What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-09 compared with 2023-08-09 · 264 added, 237 removed, 1794 unchanged (22% of the section changed)

3 unchanged sentences

(Dollars in thousands)

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)

September 30,

Unrestricted cash and cash equivalents (including $ 162.7 million and $ 202.2 million associated with variable interest entities at September 30, 2023 and December 31, 2022, respectively)

$ 355,707  

$ 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)

Restricted cash and cash equivalents (including $ 25.6 million and $ 27.6 million associated with variable interest entities at September 30, 2023 and December 31, 2022, respectively)

44,315  

1 unchanged sentence

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)

Loans, interest and fees receivable, at fair value (including $ 2,031.3 million and $ 1,735.9 million associated with variable interest entities at September 30, 2023 and December 31, 2022, respectively)

2,049,993  

27 unchanged sentences

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)

Notes payable, net (including $ 1,719.7 million and $ 1,586.0 million associated with variable interest entities at September 30, 2023 and December 31, 2022, respectively)

1,788,098  

11 unchanged sentences

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

Series A preferred stock, 400,000 shares issued and outstanding at June 30, 2023 (liquidation preference - $ 40.0 million);

Series A preferred stock, 400,000 shares issued and outstanding at September 30, 2023 (liquidation preference - $ 40.0 million);

400,000 shares issued and outstanding at December 31, 2022 (Note 5) (1)

5 unchanged sentences

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);

Series B preferred stock, no par value, 3,256,561 shares issued and outstanding at September 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

14,651,321 and 14,453,415 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

Paid-in capital

20 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Consumer loans, including past due fees

24 unchanged sentences

Equity and Temporary Equity (Unaudited)

For the Three and Six Months Ended June 30, 2023 and June 30, 2022

For the Three and Nine Months Ended September 30, 2023 and September 30, 2022

(Dollars in thousands)

30 unchanged sentences

Balance at June 30, 2023

Accretion of discount associated with issuance of subsidiary equity

Preferred dividends

Stock option exercises and proceeds related thereto

Compensatory stock issuances, net of forfeitures

Issuance of series B preferred stock, net

Stock-based compensation costs

Redemption and retirement of common shares

Net income (loss)

Balance at September 30, 2023

Series B Preferred Stock

26 unchanged sentences

Balance at June 30, 2022

Accretion of discount associated with issuance of subsidiary equity

Discount associated with repurchase of preferred stock

Preferred dividends

Stock option exercises and proceeds related thereto

Compensatory stock issuances, net of forfeitures

Issuance of series B preferred stock, net

Stock-based compensation costs

Redemption and retirement of preferred shares

Redemption and retirement of common shares

Net income (loss)

Balance at September 30, 2022

See accompanying notes.

2 unchanged sentences

(Dollars in thousands)

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Operating activities

9 unchanged sentences

Increase in uncollected fees on earning assets

Increase (decrease) in income tax liability

Increase in income tax liability

Increase in accounts payable and accrued expenses

14 unchanged sentences

Repayment of borrowings

Net cash (used in) provided by financing activities

Net cash provided by financing activities

Effect of exchange rate changes on cash and cash equivalents and restricted cash

9 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2023 and 2022

September 30, 2023 and 2022

Description of Our Business

24 unchanged sentences

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.

As a result of a new strain of coronavirus ("COVID- 19" ) 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”

22 unchanged sentences

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. 

We maintain our cash and cash equivalents in accounts at regulated domestic financial institutions in amounts that exceed FDIC insured amounts which aggregated approximately $ 3.3  million as of September 30, 2023 based on our current banking relationships.

Loans, Interest and Fees Receivable

25 unchanged sentences

We purchased auto loans with outstanding principal of $ 59.0 million, $ 179.3 million, 

$ 52.8 million and $ 109.3 million for the three and six months ended June 30, 2023 

$ 56.3 million and $ 165.6 million for the three and nine months ended September 30, 2023 

and 2022, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

3 unchanged sentences

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.

