with our private label credit receivables, noted above, and the remaining proceeds have been invested in the acquisition of receivables. The terms of the ABS allow for a 3 -year revolving structure with an 18 -month amortization period. The weighted average interest rate on the securities is fixed at 7.3 %.   In May 2023, we (through a wholly owned subsidiary) entered a revolving credit facility with a $ 20.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 10.0 million was drawn as of June 30, 2023). 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 Term SOFR plus 3.75 %. The facility matures on May 26, 2026  and is subject to certain covenants and restrictions of which the failure could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus.   As of June 30, 2023, we were in compliance with the covenants underlying our various notes payable and credit facilities.   Senior Notes, net   In  November 2021, we issued $ 150.0 million aggregate principal amount of senior notes (included on our consolidated balance sheet as "Senior notes, net"). The senior notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any. The senior notes are effectively subordinated to all of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the senior notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company). The senior notes bear interest at the rate of 6.125 % per annum. Interest on the senior notes is payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year. The senior notes will mature on November 30, 2026. 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 and six months ended June 30, 2023 and 2022  totaled $ 0.3  million $ 0.7 million, $ 0.4 million and $ 0.7  million, respectively. We repurchased $ 786,000 of the outstanding principal amount of these senior notes for the for the three and six months ended June 30, 2023.     10. Commitments and Contingencies   General   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 $2.5  billion at June 30, 2023. We have never experienced a situation in which all borrowers have exercised their entire available lines of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would be a concurrent increase in assets should there be any exercise of these lines of credit.   Additionally, our CAR operations provide floor-plan financing for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The floor plan financing allows dealers and finance companies to borrow up to the maximum pre-approved credit limit allowed in order to finance ongoing inventory needs. These loans are secured by the underlying auto inventory and, in certain cases where we have other lending products outstanding with the dealer, are secured by the collateral under those lending arrangements as well, including any outstanding dealer reserves. As of June 30, 2023, CAR had unfunded outstanding floor-plan financing commitments totaling $ 10.3 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 $ 21.4 million remains pledged as of June 30, 2023 to support various ongoing contractual obligations.   Under agreements with third -party originating and other financial institutions, we have agreed to indemnify the financial institutions for certain liabilities associated with the services we provide on behalf of the financial institutions—such indemnification obligations generally being limited to instances in which we either (a) have been afforded the opportunity to defend against any potentially indemnifiable claims or (b) have reached agreement with the financial institutions regarding settlement of potentially indemnifiable claims. As of June 30, 2023, we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote. We would accrue liabilities related to these contingencies in any future period if and in which we assess the likelihood of an estimable payment as probable.   Under the account terms, consumers have the option of enrolling in a credit protection program with our issuing bank partners which would make the minimum payments owed on their accounts for a period of up to six months upon the occurrence of an eligible event. Eligible events typically include loss of life, job loss, disability, or hospitalization. As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 65.0 million as of June 30, 2023. 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. We include our estimate of future claims under this program within our fair value analysis of the associated receivables.   We also are subject to certain minimum payments under cancelable and non-cancelable lease arrangements. For further information regarding these commitments, see Note 8, “Leases”.   24 Table of Contents Litigation   We are involved in various legal proceedings that are incidental to the conduct of our business. There are currently no pending legal proceedings that are expected to be material to us.    11. Net Income Attributable to Controlling Interests Per Common Share   We compute net income attributable to controlling interests per common share by dividing net income attributable to controlling interests by the weighted average number of shares of common stock (including participating securities) outstanding during the period, as discussed below. Diluted computations applicable in financial reporting periods in which we report income reflect the potential dilution to the basic income per share of common stock computations that could occur if securities or other contracts to issue common stock were exercised, were converted into common stock or were to result in the issuance of common stock that would share in our results of operations. In performing our net income attributable to controlling interests per share of common stock computations, we apply accounting rules that require us to include all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted calculations. Common stock and certain unvested share-based payment awards earn dividends equally, and we have included all outstanding restricted stock awards in our basic and diluted calculations for current and prior periods.   The following table sets forth the computations of net income attributable to controlling interests per share of common stock (in thousands, except per share data):        For the Three Months Ended     For the Six Months Ended       June 30,     June 30,       2023     2022     2023     2022   Numerator:                                 Net income attributable to controlling interests   $ 25,089     $ 34,025     $ 51,301     $ 79,035   Preferred stock and preferred unit dividends and accretion     ( 6,289 )     ( 6,257 )     ( 12,516 )     ( 12,463 ) Net income attributable to common shareholders—basic     18,800       27,768       38,785       66,572   Effect of dilutive preferred stock dividends and accretion     598       598       1,190       1,190   Net income attributable to common shareholders—diluted   $ 19,398     $ 28,366     $ 39,975     $ 67,762   Denominator:                                 Basic (including unvested share-based payment awards) (1)     14,439       14,744       14,457       14,783   Effect of dilutive stock compensation arrangements and exchange of preferred stock     4,520       4,736       4,513       4,986   Diluted (including unvested share-based payment awards) (1)     18,959       19,480       18,970       19,769   Net income attributable to common shareholders per share—basic   $ 1.30     $ 1.88     $ 2.68     $ 4.50   Net income attributable to common shareholders per share—diluted   $ 1.02     $ 1.46     $ 2.11     $ 3.43       ( 1 ) Shares related to unvested share-based payment awards included in our basic and diluted share counts were 246,994 and 217,851 for the three and six months ended June 30, 2023  compared to 153,650 and 127,138 for the three and six months ended June 30, 2022, respectively.   As their effects were anti-dilutive, we excluded stock options to purchase 0.1 million 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, 2023 and we excluded stock options to purchase 0.1  and 0.0  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, 2022   For the three and six months ended June 30,  2023  and 2022, 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 5, "Redeemable Preferred Stock", for a further discussion of these convertible securities.     12. Stock-Based Compensation   We currently have two stock-based compensation plans, the Second Amended and Restated Employee Stock Purchase Plan (the “ESPP”) and the Fourth Amended and Restated 2014 Equity Incentive Plan (the “Fourth Amended 2014 Plan”). Our Fourth Amended 2014 Plan provides that we may grant options on or shares of our common stock (and other types of equity awards) to members of our Board of Directors, employees, consultants and advisors. The Fourth Amended 2014 Plan was approved by our shareholders in May 2019. As of June 30, 2023, 48,660 shares remained available for issuance under the ESPP and 1,929,821 shares remained available for issuance under the Fourth Amended 2014 Plan.   Exercises and vestings under our stock-based compensation plans resulted in no  income tax-related charges to paid-in capital during the three and six months ended June 30, 2023  and 2022. Restricted Stock and Restricted Stock Units   During the  six months ended June 30, 2023 and 2022, we granted 146,007 shares and 106,315 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 3.6 million and $ 5.0 million, respectively. We incurred expenses of $ 1.5 million and $ 1.3 million during the  six months ended June 30, 2023  and 2022, respectively, related to restricted stock awards. When we grant restricted stock and restricted stock units, we defer the grant date value of the restricted stock and restricted stock unit and amortize that value (net of the value of anticipated forfeitures) as compensation expense with an offsetting entry to the paid-in capital component of our consolidated shareholders’ equity. Our restricted stock awards typically vest over a range of 12 to 60 months (or other term as specified in the grant which may include the achievement of performance measures) and are amortized to salaries and benefits expense ratably over applicable vesting periods. As of June 30, 2023, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 5.4 million with a weighted average remaining amortization period of 2.7 years. No forfeitures have been included in our compensation cost estimates based on historical forfeiture rates. Stock Options   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 $ 0.2  million, $ 0.4 million, $ 0.5 million and $ 1.0 million related to stock option-related compensation costs during the three and six months ended June 30, 2023  and 2022, respectively. When applicable, we recognize stock option-related compensation expense for any awards with graded vesting on a straight-line basis over the vesting period for the entire award. The table below includes additional information about outstanding options:       Number of Shares     Weighted Average Exercise Price     Weighted Average of Remaining Contractual Life (in years)     Aggregate Intrinsic Value   Outstanding at December 31, 2022     802,163     $ 12.23                   Issued     —     $ —                   Exercised     ( 6,418 )   $ 9.22                   Expired/Forfeited     ( 999 )   $ 15.30                   Outstanding at June 30, 2023     794,746     $ 12.25       1.1     $ 23,654,540   Exercisable at June 30, 2023     685,050     $ 9.31       0.8     $ 22,402,009     No options were issued during the three and six months ended June 30, 2023  and 2022. We had $ 0.4 million and $ 0.8 million of unamortized deferred compensation costs associated with non-vested stock options as of June 30, 2023  and December 31, 2022, respectively, with a weighted average remaining amortization period of 0.8  years as of June 30, 2023. Upon exercise of outstanding options, the Company issues new shares.     13. ATM Program   On August 10, 2022, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) providing for the sale by the Company of up to an aggregate offering price of $ 100,000,000 of our (i) Series B Preferred Stock and (ii) senior notes, from time to time through a sales agent, in connection with the ATM Program. Sales pursuant to the Sales Agreement, if any, may be made in transactions that are deemed to be “at-the-market offerings” as defined in Rule 415 under the Securities Act of 1933, as amended, including sales made directly on or through the NASDAQ Global Select Market. The sales agent will make all sales using commercially reasonable efforts consistent with its normal trading and sales practices up to the amount specified in, and otherwise in accordance with the terms of, the placement notice.   