What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2025-03-13 compared with 2024-03-04 · 509 added, 361 removed, 1154 unchanged (43% of the section changed)

2 unchanged sentences

As of December 31, 2024, an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Act) was carried out on behalf of Atlanticus Holdings Corporation and our subsidiaries by our management and with the participation of our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer).

Based upon the evaluation, our principal executive officer and principal financial officer concluded that these disclosure controls and procedures were effective as of December 31, 2023.

Our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were not effective as of December 31, 2024 because of the material weakness in our internal control over financial reporting identified below.

Notwithstanding this material weakness, the Company has concluded that no material misstatements exist in the consolidated financial statements as filed in the Form 10-K, and such financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

Accordingly, there are no changes to the Company’s previously reported consolidated financial statements.

Management ’ s Report on Internal Control over Financial Reporting

1 unchanged sentence

Our management conducted an evaluation of the effectiveness of internal control over financial reporting as of December 31, 2024, based on the framework in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control-Integrated Framework (2013 framework) .

Based on our evaluation under the COSO 2013 framework, management has concluded that internal control over financial reporting was effective as of December 31, 2023.

The effectiveness of the Company’s internal control over financial reporting as of December 31, 2023, has been audited by BDO USA, P.C., an independent registered public accounting firm, as stated in their accompanying attestation report, which expresses an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting as of December 31, 2023.

BDO's report is on page F-1 of the attached financial statements.

Remediation of Previously Reported Material Weakness

As previously reported, the Company’s management determined that they did not maintain effective controls and retain sufficient documentary evidence to support the precision of review over the development of cash flow forecasts used in the calculation of the fair value estimate of loans at fair value.

This deficiency represented a material weakness in the Company’s internal control over financial reporting.

In Management’s Report on Internal Control over Financial Reporting included in this Annual Report on Form 10-K, as a result of the material weakness described below, management has concluded that the Company did not maintain effective internal control over financial reporting as of December 31, 2024, based on criteria in the COSO 2013 framework.

As of December 31, 2024, the Company’s management determined a material weakness in its internal control over financial reporting exists related to management’s failure to adequately design and implement internal controls to determine whether or not each of the inputs into the Company’s valuation model for its Loans at fair value were consistent with U.S.

The Company’s independent registered public accounting firm, Deloitte & Touche LLP, has issued an audit report which expresses an adverse opinion on the Company’s internal control over financial reporting as of December 31, 2024, which is included below.

Remediation Plan

The Company’s management is committed to maintaining a strong internal control environment.

In response to the material weakness identified above, management, with the oversight of the Audit Committee of the Board of Directors, evaluated the material weakness described above and designed a remediation plan to enhance the Company’s internal control environment.

To remediate the material weakness, the Company’s management enhanced the design of certain review controls to include sufficient precision of management’s review as well as retain incremental evidence that supports the effectiveness of controls related to the development and review of cash flow forecasts used in the calculation of the fair value estimate of loans at fair value.

These enhanced controls were implemented as of June 30, 2023, and have been tested and determined to be operating effectively for a sufficient period of time.

Accordingly, the Company concluded that the material weakness identified above has been effectively remediated as of December 31, 2023.

To remediate the material weakness, the Company’s management will implement a new control designed to evaluate the appropriateness in accordance with U.S.

GAAP of all inputs used in the Company’s valuation model for its Loans at fair value.

We will assess the ongoing operating effectiveness of the newly designed control in future periods.

The material weakness cannot be considered remediated until the applicable control has operated for a sufficient period of time and we have concluded, through testing, that this control is operating effectively.

Changes in Internal Control Over Financial Reporting

During the quarter ended December 31, 2023, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Act) occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

During the quarter ended December 31, 2024, except for the material weakness identified above, no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Act) occurred that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Controls

8 unchanged sentences

Due to inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Atlanticus Holdings Corporation

Opinion on Internal Control over Financial Reporting

We have audited the internal control over financial reporting of Atlanticus Holdings Corporation and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 13, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management's assessment:

Management failed to adequately design and implement internal controls to determine whether each of the inputs into the Company’s valuation model for its Loans at fair value were consistent with generally accepted accounting principles.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2024, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte & Touche LLP

March 13, 2025

OTHER INFORMATION

17 unchanged sentences

INDEX TO FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm on Internal Control Over Financial Reporting ( BDO USA, P.C .;

Report of Independent Registered Public Accounting Firm ( Deloitte & Touche LLP ;

Atlanta, GA ;

20 unchanged sentences

Description of Atlanticus Holdings Corporation's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934

Filed herewith

March 4, 2024, Form 10-K, exhibit 4.1

Form of common stock certificate

18 unchanged sentences

January 30, 2024, Form 8-K, exhibit 4.1

Form of 9.25% Senior Notes due 2029 (included in Exhibit 4.3(e))

Form of 9.25% Senior Notes due 2029 – Initial Offering (included in Exhibit 4.3(e))

January 30, 2024, Form 8-K, exhibit 4.2

Fourth Supplemental Indenture, dated as of July 26, 2024, by and between Atlanticus Holdings Corporation and U.S.

Bank Trust Company, National Association, as trustee

July 30, 2024, Form 8-K, exhibit 4.1

Form of 9.25% Senior Notes due 2029 – Add-On Offering (included in Exhibit 4.3(g))

July 30, 2024, Form 8-K, exhibit 4.2

Fifth Supplemental Indenture, dated as of August 26, 2024, by and between Atlanticus Holdings Corporation and U.S.

Bank Trust Company, National Association, as trustee

August 26, 2024, Form 8-K, exhibit 4.1

Form of 9.25% Senior Notes due 2029 – ATM Offering (included in Exhibit 4.3(i))

August 26, 2024, Form 8-K, exhibit 4.2

Stockholders Agreement dated as of April 28, 1999

26 unchanged sentences

Filed herewith

Description of Exhibit

Incorporated by Reference from Atlanticus’ SEC Filings

Unless Otherwise Indicated(1)

Assumption Agreement dated June 30, 2009 between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and Atlanticus Services Corporation (formerly CompuCredit Corporation)

3 unchanged sentences

May 15, 2017, Form 10-Q, exhibit 10.1

Description of Exhibit

Incorporated by Reference from Atlanticus’ SEC Filings

Unless Otherwise Indicated(1)

Purchase Agreement, dated February 8, 2017, among TSO-Fortiva Notes Holdco LP, TSO-Fortiva Certificate Holdco LP, Perimeter Funding Corporation, Atlanticus Services Corporation and Perimeter Master Note Business Trust

22 unchanged sentences

Series 2018-One Indenture Supplement for Fortiva Retail Credit Master Note Business Trust, dated November 9, 2018

Filed herewith

March 4, 2024, Form 10-K, exhibit 10.12(a)

Amended and Restated Trust Agreement, dated November 9, 2018, between FRC Funding Corporation and Wilmington Trust, National Association

16 unchanged sentences

March 30, 2020, Form 10-K, exhibit 10.15

At Market Issuance Sales Agreement, dated August 10, 2022, between Atlanticus Holdings Corporation and B.

Amended and Restated At Market Issuance Sales Agreement, dated August 26, 2024, between Atlanticus Holdings Corporation and B.

Riley Securities, Inc.

2 unchanged sentences

January 2, 2024, Form 8-K, exhibit 1.1

Letter of BDO USA, P.C.

to the SEC dated April 4, 2024

April 5, 2024, Form 8-K, exhibit 16.1

Atlanticus Holdings Corporation Policy Statement Regarding Securities Trading

Filed herewith

March 4, 2024, Form 10-K, exhibit 19.1

Subsidiaries of the Registrant

Filed herewith

Consent of Deloitte & Touche LLP

Filed herewith

Consent of BDO USA, P.C.

7 unchanged sentences

Atlanticus Holdings Corporation Clawback Policy

Filed Herewith

March 4, 2024, Form 10-K, exhibit 97.1

Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

38 unchanged sentences

Report of Independent Registered Public Accounting Firm

Shareholders and Board of Directors

Atlanticus Holdings Corporation

Atlanta, Georgia

Opinion on Internal Control over Financial Reporting

We have audited Atlanticus Holdings Corporation’s (the "Company’s") internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the "COSO criteria").

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria .

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated statements of income, shareholders’ equity and temporary equity and cash flows for each of the two years in the period ended December 31, 2023, and the related notes and our report dated March 4, 2024, expressed an unqualified opinion thereon.

To the shareholders and the Board of Directors of Atlanticus Holdings Corporation

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheet of Atlanticus Holdings Corporation and subsidiaries (the "Company") as of December 31, 2024, the related consolidated statements of income, cash flows, and shareholders' equity and temporary equity, for the year ended December 31, 2024, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024, and the results of its operations and its cash flows for the year ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2025, expressed an adverse opinion on the Company's internal control over financial reporting because of a material weakness.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Item 9A, Management’s Report on Internal Control over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with U.S.

These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company's financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit of internal control over financial reporting in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control over Financial Reporting

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

/s/ BDO USA, P.C.

Atlanta, Georgia

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which they relate.