As of September 30, 2023 

and December 31, 2022, the weighted average remaining accretion period for the $ 18.3  million and $ 16.2 million of deferred revenue reflected in the consolidated balance sheets was 27  months for both periods.

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

For the Three Months Ended September 30, 2023

Allowance for uncollectible loans, interest and fees receivable:

2 unchanged sentences

Balance at end of period

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Allowance for uncollectible loans, interest and fees receivable:

2 unchanged sentences

Balance at end of period

As of June 30, 2023

As of September 30, 2023

Allowance for uncollectible loans, interest and fees receivable:

7 unchanged sentences

$ 118.0  

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Other Unsecured Lending Products

7 unchanged sentences

$ ( 1.8 ) $ —

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Other Unsecured Lending Products

27 unchanged sentences

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 

An aging of our delinquent loans, interest and fees receivable, gross (in millions) by class of receivable as of September 30, 2023 

and December 31, 2022 

is as follows:

As of June 30, 2023

As of September 30, 2023

30-59 days past due

26 unchanged sentences

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

December 31, 2022  

Private label credit

24 unchanged sentences

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.

The Company modified 133,134 accounts in the amount of $ 138.4 million during the twelve month period ended September 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.

1 unchanged sentence

Twelve Months Ended

June 30, 2022

September 30, 2022

Private label credit

5 unchanged sentences

$ 16,490  

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 experienced effective tax rates of 21.2 % and 22.5 % for the three and nine months ended September 30, 2023, respectively, compared to 17.6 % and 7.1 % for the three and nine months ended September 30, 2022, respectively.

Our effective tax rates for the three and nine months ended September 30, 2023, 

are above the statutory rate principally due to ( 1 ) state and foreign income tax expense, ( 2 ) interest accrued on uncertain tax positions and ( 3 ) deduction disallowance under Section 162 (m) of the Internal Revenue Code of 1986, as amended, with respect to compensation paid to our covered employees.

Offsetting the foregoing items are deductions ( 1 ) associated with the exercises 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 ) of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes.

Our effective tax rates for the three and nine months ended September 30, 2022, 

were below the statutory rate due to deductions ( 1 ) associated with the exercises 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 ) 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.

On the basis described above, we reported interest expense of $ 0.3 million and  $ 1.4 million for the three and nine months ended September 30, 2023, respectively, while our reported interest expense was de minimis for the three and nine  months ended September 30, 2022.

Revenue from Contracts with Customers

9 unchanged sentences

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

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Interchange revenues, net (1)

7 unchanged sentences

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

For the Six Months Ended June 30, 2023

For the Nine Months Ended September 30, 2023

Interchange revenues, net (1)

7 unchanged sentences

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

For the Three Months Ended June 30, 2022

For the Three Months Ended September 30, 2022

Interchange revenues, net (1)

7 unchanged sentences

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

For the Six Months Ended June 30, 2022

For the Nine Months Ended September 30, 2022

Interchange revenues, net (1)

3 unchanged sentences

Service charges and other customer related fees

11,484  

11,538  

Total revenue from contracts with customers

35 unchanged sentences

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 have no material amounts of long lived assets located outside the U.S. 

We measure the profitability of our reportable segments based on their income after allocation of specific costs and corporate overhead;

2 unchanged sentences

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

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Consumer loans, including past due fees

6 unchanged sentences

Other revenue

10,180  

10,378  

Other non-operating revenue

( 69 )  

Total revenue

19 unchanged sentences

$ ( 841 )  

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Consumer loans, including past due fees

33 unchanged sentences

$ 2,596,901  

Three Months Ended June 30, 2022

Three Months Ended September 30, 2022

Consumer loans, including past due fees

29 unchanged sentences

$ ( 891 )  

Six Months Ended June 30, 2022

Nine Months Ended September 30, 2022

Consumer loans, including past due fees

23 unchanged sentences

$ 304,398  

Income before income taxes

Income (loss) before income taxes

$ 119,740  

8 unchanged sentences

Equity and Preferred Stock

During the three and six months ended June 30, 2023 

During the three and nine months ended September 30, 2023 

and 2022, we repurchased and contemporaneously retired 285,906 shares, 463,707 shares, 313,893 shares and 1,674,141 shares of our common stock at an aggregate cost of $ 9,399,000 , $ 14,334,000 , $ 10,863,000 and $ 88,938,000 , 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.

