Atlanticus Holdings Corp 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures 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). 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 Management of Atlanticus Holdings Corporation is responsible for establishing and maintaining adequate internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Act) for Atlanticus Holdings Corporation and our subsidiaries. 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) . 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. GAAP. 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 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, 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 The Company’s management, including its principal executive officer and principal financial officer, do not expect that the Company’s disclosure controls and procedures or the Company’s internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with policies or procedures may deteriorate. 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 Atlanta, GA March 13, 2025 ITEM 9B. OTHER INFORMATION During the three months ended December 31, 2024, none of our directors or officers (as defined in Rule 16a - 1 (f) of the Act) adopted or terminated a Rule 10b5 - 1 trading arrangement or non-Rule 10b5 - 1 trading arrangement (as such terms are defined in Item 408 of Regulation S-K of the Securities Act of 1933, as amended). ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not Applicable. 42 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE The information required by this Item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Shareholders in the sections entitled "Proposal One: Election of Directors," "Executive Officers of Atlanticus," "Delinquent Section 16(a) Reports" and "Corporate Governance" and is incorporated by reference. ITEM 11. EXECUTIVE COMPENSATION The information required by this Item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Shareholders in the section entitled "Executive and Director Compensation" and is incorporated by reference. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS The information required by this Item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Shareholders in the sections entitled "Security Ownership of Certain Beneficial Owners and Management" and "Equity Compensation Plan Information" and is incorporated by reference. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE The information required by this Item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Shareholders in the sections entitled "Related Party Transactions" and "Corporate Governance" and is incorporated by reference. ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES The information required by this Item will be set forth in our Proxy Statement for the 2025 Annual Meeting of Shareholders in the section entitled "Auditor Fees" and is incorporated by reference. 43 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES The following documents are filed as part of this Report: 1. Financial Statements INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm ( Deloitte & Touche LLP ; Atlanta, GA ; PCAOB ID# 34 ) F-1 Report of Independent Registered Public Accounting Firm on the Consolidated Financial Statements BDO USA, P.C.; Atlanta, GA; PCAOB ID#243 F-2 Consolidated Balance Sheets F-4 Consolidated Statements of Income F-5 Consolidated Statements of Shareholders’ Equity and Temporary Equity F-6 Consolidated Statements of Cash Flows F-7 Notes to Consolidated Financial Statements F-8 2. Financial Statement Schedules None. 3. Exhibits Exhibit Number Description of Exhibit Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1) 3.1 Amended and Restated Articles of Incorporation November 8, 2022, Form 10-Q, exhibit 3.1 3.1(a) Articles of Amendment Establishing Cumulative Convertible Preferred Stock, Series A (included as Exhibit B to Exhibit 3.1 hereto) November 8, 2022, Form 10-Q, exhibit 3.1 3.1(b) Amended and Restated Articles of Amendment Establishing the 7.625% Series B Cumulative Perpetual Preferred Stock (included as Exhibit C to Exhibit 3.1 hereto) November 8, 2022, Form 10-Q, exhibit 3.1 3.2 Amended and Restated Bylaws (as amended through May 12, 2017) May 16, 2017, Form 8-K, exhibit 3.2 4.1 Description of Atlanticus Holdings Corporation's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 March 4, 2024, Form 10-K, exhibit 4.1 4.2 Form of common stock certificate March 30, 2016, Form 10-K, exhibit 4.1 4.3 Indenture, dated as of November 22, 2021, by and between Atlanticus Holdings Corporation and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee November 22, 2021, Form 8-K, exhibit 4.1 4.3(a) First Supplemental Indenture, dated as of November 22, 2021, by and between Atlanticus Holdings Corporation and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee November 22, 2021, Form 8-K, exhibit 4.2 4.3(b) Form of 6.125% Senior Notes due 2026 (included in Exhibit 4.3(a) November 22, 2021, Form 8-K, exhibit 4.3 4.3(c) Second Supplemental Indenture, dated as of January 30, 2024, by and between Atlanticus Holdings Corporation and U.S. Bank Trust Company, National Association, as trustee February 2, 2024, Form 8-K, exhibit 4.1 4.3(d) Form of Additional 6.125% Senior Notes due 2026 (included in Exhibit 4.3(c)) February 2, 2024, Form 8-K, exhibit 4.2 4.3(e) Third Supplemental Indenture, dated as of January 30, 2024, by and between Atlanticus Holdings Corporation and U.S. Bank Trust Company, National Association, as trustee January 30, 2024, Form 8-K, exhibit 4.1 4.3(f) 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 4.3(g) 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 4.3(h) 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 4.3(i) 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 4.3(j) 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 10.1** Stockholders Agreement dated as of April 28, 1999 January 18, 2000, Form S-1, exhibit 10.1 10.2† Fourth Amended and Restated 2014 Equity Incentive Plan April 11, 2019, Definitive Proxy Statement on Schedule 14A, Appendix A 10.2(a)† Form of Restricted Stock Agreement–Directors August 14, 2019, Form 10-Q, exhibit 10.2 10.2(b)† Form of Restricted Stock Agreement–Employees August 14, 2019, Form 10-Q, exhibit 10.3 10.2(c)† Form of Stock Option Agreement–Directors August 14, 2019, Form 10-Q, exhibit 10.4 10.2(d)† Form of Stock Option Agreement–Employees August 14, 2019, Form 10-Q, exhibit 10.5 10.2(e)† Form of Restricted Stock Unit Agreement–Directors August 14, 2019, Form 10-Q, exhibit 10.6 10.2(f)† Form of Restricted Stock Unit Agreement–Employees August 14, 2019, Form 10-Q, exhibit 10.7 10.3† Second Amended and Restated Employee Stock Purchase Plan April 10, 2018, Definitive Proxy Statement on Schedule 14A, Appendix A 10.4† Amended and Restated Employment Agreement, dated March 18, 2021, between Atlanticus Holdings Corporation and David G. Hanna May 14, 2021, Form 10-Q, exhibit 10.1 10.5† Amended and Restated Employment Agreement, dated March 18, 2021, between Atlanticus Holdings Corporation and Jeffrey A. Howard May 14, 2021, Form 10-Q, exhibit 10.2 10.6† Employment Agreement for William R. McCamey March 28, 2014, Form 10-K, exhibit 10.8 10.7† Amended and Restated Consultant Agreement, dated May 1, 2020, between Atlanticus Services Corporation and Denise M. Harrod May 14, 2021, Form 10-Q, exhibit 10.4 10.8† Outside Director Compensation Package Filed herewith 44 Table of Contents Exhibit Number Description of Exhibit Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1) 10.9 Assumption Agreement dated June 30, 2009 between Atlanticus Holdings Corporation (formerly CompuCredit Holdings Corporation) and Atlanticus Services Corporation (formerly CompuCredit Corporation) July 7, 2009, Form 8-K, exhibit 10.1 10.10 Master Indenture for Perimeter Master Note Business Trust, dated February 8, 2017, among Perimeter Master Note Business Trust, U.S. Bank National Association and Atlanticus Services Corporation May 15, 2017, Form 10-Q, exhibit 10.1 10.11* 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 March 15, 2022, Form 10-K, exhibit 10.11(k) 10.11(a)* First Amendment to Purchase Agreement, dated June 11, 2018, among TSO-Fortiva Notes Holdco LP, TSO-Fortiva Certificate Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(k) 10.11(b)* Second Amendment to Purchase Agreement, dated November 16, 2018, among TSO-Fortiva Notes Holdco LP, TSO-Fortiva Certificate Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(l) 10.11(c) Third Amendment to Purchase Agreement, dated November 13, 2019, among TSO-Fortiva Notes Holdco LP, TSO-Fortiva Certificate Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(m) 10.11(d)* Fourth Amendment to Purchase Agreement, dated January 23, 2020, among TSO-Fortiva Notes Holdco LP, TSO-Fortiva Certificate Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(n) 10.11(e)* Purchase Agreement, dated November 16, 2018, among TSO-Fortiva Notes Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(o) 10.11(f) First Amendment to Purchase Agreement, dated November 13, 2019, among TSO-Fortiva Notes Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(p) 10.11(g)* Second Amendment to Purchase Agreement, dated January 23, 2020, among TSO-Fortiva Notes Holdco LP, Perimeter Funding Corporation, Access Financing, LLC and Perimeter Master Note Business Trust March 30, 2020, Form 10-K, exhibit 10.11(q) 10.11(h) Trust Agreement, dated February 8, 2017, between Perimeter Funding Corporation and Wilmington Trust, National Association May 15, 2017, Form 10-Q, exhibit 10.1(c) 10.11(i) First Amendment to Trust Agreement, dated June 11, 2018, between Perimeter Funding Corporation and Wilmington Trust, National Association March 30, 2020, Form 10-K, exhibit 10.11(u) 10.12 Master Indenture for Fortiva Retail Credit Master Note Business Trust, dated November 9, 2018, among Fortiva Retail Credit Master Note Business Trust, U.S. Bank National Association and Access Financing, LLC March 27, 2019, Form 10-K, exhibit 10.12 10.12(a)* Series 2018-One Indenture Supplement for Fortiva Retail Credit