Loans at Fair Value – Refer to Notes 2 and 6 to the Consolidated Financial Statements

Critical Audit Matter Description

The Company has elected the fair value option for Loans at fair value within its Credit as a Service (CaaS) segment, which are valued at $2,630.3 million at December 31, 2024.

The estimation of Loans at fair value uses internally developed discounted cash flow models that use inputs that are unobservable and are inherently judgmental and reflect management’s best estimates of the assumptions a market participant would use to calculate fair value.

Significant unobservable inputs used in the valuation methodology include estimates of future charge-off rates and recovery rates (collectively, “credit losses”), payment rates, yields earned on credit card receivables (“fees assumption”), and servicing cost, as well as the discount rate.

Given management uses complex internally developed models and unobservable inputs to estimate Loans at fair value, performing audit procedures to evaluate management’s estimate of the Loans at fair value within the CaaS segment required a high degree of auditor judgment and subjectivity and increased extent of effort, including the need to involve our internal fair value specialists.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the Loans at Fair value within the CaaS segment included the following, among others:

With the assistance of our fair value specialists, we evaluated the reasonableness of the discount rate, including developing a range of independent estimates, and comparing those to the discount rate selected by management.

For the significant unobservable inputs used in the valuation model including estimates of future charge-off rates and recovery rates (collectively, “credit losses”), payment rates, yields earned on credit card receivables (“fees assumption”), and servicing cost, we performed a quarterly retrospective review of the prior period forecast to actual value.

With the assistance of our fair value specialists, we developed a range of independent estimates of loan fair value and compared the Company’s recorded fair value of loans to this range.

/s/ Deloitte & Touche LLP

March 13, 2025

We have served as the Company's auditor since 2024.

Report of Independent Registered Public Accounting Firm

3 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Atlanticus Holdings Corporation (the "Company") as of December 31, 2023 and 2022, the related consolidated statements of income, shareholders’ equity and temporary equity and cash flows for each of the years then ended, and the related notes (collectively referred to as the "consolidated financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years then ended , in conformity with accounting principles generally accepted in the United States of America.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) ("PCAOB"), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and our report dated March 4, 2024 expressed an unqualified opinion thereon.

We have audited the accompanying consolidated balance sheet of Atlanticus Holdings Corporation (the “Company”) as of December 31, 2023, the related consolidated statements of income, shareholders’ equity and temporary equity, and cash flows for the year then ended, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the year then ended , in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing separate opinions on the critical audit matter or on the accounts or disclosures to which it relates.

Discount rate utilized in estimating the fair value of Loans at Fair Value

As described in Note 6 to the Company’s consolidated financial statements, the Company has outstanding loans at fair value of $2,174 million at December 31, 2023.

As described in Note 2 to the consolidated financial statements, all loans associated with the Company’s private label credit and general-purpose credit cards are included within loans at fair value.

The Company estimates the fair value of the loans using a discounted cash flow model, which considers various unobservable inputs such as credit losses, purchase rates, payment rates, servicing costs, contractual servicing fees, costs of funds, discount rates and yields earned on credit card receivables.

The Company re-evaluates the fair value of loans at the close of each measurement period.

The impact of changes in the fair value of loans at fair value is reflected within the period incurred and can have a material impact on the financial results of the Company.

We identified the discount rates as the significant assumptions used by the Company to estimate the fair value of outstanding loans at fair value to be a critical audit matter.

The discount rates used to discount projected cash flows that third-party market participants would use are based upon unobservable inputs and are considered highly subjective as there is no active market for these loans.

Auditing the discount rates involved especially challenging auditor judgment due to the nature of audit evidence and nature and extent of audit effort required including the involvement of individuals with specialized skill and knowledge.

The primary procedures we performed to address this critical audit matter included:

Testing the relevance and reliability of data related to the discount rates by agreeing data to internal and external third-party sources.

Involving professionals with specialized skills and knowledge in valuation to assist in the evaluation of the reasonableness of discount rates used by management to determine the fair value by comparing to market-based discount rates to determine if such assumptions were relevant, reliable, and reasonable for the purpose used, including consideration of evidence (e.g., external economic data, peer data, internal company data) that may be contradictory to the conclusion reached by management.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

/s/ BDO USA, P.C.

We have served as the Company’s auditor since 2002.

We served as the Company's auditor from 2002 to 2024.

Atlanta, Georgia

7 unchanged sentences

124,220 44,315

Loans, interest and fees receivable:

Loans at fair value (including $ 2,542.9 million and $ 2,128.6 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively)

2,630,274 2,173,759

Loans at amortized cost

118,045 105,267

Allowances for credit losses

( 1,759 ) ( 1,643 )

Deferred revenue

( 17,861 ) ( 16,190 )

Net loans, interest and fees receivable

Loans at amortized cost, net (including $ 4.9 million and $ 1.8 million of allowance for credit losses at December 31, 2024 and December 31, 2023, respectively;

and $ 19.8 million and $ 17.9 million of deferred revenue at December 31, 2024 and December 31, 2023, respectively)

84,332 98,425

20 unchanged sentences

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

Series A preferred stock, 400,000 shares issued and outstanding at December 31, 2023 (liquidation preference - $ 40.0 million);

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

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

40,000 40,000

3 unchanged sentences

Series B preferred stock, no par value, 3,301,179 shares issued and outstanding at December 31, 2024 (liquidation preference - $ 82.5 million);

3,204,640 shares issued and outstanding at December 31, 2022 (1)

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:

4 unchanged sentences

394,628 307,260

Total shareholders’ equity

Total shareholders’ equity attributable to Atlanticus Holdings Corporation

492,906 394,675

10 unchanged sentences

For the Year Ended

Revenue and other income:

Consumer loans, including past due fees

4 unchanged sentences

60,370 37,348

Total operating revenue, net

Total operating revenue and other income

1,309,955 1,155,246

Other non-operating revenue

Total revenue

Other non-operating income

Total revenue and other income

1,311,444 1,155,876

14 unchanged sentences

( 2,715 ) ( 2,560 )

( 35,411 ) ( 26,740 )

Total operating expenses

32 unchanged sentences

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

Cumulative effects from adoption of the CECL standard

— — — — — 8,582 — 8,582 — —

Accretion of discount associated with issuance of subsidiary equity

2 unchanged sentences

— — — — 16 — — 16 — —

Preferred stock and preferred unit dividends

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

— — — — ( 2,400 ) — — ( 2,400 ) — —

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

— — — — ( 6,211 ) — — ( 6,211 ) — —

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

— — — — ( 16,303 ) — — ( 16,303 ) — —

Stock option exercises and proceeds related thereto

18 unchanged sentences

— — — — — ( 250 ) — ( 250 ) — 250

Discount associated with repurchase of preferred stock

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

— — — — — ( 2,400 ) — ( 2,400 ) — —

Preferred stock and preferred unit dividends

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

— — — — — ( 6,274 ) — ( 6,274 ) — —

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

— — — — — ( 15,004 ) — ( 15,004 ) — —

Stock option exercises and proceeds related thereto

2 unchanged sentences

— — 205,301 — — — — — — —

Issuance of common stock

— — 125,000 — 7,074 — — 7,074 — —

Issuance of series B preferred stock, net

44,618 — — — 1,082 — — 1,082 — —

Distributions to owners of noncontrolling interests

— — — — — — ( 148 ) ( 148 ) — —

Contributions by owners of noncontrolling interests

2 unchanged sentences

— — — — 3,897 — — 3,897 — —

Redemption and retirement of preferred shares

Redemption and retirement of preferred shares and preferred units

— — — — — — — — — ( 50,500 )

17 unchanged sentences

30,493 37,825

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

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

( 25,344 ) ( 23,375 )

Income from merchant fees associated with Loans at fair value

( 144,344 ) ( 123,505 )

Changes in fair value of loans

733,471 689,577

Change in bank partner fees carried at fair value

Amortization of debt issuance costs

Stock-based compensation costs

Lease liability payments

( 1,871 ) ( 4,053 )

Changes in assets and liabilities:

Decrease in lease liability

( 3,014 ) ( 1,871 )

Increase in uncollected fees on earning assets

( 269,914 ) ( 247,353 )

Decrease in income tax liability

Increase (decrease) in income tax liability

( 2,251 ) ( 12,688 )

Increase in accounts payable and accrued expenses

(Decrease) increase in accounts payable and accrued expenses

( 1,061 ) 3,182

14 unchanged sentences

Noncontrolling interests contributions

Noncontrolling interests distributions

Proceeds from issuance of common stock

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

2 unchanged sentences

Proceeds from exercise of stock options

Purchase and retirement of outstanding stock

Purchase and retirement of outstanding stock and preferred units

( 52,674 ) ( 17,673 )

Proceeds from issuance of Senior notes, net of issuance costs

Proceeds from borrowings

4 unchanged sentences

393,609 163,345

Effect of exchange rate changes on cash

Net decrease in cash and cash equivalents and restricted cash

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

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

115,983 ( 49,539 )

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash equivalents at beginning of period

383,653 433,192

Cash and cash equivalents and restricted cash at end of period

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

$ 499,636 $ 383,653

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

Unrestricted cash and cash equivalents

$ 375,416 $ 339,338

Restricted cash and cash equivalents

124,220 44,315

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

$ 499,636 $ 383,653

Supplemental cash flow information

1 unchanged sentence

$ 145,669 $ 99,450

Net cash income tax payments

Cash paid for income taxes, net of refunds

$ 229 $ 1,467

Accretion of discount associated with issuance of subsidiary equity

Increase in accrued and unpaid preferred stock and preferred unit dividends

(Decrease) increase in accrued and unpaid preferred stock and preferred unit dividends

$ ( 2,063 ) $ 4

See accompanying notes.