During the three and nine months ended 

September 30, 

2023 and 2022, we sold 300 shares, 53,727 shares, 8,229  shares and 8,229  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, $ 0.2  million and $ 0.2  million, respectively.

During the three and nine months ended September 30, 2023 and 2022, we repurchased and contemporaneously retired 0 shares, 1,806 shares, 3,500  shares and 3,500  shares of Series B Preferred Stock at an aggregate cost of $ 0 , $ 29,000 , $ 70,000 and $ 70,000 , respectively.

For further information regarding the ATM Program, see Note 13  “ATM Program.”

3 unchanged sentences

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.

Dividends on the preferred stock are 6 % per annum (cumulative, non-compounding) and are payable as declared, and in preference to any dividends on common stock and Series B Preferred Stock, in cash.

The Series A Preferred Stock is perpetual and has no maturity date.

42 unchanged sentences

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

June 30, 2023 and 

September 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)

As of September 30, 2023 (1)

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

23 unchanged sentences

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.

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

17 unchanged sentences

( 1,731,194 )

Balance at June 30,

Balance at September 30,

$ 2,049,993  

7 unchanged sentences

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.

September 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.

2 unchanged sentences

Fair Value Measurement

Fair Value at June 30, 2023 (in thousands)

Fair Value at September 30, 2023 (in thousands)

Valuation Technique

33 unchanged sentences

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 

The table below summarizes (in thousands) by fair value hierarchy the September 30, 2023 

and December 31, 2022 

1 unchanged sentence

Liabilities –

As of June 30, 2023

As of September 30, 2023

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

34 unchanged sentences

Other Relevant Data

Other relevant data (in thousands) as of June 30, 2023 and 

Other relevant data (in thousands) as of September 30, 2023 and 

December 31, 2022 concerning certain assets we carry at fair value are as follows:

As of June 30, 2023

As of September 30, 2023

Loans, Interest and Fees Receivable at Fair Value

36 unchanged sentences

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

June 30, 2023

September 30, 2023

December 31, 2022

16 unchanged sentences

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.

Our leases have remaining lease terms of 1 to 11  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.

2 unchanged sentences

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,

For the Three Months Ended September 30,

For the Nine Months Ended September 30,

Operating lease cost, gross

1 unchanged sentence

$ 3,769  

$ 3,097  

Sublease income

4 unchanged sentences

$ 1,847  

$ 1,627  

Cash paid under operating leases, gross

3 unchanged sentences

Weighted average discount rate

As of June 30, 2023 , maturities of lease liabilities were as follows (in thousands):

As of September 30, 2023 , maturities of lease liabilities were as follows (in thousands):

Gross Lease Payment

1 unchanged sentence

Net Lease Payment

2023 (excluding the six months ended June 30, 2023)

$ 1,315  

$ ( 48 )  

2023 (excluding the nine months ended September 30, 2023)

$ ( 24 )  

10 unchanged sentences

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.

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

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

In connection with the commencement of this 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 this 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.

As of September 30, 2023, we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

Notes Payable

Notes Payable, at Face Value

Other notes payable outstanding as of June 30, 2023 and 

Other notes payable outstanding as of September 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:

June 30, 2023

September 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 facilities at a weighted average interest rate equal to 6.1 % as of September 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 $ 2,159.8 million as of September 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)

4 unchanged sentences

Revolving credit facility, not to exceed $ 50.0 million (expiring July 20, 2025 ) (2) (3) (4) (5)

Revolving credit facility, not to exceed $ 20.0 million (expiring September 15, 2023 ) (2) (3) (4) (5)

Revolving credit facility, not to exceed $ 200.0 million (expiring May 15, 2024 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 20.0 million (expiring December 11, 2023 ) (2) (3) (4) (5)