For further information regarding the ATM Program, see Note 4, “Shareholders’ Equity and Preferred Stock.”   14. Subsequent Events   We evaluate subsequent events that occur after our consolidated balance sheet date but before our consolidated financial statements are issued. There are two types of subsequent events: ( 1 ) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements; 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 June 30, 2023, 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. 25 Table of Contents     ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS   The following discussion should be read in conjunction with our consolidated financial statements and the related notes included therein and our Annual Report on Form 10-K for the year ended December 31, 2022, where certain terms have been defined.   This Management’s Discussion and Analysis of Financial Condition and Results of Operations includes forward-looking statements. We base these forward-looking statements on our current plans, expectations and beliefs about future events. There are risks, including the factors discussed in “Risk Factors” in Part II, Item 1A and elsewhere in this Report, that our actual experience will differ materially from these expectations. For more information, see “Forward-Looking Information” below.   In this Report, except as the context suggests otherwise, “Company,” “Atlanticus Holdings Corporation,” “Atlanticus,” “we,” “our,” “ours,” and “us” refer to Atlanticus Holdings Corporation and its subsidiaries and predecessors.   OVERVIEW   Atlanticus is a financial technology company powering more inclusive financial solutions for everyday Americans. 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 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. These consumers often have financial needs that are not effectively met by larger financial institutions. By facilitating appropriately priced consumer credit and financial service alternatives with value-added features and benefits curated for the unique needs of these consumers, we endeavor to empower better financial outcomes for everyday Americans.   Currently, within our Credit as a Service ("CaaS") segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $30 billion in consumer loans over more than 25 years of operating history, to support lenders in offering more inclusive financial services. These products include private label credit and general purpose credit cards originated by lenders through multiple channels, including retail and healthcare, direct mail solicitation, digital marketing and partnerships with third parties. The services of our bank partners are often extended to consumers who may not have access to financing options with larger financial institutions. Our flexible technology solutions allow our bank partners to integrate our paperless process and instant decisioning platform with the existing infrastructure of participating retailers, healthcare providers and other 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. Atlanticus’ underwriting process is enhanced by AI and machine learning, enabling lenders to make fast, sound decision-making when it matters most.   We are principally engaged in providing products and services to lenders in the U.S. and, in most cases, we invest in the receivables originated by lenders who utilize our technology platform and other related services. From time to time, we also purchase receivables portfolios from third parties. In this Report, “receivables” or “loans” typically refer to receivables we have purchased from our bank partners or from third parties.   Using our infrastructure and technology, we also provide loan servicing, including risk management and customer service outsourcing, for third parties. Also through our CaaS segment, we engage in testing and limited investment in consumer finance technology platforms as we seek to capitalize on our expertise and infrastructure. Additionally, we report within our CaaS segment: 1) servicing income; and 2) gains or losses associated with investments previously made in consumer finance technology platforms. These include investments in companies engaged in mobile technologies, marketplace lending and other financial technologies. None of these companies are publicly-traded and the carrying value of our investment in these companies is not material. One of these companies, Fintiv Inc., has sued Apple, Inc., Walmart, Inc., and PayPal Holdings, Inc. for patent infringement. Fintiv Inc. has approximately 150 patents related to secure money transfer on computer and mobile devices. The transaction volume in these areas has increased dramatically over the last five years. If Fintiv Inc. is successful in the patent litigation, there could be large exposure, including treble damages for these companies. The claimed losses sustained by this patent infringement are substantial and could be measured in the billions of dollars. We believe on a diluted basis that we will own over 10% of the company.  Apple has vigorously contested the claims, and we expect it to continue doing so. In light of the uncertainty around these lawsuits, we will continue to carry these investments on our books at cost minus impairment, if any, plus or minus changes resulting from observable price changes.   The recurring cash flows we receive within our CaaS segment principally include those associated with (1) private label credit and general purpose credit card receivables, (2) servicing compensation and (3) credit card receivables portfolios that are unencumbered or where we own a portion of the underlying structured financing facility.   Our credit and other operations are heavily regulated, which may cause us to change how we conduct our operations either in response to regulation or in keeping with our goal of leading the industry in adherence to consumer-friendly practices. We have made meaningful changes to our practices over the past several years, and because our account management practices are evolutionary and dynamic, it is possible that we may make further changes to these practices, some of which may produce positive, and others of which may produce adverse, effects on our operating results and financial position. Customers at the lower end of the credit score range intrinsically have higher loss rates than do customers at the higher end of the credit score range. As a result, the products we support are priced to reflect expected loss rates for our various risk categories. See “Consumer and Debtor Protection Laws and Regulations—CaaS Segment” in Part I, Item 1 of our Annual Report on Form 10-K for the year ended December 31, 2022 and Part II, Item 1A, “Risk Factors” contained in this Report.   26 Table of Contents   Subject to possible disruptions caused by inflation, rising interest rates, COVID-19 and supply chain interruptions, 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 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. We generally earn discount income over the life of the applicable loan. Additionally, we generate revenues from servicing loans on behalf of dealers for a portion of actual collections and by providing back-up servicing for similar quality assets owned by unrelated third parties. 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 June 30, 2023, our CAR operations served more than 630 dealers in 32 states and two U.S. territories. The core operations continue to perform well, absent the early 2022 settlement of outstanding litigation (achieving consistent profitability and generating positive cash flows and growth).   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 a new strain of coronavirus. The COVID-19 pandemic has negatively impacted global supply chains and business operations. In addition, rising inflation in 2021 and 2022 resulted in increased costs for many goods and services. As a result of persistently high inflation, interest rates have been on the rise. 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 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. The duration and severity of the effects of these impacts on our financial condition, results of operations and liquidity remain uncertain.    Consumer spending behavior has been significantly impacted by the COVID-19 pandemic, initially due to uncertainties about the extent and duration of the pandemic. Additionally, earlier government stimulus programs decreased consumer need for credit products and generally led to an increase in customer payments. While we have seen improvements in consumer spending behavior, receivables purchases could decline relative to the prior year if purchase behavior is further impacted by economic inflation. Furthermore, a number of our merchant partners have recently experienced labor shortages and supply chain disruptions. These trends could decrease or delay consumer spending and our receivables growth.   Borrowers impacted by COVID-19 requesting hardship assistance may have received temporary relief from payments or fee waivers. While we expect these measures to mitigate credit losses, related economic disruptions could result in increased portfolio credit losses in the future. The Biden administration ended the COVID-19 national and public health emergencies on May 11, 2023. The long term impact that the cessation of certain benefits provided under emergency relief programs will have on our consumers is uncertain although the remaining financial statement impact for those customers previously provided the aforementioned short-term payment deferrals and fee waivers is not material.    The Company remains committed to serving our bank partners, merchant partners and consumers, while caring for the health and safety of our employees and their families. The potential impact that COVID-19, related economic impacts, inflation and labor shortages and supply chain disruptions could have on our financial condition and results of operations remains uncertain. For more information, refer to Part II, Item 1A “Risk Factors” and, in particular, “Other Risks of our Business – COVID-19 has caused severe disruptions in the U.S. economy, and may have an adverse impact on our performance, results of operations and access to capital” and "Other Risks of our Business – Our business and operations may be negatively affected by rising prices and interest rates."   27 Table of Contents     CONSOLIDATED RESULTS OF OPERATIONS                       Income       For the Three Months Ended June 30,     Increases (Decreases)   (In Thousands)   2023     2022     from 2022 to 2023   Total operating revenue   $ 290,751     $ 269,796     $ 20,955   Other non-operating revenue     87       239       (152 ) Interest expense     (24,215 )     (18,925 )     (5,290 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     (309 )     (182 )     (127 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     (177,829 )     (146,559 )     (31,270 ) Net margin     88,485       104,369       (15,884 ) Operating expenses:                         Salaries and benefits     10,629       10,099       (530 ) Card and loan servicing     23,814       23,997       183   Marketing and solicitation     14,486       20,231       5,745   Depreciation     643       549       (94 ) Other     6,900       6,953       53   Total operating expenses:     56,472       61,829       5,357                             Net income     24,814       33,797       (8,983 ) Net loss attributable to noncontrolling interests     275       228       47   Net income attributable to controlling interests     25,089       34,025       (8,936 ) Net income attributable to controlling interests to common shareholders     18,800       27,768       (8,968 )                       Income       For the Six Months Ended June 30,     Increases (Decreases)   (In Thousands)   2023     2022     from 2022 to 2023   Total operating revenue   $ 551,733     $ 499,566     $ 52,167   Other non-operating revenue     146       300       (154 ) Interest expense     (48,449 )     (36,335 )     (12,114 ) Provision for losses on loans, interest and fees receivable recorded at amortized cost     (1,013 )     (329 )     (684 ) Changes in fair value of loans, interest and fees receivable recorded at fair value     (327,651 )     (251,239 )     (76,412 ) Net margin     174,766       211,963       (37,197 ) Operating expenses:                         Salaries and benefits     21,233       21,525       292   Card and loan servicing     48,149       46,672       (1,477 ) Marketing and solicitation     