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

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

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

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

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

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

Within our Credit as a Service ("CaaS") segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $39 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.

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.

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

third parties.

We are principally engaged as a program manager, providing a technology platform and corresponding services to lenders in the U.S.

to assist those lenders with offering products to consumers.

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.

We acquire these receivables for the principal amount of the loan.

For certain of our receivables, we also receive merchant fees from our retail partners that are used to enhance our returns for those 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.

This compensation is based on both fixed and variable components dependent on the underlying performance of the acquired receivables (collectively, "Bank partner fees").

As we are obligated to compensate our bank partners for the duration of the underlying account, we recognize the fair value of these Bank partner fees within Card and loan servicing on the accompanying Consolidated Statements of Income on the date we acquire the underlying receivable.

We service the underlying receivables on behalf of our bank partners by providing and/or managing the ongoing customer service activities in the form of processing payments, providing regular notices of statement activity, and resolving customer complaints, billing disputes, and fraud claims.

Our bank partners continue to own the underlying consumer accounts that they originate and provide regulatory oversight in the form of reviewing, approving the development of consumer finance programs and approving all related marketing materials, establishing the policies and procedures that govern the operation of the consumer finance programs, reviewing and approving customer complaint correspondence, performing ongoing compliance monitoring and testing and audits of the consumer finance programs, and providing settlement services between us and our retail partners.

From time to time, we also purchase receivables portfolios from third parties other than our bank partners.

These products and services are reported through two reportable 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

$42 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.

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

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

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

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

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

We also report within our CaaS segment:

1 ) servicing income; and 2 ) gains or losses associated with investments previously made in consumer finance technology platforms.

1 ) servicing income; and 2 ) gains or losses associated with notes receivable and equity investments previously made in consumer technology platforms.

These include investments in companies engaged in mobile technologies, marketplace lending and other financial technologies.

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

As a result of the declaration of a national emergency and the associated government policy responses to COVID- 19 and corresponding inflation, certain consumers were previously offered the ability to defer their payment without penalty during the national emergency period.

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

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

In accordance with the COVID- 19 Guidance, certain consumers negatively impacted by COVID- 19 were provided short-term payment deferrals and fee waivers.

Receivables enrolled in these short-term payment deferrals continued to accrue interest and their delinquency status was not changed through the deferment period.

The Biden administration ended the COVID- 19 national and public health emergencies on May 11, 2023.

This action ended the flexibility provided under the COVID- 19 Guidance.

The long-term impact that the cessation of certain benefits provided under emergency relief programs will have on our consumers is uncertain although the remaining financial statement impact for those customers previously provided the aforementioned short-term payment deferrals and fee waivers is not material.

Significant Accounting Policies and Consolidated Financial Statement Components

The following is a summary of significant accounting policies we follow in preparing our consolidated financial statements, as well as a description of significant components of our consolidated financial statements.

Basis of Presentation and Use of Estimates

We prepare our consolidated financial statements in accordance with generally accepted accounting principles in the U.S.

The consolidated financial statements furnished have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the periods presented.

The preparation of financial statements in accordance with GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of our consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period.

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Certain estimates, such as credit losses, payment rates, servicing costs, discount rates and yields earned on credit card receivables, significantly affect the reported amount (and changes thereon) of our Loans at fair value on our consolidated balance sheets and consolidated statements of income.

We have eliminated all significant intercompany balances and transactions for financial reporting purposes.

In the fourth quarter of 2024, we revised our methodology to correct the cumulative impact of an error in the discounted cash flow analysis used in the calculation of our Loans at fair value.

This revision removed the impacts of cash flows associated with subsequent purchases associated with consumer receivables and cash flows on related merchant fees.

These changes in the calculation of our Loans at fair value did not result in a restatement of our consolidated financial statements in prior periods due to the immateriality of this error on prior period results.

Additionally, we revised the presentation of our 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.

Finally, we revised the presentation of our 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, ( 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 and 3 ) reclassify lease liability payments to Decrease in lease liability below changes in assets and liabilities.

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 consolidated statement of shareholders’ equity and temporary equity and consolidated statement of cash flows were revised for consistent presentation.

Certain disclosures have been revised to conform to current year 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.

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

those that are carried at fair value (Loans at fair value) and those that are carried at net amortized cost (Loans at amortized cost).

Consolidation

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All cash balances are maintained at well capitalized institutions.

Restricted Cash

Restricted Cash and Cash Equivalents

Restricted cash includes certain collections on loans, interest and fees receivable, the cash balances of which are required to be distributed to noteholders under our debt facilities.

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For our Loans at fair value (within our CaaS segment), interest and fees are discontinued when the receivable becomes contractually 90 or more days past due.

For our Loans at amortized cost (within our Auto Finance segment), we continue interest and fee billings until the time of chargeoff if there is adequate value associated with the underlying asset serving as collateral for the receivable.

For our Loans at amortized cost (within our Auto Finance segment), we continue interest and fee billings until the time of charge off if there is adequate value associated with the underlying asset serving as collateral for the receivable.

Once a loan discontinues accruing interest and fees it is ineligible to return to accrual status.

We charge off receivables underlying our Loans at fair value, against our Changes in fair value of loans, when they become contractually more than 180 days past due, or 120 days past due if they are enrolled in an installment loan product.

We charge off our Loans at amortized cost receivables, against our Allowances for credit losses, when they become contractually more than 180 days past due.

We charge off our Loans at amortized cost receivables, against our Allowance for credit losses, when they become contractually between 120 and 180 days past due.

For all of our receivables portfolios, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death.

However, in some cases of death, we do not charge off receivables if there is a surviving, contractually liable individual or estate large enough to pay the debt in full.

We adopted Accounting Standards Update ("ASU") 2016 - 13, Measurement of Credit Losses on Financial Instruments on January 1, 2022.

This ASU requires the use of an impairment model (the current expected credit loss ("CECL") model) that is based on expected rather than incurred losses.

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

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

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

Loans at fair value.

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

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

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

All receivables associated with our private label credit and general purpose credit cards are included within this category of receivables.

Under the fair value option, fees such as annual fees are taken into income when billed to the consumer or upon loan acquisition and any cost associated with the loan acquisition are expensed in the period incurred.

The Company estimates the fair value of the loans using a discounted cash flow model, which considers various unobservable inputs such as credit losses, payment rates, servicing costs, discount rates and yields earned on credit card receivables.

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Further details concerning our loans at fair value are presented within Note 6, "Fair Values of Assets and Liabilities."

Loans at amortized cost.

Our loans at amortized cost, currently consist of receivables associated with our Auto Finance segment’s operations.

Loans at amortized cost, net.

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

We purchased auto loans with outstanding principal of $ 209.6 million and $ 233.6 million for the years ended December 31, 2024 and 2023, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

We show an allowances for credit losses for our loans at amortized cost.

We show an allowance for credit losses for our loans at amortized cost.

A considerable amount of judgment is required to assess the ultimate amount of expected losses on loans at amortized cost, and we regularly evaluate and update our methodologies to determine the most appropriate allowance necessary.

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These loans are further divided into pools based on common characteristics such as contract or acquisition channel.

For each pool, we determine the necessary allowances for credit losses using reasonable and supportable forecasts that analyze some or all of the following attributes unique to each type of receivable pool:

historical loss rates on similar loans; current delinquency and roll-rate trends which may indicate consumer loss rates in excess or less than those which historical trends might suggest; vintage analyses based on the number of months an account has been in existence; the effects of changes in the economy on consumers such as inflation or other macroeconomic changes; changes in underwriting criteria; unfunded commitments (to the extent they are unconditional), and estimated recoveries.

For each pool, we determine the necessary allowance for credit losses using reasonable and supportable forecasts that analyze some or all of the following attributes unique to each type of receivable pool:

historical loss rates on similar loans; current delinquency and roll-rate trends which may indicate consumer loss rates in excess or less than those which historical trends might suggest; the effects of changes in the economy on consumers such as inflation or other macroeconomic changes; changes in underwriting criteria; unfunded commitments (to the extent they are unconditional), and estimated recoveries.

The aforementioned inputs are calculated using historical trends over the most recent five year period, and adjusted as needed for current trends and reasonable and supportable forecasts.

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As of December 31, 2024 and December 31, 2023, the weighted average remaining accretion period for the $ 19.8 million and $ 17.9 million of deferred revenue reflected in the consolidated balance sheets was 24 and 26 months, respectively.