Master Note Business Trust, dated November 9, 2018 March 4, 2024, Form 10-K, exhibit 10.12(a) 10.12(b) Amended and Restated Trust Agreement, dated November 9, 2018, between FRC Funding Corporation and Wilmington Trust, National Association March 27, 2019, Form 10-K, exhibit 10.12(b) 45 Table of Contents Exhibit Number Description of Exhibit Incorporated by Reference from Atlanticus’ SEC Filings Unless Otherwise Indicated(1) 10.13 Amended and Restated Program Management Agreement, dated April 1, 2020, between The Bank of Missouri and Atlanticus Services Corporation August 14, 2020, Form 10-Q, exhibit 10.1 10.13(a) First Amendment to Amended and Restated Program Management Agreement, dated June 30, 2020, between The Bank of Missouri and Atlanticus Services Corporation August 14, 2020, Form 10-Q, exhibit 10.1(a) 10.13(b)* Amended and Restated Receivable Sales Agreement, dated April 1, 2020, between The Bank of Missouri and Fortiva Funding, LLC August 14, 2020, Form 10-Q, exhibit 10.2 10.13(c) First Amendment to Amended and Restated Receivable Sales Agreement, dated June 30, 2020, between The Bank of Missouri and Fortiva Funding, LLC August 14, 2020, Form 10-Q, exhibit 10.2(a) 10.13(d) Assignment and Assumption Agreement, dated March 24, 2018, among Mid America Bank & Trust Company, Atlanticus Services Corporation and The Bank of Missouri May 14, 2019, Form 10-Q, exhibit 10.2(b) 10.13(e) Assignment and Assumption Agreement, dated March 24, 2018, among Mid America Bank & Trust Company, Fortiva Funding, LLC and The Bank of Missouri May 14, 2019, Form 10-Q, exhibit 10.2(c) 10.14* Amended and Restated Operating Agreement of Access Financial Holdings, LLC, dated November 14, 2019 March 30, 2020, Form 10-K, exhibit 10.15 10.15 Amended and Restated At Market Issuance Sales Agreement, dated August 26, 2024, between Atlanticus Holdings Corporation and B. Riley Securities, Inc. August 26, 2024, Form 8-K, exhibit 1.1 10.16 At-The-Market Sales Agreement, dated December 29, 2023, between Atlanticus Holdings Corporation and BTIG, LLC January 2, 2024, Form 8-K, exhibit 1.1 16.1 Letter of BDO USA, P.C. to the SEC dated April 4, 2024 April 5, 2024, Form 8-K, exhibit 16.1 19.1 Atlanticus Holdings Corporation Policy Statement Regarding Securities Trading March 4, 2024, Form 10-K, exhibit 19.1 21.1 Subsidiaries of the Registrant Filed herewith 23.1 Consent of Deloitte & Touche LLP Filed herewith 23.2 Consent of BDO USA, P.C. Filed herewith 31.1 Certification of Principal Executive Officer pursuant to Rule 13a-14(a) Filed herewith 31.2 Certification of Principal Financial Officer pursuant to Rule 13a-14(a) Filed herewith 32.1 Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350 Filed herewith 97.1 Atlanticus Holdings Corporation Clawback Policy March 4, 2024, Form 10-K, exhibit 97.1 101.INS 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. Filed herewith 101.SCH Inline XBRL Taxonomy Extension Schema Document Filed herewith 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document Filed herewith 101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document Filed herewith 101.PRE Inline XBRL Taxonomy Presentation Linkbase Document Filed herewith 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document Filed herewith 104 Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) † Management contract, compensatory plan or arrangement. * Certain portions of this document have been omitted because they are both not material and are the type that the Company treats as private or confidential. ** Filed under CompuCredit Corporation (now Atlanticus Services Corporation) (File No. 000-25751), our predecessor issuer. ITEM 16. FORM 10-K SUMMARY None. 46 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Atlanta, State of Georgia, on March 13, 2025. Atlanticus Holdings Corporation By: /s/ Jeffrey A. Howard Jeffrey A. Howard President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this Report has been signed below by the following persons in the capacities and on the dates indicated. Signature Title Date /s/Jeffrey A. Howard Jeffrey A. Howard President, Chief Executive Officer and Director (Principal Executive Officer) March 13, 2025 /s/William R. McCamey William R. McCamey Chief Financial Officer (Principal Financial Officer) March 13, 2025 /s/Mitchell C. Saunders Mitchell C. Saunders Chief Accounting Officer (Principal Accounting Officer) March 13, 2025 /s/David G. Hanna David G. Hanna Executive Chairman of the Board March 13, 2025 /s/Denise M. Harrod Denise M. Harrod Director March 13, 2025 /s/Deal W. Hudson Deal W. Hudson Director March 13, 2025 /s/Dennis H. James Dennis H. James Director March 13, 2025 /s/Joann G. Jones Joann G. Jones Director March 13, 2025 /s/Mack F. Mattingly Mack F. Mattingly Director March 13, 2025 47 Table of Contents Report of Independent Registered Public Accounting Firm 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 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 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. 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 Atlanta, GA March 13, 2025 We have served as the Company's auditor since 2024. F-1 Table of Contents Report of Independent Registered Public Accounting Firm Shareholders and Board of Directors Atlanticus Holdings Corporation Atlanta, Georgia Opinion on the Consolidated Financial Statements 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 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 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 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 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 served as the Company's auditor from 2002 to 2024. Atlanta, Georgia March 4, 2024 F-2 Table of Contents Atlanticus Holdings Corporation and Subsidiaries Consolidated Balance Sheets (Dollars in thousands) December 31, December 31, 2024 2023 Assets Unrestricted cash and cash equivalents (including $ 140.2 million and $ 158.0 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) $ 375,416 $ 339,338 Restricted cash and cash equivalents (including $ 98.8 million and $ 20.5 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) 124,220 44,315 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, 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 Property at cost, net of depreciation 10,519 11,445 Operating lease right-of-use assets 13,878 11,310 Prepaid expenses and other assets 32,068 27,853 Total assets $ 3,270,707 $ 2,706,445 Liabilities Accounts payable and accrued expenses $ 72,088 $ 61,634 Operating lease liabilities 24,188 20,180 Notes payable, net (including $ 2,128.0 million and $ 1,795.9 million associated with variable interest entities at December 31, 2024 and December 31, 2023, respectively) 2,199,448 1,861,685 Senior notes, net 281,552 144,453 Income tax liability 114,068 85,826 Total liabilities 2,691,344 2,173,778 Commitments and contingencies (Note 10) Preferred stock, no par value, 10,000,000 shares authorized: Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $ 40.0 million) at December 31, 2024 and December 31, 2023 (Note 5) (1) 40,000 40,000 Class B preferred units issued to noncontrolling interests (Note 5) 50,000 100,250 Shareholders' Equity Series B preferred stock, no par value, 3,301,179 shares issued and outstanding at December 31, 2024 (liquidation preference - $ 82.5 million); 3,256,561 shares issued and outstanding at December 31, 2023 (liquidation preference - $ 81.4 million) (1) — — Common stock, no par value, 150,000,000 shares authorized: 14,904,192 and 14,603,563 shares issued and outstanding at December 31, 2024 and December 31, 2023, respectively — — Paid-in capital 98,278 87,415 Retained earnings 394,628 307,260 Total shareholders’ equity attributable to Atlanticus Holdings Corporation 492,906 394,675 Noncontrolling interests ( 3,543 ) ( 2,258 ) Total equity 489,363 392,417 Total liabilities, shareholders' equity and temporary equity $ 3,270,707 $ 2,706,445 (1) Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized. See accompanying notes. F-3 Table of Contents Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Income (Dollars in thousands, except per share data) For the Year Ended December 31, 2024 2023 Revenue and other income: Consumer loans, including past due fees $ 979,814 $ 879,123 Fees and related income on earning assets 269,771 238,775 Other revenue 60,370 37,348 Total operating revenue and other income 1,309,955 1,155,246 Other non-operating income 1,489 630 Total revenue and other income 1,311,444 1,155,876 Interest expense ( 160,173 ) ( 109,342 ) Provision for credit losses ( 16,368 ) ( 2,152 ) Changes in fair value of loans ( 733,471 ) ( 689,577 ) Net margin 401,432 354,805 Operating expenses: Salaries and benefits ( 50,143 ) ( 43,906 ) Card and loan servicing ( 118,400 ) ( 100,620 ) Marketing and solicitation ( 56,186 ) ( 52,421 ) Depreciation ( 2,715 ) ( 2,560 ) Other ( 35,411 ) ( 26,740 ) Total operating expenses ( 262,855 ) ( 226,247 ) Income before income taxes 138,577 128,558 Income tax expense ( 28,471 ) ( 26,604 ) Net income 110,106 101,954 Net loss attributable to noncontrolling interests 1,190 891 Net income attributable to controlling interests 111,296 102,845 Preferred stock and preferred unit dividends and discount accretion ( 23,928 ) ( 25,198 ) Net income attributable to common shareholders $ 87,368 $ 77,647 Net income attributable to common shareholders per common share—basic $ 5.92 $ 5.35 Net income attributable to common shareholders per common share—diluted $ 4.77 $ 4.24 See accompanying notes. F-4 Table of Contents Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Shareholders’ Equity and Temporary Equity For the Years Ended December 31, 2024 and 2023 (Dollars in thousands) Series B Preferred Stock Common Stock Temporary Equity Shares Issued Amount Shares Issued Amount Paid-In Capital Retained Earnings (Deficit) Noncontrolling Interests Total Equity Series A Preferred Stock Class B Preferred Units Balance at January 1, 2023 3,204,640 $ — 14,453,415 $ — $ 121,996 $ 204,415 $ ( 1,371 ) $ 325,040 $ 40,000 $ 99,950 Accretion of discount