What changed in this filing

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Item 1. Financial Statements

2024-11-07 compared with 2024-08-08 · 332 added, 164 removed, 751 unchanged (40% of the section changed)

3 unchanged sentences

(Dollars in thousands)

Unrestricted cash and cash equivalents (including $ 146.0 million and $ 158.0 million associated with variable interest entities at June 30, 2024 and December 31, 2023, respectively)

September 30,

Unrestricted cash and cash equivalents (including $ 147.3 million and $ 158.0 million associated with variable interest entities at September 30, 2024 and December 31, 2023, respectively)

$ 308,651 $ 339,338

Restricted cash and cash equivalents (including $ 33.0 million and $ 20.5 million associated with variable interest entities at June 30, 2024 and December 31, 2023, respectively)

Restricted cash and cash equivalents (including $ 22.0 million and $ 20.5 million associated with variable interest entities at September 30, 2024 and December 31, 2023, respectively)

76,058 44,315

Loans at fair value (including $ 2,168.0 million and $ 2,128.6 million associated with variable interest entities at June 30, 2024 and December 31, 2023, respectively)

Loans at fair value (including $ 2,189.4 million and $ 2,128.6 million associated with variable interest entities at September 30, 2024 and December 31, 2023, respectively)

2,511,619 2,173,759

Loans at amortized cost, net (including $ 2.4 million and $ 1.8 million of allowance for credit losses at June 30, 2024 and December 31, 2023, respectively;

and $ 18.1 million and $ 17.9 million of deferred revenue at June 30, 2024 and December 31, 2023, respectively)

Loans at amortized cost, net (including $ 4.6 million and $ 1.8 million of allowance for credit losses at September 30, 2024 and December 31, 2023, respectively;

and $ 16.9 million and $ 17.9 million of deferred revenue at September 30, 2024 and December 31, 2023, respectively)

89,109 98,425

Property at cost, net of depreciation

10,269 11,445

Operating lease right-of-use assets

7 unchanged sentences

19,446 20,180

Notes payable, net (including $ 1,816.7 million and $ 1,795.9 million associated with variable interest entities at June 30, 2024 and December 31, 2023, respectively)

Notes payable, net (including $ 1,802.6 million and $ 1,795.9 million associated with variable interest entities at September 30, 2024 and December 31, 2023, respectively)

2,016,655 1,861,685

7 unchanged sentences

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

Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $ 40.0 million) at June 30, 2024 and December 31, 2023 (Note 5) (1)

Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $ 40.0 million) at September 30, 2024 and December 31, 2023 (Note 5) (1)

40,000 40,000

2 unchanged sentences

Shareholders' Equity

Series B preferred stock, no par value, 3,300,704 shares issued and outstanding at June 30, 2024 (liquidation preference - $ 82.5 million);

Series B preferred stock, no par value, 3,300,704 shares issued and outstanding at September 30, 2024 (liquidation preference - $ 82.5 million);

3,256,561 shares issued and outstanding at December 31, 2023 (liquidation preference - $ 81.4 million) (1)

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

14,748,938 and 14,603,563 shares issued and outstanding at June 30, 2024 and December 31, 2023, respectively

14,738,862 and 14,603,563 shares issued and outstanding at September 30, 2024 and December 31, 2023, respectively

Paid-in capital

2 unchanged sentences

368,337 307,260

Total shareholders’ equity

Total shareholders’ equity attributable to Atlanticus Holdings Corporation

457,723 394,675

10 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

23 unchanged sentences

Condensed Consolidated Statements of Shareholders’ Equity and Temporary Equity (Unaudited)

For the Six Months Ended June 30, 2024 and June 30, 2023

For the Nine Months Ended September 30, 2024 and September 30, 2023

(Dollars in thousands)

9 unchanged sentences

Balance at January 1, 2024

3,256,561 $ — 14,603,563 $ — $ 87,415 $ 307,260 $ ( 2,258 ) $ 392,417 $ 40,000 $ 100,250

Accretion of discount associated with issuance of subsidiary equity

Preferred stock and preferred unit dividends

— — — — — ( 75 ) — ( 75 ) — 75

Series A preferred stock dividends ($ 1.50 dividend per share)

— — — — — ( 597 ) — ( 597 ) — —

Series B preferred stock dividends ($ 0.48 dividend per share)

— — — — — ( 1,555 ) — ( 1,555 ) — —

Class B preferred units dividends ($ 0.04 dividend per share)

— — — — — ( 4,065 ) — ( 4,065 ) — —

Compensatory stock issuances, net of forfeitures

— — 206,629 — — — — — — —

Issuance of series B preferred stock, net

44,143 — — — 1,071 — — 1,071 — —

Distributions to owners of noncontrolling interests

— — — — — — ( 148 ) ( 148 ) — —

Contributions by owners of noncontrolling interests

— — — — — — 3 3 — —

Stock-based compensation costs

— — — — 940 — — 940 — —

Redemption and retirement of common shares

— — ( 18,033 ) — ( 543 ) — — ( 543 ) — —

Net income (loss)

— — — — — 26,170 ( 351 ) 25,819 — —

Balance at March 31, 2024

3,300,704 $ — 14,792,159 $ — $ 88,883 $ 327,138 $ ( 2,754 ) $ 413,267 $ 40,000 $ 100,325

Accretion of discount associated with issuance of subsidiary equity

Preferred stock and preferred unit dividends

— — — — — ( 75 ) — ( 75 ) — 75

Series A preferred stock dividends ($ 1.50 dividend per share)

— — — — — ( 596 ) — ( 596 ) — —

Series B preferred stock dividends ($ 0.48 dividend per share)

— — — — — ( 1,573 ) — ( 1,573 ) — —

Class B preferred units dividends ($ 0.04 dividend per share)

— — — — — ( 4,064 ) — ( 4,064 ) — —

Stock option exercises and proceeds related thereto

— — 2,975 — 45 — — 45 — —

Compensatory stock issuances, net of forfeitures

— — 3,007 — — — — — — —

Stock-based compensation costs

— — — — 1,050 — — 1,050 — —

Redemption and retirement of common shares

— — ( 49,203 ) — ( 1,273 ) — — ( 1,273 ) — —

Net income (loss)

— — — — — 24,280 ( 153 ) 24,127 — —

Balance at June 30, 2024

3,300,704 $ — 14,748,938 $ — $ 88,705 $ 345,110 $ ( 2,907 ) $ 430,908 $ 40,000 $ 100,400

Accretion of discount associated with issuance of subsidiary equity

— — — — — ( 75 ) — ( 75 ) — 75

Series A preferred stock dividends ($ 1.50 dividend per share)

— — — — — ( 604 ) — ( 604 ) — —

Series B preferred stock dividends ($ 0.48 dividend per share)

— — — — — ( 1,573 ) — ( 1,573 ) — —

Class B preferred units dividends ($ 0.04 dividend per share)