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

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

For the Year Ended December 31,

Allowances for credit losses:

Notes Receivable Auto Finance Total Notes Receivable Auto Finance Total

Allowance for credit losses:

Balance at beginning of period

$ - $ ( 1.8 ) $ ( 1.8 ) $ - $ ( 1.6 ) $ ( 1.6 )

Provision for credit losses(1)

( 5.9 ) ( 10.5 ) ( 16.4 ) - ( 2.2 ) ( 2.2 )

- 9.9 9.9 - 3.9 3.9

- ( 2.5 ) ( 2.5 ) - ( 1.9 ) ( 1.9 )

Balance at end of period

For the Year Ended December 31, 2022

Other Unsecured Lending Products

Allowances for credit losses:

Balance at beginning of period

$ ( 5.9 ) $ ( 4.9 ) $ ( 10.8 ) $ - $ ( 1.8 ) $ ( 1.8 )

Cumulative effects from adoption of fair value under the CECL standard

1 ) For the year ended December 31, 2024, we recorded a provision for credit losses associated with our notes receivable from consumer technology platforms that are included in Prepaid expenses and other assets on our consolidated balance sheets.

Allowance for credit losses:

Balance of Notes Receivable at end of period individually evaluated for impairment

$ ( 5.9 ) $ —

Cumulative effects from adoption of the CECL standard

Balance of Auto Finance at end of period individually evaluated for impairment

$ ( 1.2 ) $ —

Provision for credit losses

Balance of Auto Finance at end of period collectively evaluated for impairment

$ ( 3.7 ) $ ( 1.8 )

Loans at amortized cost:

Loans at amortized cost

$ 109.0 $ 118.0

Balance at end of period

Loans at amortized cost individually evaluated for impairment

Loans at amortized cost collectively evaluated for impairment

$ 107.5 $ 118.0

Delinquent loans at amortized cost reflect the principal, fee and interest components of loans we did not collect on or prior to the contractual due date.

Amounts we believe we will not ultimately collect are included as a component in our overall allowances for credit losses.

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

All proceeds received, associated with charged-off accounts, are credited to the allowances for credit losses.

All proceeds received, associated with charged-off accounts, are credited to the allowance for credit losses.

Delinquent loans at amortized cost reflect the principal, fee and interest components of loans we did not collect on or prior to the contractual due date and are considered "past due".

Amounts we believe we will not ultimately collect are included as a component in our overall allowance for credit losses.

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 December 31, 2024 and December 31, 2023 is as follows:

As of December 31, 2023

30-59 days past due

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Total loans at amortized cost

Balance of loans greater than 90-days delinquent still accruing interest and fees

As of December 31, 2022

30-59 days past due

60-89 days past due

90 or more days past due

Delinquent loans at amortized cost

Current loans at amortized cost

Total loans at amortized cost

$ 109.0 $ 118.0

Balance of loans greater than 90-days delinquent still accruing interest and fees

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As the significant majority of the Company's receivables are held at fair value, the adoption of this ASU did not have a material impact on the Company's financial results and accompanying disclosures.

We review our Loans at amortized cost to determine if any modifications for borrowers experiencing financial difficulty were made that would qualify the receivable as a Financial Difficulty Modification ("FDM").

We review our Loans at amortized cost, net, associated with our Auto Finance segment’s operations to determine if any modifications for borrowers experiencing financial difficulty were made that would qualify the receivable as a Financial Difficulty Modification ("FDM").

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 years ended December 31, 2023, no Loans at amortized cost qualified as a FDM.

Prior to the adoption of ASU 2022 - 02, we reviewed our Loans at amortized cost to determine if any modifications for borrowers experiencing financial difficulty were made that would qualify the receivable as a troubled debt restructuring ("TDR").

For the years ended December 31, 2022, no Loans at amortized cost qualified as a TDR.

For the year ended December 31, 2024 and 2023, no Loans at amortized cost qualified as a FDM.

Property at Cost, Net of Depreciation

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We record our property at cost less accumulated depreciation or amortization.

We compute depreciation expense using the straight-line method over the estimated useful lives of our assets, which are approximately 5 years for furniture, fixtures and equipment, and 3 years for computers and software.

We compute depreciation expense using the straight-line method over the estimated useful lives of our assets, which are approximately 3 years for computers and software and 5 years for furniture, fixtures and equipment.

We amortize leasehold improvements over the shorter of their estimated useful lives or the terms of their respective underlying leases.

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Prepaid amounts are expensed as the underlying related services are performed.

Also included are ( 1 ) commissions paid associated with our various office leases which we amortize into expense over the lease terms , ( 2 ) ongoing deferred costs associated with service contracts and ( 3 ) investments in consumer finance technology platforms carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes.

Also included are ( 1 ) ongoing deferred costs associated with service contracts and ( 2 ) notes receivable and equity investments in consumer technology platforms carried at cost minus impairment, if any, plus or minus changes resulting from observable price changes.

Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses reflect both the billed and unbilled amounts owed at the end of a period for services rendered.

Accounts payable and accrued expenses reflect both the billed and unbilled amounts owed at the end of a period for services rendered as well as the fair value of our Bank partner fees associated with purchased receivables.

Revenue Recognition and Revenue from Contracts with Customers

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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.

These fees are recognized when assessed based upon the contractual terms of the loans.

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

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

Retail partner incentives such as fee reductions or rebates are recorded as a reduction to revenue over the period the incentives are earned.

Merchant fees paid or received associated with the acquisition of Fair Value Receivables are recognized when the merchant confirms the transaction with us, which fulfills the terms of the associated merchant agreement.

Our merchant agreements are defined at the transaction level and do not extend beyond the service already provided (i.e., each transaction is separate).

We independently negotiate each agreement with separate counterparties and consider ourselves the principal in each agreement with our bank partners and retail partners.

As such, we view the economic substance of our relationship with our retail partners as a service contract.

The merchant fee is derived based on the value of the goods purchased from our retail partners and considers factors such as the consumer’s credit risk and the terms of our bank partners' related product offering.

Our service comprises a single performance obligation to facilitate the transaction between the retail partner and its consumer and the merchant fee is recognized into income when the retail partner successfully confirms the transaction, as no remaining obligations exist under the contract.

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 primarily include fees associated with credit products such as annual fees, cash advance fees, and other fees.

These fees are assessed based upon the contractual terms of the loans.

We recognize these fees as income when they are billed 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 revenues associated with interchange revenues, servicing income and ancillary product offerings (primarily associated with a credit protection program offered by our issuing bank partner).

Other revenue includes revenue from contracts with customers, which includes interchange revenues, servicing income, service charges and other customer related fees.

We recognize these fees as income in the period earned.

Other non-operating revenue

Other non-operating revenue includes revenues associated with investments in equity method investees and other revenues not associated with our ongoing business operations.

Other non-operating income

Other non-operating income includes income (or loss) associated with investments in non-core businesses or other items not directly associated with our ongoing operations.

None of these companies are publicly-traded and there are no material pending liquidity events.

We will continue to carry the investments on our books at cost minus impairment, if any, plus or minus changes resulting from observable price changes.

Revenue from Contracts with Customers

The majority of our revenue is earned from financial instruments and is not included within the scope of Accounting Standards Codification ("ASC") 606, "Revenue from Contracts with Customers".

We have determined that revenue from contracts with customers would primarily consist of interchange revenues in our CaaS segment and servicing revenue and other customer-related fees in both our CaaS segment and our Auto Finance segment.

We have determined that revenue from contracts with customers would primarily consist of merchant fees and interchange revenues in our CaaS segment and servicing revenue and other customer-related fees in both our CaaS segment and our Auto Finance segment.

Interchange fees are earned when our customers’ cards are used over established card networks.

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Service charges and other customer related fees are earned from customers based on the occurrence of specific services and are paid by customers per the terms of their credit agreement.

None of these revenue streams result in an ongoing obligation beyond what has already been rendered.

Revenue from these contracts with customers comprises Other revenue on our consolidated statements of income.

Revenue from these contracts with customers is included in Consumer loans, including past due fees and Other revenue on our consolidated statements of income.

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

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30,881 57 30,938

Total Other revenue

59,561 809 60,370

Merchant fees (2)

144,344 — 144,344

Total revenue from contracts with customers

$ 203,905 $ 809 $ 204,714

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

For the Year Ended December 31, 2023

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11,731 75 11,806

Total Other revenue

36,524 824 37,348

Merchant fees (2)

123,505 — 123,505

Total revenue from contracts with customers

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

( 2 ) Merchant fees are included Consumer loans, including past due fees on our consolidated statements of income

Card and Loan Servicing Expenses

Card and loan servicing costs primarily include collections and customer service expenses.

Card and loan servicing costs primarily include collections and customer service expenses and our Bank partner fees.

Within this category of expenses are personnel, service bureau, cardholder correspondence and other direct costs associated with our collections and customer service efforts.

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We expense card and loan servicing costs as we incur them, with the exception of prepaid costs, which we expense over respective service periods.

As we are obligated to compensate our bank partners for the duration of the underlying account, we also included changes in the fair value of the Bank partner fees in this category associated with purchased receivables.

Marketing and Solicitation Expenses

We expense product solicitation costs, including printing, credit bureaus, list processing, telemarketing, postage, and internet marketing fees, as we incur these costs or expend resources.