24,892       40,804       15,912   Depreciation     1,261       1,142       (119 ) Other     13,136       21,646       8,510   Total operating expenses:     108,671       131,789       23,118                             Net income     50,708       78,552       (27,844 ) Net loss attributable to noncontrolling interests     593       483       110   Net income attributable to controlling interests     51,301       79,035       (27,734 ) Net income attributable to controlling interests to common shareholders     38,785       66,572       (27,787 )   28 Table of Contents   Three and Six Months Ended June 30, 2023, Compared to Three and Six Months Ended June 30, 2022   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 $1,908.9 million as of June 30, 2022 to $2,173.4 million as of June 30, 2023. We continue to experience 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 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 that we expect to result in net period-over-period growth in our total interest income and related fees for these operations for the majority of 2023, albeit at a decreased growth rate to that experienced in 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 effective marketing for the general purpose credit card operations. Other revenue on our consolidated statements of income consists of ancillary, interchange and servicing income. Ancillary and interchange revenues are largely impacted by growth in our receivables as discussed above. These fees are earned when customers we serve use their cards over established card networks. We earn a portion of the interchange fee the card networks charge merchants for the transaction. We earn servicing income by servicing loan portfolios for third parties. Unless and/or until we grow the number of contractual servicing relationships we have with third parties or our current relationships grow their loan portfolios, we will not experience significant growth and income within this category. 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. This has 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 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. See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components-Recent Accounting Pronouncements” to our consolidated financial statements included herein for further discussion of our adoption of ASU 2016-13.   Other non-operating revenue.  Included within our Other non-operating revenue category is income (or loss) associated with investments in non-core businesses or other items not directly associated with our ongoing operations. These investments are carried at cost. None of these companies are publicly-traded and there are no material pending liquidity events. We will continue to carry the investments on our books at cost minus impairment, if any, plus or minus changes resulting from observable price changes.   Interest expense.  Variations in interest expense are due to new borrowings associated with growth in private label credit and general purpose credit card receivables and CAR operations as evidenced within Note 9, “Notes Payable,” 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 $1,359.7 million as of June 30, 2022 to $1,595.8 million as of June 30, 2023. The majority of this increase in outstanding debt relates to the addition of multiple revolving credit facilities during 2022. Recent increases in the federal funds rate have thus far had a modest impact on our interest expense as over 85% 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 federal funds rate increases. As such, we expect our quarterly interest expense for these operations to increase compared to prior periods.   Provision for losses on loans, interest and fees receivable recorded at amortized cost.  Our provision for losses on loans, interest and fees receivable recorded at amortized cost 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 amortized cost.    We have experienced a period-over-period increase in this category primarily reflecting growth in the underlying receivables subject to this provision as well as slight increases in delinquency rates, similar to those experienced in periods prior to COVID-19 and the related government stimulus programs.  See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements and the discussions of our CaaS and Auto Finance segments for further credit quality statistics and analysis. We expect that our provision for losses on loans will increase modestly in 2023 in relation to growth in the underlying Auto Finance receivables.   29 Table of Contents   Changes in fair value of loans, interest and fees receivable recorded at fair value.  The increase in Changes in fair value of loans, interest and fees receivable 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 $412.4 million for the six months ended June 30, 2022 to $453.8 million for the six months ended June 30, 2023. 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 recorded at fair value was a reduction in the discount rate applied to the net cash flows associated with these investments during the second quarter of 2022. The applied discount rate represents estimates third-party market participants could use in determining fair value. The reduction in this discount rate reflected 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, we expect our change in fair value of credit card receivables recorded at fair value to increase throughout 2023 commensurate with growth in these receivables. We may, however, 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 expenses. Total operating expenses variances for the three and six months ended June 30, 2023, relative to the three and six months ended June 30, 2022, reflect the following:     • slight increases in salaries and benefit costs related to both the growth in the number of employees and inflationary compensation pressure. We expect some continued increase in this cost for the remainder of 2023 compared to 2022 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 $1,908.9 million outstanding to $2,173.4 million outstanding at June 30, 2022 and June 30, 2023, 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 2023. 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.   • decreases in marketing and solicitation costs primarily due to significant decreases in origination and brand marketing support for the three and six months ended June 30, 2023 when compared to the three and six months ended June 30, 2022. This recent decline in marketing and solicitation costs is a direct result of tightened underwriting standards adopted during the second quarter 2022 (and subsequent quarters). We expect some increases in period over period results for the remainder of 2023, although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates; and   • 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 was a one-time $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. 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 activities, 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. The above-referenced unknown potential impacts related to COVID-19 could result in more variability in these expenses and could impair our ability to acquire new receivables, resulting in increased costs despite our efforts to manage costs effectively.   Noncontrolling interests.  We reflect the ownership interests of noncontrolling holders of equity in our majority-owned subsidiaries as noncontrolling interests in our consolidated statements of income. In November 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. The units carry a 16% preferred return paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional units or cash, at our election. The units have both call and put rights and are also subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the subsidiary. In March 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms. The proceeds from the transaction were used for general corporate purposes. We have included the issuance of these Class B preferred units as temporary noncontrolling interests on the consolidated balance sheets and the associated dividends are included as a reduction of our net income attributable to common shareholders on the consolidated statements of income.   30 Table of Contents   Income Taxes. We experienced effective tax rates of 22.3% and 23.1% for the three and six months ended June 30, 2023, compared to 20.4% and 2.0% for the three and six months ended June 30, 2022.   Our effective tax rates for the three and six months ended June 30, 2023, are above the statutory rate principally due to (1) state and foreign income tax expense, (2) interest accrued on uncertain tax positions, (3) taxes on global intangible low-taxed income, and (4) deduction disallowance under Section 162(m) of the Internal Revenue Code of 1986, as amended, with respect to compensation paid to our covered employees. Partially offsetting the foregoing items was our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes.   Our effective tax rates for the three and six months ended June 30, 2022, were 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 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 were the effects of 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 income. 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. On the basis described above, we reported interest expense of $1.1 million for the six months ended June 30, 2023, and de minimis interest expense for the six months ended June 30, 2022.   CaaS Segment   Our CaaS segment includes our activities related 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. The types of revenues we earn from our investments in receivables portfolios and services primarily include fees and finance charges, merchant fees or annual fees associated with the private label credit and general purpose credit card receivables.   We record (i) the finance charges, merchant fees and late fees assessed on our CaaS segment receivables in the Revenue - Consumer loans, including past due fees category on our consolidated statements of income, (ii) the annual, monthly maintenance, returned-check, cash advance and other fees in the Revenue - Fees and related income on earning assets category on our consolidated statements of income, and (iii) the charge-offs (and recoveries thereof) within our Provision for losses on loans, interest and fees receivable recorded at amortized cost on our consolidated statements of income (for all credit product receivables other than those for which we have elected the fair value option) and within Changes in fair value of loans, interest and fees receivable and notes payable on our consolidated statements of income (for all of our other receivables for which we use the fair value method). Additionally, we show the effects of fair value changes for those credit card receivables for which we have elected the fair value option as a component of Changes in fair value of loans, interest and fees receivable recorded at fair value in our consolidated statements of income.   We historically have invested in receivables portfolios through subsidiary entities. If we control through direct ownership or exert a controlling interest in the entity, we consolidate it and reflect its operations as noted above. If we exert significant influence but do not control the entity, we record our share of its net operating results in the equity in income of equity-method investee category on our consolidated statements of income.   31 Table of Contents   Non-GAAP Financial Measures   In addition to financial measures presented in accordance with GAAP, we present managed receivables, total managed yield, total managed yield ratio, combined principal net charge-off ratio, percent of managed receivables 30-59 days past due, percent of managed receivables 60-89 days past due and percent of managed receivables 90 or more days past due, all of which are non-GAAP financial measures. These non-GAAP financial measures aid in the evaluation of the performance of our credit portfolios, including our risk management, servicing and collection activities and our valuation of purchased receivables. The credit performance of our managed receivables provides information concerning the quality of loan originations and the related credit risks inherent with the portfolios. Management relies heavily upon financial data and results prepared on the “managed basis” in order to manage our business, make planning decisions, evaluate our performance and allocate resources.   