— — — — — ( 4,064 ) — ( 4,064 ) — —

Stock option exercises and proceeds related thereto

— — 1,700 — 26 — — 26 — —

Compensatory stock issuances, net of forfeitures

— — ( 583 ) — — — — — — —

Stock-based compensation costs

— — — — 979 — — 979 — —

Redemption and retirement of preferred shares and preferred units

— — — — — — — — — ( 25,500 )

Redemption and retirement of common shares

— — ( 11,193 ) — ( 324 ) — — ( 324 ) — —

Net income (loss)

— — — — — 29,543 ( 354 ) 29,189 — —

Balance at September 30, 2024

3,300,704 $ — 14,738,862 $ — $ 89,386 $ 368,337 $ ( 3,261 ) $ 454,462 $ 40,000 $ 74,975

Series B Preferred Stock

8 unchanged sentences

Balance at January 1, 2023

3,204,640 $ — 14,453,415 $ — $ 121,996 $ 204,415 $ ( 1,371 ) $ 325,040 $ 40,000 $ 99,950

Accretion of discount associated with issuance of subsidiary equity

— — — — (75 ) — — ( 75 ) — 75

Discount associated with repurchase of preferred stock

Preferred dividends

— — — — 16 — — 16 — —

Series A preferred stock dividends ($ 1.50 dividend per share)

— — — — ( 592 ) — — ( 592 ) — —

Series B preferred stock dividends ($ 0.48 dividend per share)

— — — — ( 1,556 ) — — ( 1,556 ) — —

Class B preferred units dividends ($ 0.04 dividend per share)

— — — — ( 4,020 ) — — ( 4,020 ) — —

Stock option exercises and proceeds related thereto

— — 1,258 — 19 — — 19 — —

Compensatory stock issuances, net of forfeitures

— — 146,227 — — — — — — —

Issuance of series B preferred stock, net

51,327 — — — 1,069 — — 1,069 — —

Contributions by owners of noncontrolling interests

— — — — — — 4 4 — —

Stock-based compensation costs

— — — — 931 — — 931 — —

Redemption and retirement of preferred shares

Redemption and retirement of shares

(1,806 ) — — — ( 45 ) — — ( 45 ) — —

Redemption and retirement of common shares

— — ( 72,354 ) — ( 1,947 ) — — ( 1,947 ) — —

Net income (loss)

— — — — — 26,212 ( 318 ) 25,894 — —

Balance at March 31, 2023

3,254,161 $ — 14,528,546 $ — $ 115,796 $ 230,627 $ ( 1,685 ) $ 344,738 $ 40,000 $ 100,025

Accretion of discount associated with issuance of subsidiary equity

Preferred dividends

— — — — (75 ) — — ( 75 ) — 75

Series A preferred stock dividends ($ 1.50 dividend per share)

— — — — ( 598 ) — — ( 598 ) — —

Series B preferred stock dividends ($ 0.48 dividend per share)

— — — — ( 1,551 ) — — ( 1,551 ) — —

Class B preferred units dividends ($ 0.04 dividend per share)

— — — — ( 4,065 ) — — ( 4,065 ) — —

Stock option exercises and proceeds related thereto

— — 5,160 — 40 — — 40 — —

Compensatory stock issuances, net of forfeitures

— — ( 220 ) — — — — — — —

Issuance of series B preferred stock, net

2,100 — — — 43 — — 43 — —

Stock-based compensation costs

Redemption and retirement of shares

— — — — 1,031 — — 1,031 — —

Redemption and retirement of common shares

— — ( 105,447 ) — ( 2,988 ) — — ( 2,988 ) — —

Net income (loss)

— — — — — 25,089 ( 275 ) 24,814 — —

Balance at June 30, 2023

3,256,261 $ — 14,428,039 $ — $ 107,633 $ 255,716 $ ( 1,960 ) $ 361,389 $ 40,000 $ 100,100

Accretion of discount associated with issuance of subsidiary equity

— — — — ( 75 ) — — ( 75 ) — 75

Series A preferred stock dividends ($ 1.50 dividend per share)

— — — — ( 605 ) — — ( 605 ) — —

Series B preferred stock dividends ($ 0.48 dividend per share)

— — — — ( 1,552 ) — — ( 1,552 ) — —

Class B preferred units dividends ($ 0.04 dividend per share)

— — — — ( 4,109 ) — — ( 4,109 ) — —

Stock option exercises and proceeds related thereto

— — 510,028 — 3,031 — — 3,031 — —

Compensatory stock issuances, net of forfeitures

— — ( 840 ) — — — — — — —

Issuance of series B preferred stock, net

300 — — — 6 — — 6 — —

Stock-based compensation costs

— — — — 908 — — 908 — —

Redemption and retirement of common shares

— — ( 285,906 ) — ( 9,399 ) — — ( 9,399 ) — —

Net income (loss)

— — — — — 25,240 ( 267 ) 24,973 — —

Balance at September 30, 2023

3,256,561 $ — 14,651,321 $ — $ 95,838 $ 280,956 $ ( 2,227 ) $ 374,567 $ 40,000 $ 100,175

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

2 unchanged sentences

Provision for credit losses

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

Deferred income tax expense

Income from accretion of discount associated with Loans at amortized cost, net

Income from merchant fees associated with Loans at fair value

Changes in fair value of loans

4 unchanged sentences

Increase in uncollected fees on earning assets

Increase in income tax liability

Increase in accounts payable and accrued expenses

(Decrease) increase in income tax liability

(Decrease) increase in accounts payable and accrued expenses

Net cash provided by operating activities

11 unchanged sentences

Proceeds from exercise of stock options

Purchase and retirement of outstanding stock

Purchase and retirement of outstanding stock and preferred units

Proceeds from issuance of Senior notes, net of issuance costs

1 unchanged sentence

Repayment of borrowings

Net cash provided by (used for) financing activities

Net cash provided by financing activities

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

2 unchanged sentences

Cash and cash equivalents and restricted cash at end of period

Cash and cash equivalents, and restricted cash at end of period

Unrestricted cash and cash equivalents

Restricted cash and cash equivalents

Cash and cash equivalents, and restricted cash at end of period

Supplemental cash flow information

6 unchanged sentences

Notes to Condensed Consolidated Financial Statements

June 30, 2024 and 2023

September 30, 2024 and 2023

Description of Our Business

2 unchanged sentences

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

Through our subsidiaries, we provide technology and other support services to lenders who offer an array of financial products and services to consumers who may have been declined by other providers of credit.

Through our subsidiaries, we provide technology and other support services to lenders who offer an array of financial products and services, including private label and general purpose card products, to consumers who may have been declined by other providers of credit.

Private label and general purpose card products are originated by The Bank of Missouri and WebBank (collectively, our “bank partners”).

Our bank partners originate these accounts through multiple channels , including retail and healthcare point-of-sale locations, direct mail solicitation, digital marketing and partnerships with third parties.