We expense broker fees and product solicitation costs, including printing, credit bureaus, list processing, telemarketing, postage, and internet marketing fees, as we incur these costs or expend resources.

Recent Accounting Pronouncements

In June 2016, the FASB issued ASU 2016 - 13, Measurement of Credit Losses on Financial Instruments.

The guidance requires an assessment of credit losses based on expected rather than incurred losses (known as the current expected credit loss model).

This generally will result in the recognition of allowances for losses earlier than under current accounting guidance for trade and other receivables, held to maturity debt securities and other instruments.

The FASB has added several technical amendments (ASU 2018 - 19, 2019 - 04, 2019 - 10, 2019 - 11 and 2020 - 03 ) to clarify technical aspects of the guidance and applicability to specific financial instruments or transactions.

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

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

We adopted ASU 2016 - 13 beginning January 1, 2022, using the modified retrospective method of adoption.

We elected the fair value option for all receivables in our CaaS segment previously measured at amortized cost.

For all other receivables, we recorded an increase to our Allowances for credit losses using the current expected credit loss model.

As a result of our adoption, we increased our Loans at fair value (net of the related revaluation) by $ 315.0 million (with a corresponding decrease to Loans at amortized cost of $ 375.7 million), a decrease to our Allowances for credit losses of $ 55.6 million, a decrease to our Deferred revenue of $ 15.6 million, a decrease to Accounts payable and accrued expenses of $ 600 thousand, an increase to our deferred tax liability of $ 2.5 million, and an increase to our retained earnings of $ 8.6 million.

The aforementioned impacts associated with our adoption of ASU 2016 - 13 primarily relate to those assets within our CaaS segment with an immaterial impact to our Auto Finance segment receivables.

In March 2020, the FASB issued ASU No.

2020 - 04, Reference Rate Reform (Topic 848 ), Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The guidance provides an optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

In January 2021, the FASB issued ASU 2021 - 01, Reference Rate Reform (Topic 848 ):

Scope, which refines the scope of ASC 848 and clarifies some of its guidance as part of the FASB’s monitoring of global reference rate reform.

In December 2022, the FASB issued ASU 2022 - 06, "Reference Rate Reform (Topic 848 ):

Deferral of the Sunset Date of Topic 848", to extend the temporary accounting rules under Topic 848 from December 31, 2022 to December 31, 2024.

These ASUs are effective for all entities upon their respective issuance dates through December 31, 2024.

We have reviewed all outstanding financial agreements, noting none utilize London Interbank Offered Rate ("LIBOR") as the reference rate and, as such, determined there is no impact to our consolidated financial statements.

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024 - 03, "Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures" which requires disaggregated disclosure of income statement expenses for public business entities.

The ASU does not change the expense captions an entity presents on the face of the income statement.

Instead, it requires disaggregation of certain expense captions into specified categories in disclosures within the footnotes to the financial statements.

The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027 and early adoption of the amendments is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our financial statement disclosures.

In December 2023, the FASB issued ASU 2023 - 09, "Income Taxes (Topic 740 ):

Improvements to Income Tax Disclosures" ("Topic 740" ).

Topic 740 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income (loss) from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign).

Topic 740 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes.

The guidance is effective for annual periods beginning after December 15, 2024.

Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance.

This guidance should be applied on a prospective basis, but retrospective application is permitted.

We are currently evaluating the potential impact of adopting this new guidance on our financial statement disclosures.

In November 2023, the FASB issued ASU 2023 - 07, "Segment Reporting (Topic 280 ):

Improvements to Reportable Segments Disclosures" ("Topic 280" ).

Topic 280 enhances disclosures of significant segment expenses and other segment items regularly provided to the chief operating decision maker ("CODM"), extends certain annual disclosures to interim periods and permits more than one measure of segment profit (loss) to be reported under certain conditions.

The amendments are effective in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Retrospective adoption to all periods presented is required, and early adoption of the amendments is permitted.

The adoption of this guidance did not have a material impact on the Company's financial results and accompanying disclosures.

See Note 3, "Segment Reporting" to our consolidated financial statements for additional information.

On March 31, 2022, the FASB issued ASU 2022 - 02, "Financial Instruments - Credit Losses (Topic 326 ):

Troubled Debt Restructurings and Vintage Disclosures".

The ASU eliminates the accounting guidance for troubled debt restructurings by creditors while adding disclosures for certain loan restructurings by creditors when a borrower is experiencing financial difficulty.

Topic 326 eliminates the accounting guidance for troubled debt restructurings by creditors while adding disclosures for certain loan restructurings by creditors when a borrower is experiencing financial difficulty.

This guidance requires an entity to determine whether a modification results in a new loan or a continuation of an existing loan.

Additionally, the ASU requires disclosure of current period gross write-offs by year of origination for financing receivables.

The disclosures required by this ASU are required for receivables held at amortized cost and exclude those accounted for using fair value.

The Company adopted this ASU on January 1, 2023.

Additionally, Topic 326 requires disclosure of current period gross write-offs by year of origination for financing receivables.

The disclosures required by Topic 326 are required for receivables held at amortized cost and exclude those accounted for using fair value.

The Company adopted Topic 326 on January 1, 2023.

As the significant majority of the Company's receivables are held at fair value, the adoption of Topic 326 did not have a material impact on the Company's financial results and accompanying disclosures.

Segment Reporting

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CaaS and Auto Finance.

The Company defines operating segments to be components of the Company for which discrete financial information is evaluated regularly by the Company’s Chief Executive Officer (our chief operating decision maker, "CODM") to allocate resources and evaluate financial performance.

The CODM uses GAAP Income before income taxes to evaluate segment profitability as it provides the best insight into the segments overall economic performance.

Income before income taxes is used regularly in the forecasting and budgeting process when assessing performance on a quarterly basis and making decisions about capital and personnel allocations.

Our CaaS segment includes the operations of two operating segments aggregated into one reportable segment which includes our private label credit and general purpose credit cards, which, through our bank partners, provide financing solutions to consumers.

Our Auto Finance reportable segment purchases and/or service loans secured by automobiles and provides other financing options to independent automotive dealers and automotive finance companies.

These two reportable segments were determined by management based on the characteristics of the underlying products, management structures and expected returns.

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

We measure the profitability of our reportable segments based on their income after allocation of specific costs and corporate overhead; however, our segment results do not reflect any charges for internal capital allocations among our segments.

and all revenue is generated within the U.S.

We measure the profitability of our reportable segments based on their income after allocation of specific costs and corporate overhead (Income before income taxes); however, our segment results do not reflect any charges for internal capital allocations among our segments.

Company revenues, expenses and profitability are aggregated into these segments and presented to the CODM as detailed below.

Overhead costs are allocated based on headcounts and other applicable measures to better align costs with the associated revenues.

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

Income taxes are allocated to the individual segments whereby each operating segment determines income tax expense or benefit as if it filed a separate tax return.

Reportable segment information (in thousands) is as follows:

Year Ended December 31, 2024

Revenue and other income:

Consumer loans, including past due fees

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59,561 809 60,370

Total operating revenue, net

Total operating revenue and other income

1,268,763 41,192 1,309,955

Other non-operating revenue

Total revenue

Other non-operating income

334 1,155 1,489

Total revenue and other income

1,269,097 42,347 1,311,444

Interest expense

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372,616 28,816 401,432

Income before income taxes

Operating expenses:

Salaries and benefits

( 45,283 ) ( 4,860 ) ( 50,143 )

Income tax expense

Card and loan servicing

( 105,149 ) ( 13,251 ) ( 118,400 )

Marketing and solicitation

( 56,062 ) ( 124 ) ( 56,186 )

( 2,641 ) ( 74 ) ( 2,715 )

( 31,082 ) ( 4,329 ) ( 35,411 )

Total operating expenses

( 240,217 ) ( 22,638 ) ( 262,855 )

Income before income taxes

132,399 6,178 138,577

$ 3,181,428 $ 89,279 $ 3,270,707

Year Ended December 31, 2023

Revenue and other income:

Consumer loans, including past due fees

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36,524 824 37,348

Total operating revenue, net

Total operating revenue and other income

1,115,210 40,036 1,155,246

Other non-operating revenue

Total revenue

Other non-operating income

Total revenue and other income

1,115,632 40,244 1,155,876

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320,065 34,740 354,805

Income before income taxes

Operating expenses:

Salaries and benefits

( 38,894 ) ( 5,012 ) ( 43,906 )

Income tax expense

Card and loan servicing

( 87,772 ) ( 12,848 ) ( 100,620 )

Marketing and solicitation

( 52,301 ) ( 120 ) ( 52,421 )

( 2,508 ) ( 52 ) ( 2,560 )

( 22,068 ) ( 4,672 ) ( 26,740 )

Total operating expenses

( 203,543 ) ( 22,704 ) ( 226,247 )

Income before income taxes

116,522 12,036 128,558

$ 2,602,615 $ 103,830 $ 2,706,445

Shareholders’ Equity and Preferred Stock

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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 (the "Series B 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.