These non-GAAP financial measures are presented for supplemental informational purposes only. These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation from, or as a substitute for, GAAP financial measures. These non-GAAP financial measures may differ from the non-GAAP financial measures used by other companies. A reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures or the calculation of the non-GAAP financial measures are provided below for each of the fiscal periods indicated.   These non-GAAP financial measures include only the performance of those receivables underlying consolidated subsidiaries (for receivables carried at amortized cost basis and fair value) and exclude the performance of receivables held by our former equity method investee. As the receivables underlying our former equity method investee reflect a small and diminishing portion of our overall receivables base, we do not believe their inclusion or exclusion in the overall results is material. Additionally, we calculate average managed receivables based on the quarter-end balances.   The comparison of non-GAAP managed receivables to our GAAP financial statements requires an understanding that managed receivables reflect the face value of loans, interest and fees receivable without any adjustment for potential credit losses to reflect fair value.   Below are (i) the reconciliation of Loans, interest and fees receivable, at fair value to Loans, interest and fees receivable, at face value and (ii) the calculation of managed receivables:       At or for the Three Months Ended       2023     2022     2021   (in Millions)   Jun. 30 (1)     Mar. 31 (1)     Dec. 31 (1)     Sep. 30 (1)     Jun. 30 (1)     Mar. 31 (1)     Dec. 31 (1)     Sep. 30 (1)   Loans, interest and fees receivable, at fair value   $ 1,916.1     $ 1,795.6     $ 1,818.0     $ 1,728.1     $ 1,616.9     $ 1,405.8     $ 1,026.4     $ 846.2   Fair value mark against receivable (2)   $ 257.9     $ 260.1     $ 302.1     $ 322.3     $ 293.0     $ 272.9     $ 208.9     $ 182.2   Loans, interest and fees receivable, at face value   $ 2,174.0     $ 2,055.7     $ 2,120.1     $ 2,050.4     $ 1,909.9     $ 1,678.7     $ 1,235.3     $ 1,028.4   Fair value to face value ratio (3)     88.1 %     87.3 %     85.8 %     84.3 %     84.7 %     83.7 %     83.1 %     82.3 %   (1) We elected the fair value option to account for certain loans receivable associated with our private label credit and general purpose credit card platform that were acquired on or after January 1, 2020, and, as discussed in more detail elsewhere in this Report, 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 previously accounted for under the amortized cost method. (2) The fair value mark against receivables reflects the difference between the face value of a receivable and the net present value of the expected cash flows associated with that receivable. See Note 6, “Fair Value of Assets and Liabilities” to our consolidated financial statements included herein for further discussion of assumptions underlying this calculation. (3) The Fair value to face value ratio is calculated using Loans, interest and fees receivable, at fair value as the numerator, and Loans, interest and fees receivable, at face value, as the denominator.         At or for the Three Months Ended       2023     2022     2021   (in Millions)   Jun. 30 (1)     Mar. 31 (1)     Dec. 31 (1)     Sep. 30 (1)     Jun. 30 (1)     Mar. 31 (1)     Dec. 31     Sep. 30   Loans, interest and fees receivable, gross   $ —     $ —     $ —     $ —     $ —     $ —     $ 375.7     $ 417.8   Loans, interest and fees receivable, gross from fair value reconciliation above     2,174.0       2,055.7       2,120.1       2,050.4       1,909.9       1,678.7       1,235.3       1,028.4   Total managed receivables   $ 2,174.0     $ 2,055.7     $ 2,120.1     $ 2,050.4     $ 1,909.9     $ 1,678.7     $ 1,611.0     $ 1,446.2     (1) As discussed in more detail elsewhere in this Report, 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) 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 names 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. These changes reflect that we now subtract finance charge-offs in the calculation of combined principal net charge-offs and the related ratio. We believe this revised calculation is more in line with the calculations used by our peers. 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 is as follows:       At or for the Three Months Ended       2023     2022     2021   (in Millions)   Jun. 30     Mar. 31     Dec. 31     Sep. 30     Jun. 30     Mar. 31     Dec. 31     Sep. 30   Consumer loans, including past due fees   $ 210.3     $ 200.5     $ 202.9     $ 208.9     $ 182.8     $ 156.5     $ 144.1     $ 132.7   Fees and related income on earning assets     62.9       44.3       48.0       48.5       65.8       54.7       53.8       54.1   Other revenue     7.6       6.7       8.5       11.1       12.2       10.0       9.7       8.4   Adjustments due to acceleration of merchant fee discount amortization under fair value accounting     (10.6 )     (0.5 )     3.4       (7.9 )     (12.1 )     1.8       (3.4 )     (14.7 ) Adjustments due to acceleration of annual fees recognition under fair value accounting     (9.8 )     7.3       7.9       10.0       (6.6 )     (1.3 )     (4.4 )     (12.0 ) Removal of expense accruals under GAAP     —       —       —       —       —       —       —       0.2   Removal of finance charge-offs     (54.2 )     (61.7 )     (58.3 )     (45.3 )     (41.2 )     (32.5 )     (28.1 )     (16.3 ) Total managed yield   $ 206.2     $ 196.6     $ 212.4     $ 225.3     $ 200.9     $ 189.2     $ 171.7     $ 152.4     As of January 1, 2022, we changed the names 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. These changes reflect that we now subtract finance charge-offs in the calculation of combined principal net charge-offs and the related ratio. We believe this revised calculation is more in line with the calculations used by our peers. All prior periods have been restated to reflect this new methodology. The calculation of Combined principal net charge-offs used in our Combined principal net charge-off ratio, annualized is as follows:       At or for the Three Months Ended       2023     2022     2021   (in Millions)   Jun. 30 (1)     Mar. 31 (1)     Dec. 31 (1)     Sep. 30 (1)     Jun. 30 (1)     Mar. 31 (1)     Dec. 31     Sep. 30   Net losses on impairment of loans, interest and fees receivable recorded at fair value   $ 180.0     $ 191.9     $ 182.3     $ 134.4     $ 126.5     $ 101.3     $ 46.7     $ 25.6   Gross charge-offs on non-fair value accounts     —       —       —       —       —       —       38.7       27.1   Finance charge-offs (2)     (54.2 )     (61.7 )     (58.3 )     (45.3 )     (41.2 )     (32.5 )     (28.1 )     (16.3 ) Recoveries on non-fair value accounts     —       —       —       —       —       —       (4.1 )     (2.7 ) Combined principal net charge-offs   $ 125.8     $ 130.2     $ 124.0     $ 89.1     $ 85.3     $ 68.8     $ 53.2     $ 33.7     (1) As discussed in more detail elsewhere in this Report, 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) Finance charge-offs are included as a component of our Provision for losses on loans, interest and fees receivable recorded at amortized cost and Changes in fair value of loans, interest and fees receivable recorded at fair value in the accompanying consolidated statements of income.   32 Table of Contents   Our delinquency and charge-off data at any point in time reflect the credit performance of our managed receivables. The average age of the accounts underlying our receivables, the timing and size of portfolio purchases, the success of our collection and recovery efforts and general economic conditions all affect our delinquency and charge-off rates. The average age of the accounts underlying our receivables portfolio also affects the stability of our delinquency and loss rates. We consider this delinquency and charge-off data in our allowance for uncollectible loans, interest and fees receivable for our other credit product receivables that we report at amortized cost. Our strategy for managing delinquency and receivables losses consists of account management throughout the life of the receivable. This strategy includes credit line management and pricing based on the risks. See also our discussion of collection strategy under “Collection Strategy” in Item 1, “Business” of our Annual Report on Form 10-K for the year ended December 31, 2022.   The following table presents the delinquency trends of the receivables we manage within our CaaS segment, as well as charge-off data and other non-GAAP managed receivables statistics (in thousands; percentages of total):       At or for the Three Months Ended       2023     2022       Jun. 30     Mar. 31     Dec. 31     Sep. 30       Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables   Period-end managed receivables   $ 2,174,001             $ 2,055,678             $ 2,120,126             $ 2,050,354           30-59 days past due   $ 96,670       4.4 %   $ 76,139       3.7 %   $ 97,373       4.6 %   $ 98,841       4.8 % 60-89 days past due   $ 81,477       3.7 %   $ 88,529       4.3 %   $ 115,636       5.5 %   $ 107,091       5.2 % 90 or more days past due   $ 170,274       7.8 %   $ 197,418       9.6 %   $ 220,901       10.4 %   $ 204,752       10.0 % Average managed receivables   $ 2,114,840             $ 2,087,902             $ 2,085,240             $ 1,979,619           Total managed yield ratio, annualized (2)     39.0 %             37.7 %             40.7 %             45.5 %         Combined principal net charge-off ratio, annualized (3)     23.8 %             24.9 %             23.8 %             18.0 %         Interest expense ratio, annualized (4)     4.4 %             4.5 %             4.5 %             4.2 %         Net interest margin ratio, annualized (5)     10.8 %             8.3 %             12.4 %             23.3 %           33 Table of Contents         At or for the Three Months Ended       2022     2021       Jun. 30     Mar. 31     Dec. 31     Sep. 30       Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     Amortized Cost Receivables (1)     Total     % of Period-end managed receivables     Fair Value Receivables     Amortized Cost Receivables (1)     Total     % of Period-end managed receivables   Period-end managed receivables   $ 1,908,884             $ 1,677,610             $ 1,235,287     $ 375,713     $ 1,611,000             $ 1,028,367     $ 417,767     $ 1,446,134           30-59 days past due   $ 83,390       4.4 %   $ 56,860       3.4 %   $ 50,320     $ 10,594     $ 60,914       3.8 %   $ 34,763     $ 10,842     $ 45,605       3.2 % 60-89 days past due   $ 66,935       3.5 %   $ 52,995       3.2 %   $ 43,620     $ 9,468     $ 53,088       3.3 %   $ 28,332     $ 9,884     $ 38,216       2.6 % 90 or more days past due   $ 148,907       7.8 %   $ 142,654       8.5 %   $ 91,432     $ 24,739     $ 116,171       7.2 %   $ 51,061     $ 40,396     $ 91,457       6.3 % Average managed receivables   $ 1,793,247             $ 1,644,305                             $ 1,528,567                             $ 1,346,829           Total managed yield ratio, annualized (2)     44.8 %             46.0 %                             44.9 %                             45.3 %         Combined principal net charge-off ratio, annualized (3)     19.0 %             16.7 %                             13.9 %                             10.0 %         Interest expense ratio, annualized (4)     4.1 %             4.2 %                             4.0 %                             3.6 %         Net interest margin ratio, annualized (5)     21.7 %             25.1 %                             27.0 %                             31.7 %           (1) As discussed in more detail elsewhere in this Report, 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. (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.   