associated with issuance of subsidiary equity — — — — (300 ) — — ( 300 ) — 300 Discount associated with repurchase of preferred stock — — — — 16 — — 16 — — 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 — — 576,758 — 3,405 — — 3,405 — — Compensatory stock issuances, net of forfeitures — — 148,546 — — — — — — — Issuance of series B preferred stock, net 53,727 — — — 1,118 — — 1,118 — — Contributions by owners of noncontrolling interests — — — — — — 4 4 — — Stock-based compensation costs — — — — 3,783 — — 3,783 — — Redemption and retirement of preferred shares ( 1,806 ) — — — ( 45 ) — — ( 45 ) — — Redemption and retirement of common shares — — ( 575,156 ) — ( 17,644 ) — — ( 17,644 ) — — Net income (loss) — — — — — 102,845 ( 891 ) 101,954 — Balance at December 31, 2023 3,256,561 $ — 14,603,563 $ — $ 87,415 $ 307,260 $ ( 2,258 ) $ 392,417 $ 40,000 $ 100,250 Accretion of discount associated with issuance of subsidiary equity — — — — — ( 250 ) — ( 250 ) — 250 Series A preferred stock dividends ($ 1.50 dividend per share) — — — — — ( 2,400 ) — ( 2,400 ) — — Series B preferred stock dividends ($ 0.48 dividend per share) — — — — — ( 6,274 ) — ( 6,274 ) — — Class B preferred units dividends ($ 0.04 dividend per share) — — — — — ( 15,004 ) — ( 15,004 ) — — Stock option exercises and proceeds related thereto — — 49,682 — 984 — — 984 — — Compensatory stock issuances, net of forfeitures — — 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 — — — — — — 53 53 — — Stock-based compensation costs — — — — 3,897 — — 3,897 — — Redemption and retirement of preferred shares and preferred units — — — — — — — — — ( 50,500 ) Redemption and retirement of common shares — — ( 79,354 ) — ( 2,174 ) — — ( 2,174 ) — — Net income (loss) — — — — — 111,296 ( 1,190 ) 110,106 — — Balance at December 31, 2024 3,301,179 $ — 14,904,192 $ — $ 98,278 $ 394,628 $ ( 3,543 ) $ 489,363 $ 40,000 $ 50,000 See accompanying notes. F-5 Table of Contents Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Cash Flows (Dollars in thousands) For the Year Ended December 31, 2024 2023 Operating activities Net income $ 110,106 $ 101,954 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation, amortization and accretion, net 5,187 4,043 Provision for credit losses 16,368 2,152 Deferred income tax expense 30,493 37,825 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 1,448 — Amortization of debt issuance costs 11,828 7,179 Stock-based compensation costs 3,897 3,783 Changes in assets and liabilities: Decrease in lease liability ( 3,014 ) ( 1,871 ) Increase in uncollected fees on earning assets ( 269,914 ) ( 247,353 ) Increase (decrease) in income tax liability ( 2,251 ) ( 12,688 ) (Decrease) increase in accounts payable and accrued expenses 2,535 18,414 Other ( 1,061 ) 3,182 Net cash provided by operating activities 469,405 459,317 Investing activities Proceeds from recoveries on charged off receivables 44,109 51,578 Investments in earning assets ( 2,628,894 ) ( 2,516,359 ) Proceeds from earning assets 1,839,543 1,796,570 Purchases and development of property ( 1,789 ) ( 3,992 ) Net cash used in investing activities ( 747,031 ) ( 672,203 ) Financing activities Noncontrolling interests contributions 53 4 Noncontrolling interests distributions ( 148 ) — Proceeds from issuance of common stock 7,074 — Proceeds from issuance of Series B preferred stock, net of issuance costs 1,082 1,118 Preferred stock and preferred unit dividends ( 25,741 ) ( 24,910 ) Proceeds from exercise of stock options 984 3,405 Purchase and retirement of outstanding stock and preferred units ( 52,674 ) ( 17,673 ) Proceeds from issuance of Senior notes, net of issuance costs 135,252 — Proceeds from borrowings 893,971 955,278 Repayment of borrowings ( 566,244 ) ( 753,877 ) Net cash provided by financing activities 393,609 163,345 Effect of exchange rate changes on cash and cash equivalents and restricted cash and cash equivalents — 2 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 equivalents at beginning of period 383,653 433,192 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 Cash paid for interest $ 145,669 $ 99,450 Cash paid for income taxes, net of refunds $ 229 $ 1,467 Accretion of discount associated with issuance of subsidiary equity $ 250 $ 300 (Decrease) increase in accrued and unpaid preferred stock and preferred unit dividends $ ( 2,063 ) $ 4 See accompanying notes. F-6 Table of Contents Atlanticus Holdings Corporation and Subsidiaries Notes to Consolidated Financial Statements December 31, 2024 and 2023 1. Description of Our Business Our accompanying consolidated financial statements include the accounts of Atlanticus Holdings Corporation (the "Company") and those entities we control. We are a purpose driven financial technology company. We are primarily focused on facilitating consumer credit through the use of our financial technology and related services. 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 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 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. None of these companies are publicly-traded, and the carrying values of our investments in these companies are not material. Within our Auto Finance segment, our CAR subsidiary operations principally purchase and/or service loans secured by automobiles from or for, and also provide floor plan financing for, a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, used car business. We purchase auto loans at a discount and with dealer retentions or holdbacks that provide risk protection. Also within our Auto Finance segment, we are providing certain installment lending products in addition to our traditional loans secured by automobiles. F- 7 Table of Contents 2. Significant Accounting Policies and Consolidated Financial Statement Components The following is a summary of significant accounting policies we follow in preparing our consolidated financial statements, as well as a description of significant components of our consolidated financial statements. 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. We base these estimates on information available to us as of the date of the financial statements. Actual results could differ materially from these estimates. Certain estimates, such as credit losses, payment rates, 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. 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 The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s policy is to consolidate the financial statements of entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by evaluating whether the entity is a voting interest entity or variable interest entity ("VIE") and if the accounting guidance requires consolidation. For more information on the Company's VIEs, see Note 8 "Variable Interest Entities". Unrestricted Cash and Cash Equivalents Unrestricted cash and cash equivalents consist of cash, money market investments and overnight deposits. We consider all highly liquid cash investments with low interest rate risk and original maturities of three months or less to be cash equivalents. Cash equivalents are carried at cost, which approximates fair value. We maintain unrestricted cash and cash equivalents for general operating purposes. We maintain our cash and cash equivalents in accounts at regulated domestic financial institutions in amounts that exceed FDIC insured amounts. All cash balances are maintained at well capitalized institutions. 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. Our restricted cash balances also include minimum cash balances held in accounts at the request of certain of our business partners. F- 8 Table of Contents Loans, Interest and Fees Receivable 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). 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 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 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. Loans at fair value. Loans at fair value represent receivables for which we have elected the fair value option (the "Fair Value Receivables"). The Fair Value Receivables are held by entities that qualify as VIEs, and are consolidated onto our consolidated balance sheets, some portfolios of which are unencumbered and some of which are still encumbered under structured or other financing facilities. Loans and finance receivables include accrued and unpaid interest and fees. 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. The Company re-evaluates the fair value of loans receivable at the close of each measurement period. Changes in the fair value of loans are recorded as a component of "Changes in fair value of loans" in the consolidated statements of income in the period of the fair value changes. Changes in the fair value of loans include the impact of current period charge-offs associated with these receivables. Further details concerning our loans at fair value are presented within Note 6, "Fair Values of Assets and Liabilities." 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 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. Our loans at amortized cost consist of smaller-balance, homogeneous loans in our Auto Finance segment. These loans are further divided into pools based on common characteristics such as contract or acquisition channel. For each pool, we determine the necessary allowance for 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. We may individually evaluate a receivable or pool of receivables for credit losses if circumstances indicate that the receivable or pool of receivables may be at higher risk for non-performance than other receivables (e.g., if a particular retail or auto-finance partner has indications of non-performance (such as a bankruptcy) that could impact the underlying pool of receivables we purchased from the partner). Certain of our loans at amortized cost also contain components of deferred revenue related to loan discounts on the purchase of our auto finance receivables. 