What changed in this filing

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Item 1. Financial Statements

2025-05-08 compared with 2024-11-07 · 384 added, 407 removed, 676 unchanged (54% of the section changed)

3 unchanged sentences

(Dollars in thousands)

September 30,

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

Unrestricted cash and cash equivalents (including $ 164.3 million and $ 140.2 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively)

$ 350,390 $ 375,416

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

Restricted cash and cash equivalents (including $ 86.9 million and $ 98.8 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively)

111,059 124,220

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

Loans at fair value (including $ 2,622.4 million and $ 2,542.9 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively)

2,668,503 2,630,274

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

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

Loans at amortized cost, net (including $ 4.8 million and $ 4.9 million of allowance for credit losses at March 31, 2025 and December 31, 2024, respectively;

and $ 20.1 million and $ 19.8 million of deferred revenue at March 31, 2025 and December 31, 2024, respectively)

81,238 84,332

Property at cost, net of depreciation

12,401 10,519

Operating lease right-of-use assets

7 unchanged sentences

24,145 24,188

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

Notes payable, net (including $ 2,137.6 million and $ 2,128.0 million associated with variable interest entities at March 31, 2025 and December 31, 2024, respectively)

2,174,632 2,199,448

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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 September 30, 2024 and December 31, 2023 (Note 5) (1)

Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $ 40.0 million) at March 31, 2025 and December 31, 2024 (Note 5) (1)

40,000 40,000

Class B preferred units issued to noncontrolling interests (Note 5)

74,975 100,250

Shareholders' Equity

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

Series B preferred stock, no par value, 3,314,840 shares issued and outstanding at March 31, 2025 (liquidation preference - $ 82.9 million);

3,301,179 shares issued and outstanding at December 31, 2024 (liquidation preference - $ 82.5 million) (1)

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

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

15,097,243 and 14,904,192 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively

Paid-in capital

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For the Three Months Ended

For the Nine Months Ended

September 30,

Revenue and other income:

Consumer loans, including past due fees

$ 247,655 $ 230,374

Fees and related income on earning assets

78,341 47,905

Other revenue

Total operating revenue

Other non-operating revenue

Total revenue

18,877 11,895

Total operating revenue and other income

344,873 290,174

Other non-operating income

Total revenue and other income

345,166 290,706

Interest expense

( 47,530 ) ( 35,063 )

Provision for credit losses

( 1,068 ) ( 2,944 )

Changes in fair value of loans

( 178,345 ) ( 159,171 )

118,223 93,528

Operating expenses:

Salaries and benefits

( 15,503 ) ( 13,312 )

Card and loan servicing

( 32,152 ) ( 26,822 )

Marketing and solicitation

( 20,334 ) ( 10,428 )

( 797 ) ( 654 )

( 8,569 ) ( 9,491 )

Total operating expenses

( 77,355 ) ( 60,707 )

Income before income taxes

40,868 32,821

Income tax expense

( 9,746 ) ( 7,002 )

31,122 25,819

Net loss attributable to noncontrolling interests

Net income attributable to controlling interests

31,520 26,170

Preferred stock and preferred unit dividends and discount accretion

( 3,574 ) ( 6,292 )

Net income attributable to common shareholders

$ 27,946 $ 19,878

Net income attributable to common shareholders per common share—basic

$ 1.85 $ 1.35

Net income attributable to common shareholders per common share—diluted

$ 1.49 $ 1.09

See accompanying notes.