We are principally engaged in providing these products and services to lenders in the U.S.

and, in most cases, we invest in the receivables originated by lenders who utilize our technology platform and other related services.

(including our bank partners) for which these lenders pay us a fee and in most circumstances, the lenders are then obligated to sell us the receivables they generate from these products and services.

We acquire these receivables for the principal amount of the loan less any up-front fees and any third party or merchant fees associated with the receivables.

We compensate our bank partners monthly for the regulatory oversight they provide associated with our acquired receivables, the underlying accounts of which they continue to own and service, and also based on variable levels of the underlying performance of the acquired receivables.

From time to time, we also purchase receivables portfolios from third parties.

In these Notes to Condensed Consolidated Financial Statements, "receivables" or "loans" typically refer to receivables we have purchased from our bank partners or from third parties.

Within our Credit as a Service ("CaaS") segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $40 billion in consumer loans over more than 25 years of operating history, to support lenders in offering more inclusive financial services.

These products include private label credit and general purpose credit cards originated by lenders through multiple channels, including retailers and healthcare providers, direct mail solicitation, digital marketing and partnerships with third parties.

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

These products and services are reported through two segments, Credit as a Service ("CaaS") and Auto Finance.

Within our CaaS segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $41 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 cards using the Fortiva and Curae brand names as well as merchant associated brands.

Our general purpose credit cards use the Aspire, Imagine and Fortiva brand names.

Private label credit products associated with the healthcare space are generally issued under the Curae brand while all other retail partnerships, including those in consumer electronics, furniture, elective medical procedures, and home-improvement use the Fortiva brand or use our retail partners’ brands.

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

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

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

Atlanticus’ underwriting process is enhanced by artificial intelligence and machine learning, enabling fast, sound decision-making when it matters most.

13 unchanged sentences

Actual results could differ materially from these estimates.

Recent rules enacted by the Consumer Financial Protection Bureau ("CFPB"), which, if implemented, would limit the late fees charged to consumers in most instances, are expected to adversely impact the revenue recognized on our receivables.

In order to mitigate these impacts, our bank partners have taken a number of steps, from modifying products and policies (such as further tightening the criteria used to evaluate new loans) to changing prices (including increasing interest rates and fees charged to consumers).

We believe these product, policy and pricing changes will offset the negative impact of a reduced late fee.

In the third quarter of 2024, we revised the presentation of our condensed consolidated statement of shareholders’ equity and temporary equity to present the preferred stock and preferred unit dividends on an individual instrument basis, including the dividends per share.

We also revised the presentation of our condensed consolidated statement of cash flows to ( 1 ) present the income from accretion of discounts associated with loans from amortized cost, net separate from the income from merchant fees associated with loans at fair value and ( 2 ) include a reconciliation of the unrestricted cash and cash equivalents and restricted cash and cash equivalents to arrive at the ending cash and cash equivalents and restricted cash at end of period.

These changes in presentation had no effect on our consolidated total equity or consolidated net cash provided by operating activities or ending cash and cash equivalents and restricted cash, and our historical condensed consolidated statement of shareholders’ equity and temporary equity and condensed consolidated statement of cash flows were revised for consistent presentation.

Recent rules enacted by the Consumer Financial Protection Bureau ("CFPB"), which, if implemented, would further limit the late fees charged to consumers in most instances, are expected to adversely impact the revenue recognized on our receivables.

In order to mitigate these impacts and continue to serve consumers, we have worked collaboratively with our bank partners to assist them in taking a number of steps, from modifying products and policies (such as further tightening the criteria used to evaluate new loans) to changing prices (including increasing interest rates and fees charged to consumers).

While our bank partners have the flexibility to unilaterally make changes to program offerings and must approve all changes to existing or new program offerings, we are only obligated to acquire receivables originated by the bank that utilized mutually agreed upon underwriting standards.

The changes will take several quarters to fully implement.

These modifications could result in changes to certain estimates such as credit losses, payment rates, servicing costs, discount rates and yields earned on credit card receivables and affect the reported amount (and changes thereon) of our Loans at fair value on our condensed consolidated balance sheets and condensed consolidated statements of income.

We maintain two categories of Loans on our condensed consolidated balance sheets:

9 unchanged sentences

Our loans at amortized cost, net, currently consist of receivables associated with our Auto Finance segment’s operations and are presented in the condensed consolidated balance sheets net of the related allowance for credit losses and deferred revenue.

We purchased auto loans with outstanding principal of $ 51.2 million, $ 112.2 million, $ 55.3 million and $ 120.3 million for the three and six months ended June 30, 2024 and 2023, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

We purchased auto loans with outstanding principal of $ 48.9 million, $ 161.1 million, $ 59.0 million and $ 179.3 million for the three and nine months ended September 30, 2024 and 2023, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

Certain of our loans at amortized cost, net, also contain components of deferred revenue related to loan discounts on the purchase of our auto finance receivables.

As of June 30, 2024 and December 31, 2023, the weighted average remaining accretion period for the $ 18.1 million and $ 17.9 million of deferred revenue reflected in the condensed consolidated balance sheets was 24 and 26 months, respectively.

As of September 30, 2024 and December 31, 2023, the weighted average remaining accretion period for the $ 16.9 million and $ 17.9 million of deferred revenue reflected in the condensed consolidated balance sheets was 24 and 26 months, respectively.

A roll-forward (in millions) of our allowance for credit losses by class of receivable is as follows:

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Allowances for credit losses:

6 unchanged sentences

$ ( 4.6 ) $ ( 1.8 )

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Allowances for credit losses:

6 unchanged sentences

$ ( 4.6 ) $ ( 1.8 )

September 30,

Allowances for credit losses:

10 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 receivables is performing.

An aging of our delinquent loans at amortized cost (in millions) as of June 30, 2024 and December 31, 2023 is as follows:

An aging of our delinquent loans at amortized cost (in millions) as of September 30, 2024 and December 31, 2023 is as follows:

September 30,

30-59 days past due

9 unchanged sentences

This could include a restructuring of the loan terms to alleviate the burden of the borrower's near-term cash requirements, such as a modification of terms to reduce or defer cash payments to help the borrower attempt to improve its financial condition.

For the six months ended June 30, 2024, no Loans at amortized cost qualified as a FDM.

We experienced effective tax rates of 15.6 % and 18.5 % for the three and six months ended June 30, 2024, respectively, compared to 22.3 % and 23.1 % for the three and six months ended June 30, 2023, respectively.

Our effective tax rates for the three and six months ended June 30, 2024 are below the statutory rate principally due to our deduction for income tax purposes of ( 1 ) amounts characterized in our condensed consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes, and ( 2 ) a loss related to our unrecovered investment in a foreign subsidiary—such subsidiary which ceased operations in the three months ended June 30, 2024, and with respect to which we had used “permanently reinvested earnings” accounting in our condensed consolidated financial statements.