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. F- 9 Table of Contents A roll-forward (in millions) of our allowance for credit losses by class of receivable is as follows: For the Year Ended December 31, 2024 2023 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 ) Charge-offs - 9.9 9.9 - 3.9 3.9 Recoveries - ( 2.5 ) ( 2.5 ) - ( 1.9 ) ( 1.9 ) Balance at end of period $ ( 5.9 ) $ ( 4.9 ) $ ( 10.8 ) $ - $ ( 1.8 ) $ ( 1.8 ) 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. December 31, December 31, As of 2024 2023 Allowance for credit losses: Balance of Notes Receivable at end of period individually evaluated for impairment $ ( 5.9 ) $ — Balance of Auto Finance at end of period individually evaluated for impairment $ ( 1.2 ) $ — 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 Loans at amortized cost individually evaluated for impairment $ 1.5 $ — Loans at amortized cost collectively evaluated for impairment $ 107.5 $ 118.0 Recoveries, noted above, consist of amounts received from the efforts of third -party collectors. All proceeds received, associated with charged-off accounts, are credited to the allowance for 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: December 31, December 31, As of 2024 2023 30-59 days past due $ 7.6 $ 9.4 60-89 days past due 3.2 3.4 90 or more days past due 4.7 3.5 Delinquent loans at amortized cost 15.5 16.3 Current loans at amortized cost 93.5 101.7 Total loans at amortized cost $ 109.0 $ 118.0 Balance of loans greater than 90-days delinquent still accruing interest and fees $ 3.7 $ 2.6 Loan Modifications and Restructurings We adopted Accounting Standards Update ("ASU") No. 2022 - 02, "Financial Instruments - Credit Losses (Topic 326 ): Troubled Debt Restructurings and Vintage Disclosures" on January 1, 2023. The disclosures required by this ASU are required for receivables held at amortized cost and exclude those accounted for using fair value. 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, 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. 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 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 year ended December 31, 2024 and 2023, no Loans at amortized cost qualified as a FDM. F- 10 Table of Contents Property at Cost, Net of Depreciation We capitalize costs related to internal development and implementation of software used in our operating activities. These capitalized costs consist almost exclusively of fees paid to third -party consultants to develop code and install and test software specific to our needs and to customize purchased software to maximize its benefit to us. 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 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. We periodically review our property to determine if it is impaired. We incurred no impairment costs in the years ended December 31, 2024 and 2023 . Leases We determine if an arrangement contains a lease at inception, and leases are classified as either operating or finance leases at the lease commencement date. An arrangement contains a lease if it implicitly or explicitly identifies an asset to be used and conveys the right to control the use of the identified asset in exchange for consideration. Right-of-use ("ROU") assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized upon commencement of the lease based on the present value of the lease payments over the lease term. When readily determinable, we use the implicit rate within the lease. As most of our leases do not provide an implicit interest rate, we generally use our incremental borrowing rate. The incremental borrowing rate is based on the estimated rate of interest for fully collateralized and fully amortizing borrowings over a similar term as the lease payments at commencement date. The incremental borrowing rate is used to determine the present value of lease payments. Our expected lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease expense for operating leases and short-term leases is recognized on a straight-line basis over the lease term. Expenses associated with operating leases are recorded in Other expenses on our Consolidated Statements of Income. Short-term leases with a term of 12 months or less are not capitalized. Prepaid Expenses and Other Assets Prepaid expenses and other assets include amounts paid to third parties for marketing and other services as well as amounts owed to us by third parties. Prepaid amounts are expensed as the underlying related services are performed. 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 as well as the fair value of our Bank partner fees associated with purchased receivables. Revenue Recognition and Revenue from Contracts with Customers Consumer Loans, Including Past Due Fees Consumer loans, including past due fees reflect interest income, including finance charges, and late fees on loans in accordance with the terms of the related customer agreements. 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. 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 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. F- 11 Table of Contents Other revenue 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 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 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. We earn a portion of the interchange fee the card networks charge merchants for the transaction and these fees are settled daily. Servicing revenue is generated by meeting contractual performance obligations related to the collection of amounts due on receivables, and is settled with the customer net of our fee, which can be settled daily or monthly. 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. 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. None of these revenue streams result in an ongoing obligation beyond what has already been rendered. 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: For the Year Ended December 31, 2024 CaaS Auto Finance Total Interchange revenues, net (1) $ 19,317 $ — $ 19,317 Servicing income 9,363 752 10,115 Service charges and other customer related fees 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 For the Year Ended December 31, 2023 CaaS Auto Finance Total Interchange revenues, net (1) $ 21,453 $ — $ 21,453 Servicing income 3,340 749 4,089 Service charges and other customer related fees 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 $ 160,029 $ 824 $ 160,853 ( 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 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. Card and loan servicing costs also include outsourced collections and customer service expenses. 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 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. F- 12 Table of Contents Recent Accounting Pronouncements 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". 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, 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. F- 13 Table of Contents 3. Segment Reporting We operate primarily within one industry consisting of two reportable segments by which we manage our business. Our two reportable segments are: CaaS and Auto Finance. 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. 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. 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 CaaS Auto Finance Total Revenue and other income: Consumer loans, including past due fees $ 939,514 $ 40,300 $ 979,814 Fees and related income on earning assets 269,688 83 269,771 Other revenue 59,561 809 60,370 Total operating revenue and other income 1,268,763 41,192 1,309,955 Other non-operating income 334 1,155 1,489 Total revenue and other income 1,269,097 42,347 1,311,444 Interest expense ( 157,178 ) ( 2,995 ) ( 160,173 ) Provision for credit losses ( 5,832 ) ( 10,536 ) ( 16,368 ) Changes in fair value of loans ( 733,471 ) — ( 733,471 ) Net margin 372,616 28,816 401,432 Operating expenses: Salaries and benefits ( 45,283 ) ( 4,860 ) ( 50,143 ) Card and loan servicing ( 105,149 ) ( 13,251 ) ( 118,400 ) Marketing and solicitation ( 56,062 ) ( 124 ) ( 56,186 ) Depreciation ( 2,641 ) ( 74 ) ( 2,715 ) Other ( 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 Total assets $ 3,181,428 $ 89,279 $ 3,270,707 Year Ended December 31, 2023 CaaS Auto Finance Total Revenue and other income: Consumer loans, including past due fees $ 839,995 $ 39,128 $ 879,123 Fees and related income on earning assets 238,691 84 238,775 Other revenue 36,524 824 37,348 Total operating revenue and other income 1,115,210 40,036 1,155,246 Other non-operating income 422 208 630 Total revenue and other income 1,115,632 40,244 1,155,876 Interest expense ( 105,990 ) ( 3,352 ) ( 109,342 ) Provision for credit losses — ( 2,152 ) ( 2,152 ) Changes in fair value of loans ( 689,577 ) — ( 689,577 ) Net margin 320,065 34,740 354,805 Operating expenses: Salaries and benefits ( 38,894 ) ( 5,012 ) ( 43,906 ) Card and loan servicing ( 87,772 ) ( 12,848 ) ( 100,620 ) Marketing and solicitation ( 52,301 ) ( 120 ) ( 52,421 ) Depreciation ( 2,508 ) ( 52 ) ( 2,560 ) Other ( 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 Total assets $ 2,602,615 $ 103,830 $ 2,706,445 F- 14 Table of Contents 4. Shareholders’ Equity and Preferred Stock During the years ended December 31, 2024 and 2023, we repurchased and contemporaneously retired 79,354 shares and 575,156 shares of our common stock at an aggregate cost of $ 2.2 million and $ 17.6 million, respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations. Preferred Stock 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. ATM Programs 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. 