Revolving credit facility, not to exceed $ 200.0 million (paid off in September 2023 )

Revolving credit facility, not to exceed $ 88.9 million (expiring January 15, 2025 ) (3) (4) (5) (6)

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

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

Revolving credit facility, not to exceed $ 35.0 million (expiring July 31, 2026 ) (2) (3) (4) (5)

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

Revolving credit facility, not to exceed $ 75.0 million (expiring March 15, 2025 ) (3) (4) (5) (6)

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

Revolving credit facility, not to exceed $ 75.0 million (expiring September 1, 2025 ) (2) (3) (4) (5) (6)

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

Revolving credit facility, not to exceed $ 250.0 million (expiring January 15, 2029 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 100.0 million (expiring August 5, 2024 ) (3) (4) (5) (6)

1 unchanged sentence

Revolving credit facility, not to exceed $ 20.0 million (expiring May 26, 2026 ) (3) (4) (5)

Revolving credit facility, not to exceed $ 300.0 million (expiring February 15, 2028 ) (3) (4) (5) (6)

Other facilities

15 unchanged sentences

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 %.

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).

As of September 30, 2023 , the Prime Rate was 8.50 % and the Secured Overnight Financing Rate ("SOFR") was 5.31 %.

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 %.

1 unchanged sentence

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

October 2016, we (through a wholly owned subsidiary) entered a revolving credit facility available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $ 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.

1 unchanged sentence

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.

As of September 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 %.

3 unchanged sentences

The note is guaranteed by Atlanticus.

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.

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 $ 0.0 million was outstanding as of September 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).

As of September 30, 2023, the aggregate borrowing limit was $ 100.0 million.

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

The facility matures on 

December 11, 2023.

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 November 2019, we (through a wholly owned subsidiary) sold $ 200.0 million of ABS secured by certain credit card receivables.

The terms of the ABS allowed for a three -year revolving structure with a subsequent 12 -month to 18 -month amortization period.

The weighted average interest rate on the securities was fixed at 4.91 %.

This facility was paid off in September 2023.

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 %.

The terms of the ABS allow for a three -year revolving structure with a subsequent 18 -month amortization period and expires January 15, 2025.

The weighted average interest rate on the securities is fixed at 5.47 %. This facility is currently in contractually scheduled amortization.

In October 2020, we (through a wholly owned subsidiary) sold $ 250.0 million of ABS secured by certain private label credit receivables.

2 unchanged sentences

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.

In January 2021, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 35.0 million borrowing limit (of which $ 35.0 million was drawn as of September 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 facility matures on July 31, 2026 

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.

2 unchanged sentences

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.

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 September 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.

The terms of the facility allow for a 24 -month revolving structure with an 18 -month amortization period and the facility matures in (as subsequently amended) September 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).

1 unchanged sentence

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).

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 September 30, 2023) secured by certain credit card receivables (expiring January 15, 2029).

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.

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 September 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.

In September 2022, we (through a wholly owned subsidiary) sold $ 100.0 million of ABS secured by certain private label credit receivables (expiring March 15, 2027).

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.

1 unchanged sentence

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 %.

2 unchanged sentences

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.

In September 2023, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring February 15, 2028).

A portion of the proceeds from the sale was used to pay down other facilities associated with our credit card receivables, noted above, and the remaining proceeds have been invested in 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 9.51 %.

As of September 30, 2023, we were in compliance with the covenants underlying our various notes payable and credit facilities.

Senior Notes, net

6 unchanged sentences

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.

Amortization of these fees for the three and nine months ended September 30, 2023 and 2022  totaled $ 0.4  million, $ 1.1 million, $ 0.4 million and $ 1.1  million, respectively.

We repurchased $ 322,000 and $ 1,108,000 of the outstanding principal amount of these senior notes for the three and nine months ended September 30, 2023, respectively.

Commitments and Contingencies

Under finance products available in the private label credit and general purpose credit card channels, consumers have the ability to borrow up to the maximum credit limit assigned to each individual’s account.