34 Table of Contents   The following table presents additional trends and data with respect to our private label credit and general purpose credit card receivables (dollars in thousands). Results of our legacy credit card receivables portfolios are excluded:       Private Label Credit - At or for the Three Months Ended       2023     2022       Jun. 30     Mar. 31     Dec. 31     Sep. 30       Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables   Period-end managed receivables   $ 892,387             $ 835,541             $ 838,289             $ 811,307           30-59 days past due   $ 31,597       3.5 %   $ 25,774       3.1 %   $ 31,426       3.7 %   $ 30,470       3.8 % 60-89 days past due   $ 24,776       2.8 %   $ 21,036       2.5 %   $ 24,993       3.0 %   $ 25,081       3.1 % 90 or more days past due   $ 56,209       6.3 %   $ 62,609       7.5 %   $ 68,517       8.2 %   $ 58,506       7.2 % Average APR     17.0 %             17.5 %             17.5 %             17.2 %         Receivables purchased during period   $ 260,281             $ 201,375             $ 192,773             $ 213,797                   Private Label Credit - At or for the Three Months Ended       2022     2021       Jun. 30     Mar. 31     Dec. 31     Sep. 30       Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     Amortized Cost Receivables (1)     Total     % of Period-end managed receivables     Fair Value Receivables     Amortized Cost Receivables (1)     Total     % of Period-end managed receivables   Period-end managed receivables   $ 762,252             $ 702,423             $ 595,277     $ 116,225     $ 711,502             $ 553,343     $ 135,213     $ 688,556           30-59 days past due   $ 26,197       3.4 %   $ 19,344       2.8 %   $ 19,942     $ 3,285     $ 23,227       3.3 %   $ 15,884     $ 3,575     $ 19,459       2.8 % 60-89 days past due   $ 19,058       2.5 %   $ 16,482       2.3 %   $ 16,323     $ 2,616     $ 18,939       2.7 %   $ 12,187     $ 2,994     $ 15,181       2.2 % 90 or more days past due   $ 42,614       5.6 %   $ 47,214       6.7 %   $ 35,552     $ 6,834     $ 42,386       6.0 %   $ 25,277     $ 11,224     $ 36,501       5.3 % Average APR     17.8 %             18.0 %                             18.4 %                             18.4 %         Receivables purchased during period   $ 225,041             $ 159,837                             $ 177,441                             $ 211,272                   General Purpose Credit Card - At or for the Three Months Ended       2023     2022       Jun. 30     Mar. 31     Dec. 31     Sep. 30       Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Total     % of Period-end managed receivables     Total     % of Period-end managed receivables   Period-end managed receivables   $ 1,280,979             $ 1,219,429             $ 1,281,051             $ 1,238,177           30-59 days past due   $ 65,067       5.1 %   $ 50,355       4.1 %   $ 65,940       5.1 %   $ 68,362       5.5 % 60-89 days past due   $ 56,698       4.4 %   $ 67,486       5.5 %   $ 90,639       7.1 %   $ 82,006       6.6 % 90 or more days past due   $ 114,046       8.9 %   $ 134,799       11.1 %   $ 152,375       11.9 %   $ 146,229       11.8 % Average APR     27.2 %             26.4 %             26.1 %             26.3 %         Receivables purchased during period   $ 380,509             $ 315,148             $ 383,344             $ 422,846             35 Table of Contents         General Purpose Credit Card - At or for the Three Months Ended       2022     2021       Jun. 30     Mar. 31     Dec. 31     Sep. 30       Total     % of Period-end managed receivables     Fair Value Receivables     % of Period-end managed receivables     Fair Value Receivables     Amortized Cost Receivables (1)     Total     % of Period-end managed receivables     Fair Value Receivables     Amortized Cost Receivables (1)     Total     % of Period-end managed receivables   Period-end managed receivables   $ 1,146,631             $ 975,187             $ 638,761     $ 259,488     $ 898,249             $ 470,394     $ 282,554     $ 752,948           30-59 days past due   $ 57,193       5.0 %   $ 37,316       3.8 %   $ 30,361     $ 7,309     $ 37,670       4.2 %   $ 18,824     $ 7,267     $ 26,091       3.5 % 60-89 days past due   $ 47,877       4.2 %   $ 36,514       3.7 %   $ 27,287     $ 6,852     $ 34,139       3.8 %   $ 16,122     $ 6,890     $ 23,012       3.1 % 90 or more days past due   $ 106,293       9.3 %   $ 95,440       9.8 %   $ 55,860     $ 17,905     $ 73,765       8.2 %   $ 25,701     $ 29,172     $ 54,873       7.3 % Average APR     26.7 %             26.3 %                             26.8 %                             27.0 %         Receivables purchased during period   $ 491,301             $ 377,736                             $ 390,189                             $ 351,474             (1) As discussed in more detail elsewhere in this Report, 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.   The following discussion relates to the tables above.   Managed receivables levels.  We have continued to experience overall period-over-period quarterly receivables growth with over $264.5 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, 2022 to June 30, 2023. 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 $130.1 million in the twelve months ended June 30, 2023. Our general purpose credit card receivables grew by $134.3 million during the twelve months ended June 30, 2023. 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 further into 2023, although we expect the pace of growth to slow when compared to earlier periods due to tightened underwriting standards adopted during the second quarter 2022 (and subsequent quarters). These expectations are also absent the potential ongoing 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. 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. Similarly, the loss of existing retail partner relationships could adversely affect new loan acquisition levels. Our top five retail partnerships accounted for over 70% of the above-referenced Retail period-end managed receivables outstanding as of June 30, 2023.   Delinquencies. Delinquencies have the potential to impact net income in the form of net credit losses. Delinquencies also are costly in terms of the personnel and resources dedicated to resolving them. We intend for the receivables management strategies we use on our portfolios to manage and, to the extent possible, reduce the higher delinquency rates that can be expected with the younger average age of the newer receivables in our managed portfolio. These management strategies include conservative credit line management and collection strategies intended to optimize the effective account-to-collector ratio across delinquency categories. We measure the success of these efforts by reviewing delinquency rates. These rates exclude receivables that have been charged off.    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 historical delinquency rates have been 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, and previously (prior to 2020), a robust economic landscape that resulted in receivables outperforming internal expectations. Additionally, the impact on delinquency rates due to growth in the receivable base can be seen in periods of large growth in the charts above, resulting in lower delinquency rates. We have experienced increased delinquency rates in conjunction with slower receivables growth, higher energy costs and rising inflation and its negative impact on consumers. During 2023, we expect delinquencies to return to levels similar to those experienced in periods prior to COVID-19 and the related government stimulus programs. This expected decline in delinquencies in 2023, from those currently experienced, is predicated on the assumption that recent government efforts to curb inflation will be successful and our recent tightened underwriting standards implemented in the second quarter 2022 (and subsequent quarters), will prove effective at reducing account delinquencies. 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 part of our overall receivable base. In 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. Additionally, as the remainder of these accounts were removed from hardship status with the end of the COVID-19 national and public health emergencies on May 11, 2023, we expect to see some elevations in delinquency rates, albeit slight, related to those receivables. We also expect to continue to see seasonal payment patterns on these receivables that impact our delinquencies in line with prior periods (albeit at higher levels when compared to those prior periods in 2021). 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 tax refunds for many consumers. These expectations are 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.    Total managed yield ratio, annualized .  During 2021 and much of 2022, we experienced growth in newer, higher yielding receivables, including private label credit and general purpose credit card receivables. While this growth has contributed to higher overall 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 expected declining rates of growth of our managed receivables that are primarily a result of the slowing growth of general purpose credit card receivables, will result in slightly lower total managed yield ratios. With tightened underwriting standards implemented in the second quarter 2022 (and subsequent quarters), we currently expect slightly lower managed yield ratios (and correspondingly lower delinquency rates) associated with these newer receivables for the remainder of 2023.   Combined principal net charge-off ratio, annualized.  We charge off our CaaS segment receivables when they become contractually more than 180 days past due. For all of our products, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death. However, in some cases of death, we do not charge off receivables if there is a surviving, contractually liable individual or an estate large enough to pay the debt in full. When the principal of an outstanding loan is charged off, the related finance charges and fees are simultaneously charged off, resulting in a reduction to our Total managed yield.   Growth within our general purpose credit card receivables (as a percent of outstanding receivables) has resulted in increases in our charge-offs over time. Improvements in our delinquency rates throughout in 2021, as a result of the increases in customer payments noted above, resulted in lower charge-offs than we would have otherwise expected in early 2022 periods. The increase in the combined principal net charge-off ratio, annualized in late 2022 and the first and second quarters of 2023 is a reflection of the increased delinquencies noted in the latter part of 2021 and in 2022 as consumer behavior reverted to more historical norms and inflation, particularly as it relates to higher gas prices, negatively impacted some consumers' ability to make payments on outstanding loans and fees receivable.   36 Table of Contents   As delinquency rates continue to be elevated relative 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 to continue to increase, when compared to comparable prior periods since the onset of COVID-19. These increased charge-off rates are expected to continue through the third quarter of 2023 before returning to historically normalized levels. This expectation is predicated on the assumption that recent actions by the federal government to reduce inflation will be successful. Our charge-off ratio has also been impacted due to (and will continue to be impacted by): 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 leads to periodic increases in combined principal net charge offs, (3) recent vintages reaching peak charge-off periods, (4) our receivables growth during 2021 and early 2022, (5) the aforementioned tightened underwriting standards implemented in the second quarter 2022 (and subsequent quarters) that will slow the pace of growth in our receivables base, 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 as well as the addition of new funding facilities. In general, we have obtained lower cost financing with fixed interest rates, resulting in lower interest expense ratios when compared to corresponding prior periods. Recent increases in the federal funds borrowing rate have led to an increase in spreads for newly-originated debt and for that portion of debt which does not have fixed rates. As such, we expect the interest expense ratio to increase when compared to prior quarters as we replace existing financing arrangements with new ones.   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 in 2022.   Average APR. The average annual percentage rate (“APR”) charged to customers varies by receivable type, credit history and other factors. The APRs for receivables originated through our private label credit platform range from 0% to 36.0%. For general purpose credit card receivables, APRs range from 19.99% to 36.0%. We have experienced minor fluctuations in our average APR based on the relative product mix of receivables purchased during a period. For those receivables that did not contain fixed APRs we have seen some increases in rates charged, as the underlying rates are tied to the federal funds borrowing rate which has increased throughout 2022. We currently expect our average APRs in 2023 to remain consistent with average APRs over the past several quarters; however, the timing and relative mix of receivables acquired could cause some minor fluctuations. We do not acquire or service receivables that have an APR above 36.0%.   