Our preferred stock consists of 7.625 % Series B Cumulative Perpetual Preferred Stock (the "Series B Preferred Stock"), liquidation preference of $ 25.00 per share (the "Series B Preferred Stock").

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 years ended December 31, 2024 and 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 , respectively.

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) senior notes, from time to time through a sales agent, in connection with the Company's "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").

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, including sales made directly on or through the NASDAQ Global Select Market.

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, (ii) 6.125 % Senior Notes due 2026 (the "2026 Senior Notes"), and (iii) 9.25 % Senior Notes due 2029 (the "2029 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 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 years ended December 31, 2024 and 2023, we sold 44,618 shares and 53,727 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $ 1.1 million and $ 1.1 million, respectively.

During the years ended December 31, 2024 and 2023, no 2026 Senior Notes were sold under the Company's Preferred Stock ATM Program.

During years ended December 31, 2024 and 2023, we sold $ 24.9 million and $ 0 , respectively, principal amount of our 2029 Senior Notes under our Preferred Stock ATM Program for net proceeds of $ 24.6 million and $ 0 , respectively.

During the year ended December 31, 2024, we sold 125,000 common shares under the Company’s Common Stock ATM Program for net proceeds of $ 7.1 million.

During the year ended December 31, 2023, no common shares were sold under the Company’s Common Stock ATM Program.

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

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

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

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 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 year ended December 31, 2024, we redeemed 50.5 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 consolidated balance sheets.

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

Changes in interest rates, credit spreads, discount rates, realized and projected credit losses and cash flow timing will lead to changes in the fair value of loans and therefore impact earnings.

Changes in yields, purchase and payment rates, servicing rates, realized and projected credit loss rates and discount rates will lead to changes in the fair value of loans and therefore impact earnings.

Further, our retail asset typically has seasonal growth during the summer months, impacting the fair value of assets.

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

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The fair value of the loans takes into consideration net charge-offs for the remaining life of the loans with no separate allowance for credit loss calculation;

Certain fee billings (such as annual or merchant fees) and expenses of loans are no longer deferred but recognized (when billed or incurred) in income or expense, respectively;

Certain fee billings (such as annual fees) and expenses of loans are no longer deferred but recognized (when billed or incurred) in income or expense, respectively;

The net present value of cash flows associated with future fee billings on existing receivables are included in fair value;

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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 December 31, 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:

The table below summarizes (in thousands) by fair value hierarchy the December 31, 2024 and December 31, 2023 fair values and carrying amounts of ( 1 ) our assets that are 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 December 31, 2024 (1)

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Carrying Amount of Assets

Loans at amortized cost for which it is practicable to estimate fair value and which are carried at net amortized cost

Loans at amortized cost, net for which it is practicable to estimate fair value and which are carried at net amortized cost

$ — $ — $ 95,871 $ 84,332

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Carrying Amount of Assets

Loans at amortized cost for which it is practicable to estimate fair value and which are carried at net amortized cost

Loans at amortized cost, net for which it is practicable to estimate fair value and which are carried at net amortized cost

$ — $ — $ 105,409 $ 98,425

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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 consolidated financial statements, gains and losses associated with fair value changes are detailed on our consolidated statements of income as a component of "Changes in fair value of loans".

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

Variations in the three month U.S.

Treasury bill rate over the measurement period are used to determine the portion of change in fair value considered to be attributable to changes in instrument-specific credit risk.

These variations are applied to the period end discount rate we use to determine fair value.

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.

For the years ended December 31, 2024 and 2023, we estimate the portion of fair value changes considered to be attributable to changes in instrument-specific credit risk to be $ 14.3 million and $( 10.5 ) million, respectively.

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 years ended December 31, 2023 and 2022:

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$ 2,173,759 $ 1,817,976

Cumulative effects from adoption of fair value under the CECL standard

Changes in fair value of loans at fair value, included in earnings

129,832 71,024

Changes in fair value due to principal charge-offs, net of recoveries

Changes in fair value due to current period principal charge-offs, net of recoveries (1)

( 611,319 ) ( 538,146 )

Changes in fair value due to finance and fee charge-offs

Changes in fair value due to current period finance and fee charge-offs (1)

( 251,984 ) ( 222,455 )

Total Changes in fair value of loans (2)

( 733,471 ) ( 689,577 )

2,580,684 2,427,095

Finance and fees, added to the account balance

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$ 2,630,274 $ 2,173,759

Aggregate unpaid gross balance of loans carried at fair value

$ 2,724,782 $ 2,411,255

Change in unrealized losses for the period included in earnings (or changes in net assets) for assets held at the end of the period

$ 129,832 $ 71,024

( 1 ) Reflects the current period charge-offs (net of recoveries) of loans at fair value.

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

( 3 ) As of December 31, 2024 and December 31, 2023, the aggregate unpaid principal balance included within loans at fair value was $ 2,473 million and $ 2,177 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.

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents quantitative information about the valuation techniques and the inputs used in the fair value measurement as of December 31, 2023 and December 31, 2022.

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

This market degradation is included in the below quantitative information:

Quantitative Information about Level 3 Fair Value Measurement

Fair Value Measurement

Fair Value at December 31, 2023 (in thousands)

Valuation Technique

Unobservable Input

Range (Weighted Average)(1)

Loans at fair value

$ 2,173,759 Discounted cash flows

Gross yield, net of finance charge charge-offs

28.3% to 38.4% (34.5%)

9.5% to 9.6% (9.5%)

Expected principal credit loss rate

30.8% to 35.6% (32.7%)

Servicing rate

3.0% to 3.4% (3.2%)

Discount rate

7.1% to 13.1% (10.0%)

Fair Value Measurement

Fair Value at December 31, 2022 (in thousands)

Valuation Technique

Unobservable Input

Range (Weighted Average)(1)

Loans at fair value

$ 1,817,976 Discounted cash flows

Gross yield, net of finance charge charge-offs

24.7% to 36.1% (31.6%)

5.0% to 11.4% (10.3%)

Expected principal credit loss rate

9.2% to 30.3% (30.2%)

Servicing rate

3.5% to 6.4% (3.6%)

Discount rate

5.6% to 15.0% (10.1%)

Weighted average rates are calculated using the quotient of the gross outstanding balance of receivables at period end for each pool of receivables and the entire pool of receivables multiplied by the applicable rate for each pool of 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 .

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.

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 consolidated balance sheets and consolidated statements of income.

The fair value of loans we acquire associated with our retail partners are typically lower than the aggregate unpaid gross balance of the underlying loans due to loan originations by our bank partners that contain below market interest rates or fees charged to consumers.

Under agreements with our bank partners, we are required to purchase these receivables for amounts that may be in excess of fair value.

In these instances, a fair value assessment that is less than the purchase price of the receivable can occur on the date we initially acquire the receivable, resulting in a loss on acquisition of the receivable.

This negative fair value assessment is included in Changes in fair value of loans on our Consolidated Statements of Income.

In cases where we acquire these below market receivables, we charge merchant fees to our retail partners to facilitate the transaction and ensure we earn adequate returns.

These merchant fees are based on the value of the goods purchased from our retail partners, the consumer’s credit risk and the terms of our bank partners' related product offering.

These fees are recognized upon completion of our services, which coincides with the funding of the loan by our bank partners, in Consumer loans, including past due fees on our Consolidated Statements of Income.

These merchant fees often offset the negative impact of the initial acquisition of the underlying receivable.

As such, 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

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Carrying Amount of Liabilities

Loan purchase commitment

$ — $ — $ 285 $ 285

Bank partner fees carried at fair value

$ — $ — $ 13,644 $ 13,644

Liabilities not carried at fair value

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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.

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

These recent financing arrangements provide positive evidence that the underlying data used in our assessment of fair value has not changed relative to the general market and therefore the fair value of our debt continues to be the same as the carrying value.

Bank partner fees carried at fair value in accordance with ASC 815, "Derivatives and Hedging", reflect the estimated fair value of future compensation we owe our bank partners associated with the regulatory oversight they provide on our acquired receivables, the underlying accounts of which they continue to own and service.

This compensation is based on both a fixed and variable component, dependent on the underlying performance of the acquired receivables.

We estimate the present value of this compensation using internally-developed estimates of payment rates and discount rates.

We recognize the fair value of these Bank partner fees within Card and loan servicing on the accompanying Consolidated Statements of Income on the date we acquire the underlying receivable.

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.

We have evaluated the fair value of our third party debt by analyzing repayment terms and credit spreads included in our recent financing arrangements to those of our existing facilities.

See Note 10, "Notes Payable," for further discussion on our other notes payable.

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Loans at Fair Value Pledged as Collateral under Structured Financings

Aggregate unpaid gross balance of loans at fair value

Aggregate unpaid gross balance of loans carried at fair value

$ — $ 2,724,782

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Loans at Fair Value Pledged as Collateral under Structured Financings

Aggregate unpaid gross balance of loans at fair value

Aggregate unpaid gross balance of loans carried at fair value

$ 507 $ 2,410,748

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As of December 31,

Furniture and fixtures

Data processing and telephone equipment

Furniture and fixtures

Leasehold improvements

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The results of operations and financial position of consolidated VIEs are included in our consolidated financial statements.

The Company consolidates all VIEs.