Offsetting the foregoing items were ( 1 ) state and foreign income tax expense including the effects of law changes enacted in the three months ended June 30, 2024 in certain states in which we operate, ( 2 ) taxes on global intangible low-taxed income, and ( 3 ) deduction disallowance under Section 162 (m) of the Internal Revenue Code of 1986, as amended (the “Code”), with respect to compensation paid to our covered employees.

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 the Code 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 condensed consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes.

For the nine months ended September 30, 2024 , no Loans at amortized cost qualified as a FDM.

We experienced effective tax rates of 21.5 % and 19.7 % for the three and nine months ended September 30, 2024, respectively, compared to 21.2 % and 22.5 % for the three and nine months ended September 30, 2023, respectively.

In all periods, the factors that decreased our effective tax rate relative to the statutory rate included ( 1 ) our deduction for income tax purposes of amounts characterized in our condensed consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and ( 2 ) deductions associated with the 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.

Also, in all periods, the factors that increased our effective tax rate relative to the statutory rate included ( 1 ) state and foreign income tax expense, including the effects of law changes enacted in certain states in which we operate, ( 2 ) taxes on global intangible low-taxed income, 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.

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 condensed 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.

Our interest expense was $ 93 thousand for the six months ended June 30, 2024, and $ 1.14 million for the six months ended June 30, 2023.

Our net interest expense reflected within our income tax line item was $ 140,000 for the nine months ended September 30, 2024, and $ 1.4 million for the nine months ended September 30, 2023.

Revenue Recognition and Revenue from Contracts with Customers

Consumer Loans, Including Past Due Fees

Consumer loans, including past due fees reflect interest income, including finance charges, and late fees on loans in accordance with the terms of the related customer agreements.

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

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

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

Fees and Related Income on Earning Assets

Fees and related income on earning assets primarily include fees associated with credit products such as annual fee billings and cash advance fees, among others.

These fees are assessed on the receivables underlying the private label and general purpose credit cards we service.

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

Fees and related income on earning assets, net of amounts that we consider uncollectible, are included in loans, interest and fees receivable and revenue when the fees are earned based upon the contractual terms of the loans.

Other revenue

Other revenue includes revenue from contracts with customers, which includes interchange revenues, servicing income and ancillary product offerings (primarily associated with a credit protection program offered by our issuing bank partner).

We recognize these fees as income in the period earned.

Other non-operating revenue

Other non-operating revenue includes revenues not associated with our ongoing business operations.

Revenue from Contracts with Customers

1 unchanged sentence

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

For the Three Months Ended June 30, 2024

For the Three Months Ended September 30, 2024

Interchange revenues, net (1)

7 unchanged sentences

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

For the Six Months Ended June 30, 2024

For the Nine Months Ended September 30, 2024

Interchange revenues, net (1)

7 unchanged sentences

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

For the Three Months Ended June 30, 2023

For the Three Months Ended September 30, 2023

Interchange revenues, net (1)

1 unchanged sentence

Servicing income

943 179 1,122

Service charges and other customer related fees

3 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)

38 unchanged sentences

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

Three Months Ended June 30, 2024

Three Months Ended September 30, 2024

Consumer loans, including past due fees

7 unchanged sentences

Other non-operating revenue

( 31 ) 301 270

Total revenue

7 unchanged sentences

$ 95,104 $ 5,256 $ 100,360

Income before income taxes

Income (loss) before income taxes

$ 37,769 $ ( 483 ) $ 37,286

Income tax expense

Income tax (expense) benefit

$ ( 8,237 ) $ 140 $ ( 8,097 )

Six Months Ended June 30, 2024

Nine Months Ended September 30, 2024

Consumer loans, including past due fees

7 unchanged sentences

Other non-operating revenue

330 854 1,184

Total revenue

12 unchanged sentences

$ 2,945,030 $ 94,934 $ 3,039,964

Three Months Ended June 30, 2023

Three Months Ended September 30, 2023

Consumer loans, including past due fees

7 unchanged sentences

Other non-operating revenue

( 69 ) 63 ( 6 )

Total revenue

11 unchanged sentences

$ ( 5,944 ) $ ( 841 ) $ ( 6,785 )

Six Months Ended June 30, 2023

Nine Months Ended September 30, 2023

Consumer loans, including past due fees

22 unchanged sentences

Shareholders’ Equity and Preferred Stock

During the three and six months ended June 30, 2024 and 2023, we repurchased and contemporaneously retired 49,203 shares, 67,236 shares, 105,447 shares and 177,801 shares of our common stock at an aggregate cost of $ 1.3 million, $ 1.8 million, $ 3.0 million and $ 4.9 million, respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.

During the three and nine months ended September 30, 2024 and 2023, we repurchased and contemporaneously retired 11,193 shares, 78,429 shares, 285,906 shares and 463,707 shares of our common stock at an aggregate cost of $ 0.3 million, $ 2.1 million, $ 9.4 million and $ 14.3 million, 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.

Preferred Stock

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

We pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by our Board of Directors, in the amount of 6 % of the $ 100.00 liquidation preference per share annually.

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

During the three and six months ended June 30, 2023, we repurchased and contemporaneously retired 0 shares and 1,806 shares of Series B preferred stock at an aggregate cost of $ 0 and $ 29,000 .

No shares of Series B preferred stock were repurchased in the three and six months ended June 30, 2024.

On August 10, 2022, the Company entered into an At Market Issuance Sales Agreement (the "Preferred Stock Sales Agreement") providing for the sale by the Company of up to an aggregate offering price of $ 100.0 million of our (i) Series B preferred stock and (ii) 2026 Senior Notes, from time to time through a sales agent, in connection with the Company's Series B preferred stock and 2026 Senior Notes "at-the-market" offering program (the "Preferred Stock ATM Program").

Further, on December 29, 2023, the Company entered into an At-The-Market Sales Agreement (the "Common Stock Sales Agreement") providing for the sale by the Company of its common stock, no par value per share, up to an aggregate offering price of $ 50.0 million, from time to time to or through a sales agent, in connection with the Company’s common stock ATM Program ("Common Stock ATM Program").

During the three and nine months ended September 30, 2023, we repurchased and contemporaneously retired 0 shares and 1,806 shares of Series B preferred stock at an aggregate cost of $ 0 and $ 29,000 .

No shares of Series B preferred stock were repurchased in the three and nine months ended September 30, 2024 .

On August 10, 2022, we entered into an At Market Issuance Sales Agreement (the "Preferred Stock Sales Agreement") providing for the sale by the Company of up to an aggregate offering price of $ 100.0 million of our (i) Series B preferred stock and (ii) 6.125 % Senior Notes due 2026 (the "2026 Senior Notes"), from time to time through a sales agent, in connection with the Company's Series B preferred stock and 2026 Senior Notes "at-the-market" offering program (the "Preferred Stock ATM Program").