Unfunded commitments under these products aggregated $2.5  billion at June 30, 2023.

Unfunded commitments under these products aggregated $ 2.4  billion at September 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.

3 unchanged sentences

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.

As of September 30, 2023, CAR had unfunded outstanding floor-plan financing commitments totaling $ 9.8 million.

Each draw against unused commitments is reviewed for conformity to pre-established guidelines.

Under agreements with third -party originating and other financial institutions, we have pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $ 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 pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $ 18.7 million remains pledged as of September 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.

As of September 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.

Under the account terms, consumers have the option of enrolling with our issuing bank partners in a credit protection program, 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.

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 68.6  million as of September 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.

11 unchanged sentences

For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Net income attributable to controlling interests

39 unchanged sentences

$ 4.85  

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, 

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 241,302 and 225,754 for the three and nine months ended September 30, 2023  compared to 146,617 and 133,702 for the three and nine months ended September 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 nine months ended September 30, 2023 and we excluded stock options to purchase 0.1 million and 0.0  million shares from our net income attributable to controlling interests per share of common stock calculations for the three and nine months ended September 30, 2022.

For the three and nine months ended September 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.

4 unchanged sentences

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 

As of September 30, 2023, 47,896 shares remained available for issuance under the ESPP and 2,117,211 shares remained available for issuance under the Fourth Amended 2014 Plan.

Exercises and vestings under our stock-based compensation plans resulted in no  income tax-related charges to paid-in capital during the three and nine months ended September 30, 2023 

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 

nine months ended September 30, 2023 and 2022, we granted 145,167 shares and 103,957 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 3.6 million and $ 4.9 million, respectively.

We incurred expenses of $ 2.3 million and $ 1.9  million during the 

nine months ended September 30, 2023 

and 2022, respectively, related to restricted stock awards.

1 unchanged sentence

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.

As of September 30, 2023, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 4.6 million with a weighted average remaining amortization period of 2.6  years.

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

2 unchanged sentences

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 

We had expense of $ 0.1  million, $ 0.6  million, $ 0.3  million and $ 1.3  million related to stock option-related compensation costs during the three and nine months ended September 30, 2023 

and 2022, respectively.

13 unchanged sentences

$ 15.30  

Outstanding at June 30, 2023

Outstanding at September 30, 2023

283,718  

1 unchanged sentence

$ 2,869,619  

Exercisable at June 30, 2023

Exercisable at September 30, 2023

200,638  

1 unchanged sentence

$ 2,288,407  

No options were issued during the three and six months ended June 30, 2023 

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.

No options were issued during the three and nine months ended September 30, 2023 

We had $ 0.2  million and $ 0.8 million of unamortized deferred compensation costs associated with non-vested stock options as of September 30, 2023 

and December 31, 2022, respectively, with a weighted average remaining amortization period of 0.7  years as of September 30, 2023.

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

10 unchanged sentences

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

We have evaluated subsequent events occurring after 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.

We have evaluated subsequent events occurring after September 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.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

19 unchanged sentences

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.

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 $38 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.

41 unchanged sentences

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.

As of September 30, 2023, our CAR operations served more than 650 dealers in 32 states and two U.S.

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).

5 unchanged sentences

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

The impacts of 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 impacts of responses to the COVID-19 pandemic by both consumers and governments, rising energy costs, inflation, rising interest rates, and unresolved geopolitical tensions including 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. 

16 unchanged sentences

CONSOLIDATED RESULTS OF OPERATIONS

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Increases (Decreases)

14 unchanged sentences

Net income attributable to controlling interests to common shareholders

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Increases (Decreases)

14 unchanged sentences

Net income attributable to controlling interests to common shareholders

Three and Six Months Ended June 30, 2023, Compared to Three and Six Months Ended June 30, 2022

Three and Nine Months Ended September 30, 2023, Compared to Three and Nine Months Ended September 30, 2022

Total operating revenue.

1 unchanged sentence

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.