5. Redeemable Preferred Stock On November 26, 2014, we and certain of our subsidiaries entered into a Loan and Security Agreement with Dove Ventures, LLC, a Nevada limited liability company ("Dove"). The agreement provided for a senior secured term loan facility in an amount of up to $ 40.0 million at any time outstanding. On December 27, 2019, the Company issued 400,000 shares of its Series A Preferred Stock with an aggregate initial liquidation preference of $ 40.0 million, in exchange for full satisfaction of the $ 40.0 million that the Company owed Dove under the Loan and Security Agreement. Dividends on the preferred stock are 6 % per annum (cumulative, non-compounding) and are payable as declared, and in preference to any dividends on common stock and Series B preferred stock, in cash. The Series A Preferred Stock is perpetual and has no maturity date. The Company may, at its option, redeem the shares of Series A Preferred Stock on or after January 1, 2025 at a redemption price equal to $ 100 per share, plus any accumulated and unpaid dividends. At the request of holders of a majority of the shares of Series A Preferred Stock, the Company shall offer to redeem all of the Series A Preferred Stock at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends, at the option of the holders thereof, on or after January 1, 2024. Upon the election by the holders of a majority of the shares of Series A Preferred Stock, each share of the Series A Preferred Stock is convertible into the number of shares of the Company’s common stock as is determined by dividing (i) the sum of (a) $100 and (b) any accumulated and unpaid dividends on such share by (ii) an initial conversion price equal to $ 10 per share, subject to certain adjustment in certain circumstances to prevent dilution. Given the redemption rights contained within the Series A Preferred Stock, we account for the outstanding preferred stock as temporary equity in the consolidated balance sheets. Dividends paid on the Series A Preferred Stock are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. The common stock issuable upon conversion of Series A Preferred Stock is included in our calculation of Net income attributable to common shareholders per share—diluted. See Note 13, "Net Income Attributable to Controlling Interests Per Common Share" for more information. Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts. On November 14, 2019, a wholly-owned subsidiary issued 50.5 million Class B preferred units at a purchase price of $ 1.00 per unit to an unrelated third party. The units carry a 16 % preferred return to be paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional units or cash, at our election. The units have both call and put rights and are also subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the subsidiary. 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 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. Dividends paid on the Class B preferred units are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. See Note 13, "Net Income Attributable to Controlling Interests Per Common Share" for more information. F- 15 Table of Contents 6. Fair Values of Assets and Liabilities Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. 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 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: • Receivables are recorded at their fair value, not their principal and fee balance or cost basis; • The fair value of the loans takes into consideration net charge-offs for the remaining life of the loans with no separate allowance for credit loss calculation; • Certain fee billings (such as annual 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; • Changes in the fair value of loans impact net margins; and • Net charge-offs are recognized as they occur rather than through the establishment of an allowance and provision for credit losses for those loans, interest and fees receivable carried at amortized cost. For receivables that are carried at net amortized cost, we include disclosures of the fair value of such receivables to the extent practicable within the disclosures below. Where applicable, we account for our financial assets and liabilities at fair value based upon a three -tiered valuation system. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Where inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input that is significant to the fair value measurement in its entirety. Valuations and Techniques for Assets Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The table below summarizes (in thousands) by fair value hierarchy the 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) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Carrying Amount of Assets Loans 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 Loans at fair value $ — $ — $ 2,630,274 $ 2,630,274 ( 1 ) For cash, deposits and investments in equity securities, the carrying amount is a reasonable estimate of fair value. Assets – As of December 31, 2023 (1) Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Carrying Amount of Assets Loans 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 Loans at fair value $ — $ — $ 2,173,759 $ 2,173,759 ( 1 ) For cash, deposits and investments in equity securities, the carrying amount is a reasonable estimate of fair value. For those asset classes above that are 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. F- 16 Table of Contents For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the years ended December 31, 2023 and 2022: Loans at Fair Value 2024 2023 Balance at January 1, $ 2,173,759 $ 1,817,976 Changes in fair value of loans at fair value, included in earnings 129,832 71,024 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 current period finance and fee charge-offs (1) ( 251,984 ) ( 222,455 ) Total Changes in fair value of loans (2) ( 733,471 ) ( 689,577 ) Purchases 2,580,684 2,427,095 Finance and fees, added to the account balance 1,080,950 970,006 Settlements ( 2,471,648 ) ( 2,351,741 ) Balance at December 31,(3) $ 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. Loans at Fair Value. 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 private label credit and general purpose credit card receivables. We forecast the cash flows underlying our fair value assessment based on the individual offer type (in the case of general purpose credit cards) or by specific offers at our retail partners (for private label credit). While overall product return requirements among the offer types may be similar, the individual product offerings necessary to achieve those returns is often unique to each offer and retailer based on several factors, including acceptance rates of the offers by consumers and underlying consumer performance data which varies by offer type . Our fair value models include market degradation to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that current trends would suggest. 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. In order to mitigate these impacts and continue to serve consumers, we have worked collaboratively with our bank partners to assist them in taking a number of steps, from modifying products and policies (such as further tightening the criteria used to evaluate new loans) to changing prices (including increasing interest rates and fees charged to consumers). While our bank partners have the flexibility to unilaterally make changes to program offerings and must approve all changes to existing or new program offerings, we are only obligated to acquire receivables originated by the bank that utilized mutually agreed upon underwriting standards. The changes will take several quarters to fully implement. These modifications 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. F- 17 Table of Contents Valuations and Techniques for Liabilities Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the liability. The table below summarizes (in thousands) by fair value hierarchy the December 31, 2024 and 2023 fair values and carrying amounts of our liabilities not carried at fair value, but for which fair value disclosures are required: Liabilities – As of December 31, 2024 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Carrying Amount of Liabilities Loan purchase commitment $ — $ — $ 285 $ 285 Bank partner fees carried at fair value $ — $ — $ 13,644 $ 13,644 Liabilities not carried at fair value Revolving credit facilities $ — $ — $ 2,149,933 $ 2,193,993 Amortizing debt facilities $ — $ — $ 5,455 $ 5,455 Senior notes, net $ 281,703 $ — $ — $ 281,552 Liabilities – As of December 31, 2023 Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Carrying Amount of Liabilities Liabilities not carried at fair value Revolving credit facilities $ — $ — $ 1,838,647 $ 1,838,647 Amortizing debt facilities $ — $ — $ 23,038 $ 23,038 Senior notes, net $ 138,229 $ — $ — $ 144,453 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. Other Relevant Data Other relevant data (in thousands) as of December 31, 2024 and December 31, 2023 concerning certain assets and liabilities we carry at fair value are as follows: As of December 31, 2024 Loans at Fair Value Loans at Fair Value Pledged as Collateral under Structured Financings Aggregate unpaid gross balance of loans carried at fair value $ — $ 2,724,782 Aggregate unpaid principal balance included within loans at fair value $ — $ 2,472,999 Aggregate fair value of loans at fair value $ — $ 2,630,274 Aggregate fair value of loans at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) $ — $ 32,781 Unpaid principal balance of loans at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans, interest and fees receivable $ — $ 145,099 As of December 31, 2023 Loans at Fair Value Loans at Fair Value Pledged as Collateral under Structured Financings Aggregate unpaid gross balance of loans carried at fair value $ 507 $ 2,410,748 Aggregate unpaid principal balance included within loans at fair value $ 491 $ 2,176,845 Aggregate fair value of loans at fair value $ 508 $ 2,173,251 Aggregate fair value of loans at fair value that are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) $ — $ 29,149 Unpaid principal balance of loans at fair value and are 90 days or more past due (which also coincides with finance charge and fee non-accrual policies) over the fair value of such loans, interest and fees receivable $ 9 $ 147,803 F- 18 Table of Contents 7. Property Details (in thousands) of our property on our consolidated balance sheets are as follows: As of December 31, 2024 2023 Data processing and telephone equipment $ 871 $ 684 Software 1,848 850 Furniture and fixtures 3,468 3,286 Leasehold improvements 6,106 5,972 Other 7,576 7,576 Total cost 19,869 18,368 Less accumulated depreciation ( 9,350 ) ( 6,923 ) Property, net $ 10,519 $ 11,445 Depreciation expense totaled $ 2.7 million and $ 2.6 million for the years ended December 31, 2024 and 2023 , respectively. 