Receivables purchased during period. Receivables purchased during period reflect the gross amount of investments we have made in a given period, net of any credits issued to consumers during that same period. For most periods presented, our private label credit receivable purchases experienced overall growth largely based on the addition of new private label credit retail partners, as previously discussed. We may experience periodic declines in these acquisitions due to: the loss of one or more retail partners; seasonal purchase activity by consumers; labor shortages and supply chain disruptions; or the timing of new customer originations by our issuing bank 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 issuing bank partners and the availability of capital to fund new purchases. Nonetheless, absent the potential impacts COVID-19 may have on our ability to acquire new receivables or the impact it may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect continued growth in the acquisition of these receivables during 2023.   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. and U.S. territories.   Collectively, as of June 30, 2023, we served more than 630 dealers through our Auto Finance segment in 32 states and two U.S. territories.   Non-GAAP Financial Measures   For reasons set forth above within our CaaS segment discussion, we also provide managed receivables-based financial, operating and statistical data for our Auto Finance segment. Reconciliation of the auto finance managed receivables data to GAAP data requires an understanding that our 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. Similar to the managed calculation above, the average managed receivables used in the ratios below is calculated based on the quarter ending balances of consolidated receivables.   A reconciliation of our operating revenues to comparable amounts used in our calculation of Total managed yield ratios follows (in millions):       At or for the Three Months Ended       2023     2022     2021       Jun. 30     Mar. 31     Dec. 31     Sep. 30     Jun. 30     Mar. 31     Dec. 31     Sep. 30   Consumer loans, including past due fees   $ 9.7     $ 9.2     $ 9.0     $ 9.1     $ 8.8     $ 8.3     $ 8.5     $ 8.4   Other revenue     0.2       0.2       0.3       0.2       0.2       0.3       0.3       0.3   Finance charge-offs     —       —       —       —       —       —       —       —   Total managed yield   $ 9.9     $ 9.4     $ 9.3     $ 9.3     $ 9.0     $ 8.6     $ 8.8     $ 8.7     As of January 1, 2022, we changed the names 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. These changes reflect that we now subtract finance charge-offs in the calculation of combined principal net charge-offs and the related ratio. We believe this revised calculation is more in line with the calculations used by our peers. All prior periods have been restated to reflect this new methodology. The calculation of Combined principal net charge-offs used in our Combined principal net charge-off ratio, annualized follows (in millions):       At or for the Three Months Ended       2023     2022     2021       Jun. 30     Mar. 31     Dec. 31     Sep. 30     Jun. 30     Mar. 31     Dec. 31     Sep. 30   Gross charge-offs   $ 0.8     $ 1.0     $ 1.2     $ 0.6     $ 0.4     $ 0.4     $ 0.4     $ 0.3   Finance charge-offs (1)     —       —       —       —       —       —       —       —   Recoveries     (0.5 )     (0.4 )     (0.4 )     (0.4 )     (0.2 )     (0.3 )     (0.2 )     (0.2 ) Combined principal net charge-offs   $ 0.3     $ 0.6     $ 0.8     $ 0.2     $ 0.2     $ 0.1     $ 0.2     $ 0.1     (1) Finance charge-offs are included as a component of our Provision for losses on loans, interest and fees receivable recorded at amortized cost value in the accompanying consolidated statements of income.   37 Table of Contents   Financial, operating and statistical metrics for our Auto Finance segment are detailed (in thousands; percentages of total) in the following table:       At or for the Three Months Ended       2023     2022     2021       Jun. 30     % of Period-end managed receivables     Mar. 31     % of Period-end managed receivables     Dec. 31     % of Period-end managed receivables     Sep. 30     % of Period-end managed receivables     Jun. 30     % of Period-end managed receivables     Mar. 31     % of Period-end managed receivables     Dec. 31     % of Period-end managed receivables     Sep. 30     % of Period-end managed receivables   Period-end managed receivables   $ 115,055             $ 113,367             $ 105,267             $ 107,410             $ 104,563             $ 99,916             $ 94,580             $ 93,374           30-59 days past due   $ 8,070       7.0 %   $ 6,145       5.4 %   $ 8,516       8.1 %   $ 6,772       6.3 %   $ 7,044       6.7 %   $ 4,527       4.5 %   $ 7,019       7.4 %   $ 5,855       6.3 % 60-89 days past due   $ 3,047       2.6 %   $ 1,977       1.7 %   $ 2,969       2.8 %   $ 2,248       2.1 %   $ 2,361       2.3 %   $ 1,481       1.5 %   $ 2,483       2.6 %   $ 2,014       2.2 % 90 or more days past due   $ 1,699       1.5 %   $ 1,942       1.7 %   $ 2,060       2.0 %   $ 1,434       1.3 %   $ 1,106       1.1 %   $ 1,260       1.3 %   $ 1,762       1.9 %   $ 1,534       1.6 % Average managed receivables   $ 114,211             $ 109,317             $ 106,339             $ 105,987             $ 102,240             $ 97,248             $ 93,977             $ 93,269           Total managed yield ratio, annualized (1)     34.7 %             34.4 %             35.0 %             35.1 %             35.2 %             35.4 %             37.5 %             37.3 %         Combined principal net charge-off ratio, annualized (2)     1.1 %             2.2 %             3.0 %             0.8 %             0.8 %             0.4 %             0.9 %             0.4 %         Recovery ratio, annualized (3)     1.8 %             1.5 %             1.5 %             1.5 %             0.8 %             1.2 %             0.9 %             0.9 %           (1) 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 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. (3) The Recovery ratio, annualized is calculated using annualized Recoveries as the numerator and Period-end average managed receivables as the denominator.   38 Table of Contents   Managed receivables.  Absent the potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable, we expect modest growth in the level of our managed receivables for 2023 when compared to the same periods in prior years as CAR expands within its current geographic footprint and continues plans for service area expansion. Although we are expanding our CAR operations, the Auto Finance segment faces strong competition from other specialty finance lenders, as well as the indirect effects on us of our buy-here, pay-here dealership partners’ competition with other franchise dealerships for consumers interested in purchasing automobiles. We continually evaluate bulk purchases of receivables and have experienced good growth in our receivables base throughout 2022 resulting from several bulk purchases; however, the timing and size of such purchases are difficult to predict.    Delinquencies.  As discussed elsewhere in this Report, 2021 and early 2022 delinquency rates benefitted from government stimulus programs that resulted in customer payments in excess of historical experience. While we have experienced recent increases in our delinquency rates (and related charge-offs), we do not believe they will have a significantly adverse impact on our results of operations; even at slightly elevated rates, we earn significant yields on CAR’s receivables and have significant dealer reserves (i.e., retainages or holdbacks on the amount of funding CAR provides to its dealer customers) to protect against meaningful credit losses. 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 tax refunds for many consumers.   Total managed yield ratio, annualized. We have experienced modest fluctuations in our total managed yield ratio largely impacted by the relative mix of receivables in various products offered by CAR as some shorter-term product offerings tend to have higher yields. Yields on our CAR products over the last few quarters are consistent with our expectations over the coming quarters. Further, we expect our total managed yield ratio to remain in line with current experience, with moderate fluctuations based on relative growth or declines in average managed receivables for a given quarter. These variations depend on the relative mix of receivables in our various product offerings. Additionally, our product offerings in the U.S. territories tend to have slightly lower yields than those offered in the U.S. As such, growth in that region also will serve to slightly depress our overall total managed yield ratio, yet we expect growth in that region to continue to generate attractive returns on assets.   Combined principal net charge-off ratio, annualized and recovery ratio, annualized. We charge off auto finance receivables when they are between 120 and 180 days past due, unless the collateral is repossessed and sold before that point, in which case we will record a charge off when the proceeds are received. Combined principal net charge-off ratios in the above table reflect the lower delinquency rates we have recently experienced. Increases in our Combined principal net charge-off ratios for the fourth quarter of 2022 and first quarter of 2023 are indicative of our charge off levels returning to historically normalized levels (i.e., those periods prior to COVID-19 and the related government stimulus programs). While we anticipate our charge offs to be incurred ratably across our portfolio of dealers, specific dealer-related losses are difficult to predict and can negatively influence our combined principal net charge-off ratio. We continually re-assess our dealers and will take appropriate action if we believe a particular dealer’s risk characteristics adversely change. While we have appropriate dealer reserves to mitigate losses across the majority of our pool of receivables, the timing of recognition of these reserves as an offset to charge offs is largely dependent on various factors specific to each of our dealer partners including ongoing purchase volumes, outstanding balances of receivables and current performance of outstanding loans. As such, the timing of charge-off offsets is difficult to predict; however, we believe that these reserves are adequate to offset any loss exposure we may incur. Additionally, the products we issue in the U.S. territories do not have dealer reserves with which we can offset losses. We also expect our recovery rate to fluctuate modestly from quarter to quarter due to the timing of the sale of repossessed autos. Given the potential impacts COVID-19 and related economic impacts may have on our ability to acquire new receivables or the impact they may have on consumers' ability to make payments on outstanding loans and fees receivable, we could experience variation in these expectations.   Definitions of Certain Non-GAAP Financial Measures   Total managed yield ratio, annualized.  Represents an annualized fraction, the numerator of which includes (as appropriate for each applicable disclosed segment) the: 1) finance charge and late fee income billed on all consolidated outstanding receivables and the amortization of merchant fees, collectively included in the consumer loans, including past due fees category on our consolidated statements of income; plus 2) credit card fees (including over-limit fees, cash advance fees, returned check fees and interchange income), earned, amortized amounts of annual membership fees with respect to certain credit card receivables, collectively included in our fees and related income on earning assets category on our consolidated statements of income; plus 3) servicing, other income and other activities collectively included in our other operating income category on our consolidated statements of income; minus 4) finance charge and fee losses from consumers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased consumers. The denominator is our average managed receivables.   