Period-over-period results primarily relate to growth in private label credit and general purpose credit card products, the receivables of which increased from $2,049.5 million as of September 30, 2022 to $2,314.6 million as of September 30, 2023.

We experienced higher period over period growth in our private label credit acquisitions for the third quarter of 2023 than in our acquisition of general purpose credit card receivables. 

This increase is primarily due to growth associated with our largest existing retail partners.

The relative mix of receivable acquisitions can lead to some variation in our corresponding revenue as a declining share of general purpose credit card receivables (which tend to have higher yields and corresponding charge-offs) relative to an increasing share of private label credit receivables may result in lower aggregate gross yields for the period. 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 fourth quarter 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.

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 the level of marketing investment for the general purpose credit card operations.

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

11 unchanged sentences

 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.

3 unchanged sentences

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.

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 $1,473.1 million as of September 30, 2022 to $1,719.7 million as of September 30, 2023.

The majority of this increase in outstanding debt relates to the addition of multiple revolving credit facilities during 2022 and 2023.

Recent increases in the federal funds rate have started to increase our interest expense as we have raised additional capital (or replaced existing facilities) over the last two years.

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

As such, we expect our quarterly interest expense for these operations to increase compared to prior periods. However, we do not expect our interest expense to increase significantly in the short term (absent raising additional capital) because over 85% of interest rates on our outstanding debt are fixed.

Provision for losses on loans, interest and fees receivable recorded at amortized cost.

5 unchanged sentences

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.

We expect that our provision for losses on loans will continue to increase modestly in 2023 in relation to growth in the underlying Auto Finance receivables.

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.

 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).

For both periods presented, we included asset performance 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.

2 unchanged sentences

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.

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 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.

Additionally, as receivables associated with both 1) assets acquired prior to our tightened underwriting standards (mentioned above) and 2) those assets negatively impacted by inflation, gradually become a smaller percentage of the portfolio, we expect to see overall improvements in the measured fair value of our portfolios of acquired receivables.

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;

Total operating expenses variances for the three and nine months ended September 30, 2023, relative to the three and nine months ended September 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 fourth quarter 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 $2,049.5 million outstanding to $2,314.6 million outstanding at September 30, 2022 and September 30, 2023, respectively.

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

decreases in marketing and solicitation costs primarily due to significant decreases in origination and brand marketing support for the nine months ended September 30, 2023 when compared to the nine months ended September 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 continued in subsequent quarters). These costs started to increase for the three months ended September 30, 2023, and we expect some increases in period over period results for the fourth quarter 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;

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

16 unchanged sentences

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.

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 experienced effective tax rates of 21.2% and 22.5% for the three and nine months ended September 30, 2023, respectively, compared to 17.6% and 7.1% for the three and nine months ended September 30, 2022, respectively.

Our effective tax rates for the three and nine months ended September 30, 2023, are above the statutory rate principally due to (1) state and foreign income tax expense, (2) interest accrued on uncertain tax positions and (3) deduction disallowance under Section 162(m) of the Internal Revenue Code of 1986, as amended,  with respect to compensation paid to our covered employees.

Offsetting the foregoing items are deductions (1) associated with the exercises of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’

Our effective tax rates for the three and nine months ended September 30, 2022, were below the statutory rate due to deductions (1) associated with the exercises 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) 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.

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.

On the basis described above, we reported interest expense of $0.3 million and  $1.4 million for the three and nine months ended September 30, 2023, respectively, while our reported interest expense was de minimis for the three and nine months ended September 30, 2022.

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.

36 unchanged sentences

Total managed receivables

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).

First, managed receivables data are based on billings and actual charge-offs as they occur without regard to any changes in fair value of loans, interest and fees receivable recorded at fair value or 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.

13 unchanged sentences

Adjustments due to acceleration of annual fees recognition under fair value accounting

Removal of expense accruals under GAAP

Removal of finance charge-offs

12 unchanged sentences

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.

The average age of the accounts underlying our receivables, the timing and size of receivable 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 portfolios of receivables 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.