On August 26, 2024, we amended and restated the Preferred Stock Sales Agreement to remove our 2026 Senior Notes and to include our 9.25 % Senior Notes due 2029 (the "2029 Senior Notes") in the Preferred Stock ATM Program.

On December 29, 2023, the Company entered into an At-The-Market Sales Agreement (the "Common Stock Sales Agreement") providing for the sale by the Company of its common stock, no par value per share, up to an aggregate offering price of $ 50.0 million, from time to time to or through a sales agent, in connection with the Company’s common stock ATM Program ("Common Stock ATM Program").

Sales pursuant to both the Preferred Stock Sales Agreement and Common Stock Sales Agreement, if any, may be made in transactions that are deemed to be "at-the-market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), including sales made directly on or through the NASDAQ Global Select Market.

The sales agents will make all sales using commercially reasonable efforts consistent with their normal trading and sales practices up to the amount specified in, and otherwise in accordance with the terms of, the placement notices.

During the three and six months ended June 30, 2024 and 2023, we sold 0 shares, 44,143 shares, 2,100 shares and 53,427 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $ 0 million, $ 1.1 million, $ 0.0 million and $ 1.1 million, respectively.

During the three and six months ended June 30, 2024 and 2023, no 2026 Senior Notes were sold under the Company's Preferred Stock ATM Program.

During the three and six months ended June 30, 2024, no common shares were sold under the Company’s Common Stock ATM Program.

During the three and nine months ended September 30, 2024 and 2023, we sold 0 shares, 44,143 shares, 300 shares and 53,727 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $ 0 million, $ 1.1 million, $ 0.0 million and $ 1.1 million, respectively.

During the three and nine months ended September 30, 2024 and 2023, no 2026 Senior Notes were sold under the Company's Preferred Stock ATM Program.

During the three and nine months ended September 30, 2024 , we sold $ 13.5 million principal amount of our 2029 Senior Notes under our Preferred Stock ATM Program for net proceeds of $ 13.4 million.

During the three and nine months ended September 30, 2024 , no common shares were sold under the Company’s Common Stock ATM Program.

Redeemable Preferred Stock

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A holder of the Class B preferred units may, at its election and with notice, require the Company to redeem part or all of such holder’s Class B preferred units for cash at $1.00 per unit, on or after October 14, 2024.

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

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

The Company has the right to redeem the Class B preferred units at any time with notice.

During the three and nine months ended September 30, 2024 , we redeemed 25.5 million of the Class B preferred units at $ 1.00 per unit plus accrued but unpaid interest thereon.

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

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

The table below summarizes (in thousands) by fair value hierarchy the June 30, 2024 and December 31, 2023 fair values and carrying amounts of ( 1 ) our assets that are required to be carried at fair value in our condensed 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, 2024 (1)

The table below summarizes (in thousands) by fair value hierarchy the September 30, 2024 and December 31, 2023 fair values and carrying amounts of ( 1 ) our assets that are carried at fair value in our condensed consolidated financial statements and ( 2 ) our assets not carried at fair value, but for which fair value disclosures are required:

Assets – As of September 30, 2024 (1)

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

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

For those asset classes above that are required to be carried at fair value in our condensed consolidated financial statements, gains and losses associated with fair value changes are detailed on our condensed consolidated statements of income as a component of "Changes in fair value of loans".

For our loans 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 three and six months ended June 30, 2024 and 2023:

For those asset classes above that are carried at fair value in our condensed consolidated financial statements, gains and losses associated with fair value changes are detailed on our condensed consolidated statements of income as a component of "Changes in fair value of loans." Gross yield net of finance charge chargeoffs (including late fees and interest charges on outstanding balances), payment rates, servicing rates and expected net principal credit loss rates vary based on the delinquency or payment behavior of a consumer and impact the return rate third -party market participants would require.

As such, we consider all of these risks as “credit risk.” For our loans included in the above table, we assess the fair value of these assets based on our estimate of future cash flows net of servicing costs, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk.

Loans at Fair Value

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( 187,120 ) ( 162,970 )

Total Changes in fair value of loans (1)

( 549,161 ) ( 505,505 )

1,969,259 1,801,802

Finance and fees, added to the account balance

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( 1,868,085 ) ( 1,766,064 )

Balance at June 30,

Balance at September 30,(2)

$ 2,511,619 $ 2,049,993

( 1 ) Total Changes in fair value of loans is included in our Condensed Consolidated Statements of Income.

( 2 ) As of September 30, 2024 and September 30, 2023, the aggregate unpaid principal balance included within loans at fair value was $ 2,420 million and $ 2,096 million, respectively.

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

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The fair value of Loans at fair value is based on the present value of future cash flows using a valuation model of expected cash flows and the estimated cost to service and collect those cash flows.

We estimate the present value of these future cash flows using internally-developed estimates of assumptions third -party market participants would use in determining fair value, including estimates of credit losses, payment rates, servicing costs, discount rates and yields earned on credit card receivables.

We forecast the cash flows underlying our fair value assessment based on the individual offer type (in the case of general purpose credit cards) or by specific offers at our retail partners (for private label credit).

While overall product return requirements among the offer types may be similar, the individual product offerings necessary to achieve those returns is often unique to each offer and retailer based on several factors, including acceptance rates of the offers by consumers and underlying consumer performance data which varies by offer type .

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 current trends would suggest.

Recent rules enacted by the CFPB, which, if implemented, would limit the late fees charged to consumers in most instances, are expected to adversely impact the revenue recognized on our receivables.

We believe these product, policy and pricing changes will offset the negative impact of a reduced late fee.

Further, recent rules enacted by the CFPB, which, if implemented, would further limit the late fees charged to consumers in most instances, are expected to adversely impact the revenue recognized on our receivables.

Our fair value models currently assume an implementation of these rules in July 2025.

The changes will take several quarters to fully implement.

These modifications and the timing of the CFPB's rules implementation could result in changes to certain estimates such as credit losses, payment rates, servicing costs, discount rates and yields earned on credit card receivables and affect the reported amount (and changes thereon) of our Loans at fair value on our condensed consolidated balance sheets and condensed consolidated statements of income.

Our Loans at fair value are typically lower than the aggregate unpaid gross balance of the underlying loans primarily due to merchant fees we obtain associated with the acquisition of private label credit receivables.

These merchant fees ensure that we achieve adequate returns on the investment in the receivables.

As these merchant fees reduce the amount of cash we use to acquire the receivable, it is not always necessary for us to collect the aggregate unpaid gross balance of the underlying receivable to achieve desired returns.