8. Variable Interest Entities The Company contributes the vast majority of receivables to VIEs. These entities are sometimes established to facilitate third party financing. When assets are contributed to a VIE, they serve as collateral for the debt securities issued by that VIE. The evaluation of whether the entity qualifies as a VIE is based upon the sufficiency of the equity at risk in the legal entity. This evaluation is generally a function of the level of excess collateral in the legal entity. We consolidate VIEs when we hold a variable interest and we have exposure to loss that has the potential to be significant and therefore, are the primary beneficiary. Through our role as servicer, we have the power to direct activities to service the receivables (in accordance with defined servicing procedures), and as such, have the ability to significantly impact the economic performance of those VIEs. In certain circumstances we guarantee the performance of the underlying debt or agree to contribute additional collateral when necessary, which results in retention of exposure to loss that has the potential to be significant. As a result, the Company is the primary beneficiary and consolidates the VIEs. When collateral is pledged, it is not available for the general use of the Company and can only be used to satisfy the related debt obligation. The results of operations and financial position of consolidated VIEs are included in our consolidated financial statements. The 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): As of December 31, 2024 December 31, 2023 Unrestricted cash and cash equivalents $ 140.2 $ 158.0 Restricted cash and cash equivalents 98.8 20.5 Loans at fair value 2,542.9 2,128.6 Total Assets held by VIEs $ 2,781.9 $ 2,307.1 Notes Payable, net held by VIEs $ 2,128.0 $ 1,795.9 F- 19 Table of Contents 9. Leases We have operating leases primarily associated with our corporate offices and regional service centers as well as for certain equipment. Our leases have remaining lease terms of 1 to 10 years, some of which include options, at our discretion, to extend the leases for additional periods generally on one -year revolving periods. Other leases allow for us to terminate the lease based on appropriate notification periods. For certain of our leased offices, we sublease a portion of the unoccupied space. The components of lease expense associated with our lease liabilities and supplemental cash flow information related to those leases were as follows (dollar amounts in thousands): For the Year Ended December 31, 2024 2023 Operating lease cost, gross $ 2,541 $ 2,558 Sublease income ( 98 ) ( 96 ) Net Operating lease cost $ 2,443 $ 2,462 Cash paid under operating leases, gross $ 3,014 $ 1,871 Weighted average remaining lease term - months 112 122 Weighted average discount rate 7.1 % 6.6 % As of December 31, 2024 , scheduled payments of lease liabilities were as follows (in thousands): Gross Lease Payment Payments received from Sublease Net Lease Payment 2025 $ 3,046 $ ( 41 ) $ 3,005 2026 3,687 — 3,687 2027 3,572 — 3,572 2028 3,511 — 3,511 2029 3,466 — 3,466 Thereafter 16,704 — 16,704 Total lease payments 33,986 ( 41 ) 33,945 Less imputed interest ( 9,798 ) Operating lease liabilities $ 24,188 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. As of December 31, 2024, we had no material non-cancelable capital leases with initial or remaining terms of more than one year. F- 20 Table of Contents 10. Notes Payable Notes Payable, at Face Value Other notes payable outstanding as of December 31, 2024 and December 31, 2023 that are secured by the financial and operating assets of either the borrower, another of our subsidiaries or both, include the following, scheduled (in millions); except as otherwise noted, the assets of our holding company (Atlanticus Holdings Corporation) are subject to creditor claims under these scheduled facilities: As of December 31, 2024 December 31, 2023 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 December 1, 2026 ) (1) (2) (3) $ 36.1 $ 42.7 Revolving credit facility, not to exceed $ 50.0 million (expiring October 30, 2026 ) (2) (3) (4) (5) 49.8 38.6 Revolving credit facility, not to exceed $ 100.0 million (expiring December 15, 2025 ) (2) (3) (4) (5) (6) — — Revolving credit facility, not to exceed $ 75.0 million (expiring July 20, 2026 ) (2) (3) (4) (5) 74.6 47.5 Revolving credit facility, not to exceed $ 20.0 million (expiring April 10, 2025 ) (2) (3) (4) (5) 14.5 14.3 Revolving credit facility, not to exceed $ 250.0 million, repaid in May 2024 — 250.0 Revolving credit facility, not to exceed $ 50.0 million (expiring July 15, 2027 ) (2) (3) (4) (5) 50.0 15.0 Revolving credit facility, not to exceed $ 300.0 million (expiring December 15, 2026 ) (3) (4) (5) (6) 300.0 300.0 Revolving credit facility, not to exceed $ 283.3 million (expiring May 15, 2026 ) (3) (4) (5) (6) 283.3 300.0 Revolving credit facility, not to exceed $ 325.0 million (expiring November 15, 2028 ) (2) (3) (4) (5) (6) 325.0 250.0 Revolving credit facility, not to exceed $ 158.3 million (expiring August 5, 2026 ) (2) (3) (4) (5) (6) — 50.0 Revolving credit facility, not to exceed $ 100.0 million (expiring March 15, 2027 ) (3) (4) (5) (6) 100.0 100.0 Revolving credit facility, not to exceed $ 25.0 million (expiring August 30, 2027 ) (2) (3) (4) (5) 12.5 — Revolving credit facility, not to exceed $ 300.0 million (expiring February 15, 2028 ) (3) (4) (5) (6) 300.0 300.0 Revolving credit facility, not to exceed $ 150.0 million (expiring May 17, 2027 ) (3) (4) (5) (6) 150.0 150.0 Revolving credit facility, not to exceed $ 250.0 million (expiring November 15, 2028 ) (3) (4) (5) (6) 250.0 — Revolving credit facility, not to exceed $ 150.0 million (expiring March 29, 2025 ) (3) (4) (5) (6) 140.0 — Revolving credit facility, not to exceed $ 32.8 million (expiring March 29, 2025 ) (3) (4) (5) 30.0 — Revolving credit facility, not to exceed $ 100.0 million (expiring January 16, 2029 ) (3) (4) (5) (6) 100.0 — Other facilities Other debt 5.5 5.6 Unsecured term debt (repaid in August 2024 ) with a weighted average interest rate equal to 8.0 % (3) — 17.4 Total notes payable before unamortized debt issuance costs and discounts 2,221.3 1,881.1 Unamortized debt issuance costs and discounts ( 21.9 ) ( 19.4 ) Total notes payable outstanding, net $ 2,199.4 $ 1,861.7 ( 1 ) Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations. ( 2 ) These notes reflect modifications to either extend the maturity date, increase the loan amount or both, and are treated as accounting modifications. ( 3 ) See below for additional information. ( 4 ) Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes. ( 5 ) Loans are associated with VIEs. See Note 8, "Variable Interest Entities" for more information. ( 6 ) Creditors do not have recourse against the general assets of the Company but only to the collateral within the VIEs. As of 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 ). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to SOFR plus 3.0 %. The facility matures on October 30, 2026 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The facility is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels. F- 21 Table of Contents In October 2016, we (through a wholly owned subsidiary) entered a revolving credit facility available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $ 36.1 million was drawn as of December 31, 2024 ). This facility is secured by the financial and operating assets of CAR and accrues interest at an annual rate equal to SOFR plus a range between 2.25 % and 2.6 % based on certain ratios. The loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. In periods subsequent to October 2016, we amended the original agreement to either extend the maturity date and/or expand the capacity of this revolving credit facility. As of 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. In December 2017, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 75.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 74.6 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 Term Secured Overnight Financing Rate ("Term SOFR") plus 3.6 %. 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. The facility is subject to certain affirmative covenants, including payment, delinquency and charge-off tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus. In 2018, we (through a wholly owned subsidiary) entered a revolving credit facility to sell up to an aggregate $ 100.0 million of notes that are secured by the receivables and other assets of the trust (of which $ 0.0 million 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 equals the SOFR plus 3.75 %. The facility matures on December 15, 2025, and is subject to certain affirmative covenants and collateral performance tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance of notes. As of December 31, 2024 , the aggregate borrowing limit was $ 100.0 million. In June 2019, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 20.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 14.5 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 Prime Rate. 