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

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$ 2,128.0 $ 1,795.9

Maximum exposure to loss due to involvement with VIEs

$ 2,099.0 $ 1,756.0

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

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Weighted average discount rate

As of December 31, 2023 , maturities of lease liabilities were as follows (in thousands):

As of December 31, 2024 , scheduled payments of lease liabilities were as follows (in thousands):

Gross Lease Payment

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Less imputed interest

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.

Operating lease liabilities

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.

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 commenced on December 23, 2024.

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.

The total remaining commitment under this lease is approximately $ 32.5 million and is included in the table above.

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.

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Revolving credit facilities at a weighted average interest rate equal to 7.0 % as of December 31, 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 $ 2,723.5 million as of December 31, 2024 ($ 2,252.9 million as of December 31, 2023)

Revolving credit facility, not to exceed $ 65.0 million (expiring November 1, 2025 ) (1) (2) (3)

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

$ 36.1 $ 42.7

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Revolving credit facility, not to exceed $ 75.0 million (expiring July 20, 2026 ) (2) (3) (4) (5)

Revolving credit facility, not to exceed $ 20.0 million (expiring December 11, 2024 ) (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 (paid off in November 2023 ) (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 $ 20.0 million (expiring April 10, 2025 ) (2) (3) (4) (5)

Revolving credit facility, not to exceed $ 250.0 million, repaid in May 2024

Revolving credit facility, not to exceed $ 50.0 million (expiring July 15, 2027 ) (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 September 1, 2025 ) (2) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 283.3 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 $ 325.0 million (expiring November 15, 2028 ) (2) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 158.3 million (expiring August 5, 2026 ) (2) (3) (4) (5) (6)

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)

Revolving credit facility, not to exceed $ 150.0 million (expiring May 17, 2027 ) (3) (4) (5) (6)

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)

Revolving credit facility, not to exceed $ 100.0 million (expiring January 16, 2029 ) (3) (4) (5) (6)

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 December 31, 2023 , the Prime Rate was 8.50 % and the Secured Overnight Financing Rate ("SOFR") was 5.38 %.

As of December 31, 2024 , the Prime Rate was 7.50 %, the Term Secured Overnight Financing Rate ("Term SOFR") was 4.33 % and the Secured Overnight Financing Rate ("SOFR") was 4.49 %.

In October 2015, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 50.0 million revolving borrowing limit that can be drawn to the extent of outstanding eligible principal receivables (of which $ 49.8 million was drawn as of December 31, 2024 ).

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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 December 31, 2023, the facility's borrowing limit was $ 65.0 million and the facility matures on November 1, 2025.

As of December 31, 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.

1 unchanged sentence

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.

An amendment was completed in December 2024 that extended the maturity to July 20, 2026.

There were no other material changes to the existing terms.

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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, 2024.

The facility matures on April 10, 2025.

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.

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.

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

The weighted average interest rate on the securities was fixed at 5.47 %.

This facility was paid off in November 2023.

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.

A portion of the proceeds from the sale was used to pay down our existing term ABS associated with our private label credit receivables, noted above, and the remaining proceeds were used to fund the acquisition of receivables.

The terms of the ABS allow for a 41 -month revolving structure with an 18 -month amortization period, and the securities mature between August 2025 and October 2025.

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

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) $ 50.0 million borrowing limit (of which $ 50.0 million was drawn as of December 31, 2024 ) that is available to the extent of outstanding eligible principal receivables.

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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 $ 0.0 million was outstanding as of December 31, 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 (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 December 31, 2023) secured by certain credit card receivables (expiring January 15, 2029).

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 December 31, 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 $ 50.0 million was outstanding as of December 31, 2023) 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 December 31, 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 4.2 %.

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).

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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 $ 0.0 million was drawn as of December 31, 2023).

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 December 31, 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).

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 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

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The weighted average interest rate on the securities is fixed at 9.39 %.

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).

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 were 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 8.86 %.

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 $ 140.0 million was drawn as of December 31, 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 $ 30.0 million was drawn as of December 31, 2024 .

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

The revolving credit facility of $ 30.0 million was paid down in March 2025.

In December 2024, we (through a wholly owned subsidiary) sold $ 100.0 million of ABS secured by certain credit card receivables (expiring January 16, 2029).

The terms of the ABS allow for a 30 -month revolving structure with a subsequent 18 -month amortization period.

The weighted average interest rate on the securities is fixed at 7.78 %.

As of December 31, 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 senior notes (included on our consolidated balance sheet as "Senior notes, net").

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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The 2026 Senior Notes will mature on November 30, 2026.

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

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 years ended December 31, 2024 and 2023 totaled $ 1.4 million and $ 1.4 million, respectively.

We repurchased $ 1.4 million and $ 0.0 of the outstanding principal amount of these senior notes for years ended December 31, 2023 and 2022, respectively.

We repurchased $ 0.4 and $ 1.4 million of the outstanding principal amount of these 2026 Senior Notes in the years ended December 31, 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.

The 2029 Senior Notes are effectively subordinated to all of the Company’s existing and future secured indebtedness, to the extent of the value of the assets securing such indebtedness, and the 2029 Senior Notes are structurally subordinated to all existing and future indebtedness and other liabilities (including trade payables) of the Company’s subsidiaries (excluding any amounts owed by such subsidiaries to the Company).

The 2029 Senior Notes bear interest at the rate of 9.25 % per annum.

Interest on the 2029 Senior Notes is payable quarterly in arrears on January 15, April 15, July 15 and October 15 of each year.

The 2029 Senior Notes will mature on January 31, 2029.

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 year ended December 31, 2024 totaled $ 0.8 million.

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

Commitments and Contingencies

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As of December 31, 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 if and in which we assess the likelihood of an estimable payment as probable.

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

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.

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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 account for over 70 % of our outstanding private label credit receivables as of December 31, 2023.

Our receivables base is diverse and spread across individual consumers in the U.S.

As of December 31, 2023, only one state (Texas) had receivables concentration in excess of 10% of the total pool of receivables.

Our top five retail partnerships accounted for over 75 % of our private label receivables outstanding as of December 31, 2024.

The volume of receivables purchased each period varies based on a number of factors, including seasonal consumer purchase patterns, growth (or contraction) within retail locations and consumer application volumes that retail partners may direct to our bank partners versus competitors that offer similar financing products.

During the years ended December 31, 2024 and 2023, we had receivable purchases from our top five retail partners of the following (in millions):

Gross Purchases for the Year Ended December 31,

Largest Retail Partners

1 $ 605.3 $ 273.5

2 $ 170.3 $ 163.3

3 $ 89.8 $ 124.1

4 $ 73.9 $ 57.0

5 $ 45.3 $ 48.7

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

As of December 31, 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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$ ( 142 ) $ ( 124 )

Deferred tax benefit

Deferred tax (expense) benefit

Total foreign income tax (expense)

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State and other income tax (expense):

Current tax (expense) benefit

Current tax benefit (expense)

$ 248 $ ( 191 )

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We experienced an effective income tax expense rate of 20.4 % and 20.6 % for the years ended December 31, 2024, and December 31, 2023, respectively.

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

Offsetting the above factors are the effects on our effective tax rate of state and foreign income tax expense, taxes on global intangible low-taxed income, and executive compensation deduction limitations under Section 162 (m) of the Code.

Our effective income tax expense rate for the year ended December 31, 2024, is below the statutory rate principally due to ( 1 ) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and ( 2 ) a loss related to our unrecovered investment in a foreign subsidiary which ceased operations during the year and with respect to which we had used “permanently reinvested earnings” accounting in our consolidated financial statements.

Our effective income tax expense rate for the year ended December 31, 2023, is below the statutory rate principally due to 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.

Further details related to the above are reflected in the table below reconciling our effective income tax expense rate to the statutory rate.

1 unchanged sentence

We likewise report the reversal of income tax-related interest and penalties within such line item to the extent we resolve our liabilities for uncertain tax positions or unpaid tax liabilities in a manner favorable to our accruals therefor.

We recognized $ 0.4 million in potential interest expense associated with uncertain tax positions during the year ended December 31, 2023, compared to de minimis interest expense experienced in 2022.

The following table reconciles our effective income tax expense rate to the statutory rate for 2023 and 2022:

We recognized $ 0.6 million and $ 0.4 million in potential interest associated with uncertain tax positions during the years ended December 31, 2024, and December 31, 2023, respectively.

The following table reconciles the statutory federal expense rate to our effective income tax expense rate for 2024 and 2023:

For the Year Ended December 31,

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( 0.2 ) ( 0.2 )

State taxes, net of federal tax benefit

Valuation allowances changes affecting the provision for income taxes

( 1.5 ) ( 1.3 )

State taxes, net of valuation allowance changes affecting the provision of income taxes and federal tax benefit

Prior year provision to return reconciling items, tax effects of non-controlling interests, and other

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Global intangible low-taxed income tax

Effective tax expense rate

Loss on foreign subsidiary liquidation

Effective income tax expense rate

As of December 31, 2024, and December 31, 2023, the respective significant components (in thousands) of our deferred tax assets and liabilities (which are included as a component of our Income tax liability on our consolidated balance sheets) were:

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Accruals for state taxes and interest associated with unrecognized tax benefits and unpaid accrued tax liabilities

Federal net operating loss carry-forwards

Federal net operating loss carryforwards

58,225 35,199

Federal credit carry-forward

Foreign net operating loss carry-forward

Federal credit carryforwards

Foreign net operating loss carryforwards

State tax benefits, primarily from net operating losses

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$ ( 118,771 ) $ ( 88,279 )

We undertook a detailed review of our deferred taxes and determined that a valuation allowance was required for certain deferred tax assets in state tax jurisdictions within the U.S.

and in the U.K.