Valuations and Techniques for Liabilities

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

The table below summarizes (in thousands) by fair value hierarchy the June 30, 2024 and December 31, 2023 fair values and carrying amounts of our liabilities not carried at fair value, but for which fair value disclosures are required:

Liabilities – As of June 30, 2024

The table below summarizes (in thousands) by fair value hierarchy the September 30, 2024 and December 31, 2023 fair values and carrying amounts of our liabilities not carried at fair value, but for which fair value disclosures are required:

Liabilities – As of September 30, 2024

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

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$ 138,229 $ — $ — $ 144,453

For our notes payable where market prices are not available, we assess the fair value of these liabilities based on our estimate of future cash flows generated from their underlying credit card receivables collateral, net of servicing compensation required under the note facilities, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk.

For our credit and debt facilities where market prices are not available, we assess the fair value of these liabilities based on our estimate of future cash flows generated from their underlying credit card receivables collateral, net of servicing compensation required under the note facilities, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk.

We have evaluated the fair value of our third party debt by analyzing the expected repayment terms and credit spreads included in our recent financing arrangements obtained with similar terms.

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Other Relevant Data

Other relevant data (in thousands) as of June 30, 2024 and December 31, 2023 concerning certain assets we carry at fair value are as follows:

As of June 30, 2024

Other relevant data (in thousands) as of September 30, 2024 and December 31, 2023 concerning certain assets we carry at fair value are as follows:

As of September 30, 2024

Loans at Fair Value

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

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

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

$ 4 $ 141,035

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

$ 9 $ 147,803

Variable Interest Entities

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

June 30, 2024

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

September 30, 2024

December 31, 2023

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$ 1,802.6 $ 1,795.9

Maximum exposure to loss due to involvement with VIEs

$ 2,138.2 $ 2,099.0

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

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Weighted average discount rate

As of June 30, 2024 , maturities of lease liabilities were as follows (in thousands):

As of September 30, 2024 , maturities of lease liabilities were as follows (in thousands):

Gross Lease Payment

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Net Lease Payment

2024 (excluding the six months ended June 30, 2024)

2024 (Remainder of 2024)

$ 760 $ ( 25 ) $ 735

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Operating lease liabilities

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

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 August 2021, we entered into an operating lease agreement for our corporate headquarters in Atlanta, Georgia (the "Headquarters lease") with an unaffiliated third party.

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

The remaining total commitment under this lease is approximately $ 25.1 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.

We exercised an expansion right under the Headquarters lease to add an additional 26,133 square feet (the "Expansion space") at our corporate headquarters.

The Expansion space term commences on the earlier of December 23, 2024 or when we first occupy the space, which has not yet occurred.

The Expansion space co-terminates with the Headquarters lease.

The other lease terms for the Expansion space are the same as those for the initial space leased under the Headquarters lease.

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

As of June 30, 2024, we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

As of September 30, 2024 , 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, 2024 and December 31, 2023 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, 2024

Other notes payable outstanding as of September 30, 2024 and December 31, 2023 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:

September 30, 2024

December 31, 2023

Revolving credit facilities at a weighted average interest rate equal to 7.0 % as of June 30, 2024 ( 6.3 % as of December 31, 2023) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 2,304.4 million as of June 30, 2024 ($ 2,252.9 million as of December 31, 2023)

Revolving credit facilities at a weighted average interest rate equal to 7.0 % as of September 30, 2024 ( 6.3 % as of December 31, 2023) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 2,536.3 million as of September 30, 2024 ($ 2,252.9 million as of December 31, 2023)

Revolving credit facility, not to exceed $ 65.0 million (expiring December 1, 2026 ) (1) (2) (3)

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

Revolving credit facility, not to exceed $ 75.0 million (expiring 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)

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Revolving credit facility, not to exceed $ 100.0 million (expiring March 15, 2027 ) (3) (4) (5) (6)

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

Revolving credit facility, not to exceed $ 25.0 million (expiring August 30, 2027 ) (2) (3) (4) (5)

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

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Revolving credit facility, not to exceed $ 250.0 million (expiring November 15, 2028 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 150.0 million (expiring March 29, 2025 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 32.8 million (expiring March 29, 2025 ) (3) (4) (5)

Other facilities

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

Unsecured term debt (repaid in August 2024 ) with a weighted average interest rate equal to 8.0 % (3)

Total notes payable before unamortized debt issuance costs and discounts

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

* As of June 30, 2024 , the Prime Rate was 8.50 % and the Secured Overnight Financing Rate ("SOFR") was 5.33 %.

In October 2015, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 50.0 million revolving borrowing limit that can be drawn to the extent of outstanding eligible principal receivables (of which $ 28.5 million was drawn as of June 30, 2024).

As of September 30, 2024 , the Prime Rate was 8.00 %, the Term Secured Overnight Financing Rate ("Term SOFR") was 4.85 % and the Secured Overnight Financing Rate ("SOFR") was 4.96 %.

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 %.

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

In October 2016, we (through a wholly owned subsidiary) entered a revolving credit facility available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $ 39.4 million was drawn as of June 30, 2024).

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.

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

As of June 30, 2024, the facility's borrowing limit was $ 65.0 million and the facility matures on December 1, 2026.

As of September 30, 2024 , the facility's borrowing limit was $ 65.0 million and the facility matures on December 1, 2026.

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 $ 31.3 million was drawn as of June 30, 2024).

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to Term Secured Overnight Financing Rate ("Term SOFR") plus 3.6 %.

An amendment was completed in July 2023 that extended the maturity to July 20, 2025.

There were no other material changes to the existing terms.

The facility is subject to certain affirmative covenants, including payment, delinquency and charge-off tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance.

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 3.6 %.

The facility matures on July 20, 2025 and is subject to certain affirmative covenants, including payment, delinquency and charge-off tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance.

The note is guaranteed by Atlanticus.

In 2018, we (through a wholly owned subsidiary) entered a revolving credit facility to sell up to an aggregate $ 100.0 million of notes that are secured by the receivables and other assets of the trust (of which $ 0 was outstanding as of June 30, 2024) that can be drawn upon to the extent of outstanding eligible receivables.

In 2018, we (through a wholly owned subsidiary) entered a revolving credit facility to sell up to an aggregate $ 100.0 million of notes that are secured by the receivables and other assets of the trust (of which $ 0 was outstanding as of September 30, 2024 ) that can be drawn upon to the extent of outstanding eligible receivables.

The interest rate on the notes equals the SOFR plus 3.75 %.

The facility matures on December 15, 2025 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, 2024, 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 $ 20.0 million was drawn as of June 30, 2024).

As of September 30, 2024 , 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.

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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 August 2019, Atlanticus Holdings Corporation issued a $ 17.4 million term note, which was repaid in August 2024.

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

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The facility was repaid in May 2024.

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 June 30, 2024) 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) $ 50.0 million borrowing limit (of which $ 50.0 million was drawn as of September 30, 2024 ) that is available to the extent of outstanding eligible principal receivables.

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

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The 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 was outstanding as of June 30, 2024) 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 (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).