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 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 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. This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the greater of the Prime Rate or 4 %. The facility matures on July 15, 2027 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels. In June 2021, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026 through December 15, 2026). The terms of the ABS allow for a four -year revolving structure with a subsequent 11 -month to 18 -month amortization period. The weighted average interest rate on the securities is fixed at 4.24 %. In November 2021, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026). The terms of the ABS allow for a three -year revolving structure with a subsequent 18 -month amortization period. The weighted average interest rate on the securities is fixed at 3.53 %. In May 2022, we (through a wholly owned subsidiary) entered a (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 %. F- 22 Table of Contents 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 (as subsequently amended) August 5, 2026. In September 2022, we (through a wholly owned subsidiary) sold $ 100.0 million of ABS secured by certain private label credit receivables (expiring March 15, 2027). A portion of the proceeds from the sale was used to pay down other revolving facilities associated with our private label credit receivables, noted above, and the remaining proceeds have been invested in the acquisition of receivables. The terms of the ABS allow for a 3 -year revolving structure with an 18 -month amortization period. The weighted average interest rate on the securities is fixed at 7.32 %. In May 2023, we (through a wholly owned subsidiary) entered a revolving credit facility with a (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 (as subsequently amended) August 30, 2027 and is subject to certain covenants and restrictions of which the failure could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus. In September 2023, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring February 15, 2028). A portion of the proceeds from the sale was used to pay down other facilities associated with our credit card receivables, noted above, and the remaining proceeds have been invested in the acquisition of receivables. The terms of the ABS allow for a three -year revolving structure with a subsequent 18 -month amortization period. The weighted average interest rate on the securities is fixed at 9.51 %. In November 2023, we (through a wholly owned subsidiary) sold $ 150.0 million of ABS secured by certain private label credit receivables (expiring May 17, 2027). A portion of the proceeds from the sale was used to pay down other revolving facilities associated with our private label credit receivables, noted above, and the remaining proceeds have been invested in the acquisition of receivables. The terms of the ABS allow for a 2 -year revolving structure with an 18 -month amortization period. 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 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. The 2026 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 2026 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 2026 Senior Notes bear interest at the rate of 6.125 % per annum. Interest on the 2026 Senior Notes is payable quarterly in arrears on February 1, May 1, August 1 and November 1 of each year. The 2026 Senior Notes will mature on November 30, 2026. 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 $ 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. F- 23 Table of Contents 11. Commitments and Contingencies General Under finance products available in the private label credit and general purpose credit card channels, consumers have the ability to borrow up to the maximum credit limit assigned to each individual’s account. Unfunded commitments under these products aggregated $ 2.7 billion at December 31, 2024. We have never experienced a situation in which all borrowers have exercised their entire available lines of credit at any given point in time, nor do we anticipate this will ever occur in the future. Moreover, there would be a concurrent increase in assets should there be any exercise of these lines of credit. Additionally, our CAR operations provide floor-plan financing for a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business. The floor plan financing allows dealers and finance companies to borrow up to the maximum pre-approved credit limit allowed in order to finance ongoing inventory needs. These loans are secured by the underlying auto inventory and, in certain cases where we have other lending products outstanding with the dealer, are secured by the collateral under those lending arrangements as well, including any outstanding dealer reserves. As of December 31, 2024, CAR had unfunded outstanding floor-plan financing commitments totaling $ 9.1 million. Each draw against unused commitments is reviewed for conformity to pre-established guidelines and is not unconditional. Under agreements with third -party originating and other financial institutions, we have pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $ 20.1 million remains pledged as of December 31, 2024 to support various ongoing contractual obligations. Under agreements with third -party originating and other financial institutions, we have agreed to indemnify the financial institutions for certain liabilities associated with the services we provide on behalf of the financial institutions—such indemnification obligations generally being limited to instances in which we either (a) have been afforded the opportunity to defend against any potentially indemnifiable claims or (b) have reached agreement with the financial institutions regarding settlement of potentially indemnifiable claims. As of 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 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. Eligible events typically include loss of life, job loss, disability, or hospitalization. As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 86.6 million as of December 31, 2024. We have never experienced a situation in which all eligible participants have applied for this benefit at any given point in time, nor do we anticipate this will ever occur in the future. We include our estimate of future claims under this program within our fair value analysis of the associated receivables. Concentrations We acquire all of our fair value receivables under agreements with two third -party originating institutions. 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 2024 2023 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. Litigation We are involved in various legal proceedings that are incidental to the conduct of our business. There are currently no pending legal proceedings that are expected to be material to us. F- 24 Table of Contents 12. Income Taxes Deferred tax assets and liabilities reflect the effects of tax losses, credits, and the future income tax effects of temporary differences between the consolidated financial statement carrying amounts of existing assets and liabilities and their respective tax bases and are measured using enacted tax rates that apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The current and deferred portions (in thousands) of our federal, foreign, and state and other income tax expenses or benefits are as follows: For the Year Ended December 31, 2024 2023 Federal income tax (expense): Current tax benefit $ 1,916 $ 11,536 Deferred tax (expense) ( 24,946 ) ( 34,056 ) Total federal income tax (expense) $ ( 23,030 ) $ ( 22,520 ) Foreign income tax (expense): Current tax (expense) $ ( 142 ) $ ( 124 ) Deferred tax (expense) benefit ( 1 ) 10 Total foreign income tax (expense) $ ( 143 ) $ ( 114 ) State and other income tax (expense): Current tax benefit (expense) $ 248 $ ( 191 ) Deferred tax (expense) ( 5,546 ) ( 3,779 ) Total state and other income tax (expense) $ ( 5,298 ) $ ( 3,970 ) Total income tax (expense) $ ( 28,471 ) $ ( 26,604 ) 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 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. We report income tax-related interest and penalties (including those associated with both our accrued liabilities for uncertain tax positions and unpaid tax liabilities) within our income tax line item on our consolidated statements of income. 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 $ 0.6 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, 2024 2023 Statutory federal expense rate 21.0 % 21.0 % (Decrease) increase in statutory federal tax expense rate resulting from: Share-based compensation ( 0.1 ) ( 2.3 ) Section 162(m) of the Code executive compensation deduction limitations 0.2 2.3 Net interest and penalties related to uncertain tax positions and unpaid tax liabilities 0.1 0.1 Interest expense on preferred stock classified as debt for tax purposes ( 2.3 ) ( 2.6 ) Foreign taxes ( 0.2 ) ( 0.2 ) State taxes, net of valuation allowance changes affecting the provision of income taxes and federal tax benefit 3.0 2.4 Prior year provision to return reconciling items, tax effects of non-controlling interests, and other ( 0.1 ) ( 0.4 ) Global intangible low-taxed income tax 0.3 0.3 Loss on foreign subsidiary liquidation ( 1.5 ) — Effective income tax expense rate 20.4 % 20.6 % F- 25 Table of Contents 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: As of December 31, 2024 2023 Deferred tax assets: Capitalized research and experimentation expenditures and fixed assets $ 1,960 $ 1,612 Provision for credit loss 4,640 1,791 Credit card and other loans receivable fair value election differences 23,863 54,208 Equity-based compensation 1,739 1,594 Accrued expenses 238 183 Accruals for state taxes and interest associated with unrecognized tax benefits and unpaid accrued tax liabilities 271 235 Federal net operating loss carryforwards 58,225 35,199 Federal credit carryforwards 839 231 Foreign net operating loss carryforwards — 221 Other 1,485 1,609 State tax benefits, primarily from net operating losses 24,756 26,550 Deferred tax assets, gross $ 118,016 $ 123,433 Valuation allowances ( 14,307 ) ( 18,729 ) Deferred tax assets, net of valuation allowances $ 103,709 $ 104,704 Deferred tax (liabilities): Prepaid expenses and other $ ( 1,396 ) $ ( 1,096 ) Equity in income of equity-method investee ( 1,291 ) ( 945 ) Market discount on acquired marked discount bonds ( 219,762 ) ( 190,918 ) Deferred costs ( 31 ) ( 24 ) Deferred tax (liabilities), gross $ ( 222,480 ) $ ( 192,983 ) Deferred tax (liabilities), net $ ( 118,771 ) $ ( 88,279 ) 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 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. Because our valuation allowance evaluations require consideration of future events, significant judgment is required in making the evaluations, and our conclusions could be materially different if our expectations are not met. 