30 unchanged sentences

Fair Value Receivables

Amortized Cost Receivables (1)

% of Period-end managed receivables

34 unchanged sentences

Fair Value Receivables

% of Period-end managed

Fair Value Receivables

% of Period-end managed

% of Period-end managed receivables

Fair Value Receivables

Amortized Cost Receivables (1)

% of Period-end managed

% of Period-end managed receivables

Fair Value Receivables

Amortized Cost Receivables (1)

% of Period-end managed

% of Period-end managed receivables

Period-end managed receivables

16 unchanged sentences

General Purpose Credit Card - At or for the Three Months Ended

% of Period-end managed

Fair Value Receivables

% of Period-end managed

% of Period-end managed receivables

Fair Value Receivables

Amortized Cost Receivables (1)

% of Period-end managed

% of Period-end managed receivables

Fair Value Receivables

Amortized Cost Receivables (1)

% of Period-end managed

% of Period-end managed receivables

Period-end managed receivables

6 unchanged sentences

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.

 We have continued to experience overall period-over-period quarterly receivables growth with over $265.1 million in net receivables growth associated with the private label credit and general purpose credit card products offered by our bank partners from September 30, 2022 to September 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 $132.9 million in the twelve months ended September 30, 2023.

Our general purpose credit card receivables grew by $132.3 million during the twelve months ended September 30, 2023.

While some of our merchant partners continue to face year-over-year growth challenges, others are still benefiting from continued consumer spending and a growing economy. 

Our general purpose credit card portfolio continues to grow in terms of total customers served and therefore we continue to experience growth in total managed receivables. We expect the pace of growth, near-term, to slow however, when compared to earlier periods due to tightened underwriting standards adopted during the second quarter 2022 (and continued in subsequent quarters). 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.

Our top five retail partnerships accounted for over 70% of the above-referenced Retail period-end managed receivables outstanding as of September 30, 2023.

Delinquencies.

8 unchanged sentences

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.

During the first and second quarters of 2023 we experienced increased delinquency rates in conjunction with slower receivables growth, higher energy costs and rising inflation and the resulting negative impact on consumers We have seen some abatement in these rates and expect these delinquencies in the coming quarters 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 for late 2023 and throughout 2024, 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 continued in 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 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 did not change through the deferment period.

We continue to actively work with consumers that indicate hardship as a result of COVID-19;

4 unchanged sentences

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. 

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. 

Total managed yield ratio, annualized .

1 unchanged sentence

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.

General purpose credit card receivables tend to have higher total yields than private label credit receivables, so recent declining rates of growth of our managed receivables that are primarily a result of the slowing growth of general purpose credit card receivables, have resulted in slightly lower total managed yield ratios when compared to similar periods in prior years.

With tightened underwriting standards implemented in the second quarter 2022 (and continued in subsequent quarters), we continue to expect slightly lower managed yield ratios (and correspondingly lower delinquency rates) associated with these newer receivables for the fourth quarter of 2023 and early 2024 when compared to those ratios in 2022.

Combined principal net charge-off ratio, annualized.

4 unchanged sentences

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.

Improvements in our delinquency rates throughout 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 throughout 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.

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.

These increased charge-off rates are expected to continue through the second quarter of 2024 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.

1) charge-offs associated with previously mentioned accounts enrolled in short-term payment deferrals (2) higher expected charge-off rates on the private label credit and general purpose credit card receivables corresponding with higher yields on these receivables, (3) continued testing of receivables with higher risk profiles, which leads to periodic increases in combined principal net charge offs, (4) recent vintages reaching peak charge-off periods, (5) the aforementioned tightened underwriting standards implemented in the second quarter 2022 (and continued in 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.

While charge-offs associated with previously mentioned accounts enrolled in short-term payment deferrals will have a negative impact on our Combined principal net charge-off ratio, annualized through the second quarter of 2024, they are not expected to have a material impact on our consolidated statements of income as the majority of these accounts were already considered in our changes in fair value. 

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.

4 unchanged sentences

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.