39 Table of Contents   Combined principal net charge-off ratio, annualized . Represents an annualized fraction, the numerator of which is the aggregate consolidated amounts of principal losses from consumers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased consumers, less current-period recoveries (including recoveries from dealer reserve offsets for our CAR operations), as reflected in Note 2 “Significant Accounting Policies and Consolidated Financial Statement Components—Loans, Interest and Fees Receivable”, and the denominator of which is average managed receivables. Recoveries on managed receivables represent all amounts received related to managed receivables that previously have been charged off, including payments received directly from consumers and proceeds received from the sale of those charged-off receivables. 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) and the denominator of which is average managed receivables.   Net interest margin ratio, annualized . Represents 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   As discussed elsewhere in this Report, we are closely monitoring the impacts of the COVID-19 pandemic across our business, including the resulting uncertainties around consumer spending, credit quality, levels of liquidity, labor availability, supply chain management disruptions and inflation. The ultimate impact of COVID-19 on our business, financial condition, liquidity and results of operations is dependent on future developments, which are uncertain.   We believe that our actions taken to date, our unrestricted cash, future cash provided by operating activities, availability under our debt facilities, and access to the capital markets will provide adequate resources to fund our operating and financing needs.   Our primary focus is expanding the reach of our financial technology in order to grow our private label credit and general purpose credit card receivables and generate revenues from these investments that will allow us to maintain consistent profitability. Increases in new and existing retail partnerships and the expansion of our investments in general purpose credit card finance products have resulted in year-over-year growth of total managed receivables levels, and we expect growth to continue in the coming quarters.   Accordingly, we will continue to focus on (i) obtaining the funding necessary to meet capital needs required by the growth of our receivables, (ii) adding new retail partners to our platform to continue growth of the private label credit receivables, (iii) growing general purpose credit card receivables, (iv) effectively managing costs, and (v) repurchasing outstanding shares of our common and preferred stock.   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 June 30, 2023 are those associated with the following notes payable in the amounts indicated (in millions):   Revolving credit facility (expiring September 15, 2023) that is secured by certain receivables and restricted cash   $ 7.4   Unsecured term debt (expiring August 26, 2024)     17.4   Revolving credit facility (expiring October 30, 2024) that is secured by certain receivables and restricted cash     49.9   Revolving credit facility (expiring June 16, 2025) that is secured by certain receivables and restricted cash     25.0   Total   $ 99.7     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 moderate in the current environment. We believe that the quality of our new receivables should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attracting new lending relationships. Further details concerning the above debt facilities and other debt facilities we use to fund the acquisition of receivables are provided in Note 9, “Notes Payable,” to our consolidated financial statements included herein.   In November 2021, we issued $150.0 million aggregate principal amount of senior notes (included on our consolidated balance sheet as "Senior notes, net"). The senior notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any. The senior notes are effectively subordinated to all of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the senior notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company). The senior notes bear interest at the rate of 6.125% per annum. Interest on the senior notes is payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year. The senior notes mature on November 30, 2026. We repurchased $786,000 of the outstanding principal amount of these senior notes for the six months ended June 30, 2023.   40 Table of Contents   In June and July 2021, we issued an aggregate of 3,188,533 shares of 7.625% Series B Cumulative Perpetual Preferred Stock, liquidation preference of $25.00 per share (the “Series B Preferred Stock”), for net proceeds of approximately $76.5 million after deducting underwriting discounts and commissions, but before deducting expenses and the structuring fee. We pay cumulative cash dividends on the Series B Preferred Stock, when and as declared by our Board of Directors, in the amount of $1.90625 per share each year, which is equivalent to 7.625% of the $25.00 liquidation preference per share.    On August 10, 2022, the Company entered into an At Market Issuance Sales Agreement (the “Sales Agreement”) providing for the sale by the Company of up to an aggregate offering price of $100,000,000 of our (i) Series B Preferred Stock and (ii) senior notes, from time to time through a sales agent, in connection with the Company’s “at-the-market” offering program (the “ATM Program”). During the three and six months ended June 30, 2023, we sold an aggregate of 2,100 and 53,427 shares, respectively, of our Series B Preferred Stock under the ATM Program. We received $0.0 million and $1.1 million in net proceeds from sales under the ATM Program during the three and six months ended June 30, 2023, respectively. During the three and six months ended June 30, 2023, we repurchased and contemporaneously retired 0 and 1,806 shares of Series B Preferred Stock at an aggregate cost of $0 and $29,000, respectively.     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. The units carry a 16% preferred return paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional units or cash, at our election. The units have both call and put rights and are also subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the subsidiary. In March 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms. The proceeds from the transaction were used for general corporate purposes. We have included the issuance of these Class B preferred units as temporary noncontrolling interest on the consolidated balance sheets. Dividends paid on the Class B preferred units are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. See Note 5, "Redeemable Preferred Stock" and Note 11, “Net Income Attributable to Controlling Interests Per Common Share” to our consolidated financial statements for more information.   On November 26, 2014, we and certain of our subsidiaries entered into a Loan and Security Agreement with Dove Ventures, LLC, a Nevada limited liability company (“Dove”). The agreement provided for a senior secured term loan facility in an amount of up to $40.0 million at any time outstanding. On December 27, 2019, the Company issued 400,000 shares of its Series A Preferred Stock with an aggregate initial liquidation preference of $40.0 million, in exchange for full satisfaction of the $40.0 million that the Company owed Dove under the Loan and Security Agreement. Dividends on the preferred stock are 6% per annum (cumulative, noncompounding) and are payable as declared, and in preference to any common stock dividends, in cash. The Series A Preferred Stock is perpetual and has no maturity date. The Company may, at its option, redeem the shares of Series A Preferred Stock on or after January 1, 2025 at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends. At the request of the holders of a majority of the shares of the Series A Preferred Stock, the Company is required to offer to redeem all of the Series A Preferred Stock at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends, at the option of the holders thereof, on or after January 1, 2024. Upon the election by the holders of a majority of the shares of Series A Preferred Stock, each share of the Series A Preferred Stock is convertible into the number of shares of the Company’s common stock as is determined by dividing (i) the sum of (a) $100 and (b) any accumulated and unpaid dividends on such share by (ii) an initial conversion price equal to $10 per share, subject to adjustment in certain circumstances to prevent dilution.   41 Table of Contents   At June 30, 2023, we had $342.6 million in unrestricted cash held by our various business subsidiaries. Because the characteristics of our assets and liabilities change, liquidity management is a dynamic process for us, driven by the pricing and maturity of our assets and liabilities. We historically have financed our business through cash flows from operations, asset-backed structured financings and the issuance of debt and equity. Details concerning our cash flows for the six months ended June 31, 2023 and 2022 are as follows:     • During the six months ended June 30, 2023, we generated $209.8 million of cash flows from operations compared to our generating $152.6 million of cash flows from operations during the six months ended June 30, 2022. 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. Additionally, decreased year-over-year payments made to pay federal and state taxes resulted in higher operating cash flows. 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, 2023, we used $241.4 million of cash in our investing activities, compared to use of $354.1 million of cash in investing activities during the six months ended June 30, 2022. This decrease in cash used is primarily due to decreases in the level of net investments in the private label credit and general purpose credit card receivables relative to the same period in 2022 resulting from tightened underwriting standards. 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, 2023, we used $7.2 million of cash in financing activities, compared to our generating $61.2 million of cash in financing activities during the six months ended June 30, 2022. 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. Additionally, we purchased and retired $78.1 million of our common stock during the six months ended June 30, 2022 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. We expect to take advantage of any opportunities to raise additional capital if terms and pricing are attractive to us. Any proceeds raised under these efforts or additional liquidity available to us could be used to fund (1) additional investments in private label credit and general purpose credit card finance receivables as well as the acquisition of credit card receivables portfolios and (2) further repurchases or redemptions of preferred and common stock. Pursuant to share repurchase plans authorized by our Board of Directors, we are authorized to repurchase up to 5,000,000 shares of our common stock and 500,000 shares of our Series B Preferred Stock through June 30, 2024.   CONTRACTUAL OBLIGATIONS, COMMITMENTS AND OFF-BALANCE-SHEET ARRANGEMENTS   See Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in our Annual Report on Form 10-K for the year ended December 31, 2022.   Commitments and Contingencies   We do not currently have any off-balance-sheet arrangements; however, we do have certain contractual arrangements that would require us to make payments or provide funding if certain circumstances occur; we refer to these arrangements as contingent commitments. We do not currently expect that these contingent commitments will result in any material amounts being paid by us. See Note 10, “Commitments and Contingencies,” to our consolidated financial statements included herein for further discussion of these matters.   RECENT ACCOUNTING PRONOUNCEMENTS   See Note 2, “Significant Accounting Policies and Consolidated Financial Statement Components,” to our consolidated financial statements included herein for a discussion of recent accounting pronouncements.   CRITICAL ACCOUNTING ESTIMATES   We have prepared our financial statements in accordance with GAAP. These principles are numerous and complex. We have summarized our significant accounting policies in the notes to our consolidated financial statements. In many instances, the application of GAAP requires management to make estimates or to apply subjective principles to particular facts and circumstances. A variance in the estimates used or a variance in the application or interpretation of GAAP could yield a materially different accounting result. It is impracticable for us to summarize every accounting principle that requires us to use judgment or estimates in our application. Nevertheless, we describe below the areas for which we believe that the estimations, judgments or interpretations that we have made, if different, would have yielded the most significant differences in our consolidated financial statements.   