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 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. F- 26 Table of Contents 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. 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 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: 2024 2023 Balance at January 1, $ ( 738 ) $ ( 22,692 ) Reductions based on tax positions related to prior years 72 21,983 (Additions) based on tax positions related to prior years ( 8 ) — (Additions) based on tax positions related to the current year ( 37 ) ( 29 ) Balance at December 31, $ ( 711 ) $ ( 738 ) 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. 13. Net Income Attributable to Controlling Interests Per Common Share We compute net income attributable to controlling interests per common share by dividing net income attributable to controlling interests by the weighted average number of shares of common stock (including participating securities) outstanding during the period, as discussed below. Diluted computations applicable in financial reporting periods in which we report income use the treasury stock method to reflect the potential dilution to the basic income per share of common stock computations that could occur if securities or other contracts to issue common stock were exercised, were converted into common stock or were to result in the issuance of common stock that would share in our results of operations. In performing our net income attributable to controlling interests per share of common stock computations, we apply accounting rules that require us to include all unvested stock awards that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in our basic and diluted calculations. Common stock and certain unvested share-based payment awards earn dividends equally, and we have included all outstanding restricted stock awards in our basic and diluted calculations for current and prior periods. The following table sets forth the computations of net income attributable to controlling interests per share of common stock (in thousands, except per share data): December 31, 2024 2023 Numerator: Net income attributable to controlling interests $ 111,296 $ 102,845 Preferred stock and preferred unit dividends and discount accretion ( 23,928 ) ( 25,198 ) Net income attributable to common shareholders—basic 87,368 77,647 Effect of dilutive preferred stock dividends and discount accretion 2,400 2,400 Net income attributable to common shareholders—diluted $ 89,768 $ 80,047 Denominator: Basic (including unvested share-based payment awards) (1) 14,748 14,504 Effect of dilutive stock compensation arrangements and exchange of preferred stock 4,053 4,378 Diluted (including unvested share-based payment awards) (1) 18,801 18,882 Net income attributable to common shareholders per share—basic $ 5.92 $ 5.35 Net income attributable to common shareholders per share—diluted $ 4.77 $ 4.24 ( 1 ) Shares related to unvested share-based payment awards included in our basic and diluted share counts were 362,842 for the year ended December 31, 2024 , compared to 230,428 for the year ended December 31, 2023 . As their effects were anti-dilutive, we excluded stock options to purchase 0.1 million shares from our net income attributable to controlling interests per share of common stock calculations for the year ended December 31, 2024. We excluded stock options to purchase 0.1 million shares from our net income attributable to controlling interests per share of common stock calculations for the year ended December 31, 2023. For the years ended December 31, 2024 and 2023, we included 4.0 million shares of common stock for each period in our outstanding diluted share counts associated with our Series A Preferred Stock. See Note 5, "Redeemable Preferred Stock", for a further discussion of these convertible securities. F- 27 Table of Contents 14. Stock-Based Compensation We currently have two stock-based compensation plans, the Second Amended and Restated Employee Stock Purchase Plan (the "ESPP") and the Fourth Amended and Restated 2014 Equity Incentive Plan (the "Fourth Amended 2014 Plan"). Our 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 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 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 During the years ended December 31, 2024 and 2023, we granted 205,301 shares and 148,546 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 6.3 million and $ 3.7 million, respectively. We incurred expenses of $ 3.8 million and $ 3.1 million during the years ended December 31, 2024 and 2023, respectively, related to restricted stock awards. When we grant restricted stock and restricted stock units, we defer the grant date value of the restricted stock and restricted stock unit and amortize that value (net of the value of anticipated forfeitures) as compensation expense with an offsetting entry to the paid-in capital component of our consolidated shareholders’ equity. Our restricted stock awards typically vest over a range of 12 to 60 months (or other term as specified in the grant which may include the achievement of performance measures) and are amortized to salaries and benefits expense ratably over applicable vesting periods. As of December 31, 2024, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 6.5 million with a weighted-average remaining amortization period of 3.5 years. No forfeitures have been included in our compensation cost estimates based on historical forfeiture rates. The table below includes additional information about outstanding restricted stock and restricted stock units: Number of Shares Weighted Average Grant Date Fair Value Outstanding at December 31, 2023 244,225 $ 32.75 Issued 218,650 $ 30.96 Vested ( 72,173 ) $ 33.79 Forfeited ( 13,349 ) $ 31.44 Outstanding at December 31, 2024 377,353 $ 31.56 Stock Options The exercise price per share of the options awarded under the Fourth Amended 2014 Plan must be equal to or greater than the market price on the date the option is granted. The option period may not exceed 10 years from the date of grant. We had expense of $ 0.1 million and $ 0.7 million related to stock option-related compensation costs during the years ended December 31, 2024 and 2023, respectively. When applicable, we recognize stock option-related compensation expense for any awards with graded vesting on a straight-line basis over the vesting period for the entire award. The table below includes additional information about outstanding options: Number of Shares Weighted Average Exercise Price Weighted Average of Remaining Contractual Life (in years) Aggregate Intrinsic Value Outstanding at December 31, 2023 223,406 $ 28.52 Issued — $ — Exercised ( 49,682 ) $ 19.85 Expired/Forfeited ( 13,333 ) $ 27.48 Outstanding at December 31, 2024 160,391 $ 31.30 1.2 $ 3,926,942 Exercisable at December 31, 2024 160,391 $ 31.30 1.2 $ 3,926,942 Information on stock options granted, exercised and vested is as follows (in thousands, except per share data): Year ended December 31, 2024 2023 Weighted average fair value per share of options granted N/A N/A Cash received from options exercised, net $ 984 $ 3,405 Aggregate intrinsic value of options exercised $ 1,566 $ 15,497 Grant date fair value of shares vested $ 1,071 $ 1,435 No options were issued during the years ended December 31, 2024 and 2023. We had $ 0.0 million and $ 0.1 million of unamortized deferred compensation costs associated with non-vested stock options as of December 31, 2024 and 2023, respectively, with a weighted average remaining amortization period of 0.0 years as of December 31, 2024. Upon exercise of outstanding options, the Company issues new shares. F- 28 Table of Contents 15. Employee Benefit Plans We maintain a defined contribution retirement plan ( "401 (k) plan") for our U.S. employees that provides for a matching contribution by us. All full time U.S. employees are eligible to participate in the 401 (k) plan. 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. Under the ESPP, employees can elect to have up to 10 % of their annual wages withheld to purchase our common stock up to a fair market value of $ 10,000 . The amounts deducted and accumulated by each participant are used to purchase shares of common stock on or as promptly as practicable after the last business day of each month. 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 $ 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. Our charge to expense associated with the ESPP was $ 47,000 and $ 36,000 in 2024 and 2023 respectively, which were included as a component of Salaries and benefits in the accompanying Consolidated Statements of Income. 16. Related Party Transactions Under a shareholders’ agreement which we entered into with certain shareholders, including David G. Hanna, Frank J. Hanna, III and certain trusts that were Hanna affiliates ( 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. Hanna, III. 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 $ 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 . In January 2013, HBR began leasing the services of certain employees from us. HBR reimburses us for the full cost of the employees, based on the amount of time devoted to HBR. In the 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. The agreement provided for a senior secured term loan facility in an amount of up to $ 40.0 million at any time outstanding. On December 27, 2019, the Company issued 400,000 shares of its Series A preferred stock with an aggregate initial liquidation preference of $ 40.0 million, in exchange for full satisfaction of the $ 40.0 million that the Company owed Dove under the Loan and Security Agreement. Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts. See Note 5, "Redeemable Preferred Stock," to our consolidated financial statements for more information. 17. 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. F-29