In general, we have obtained lower cost financing with fixed interest rates, resulting in lower interest expense ratios.

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.

As such, we have seen our Interest expense ratio, annualized increase throughout 2023 and we expect the interest expense ratio to increase when compared to prior quarters for the fourth quarter of 2023 and into 2024 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.

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

Given recent increases in delinquency rates, we expect this ratio to continue to fall for the fourth quarter of 2023 and into early 2024 relative to corresponding periods in 2022 and 2023, respectively. 

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

8 unchanged sentences

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:

3 unchanged sentences

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.

We currently expect to see increases in receivable acquisitions associated with our retail partnerships 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.

Nonetheless, we expect continued growth in the acquisition of these general purpose credit card receivables during the fourth quarter of 2023 and into 2024.

Auto Finance Segment

1 unchanged sentence

We have expanded these operations to also include certain installment lending products in addition to our traditional loans secured by automobiles both in the U.S.

Collectively, as of June 30, 2023, we served more than 630 dealers through our Auto Finance segment in 32 states and two U.S.

Collectively, as of September 30, 2023, we served more than 650 dealers through our Auto Finance segment in 32 states and two U.S.

Non-GAAP Financial Measures

41 unchanged sentences

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.

 We expect modest growth in the level of our managed receivables for the fourth quarter of 2023 and into 2024 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’

51 unchanged sentences

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

Facilities that could represent near-term significant refunding or refinancing needs (within the next 24 months) as of September 30, 2023 are those associated with the following notes payable in the amounts indicated (in millions):

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

Unsecured term debt (expiring August 26, 2024)

Revolving credit facility (expiring October 30, 2024) that is secured by certain receivables and restricted cash

Revolving credit facility (expiring June 16, 2025) that is secured by certain receivables and restricted cash

Based on the state of the debt capital markets, the performance of our assets that serve as security for the above facilities, and our relationships with lenders, we view imminent refunding or refinancing risks with respect to the above facilities as 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.

Revolving credit facility (expiring July 25, 2025) that is secured by certain receivables and restricted cash

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,”

6 unchanged sentences

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.

We repurchased $1,108,000 of the outstanding principal amount of these senior notes for the nine months ended September 30, 2023.

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.

2 unchanged sentences

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.  

During the three and nine months ended September 30, 2023, we sold an aggregate of 300 and 53,727 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 nine months ended September 30, 2023, respectively. During the three and nine months ended September 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.

10 unchanged sentences

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.

Dividends on the preferred stock are 6% per annum (cumulative, non-compounding) 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.

2 unchanged sentences

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.

At June 30, 2023, we had $342.6 million in unrestricted cash held by our various business subsidiaries.

At September 30, 2023, we had $355.7 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.

Details concerning our cash flows for the nine months ended September 30, 2023 and 2022 are as follows:

During the nine months ended September 30, 2023, we generated $326.7 million of cash flows from operations compared to our generating $245.6 million of cash flows from operations during the nine months ended September 30, 2022.

During the nine months ended September 30, 2023, we used $461.0 million of cash in our investing activities, compared to use of $524.4 million of cash in investing activities during the nine months ended September 30, 2022. This decrease in cash used is primarily due to decreases in the level of net investments primarily in 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 nine months ended September 30, 2023, we generated $101.2 million of cash in financing activities, compared to our generating $158.9 million of cash in financing activities during the nine months ended September 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. 

Additionally, we purchased and retired $14.4 million and $89.0 million of our common and preferred stock during the nine months ended September 30, 2023 and 2022, 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. 

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.

56 unchanged sentences

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.

In the nine months ended September 30, 2023 and 2022, we received $415,800 and $293,500, 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.

40 unchanged sentences

the performance of our Auto Finance segment;

expansion by our Auto Finance segment within its current service area and into new markets;

the impact of our credit card receivables on our financial performance;

55 unchanged sentences

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.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a “smaller reporting company,”

as defined by Item 10 of Regulation S-K, we are not required to provide this information.

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

What changed 10-Q

Item 1. Financial Statements