On a quarterly basis, we review our significant accounting policies and the related assumptions, in particular, those mentioned below, with the audit committee of the Board of Directors.   42 Table of Contents   Measurements for Loans, Interest and Fees Receivable at Fair Value   Our valuation of loans, interest and fees receivable, at fair value 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 gross yield billed by our bank partner, payment rates by consumers, expected credit loss rates due to non-payment on the receivables, expected servicing costs to collect cash flows, and discount rates which approximate required returns by a purchaser of expected cash flows. These valuation models are calculated by combining similarly priced loans and vintages to determine a stream of expected cash flows. The individual pools of cash flows are then aggregated to determine the total expected cash flows on the outstanding receivable at a given measurement period.   The estimates for credit losses, payment rates, servicing costs, contractual servicing fees, costs of funds, discount rates and yields earned on credit card receivables significantly affect the reported amount (and changes thereon) of our loans, interest and fees receivable, at fair value and our notes payable associated with structured financings, at fair value on our consolidated balance sheets and consolidated statements of income.   Allowance for Uncollectible Loans, Interest and Fees   Through our analysis of loan performance, delinquency data, charge-off data, economic trends and the potential effects of those economic trends on consumers, we establish an allowance for uncollectible loans, interest and fees receivable as an estimate of the probable losses inherent within those loans, interest and fees receivable that we do not report at fair value. Our loans, interest and fees receivable consist of smaller-balance, homogeneous loans in our Auto Finance segment. These loans are further divided into pools based on common characteristics such as contract or acquisition channel. For each pool, we determine the necessary allowance for uncollectible loans, interest and fees receivable by analyzing some or all of the following unique to each type of receivable pool: historical loss rates on similar loans; current delinquency and roll-rate trends which may indicate consumer loss rates in excess or less than those which historical trends might suggest; vintage analyses based on the number of months an account has been in existence; the effects of changes in the economy on consumers such as inflation or other macro-economic changes; changes in underwriting criteria; and estimated recoveries. These inputs are considered in conjunction with (and potentially reduced by) any unearned fees and discounts that may be applicable for an outstanding loan receivable. To the extent that actual results differ from our estimates of uncollectible loans, interest and fees receivable, our results of operations and liquidity could be materially affected.     RELATED PARTY TRANSACTIONS   Under a shareholders’ agreement which we entered into with certain shareholders, including David G. Hanna, Frank J. Hanna, III and certain trusts that were Hanna affiliates, following our initial public offering (1) if one or more of the shareholders accepts a bona fide offer from a third party to purchase more than 50% of the outstanding common stock, each of the other shareholders that is a party to the agreement may elect to sell his shares to the purchaser on the same terms and conditions, and (2) if shareholders that are a party to the agreement owning more than 50% of the common stock propose to transfer all of their shares to a third party, then such transferring shareholders may require the other shareholders that are a party to the agreement to sell all of the shares owned by them to the proposed transferee on the same terms and conditions.   In June 2007, we entered into a sublease for 1,000 square feet (as later adjusted to 3,100 square feet) of excess office space at our Atlanta headquarters with HBR Capital, Ltd. (“HBR”), a company co-owned by David G. Hanna and his brother Frank J. Hanna, III. The sublease rate per square foot is the same as the rate that we pay under the prime lease. Under the sublease, HBR paid us $62,422 and $17,299 for 2022 and 2021, respectively. The aggregate amount of payments required under the sublease from January 1, 2023 to the expiration of the sublease in May 2024 is $135,800.   In January 2013, HBR began leasing the services of certain employees from us. HBR reimburses us for the full cost of the employees, based on the amount of time devoted to HBR. In the six months ended June 30, 2023 and 2022, we received $278,500 and $197,600, 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. The agreement provided for a senior secured term loan facility in an amount of up to $40.0 million at any time outstanding. On December 27, 2019, the Company issued 400,000 shares of its Series A Preferred Stock with an aggregate initial liquidation preference of $40.0 million, in exchange for full satisfaction of the $40.0 million that the Company owed Dove under the Loan and Security Agreement. Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts. See Note 5 "Redeemable Preferred Stock" for more information.   During 2022, the Company utilized Axiom Bank, NA to provide legal and other services related to various commercial opportunities. David G. Hanna, Frank J. Hanna, III and members of their immediate families, control and own Axiom Bancshares, Inc., which is the bank holding company for Axiom Bank, NA. The aggregate amount of payments made to Axiom Bank, NA during 2022 was $1.0 million.   43 Table of Contents   FORWARD-LOOKING INFORMATION   We make forward-looking statements in this Report and in other materials we file with the Securities and Exchange Commission (“SEC”) or otherwise make public. This Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” contains forward-looking statements. In addition, our senior management might make forward-looking statements to analysts, investors, the media and others. Statements with respect to the macroeconomic environment; monetary policy by the Federal Reserve; expected revenue; income; receivables; income ratios; net interest margins; long-term shareholder returns; acquisitions of financial assets and other growth opportunities; divestitures and discontinuations of businesses; loss exposure and loss provisions; delinquency and charge-off rates; inflation; energy prices; 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; changes in the credit quality and fair value of our credit card receivables, interest and fees receivable and the fair value of their underlying structured financing facilities; the impact of actions by the Federal Deposit Insurance Corporation (“FDIC”), Federal Reserve Board, Federal Trade Commission (“FTC”), Consumer Financial Protection Bureau (“CFPB”) and other regulators on both us, banks that issue credit cards and other credit products on our behalf, and merchants that participate in our retail and healthcare private label credit operations; account growth; the performance of investments that we have made; operating expenses; marketing plans and expenses; the performance of our Auto Finance segment; the impact of our credit card receivables on our financial performance; the sufficiency of available capital; future interest costs; sources of funding operations and acquisitions; growth and profitability of our private label credit operations; our ability to raise funds or renew financing facilities; share repurchases, share issuances or dividends; debt retirement; our servicing income levels; gains and losses from investments in securities; experimentation with new products; the material weakness and remediation thereof described in Part I, Item 4 and other statements of our plans, beliefs or expectations are forward-looking statements. These and other statements using words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “plan,” “project,” “target,” “can,” “could,” “may,” “should,” “will,” “would” and similar expressions also are forward-looking statements. Each forward-looking statement speaks only as of the date of the particular statement. The forward-looking statements we make are not guarantees of future performance, and we have based these statements on our assumptions and analyses in light of our experience and perception of historical trends, current conditions, expected future developments and other factors we believe are appropriate in the circumstances. Forward-looking statements by their nature involve substantial risks and uncertainties that could significantly affect expected results, and actual future results could differ materially from those described in such statements. Management cautions against putting undue reliance on forward-looking statements or projecting any future results based on such statements or present or historical earnings levels.   Although it is not possible to identify all factors, we continue to face many risks and uncertainties. Among the factors that could cause actual future results to differ materially from our expectations are the risks and uncertainties described under “Risk Factors” set forth in Part II, Item 1A, and the risk factors and other cautionary statements in other documents we file with the SEC, including the following:     • general economic and business conditions, including conditions affecting interest rates, tariffs, consumer income, creditworthiness, consumer confidence, spending and savings levels, employment levels, our revenue, and our defaults and charge-offs;   • an increase or decrease in credit losses, or increased delinquencies, including increases due to a worsening of general economic conditions in the credit environment;   • our reliance on proprietary and third-party technology;   • the availability of adequate financing to support growth;   • the extent to which federal, state and local governmental regulation of our various business lines and the products we service for others limits or prohibits the operation of our businesses;   • current and future litigation and regulatory proceedings against us;   • competition from various sources providing similar financial products, or other alternative sources of credit, to consumers;   • the adequacy of our allowances for uncollectible loans, interest and fees receivable and estimates of loan losses used within our risk management and analyses;   • the possible impairment of assets;   • the duration and magnitude of the impact of the COVID-19 pandemic on credit usage, payment patterns and the capital markets;   • our ability to manage costs in line with the expansion or contraction of our various business lines;   • our relationship with (i) the merchants that participate in private label finance operations and (ii) the banks that issue credit cards and provide certain other credit products utilizing our technology platform and related services;    • our business, financial condition and results of operations may be adversely affected by merchants’ increasing focus on the fees charged by credit and debit card networks and by legislation and regulation impacting such fees;   • any decline in the use of cards as a payment mechanism or other adverse developments with respect to the credit card industry in general;   • increases or decreases in interest rates and uncertainty with respect to the interest rate environment;   • theft and employee errors; and   • impact of recent proposed guidance by the Biden administration and the Consumer Financial Protection Bureau regarding late fees.   Most of these factors are beyond our ability to predict or control. Any of these factors, or a combination of these factors, could materially affect our future financial condition or results of operations and the ultimate accuracy of our forward-looking statements. There also are other factors that we may not describe (because we currently do not perceive them to be material) that could cause actual results to differ materially from our expectations.   We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.