We undertook a detailed review of our deferred assets taxes and determined that valuation allowances were required for certain deferred tax assets in state tax jurisdictions within the U.S.

We reduce our deferred tax assets by valuation allowances if it is more likely than not that some or all of the deferred tax assets will not be realized.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences are deductible.

The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which temporary differences will be deductible.

In making our valuation allowance determinations, we consider all available positive and negative evidence affecting specific deferred tax assets, including our past and anticipated future performance, the reversal of deferred tax liabilities, the length of carry-back and carry-forward periods, and the implementation of tax planning strategies.

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Our valuation allowances totaled $ 14.3 million and $ 18.7 million as of December 31, 2024, and December 31, 2023, respectively.

Certain of our deferred tax assets relate to federal, foreign, and state net operating losses, and we have no other net operating loss, capital loss, or credit carryforwards other than those noted herein.

We have recorded a federal deferred tax asset of $ 35.2 million (based on indefinite-lived federal net operating loss carryforwards of $ 167.3 million).

We have recorded state deferred tax assets of $ 26.5 million based on state net operating loss carryforwards, some of which are indefinite-lived and some which expire in various years beginning in 2024;

valuation allowances of $ 18.2 million have be recorded, however, against the $26.5 million of such state deferred tax assets.

Certain of our deferred tax assets relate to federal and state net operating losses and federal tax credit carryforwards, and we have no other net operating loss, or credit carryforwards other than those noted herein.

We have recorded a federal deferred tax asset of $ 59.1 million (based on indefinite-lived federal net operating loss carryforwards of $ 277.3 million and federal tax credit carryforwards of $.8 million).

We have recorded state deferred tax assets of $ 24.8 million based on state net operating loss carryforwards, some of which are indefinite-lived and some of which expire in various years beginning in 2025;

valuation allowances of $ 14.3 million have been recorded, however, against the $ 24.8 million of such state deferred tax assets.

Our subsidiaries file federal, foreign, and/or state and other income tax returns.

In the normal course of our business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the U.S., the U.K., and various U.S.

In the normal course of our business, we are subject to examination by taxing authorities throughout the world, including such major jurisdictions as the U.S.

and various U.S.

states and territories.

With a few exceptions of a non-material nature, we are no longer subject to federal, state, local, or foreign income tax examinations for years prior to 2019.

Roll-forwards (in thousands) of our unrecognized tax benefits (excluding accrued interest related thereto of $ 1.1 million as of December 31, 2023, and $ 0.9 million as of December 31, 2022) from the beginning to the end of 2023 and 2022, respectively, are as follows:

With a few exceptions of a non-material nature, we are no longer subject to federal, state, local, or income tax examinations for years prior to 2020.

Reconciliations (in thousands) of our unrecognized tax benefits (excluding accrued interest related thereto of $ 1.3 million as of December 31, 2024, and $ 1.1 million as of December 31, 2023) from the beginning to the end of 2024 and 2023, respectively, are as follows:

Balance at January 1,

6 unchanged sentences

$ ( 711 ) $ ( 738 )

Our unrecognized tax benefits that, if recognized, would affect our effective tax expense rate are not material at only $1.1million and $ 0.9 million as of December 31, 2023, and December 31, 2022, respectively.

Our unrecognized tax benefits that, if recognized, would affect our effective income tax expense rate are not material at only $ 1.3 million and $ 1.1 million as of December 31, 2024, and December 31, 2023, respectively.

Net Income Attributable to Controlling Interests Per Common Share

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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 options on or 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 December 31, 2024, 42,859 shares remained available for issuance under the ESPP and 1,963,602 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 years ended December 31, 2023 and 2022.

Exercises and vesting under our stock-based compensation plans resulted in no income tax-related charges to paid-in capital during the years ended December 31, 2024 and 2023.

Restricted Stock and Restricted Stock Units

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employees are eligible to participate in the 401 (k) plan.

We made matching contributions of $ 748,734 and $ 341,245 for the years ended December 31, 2023 and 2022, respectively, which were included as a component of Salaries and benefits in the accompanying Consolidated Statements of Income.

We made matching contributions of $ 0.8 million and $ 0.7 million for the years ended December 31, 2024 and 2023, respectively, which were included as a component of Salaries and benefits in the accompanying Consolidated Statements of Income.

Also, all employees, excluding executive officers, are eligible to participate in the ESPP.

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The price of stock purchased under the ESPP is approximately 85 % of the fair market value per share of our common stock on the purchase date.

Employees contributed $ 108,351 to purchase 3,929 shares of common stock in 2023 and $ 107,995 to purchase 3,280 shares of common stock in 2022 under the ESPP.

Employees contributed $ 0.1 million to purchase 4,253 shares of common stock in 2024 and $ 0.1 million to purchase 3,929 shares of common stock in 2023 under the ESPP.

The ESPP covers up to 500,000 shares of common stock.

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Hanna, Frank J.

Hanna, III and certain trusts that were Hanna affiliates, following our initial public offering ( 1 ) if one or more of the shareholders accepts a bona fide offer from a third party to purchase more than 50 % of the outstanding common stock, each of the other shareholders that is a party to the agreement may elect to sell his shares to the purchaser on the same terms and conditions, and ( 2 ) if shareholders that are a party to the agreement owning more than 50% of the common stock propose to transfer all of their shares to a third party, then such transferring shareholders may require the other shareholders that are a party to the agreement to sell all of the shares owned by them to the proposed transferee on the same terms and conditions.

In June 2007, we entered into a sublease for 1,000 square feet (as later adjusted to 3,100 square feet) of excess office space at our Atlanta headquarters with HBR Capital, Ltd.

Hanna, III and certain trusts that were Hanna affiliates ( 1 ) if one or more of the shareholders accepts a bona fide offer from a third party to purchase more than 50 % of the outstanding common stock, each of the other shareholders that is a party to the agreement may elect to sell his shares to the purchaser on the same terms and conditions, and ( 2 ) if shareholders that are a party to the agreement owning more than 50% of the common stock propose to transfer all of their shares to a third party, then such transferring shareholders may require the other shareholders that are a party to the agreement to sell all of the shares owned by them to the proposed transferee on the same terms and conditions.

In June 2007, we entered into a sublease for 1,000 square feet (as later amended to 600 square feet) of excess office space at our Atlanta headquarters with HBR Capital, Ltd.

("HBR"), a company co-owned by David G.

Hanna and his brother Frank J.

We entered into a new lease for our Atlanta headquarters that commenced in June 2022.

In connection with this new prime lease, we entered into a new sublease with HBR.

The sublease rate per square foot is the same as the rate that we pay under the prime lease.

Under the sublease, HBR paid us $ 95,653 and $ 62,422 for 2023 and 2022, respectively.

Under the sublease, HBR paid us $ 0.1 million for both 2024 and 2023.

The aggregate amount of payments required under the sublease from January 1, 2025 to the expiration of the sublease in May 2025 is $ 41,000 .

1 unchanged sentence

HBR reimburses us for the full cost of the employees, based on the amount of time devoted to HBR.

In the years ended December 31, 2023 and 2022, we received $ 605,374 and $ 404,302 , respectively, of reimbursed costs from HBR associated with these leased employees.

In the years ended December 31, 2024 and 2023, we received $ 0.8 million and $ 0.6 million, 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.

6 unchanged sentences

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

See Note 5 "Redeemable Preferred Stock" for more information.

During 2022, the Company utilized Axiom Bank, NA to provide legal and other services related to various commercial opportunities.

Hanna, Frank J.

Hanna, III and members of their immediate families, control and own Axiom Bancshares, Inc., which is the bank holding company for Axiom Bank, NA.

The aggregate amount of payments made to Axiom Bank, NA during 2022 was $ 1.0 million.

See Note 5, "Redeemable Preferred Stock," to our consolidated financial statements for more information.

Subsequent Events

We evaluate subsequent events that occur after our consolidated balance sheet date but before our consolidated financial statements are issued.

There are two types of subsequent events:

( 1 ) recognized, or those that provide additional evidence with respect to conditions that existed at the date of the balance sheet, including the estimates inherent in the process of preparing financial statements;

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

We have evaluated subsequent events occurring after December 31, 2024 , and based on our evaluation we did not identify any recognized or nonrecognized subsequent events that would have required further adjustments to our consolidated financial statements other than the developments described below.

In March 2025, we redeemed the remaining 50.0 million of Class B preferred units at $ 1.00 per unit plus accrued but unpaid interest thereon.

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-K

Item 9A. Controls and Procedures