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

In May 2022, we (through a wholly owned subsidiary) entered a (as subsequently amended) $ 325.0 million ABS agreement (of which $ 325.0 million was drawn as of June 30, 2024) secured by certain credit card receivables (expiring November 15, 2028).

In May 2022, we (through a wholly owned subsidiary) entered a (as subsequently amended) $ 325.0 million ABS agreement (of which $ 325.0 million was drawn as of September 30, 2024 ) secured by certain credit card receivables (expiring November 15, 2028).

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 was outstanding as of June 30, 2024) that can be drawn upon to the extent of outstanding eligible receivables.

In August 2022, we (through a wholly owned subsidiary) entered a (as subsequently amended) $ 158.3 million ABS agreement secured by certain credit card receivables (of which $ 0 was outstanding as of September 30, 2024 ) 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.

The facility matures on (as subsequently amended) August 5, 2026.

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.

The terms of the ABS allow for a 3 -year revolving structure with an 18 -month amortization period.

The weighted average interest rate on the securities is fixed at 7.32 %.

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 $ 0 was drawn as of June 30, 2024).

In May 2023, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 25.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 12.5 million was drawn as of September 30, 2024 ).

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the Term SOFR plus 3.75 %.

The facility matures on May 26, 2026 and is subject to certain covenants and restrictions of which the failure could result in required early repayment of all or a portion of the outstanding balance.

The facility matures on (as subsequently amended) August 30, 2027 and is subject to certain covenants and restrictions of which the failure could result in required early repayment of all or a portion of the outstanding balance.

The note is guaranteed by Atlanticus.

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.

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 were 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.

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In November 2023, we (through a wholly owned subsidiary) sold $ 150.0 million of ABS secured by certain private label credit receivables (expiring May 17, 2027).

The terms of the ABS allow for a 2 -year revolving structure with an 18 -month amortization period.

1 unchanged sentence

In May 2024, we (through a wholly owned subsidiary) sold $ 250.0 million of ABS secured by certain private label credit receivables (expiring November 15, 2028).

The terms of the ABS allow for a 3 -year revolving structure with an 18 -month amortization period.

The weighted average interest rate on the securities is fixed at 8.86 %.

As of June 30, 2024, we were in compliance with the covenants underlying our various notes payable and credit facilities.

In July 2024, we (through a wholly owned subsidiary) sold $ 150.0 million of ABS secured by certain private label credit receivables (expiring March 29, 2025) of which $ 100.0 million was drawn as of September 30, 2024.

The proceeds were invested in the acquisition of 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 Term SOFR plus 2.15 %.

In conjunction with this financing, we (through as wholly owned subsidiary) also entered a revolving credit facility with a $ 32.8 million revolving limit (expiring March 29, 2025) of which $ 21.0 million was drawn as of September 30, 2024.

This facility is secured by related restricted cash and accrues interest at an annual rate equal to the Term SOFR plus 2.5 %.

As of September 30, 2024 , we were in compliance with the covenants underlying our various notes payable and credit facilities.

Senior Notes, net

In November 2021, we issued $ 150.0 million aggregate principal amount of 6.125% Senior Notes due 2026 (the "2026 Senior Notes").

In November 2021, we issued $ 150.0 million aggregate principal amount of 2026 Senior Notes.

The 2026 Senior Notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any.

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We are amortizing fees associated with the issuance of the 2026 Senior Notes into interest expense over the expected life of such notes.

Amortization of these fees for the three and six months ended June 30, 2024 and 2023 totaled $ 0.3 million.

Amortization of these fees for the three and nine months ended September 30, 2024 and 2023 totaled $ 0.4 million.

$ 1.1 million, $ 0.4 million and $ 1.1 million, respectively.

We repurchased $ 0 , $ 0.4 million, $ 0.8 million and $ 0.8 million of the outstanding principal amount of these 2026 Senior Notes in the three and six months ended June 30, 2024 and 2023, respectively.

In January and February 2024, we issued an aggregate of $ 57.2 million aggregate principal amount of 9.25% Senior Notes due 2029 (the "2029 Senior Notes").

We repurchased $ 0 , $ 0.4 million, $ 0.3 million and $ 1.1 million of the outstanding principal amount of these 2026 Senior Notes in the three and nine months ended September 30, 2024 and 2023, respectively.

In January and February 2024, we issued an aggregate of $ 57.2 million aggregate principal amount of 2029 Senior Notes.

In July 2024, we issued an additional $ 60.0 million aggregate principal amount of the 2029 Senior Notes.

The 2029 Senior Notes are general unsecured obligations of the Company and rank equally in right of payment with all of the Company’s existing and future senior unsecured and unsubordinated indebtedness, and will rank senior in right of payment to the Company’s future subordinated indebtedness, if any.

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We are amortizing fees associated with the issuance of the 2029 Senior Notes into interest expense over the expected life of such notes.

Amortization of these fees for the three and six months ended June 30, 2024 totaled $ 0.1 million and $ 0.2 million, respectively.

The 2026 Senior Notes and 2029 Senior Notes are collectively included on our condensed consolidated balance sheet as "Senior Notes, net".

Amortization of these fees for the three and nine months ended September 30, 2024 totaled $ 0.3 million and $ 0.5 million, respectively.

The 2026 Senior Notes and 2029 Senior Notes are collectively included on our condensed consolidated balance sheet as "Senior Notes, net." See Note 4 "Shareholders' Equity and Preferred Stock" for more information.

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 $ 3.4 billion at June 30, 2024.

Unfunded commitments under these products aggregated $ 3.4 billion at September 30, 2024 .

We have never experienced a situation in which all borrowers have exercised their entire available lines of credit at any given point in time, nor do we anticipate this will ever occur in the future.

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These loans are secured by the underlying auto inventory and, in certain cases where we have other lending products outstanding with the dealer, are secured by the collateral under those lending arrangements as well, including any outstanding dealer reserves.

As of June 30, 2024, CAR had unfunded outstanding floor-plan financing commitments totaling $ 11.4 million.

As of September 30, 2024 , 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 and is not unconditional.

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 $ 23.2 million remains pledged as of June 30, 2024 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 $ 19.6 million remains pledged as of September 30, 2024 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, 2024, we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote.

As of September 30, 2024 , 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 when we assess the likelihood of an estimable payment as probable.

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Eligible events typically include loss of life, job loss, disability, or hospitalization.

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 80.7 million as of June 30, 2024.

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 86.5 million as of September 30, 2024 .

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

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We acquire all of our fair value receivables under agreements with two third -party originating institutions.

Our five largest retail partners accounted for over 70 % of our outstanding private label credit receivables as of June 30, 2024.

Our general purpose credit card and private label credit receivables base is diverse and spread across individual consumers in the U.S.

As of June 30, 2024, only one state (Texas) had receivables concentration in excess of 10% of our total pool of receivables.

Our top five retail partnerships accounted for over 75 % of our private label receivables outstanding as of September 30, 2024 .

The volume of receivables purchased each period varies based on a number of factors, including seasonal consumer purchase patterns and growth (or contraction) within merchant retail locations.

Further impacting receivable purchase amounts in a period are consumer application volumes that retail partners may direct to our bank partners versus competitors who offer similar financing products to those retail merchant partners.

During the three and nine months ended September 30, 2024 and 2023, we had purchases from our top five retail partners of the following (in millions):

Purchases for the Three Months Ended September 30,

Purchases for the Nine Months Ended September 30,

Largest Retail Partners

2024 2023 2024 2023

$ 279.0 $ 93.2 $ 493.6 $ 236.6

$ 43.2 $ 41.6 $ 128.1 $ 119.6

$ 20.7 $ 28.8 $ 64.2 $ 93.0

$ 14.9 $ 13.1 $ 59.7 $ 42.1

$ 11.5 $ 11.6 $ 31.2 $ 37.0

Our general purpose credit card and private label credit receivables base is spread across individual consumers in the U.S.

As of September 30, 2024 , only one state (Texas) had receivables concentration in excess of 10% of our total pool of receivables.

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

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For the Three Months Ended

For the Six Months Ended

For the Nine Months Ended

September 30,

Net income attributable to controlling interests

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$ 1.27 $ 1.03 $ 3.35 $ 3.14

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 390,096 and 341,837 for the three and six months ended June 30, 2024 , respectively, compared to 246,994 and 217,851 for the three and six months ended June 30, 2023, respectively.

As their effects were anti-dilutive, we excluded stock options to purchase 0.1 million shares from our net income attributable to controlling interests per share of common stock calculations for both the three and six months ended June 30, 2024, respectively.

We excluded stock options to purchase 0.1 million shares from our net income attributable to controlling interests per share of common stock calculations for both the three and six months ended June 30, 2023, respectively.

For the three and six months ended June 30, 2024 and 2023, 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.

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 384,193 and 356,059 for the three and nine months ended September 30, 2024 , respectively, compared to 241,302 and 225,754 for the three and nine months ended September 30, 2023, respectively.

We excluded stock options to purchase 0.1 million shares from our net income attributable to controlling interests per share of common stock calculations for both the three and nine months ended September 30, 2023, respectively.

For the three and nine months ended September 30, 2024 and 2023, we included 4.0 million shares of common stock for each period in our outstanding diluted share counts associated with our Series A Preferred Stock.

See Note 5, "Redeemable Preferred Stock," for a further discussion of these convertible securities.

Stock-Based Compensation

We currently have two stock-based compensation plans, the Second Amended and Restated Employee Stock Purchase Plan (the "ESPP") and the Fourth Amended and Restated 2014 Equity Incentive Plan (the "Fourth Amended 2014 Plan").

We currently have two stock-based compensation plans, the Third Amended and Restated Employee Stock Purchase Plan (the "ESPP") and the Fourth Amended and Restated 2014 Equity Incentive Plan (the "Fourth Amended 2014 Plan").

Our ESPP provides that we may issue up to 500,000 shares of our common stock under the plan.

Our Fourth Amended 2014 Plan provides that we may grant up to 5,750,000 options on or shares of our common stock (and other types of equity awards) to members of our Board of Directors, employees, consultants and advisors.

Our Fourth Amended 2014 Plan provides that we may grant equity awards representing up to 5,750,000 shares of our common stock to members of our Board of Directors, employees, consultants and advisors.

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

As of June 30, 2024, 44,652 shares remained available for issuance under the ESPP and 1,945,463 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, 2024 and 2023.

As of September 30, 2024 , 43,361 shares remained available for issuance under the ESPP and 1,947,592 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, 2024 and 2023.

Restricted Stock and Restricted Stock Units

During the three and six months ended June 30, 2024 and 2023, we granted 3,007 shares, 209,636 shares, ( 220 ) shares and 146,007 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 0.1 million, $ 6.5 million, $ 0 and $ 3.6 million, respectively.

We incurred expenses of $ 1.0 million, $ 1.9 million, $ 0.8 million and $ 1.5 million during the three and six months ended June 30, 2024 and 2023, respectively, related to restricted stock awards.

During the three months ended September 30, 2024 and 2023, we had forfeitures (net of grants) of 583 shares and 840 shares of restricted stock and restricted stock units, respectively, with aggregate grant date fair values $ 0 for both periods.

For the nine months ended September 30, 2024 and 2023, we had grants (net of forfeitures) of 209,053 shares and 145,167 shares of restricted stock and restricted stock units, respectively, with aggregate grant date fair values of $ 6.5 million and $ 3.6 million, respectively.

We incurred expenses of $ 1.0 million, $ 2.8 million, $ 0.8 million and $ 2.3 million during the three and nine months ended September 30, 2024 and 2023, respectively, related to restricted stock awards.

When we grant restricted stock and restricted stock units, we defer the grant date value of the restricted stock and restricted stock unit and amortize that value (net of the value of anticipated forfeitures) as compensation expense with an offsetting entry to the paid-in capital component of our condensed consolidated shareholders’ equity.

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

As of June 30, 2024, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 8.5 million with a weighted-average remaining amortization period of 3.5 years.

As of September 30, 2024 , our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 7.5 million with a weighted-average remaining amortization period of 3.5 years.

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

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( 4,868 ) $ 32.70

Outstanding at June 30, 2024

Outstanding at September 30, 2024

384,091 $ 31.60

Stock Options

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

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

The option period may not exceed 10 years from the date of grant.

We had expense of $ 0.1 million, $ 0.1 million, $ 0.2 million and $ 0.4 million related to stock option-related compensation costs during the three and six months ended June 30, 2024 and 2023, respectively.

We had expense of $ 0 million, $ 0.1 million, $ 0.1 million and $ 0.6 million related to stock option-related compensation costs during the three and nine months ended September 30, 2024 and 2023, respectively.

When applicable, we recognize stock option-related compensation expense for any awards with graded vesting on a straight-line basis over the vesting period for the entire award.

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( 2,000 ) $ 15.30

Outstanding at June 30, 2024

Outstanding at September 30, 2024

216,731 $ 28.93 1.4 $ 1,851,836

Exercisable at June 30, 2024

Exercisable at September 30, 2024

216,731 $ 28.93 1.4 $ 1,851,836

No options were issued during the three and six months ended June 30, 2024 and 2023.

We had $ 0.0 million and $ 0.1 million of unamortized deferred compensation costs associated with non-vested stock options as of June 30, 2024 and December 31, 2023, respectively, with a weighted average remaining amortization period of 0 years as of June 30, 2024.

No options were issued during the three and nine months ended September 30, 2024 and 2023.

We had $ 0 million and $ 0.1 million of unamortized deferred compensation costs associated with non-vested stock options as of September 30, 2024 and December 31, 2023, respectively, with a weighted average remaining amortization period of 0 years as of September 30, 2024 .

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

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