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

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

For the Three Months Ended March 31, 2025 and March 31, 2024

(Dollars in thousands)

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3,301,179 $ — 14,904,192 $ — $ 98,278 $ 394,628 $ ( 3,543 ) $ 489,363 $ 40,000 $ 50,000

Accretion of discount associated with issuance of subsidiary equity

— — — — — ( 75 ) — ( 75 ) — 75

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

4 unchanged sentences

— — — — — ( 1,400 ) — ( 1,400 ) — —

Compensatory stock issuances, net of forfeitures

— — 206,629 — — — — — — —

Issuance of series B preferred stock, net

44,143 — — — 1,071 — — 1,071 — —

Distributions to owners of noncontrolling interests

— — — — — — ( 148 ) ( 148 ) — —

Contributions by owners of noncontrolling interests

— — — — — — 3 3 — —

Stock-based compensation costs

— — — — 940 — — 940 — —

Redemption and retirement of common shares

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

Net income (loss)

— — — — — 26,170 ( 351 ) 25,819 — —

Balance at March 31, 2024

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

Accretion of discount associated with issuance of subsidiary equity

— — — — — ( 75 ) — ( 75 ) — 75

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

— — — — — ( 596 ) — ( 596 ) — —

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

— — — — — ( 1,573 ) — ( 1,573 ) — —

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

— — — — — ( 4,064 ) — ( 4,064 ) — —

Stock option exercises and proceeds related thereto

2 unchanged sentences

— — 9,003 — — — — — — —

Stock-based compensation costs

— — — — 1,050 — — 1,050 — —

Redemption and retirement of common shares

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

Net income (loss)

— — — — — 24,280 ( 153 ) 24,127 — —

Balance at June 30, 2024

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

Accretion of discount associated with issuance of subsidiary equity

— — — — — ( 75 ) — ( 75 ) — 75

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

— — — — — ( 604 ) — ( 604 ) — —

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

— — — — — ( 1,573 ) — ( 1,573 ) — —

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

Issuance of common stock

— — 200,000 — 11,588 — — 11,588 — —

Stock option exercises and proceeds related thereto

Issuance of series B preferred stock, net

13,661 — — — 313 — — 313 — —

Compensatory stock issuances, net of forfeitures

Contributions by owners of noncontrolling interests

— — — — — — 78 78 — —

7 unchanged sentences

— — — — — 31,520 ( 398 ) 31,122 — —

Balance at September 30, 2024

Balance at March 31, 2025

3,314,840 $ — 15,097,243 $ — $ 110,138 $ 422,574 $ ( 3,863 ) $ 528,849 $ 40,000 $ —

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— — — — — (75 ) — ( 75 ) — 75

Discount associated with repurchase of preferred stock

— — — — 16 — — 16 — —

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

4 unchanged sentences

— — — — — ( 4,065 ) — ( 4,065 ) — —

Stock option exercises and proceeds related thereto

— — 1,258 — 19 — — 19 — —

Compensatory stock issuances, net of forfeitures

2 unchanged sentences

44,143 — — — 1,071 — — 1,071 — —

Distributions to owners of noncontrolling interests

— — — — — — ( 148 ) ( 148 ) — —

Contributions by owners of noncontrolling interests

2 unchanged sentences

— — — — 940 — — 940 — —

Redemption and retirement of preferred shares

(1,806 ) — — — ( 45 ) — — ( 45 ) — —

Redemption and retirement of common shares

4 unchanged sentences

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

Accretion of discount associated with issuance of subsidiary equity

— — — — (75 ) — — ( 75 ) — 75

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

— — — — ( 598 ) — — ( 598 ) — —

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

— — — — ( 1,551 ) — — ( 1,551 ) — —

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

— — — — ( 4,065 ) — — ( 4,065 ) — —

Stock option exercises and proceeds related thereto

— — 5,160 — 40 — — 40 — —

Compensatory stock issuances, net of forfeitures

— — ( 220 ) — — — — — — —

Issuance of series B preferred stock, net

2,100 — — — 43 — — 43 — —

Stock-based compensation costs

— — — — 1,031 — — 1,031 — —

Redemption and retirement of common shares

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

Net income (loss)

— — — — — 25,089 ( 275 ) 24,814 — —

Balance at June 30, 2023

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

Accretion of discount associated with issuance of subsidiary equity

— — — — ( 75 ) — — ( 75 ) — 75

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

— — — — ( 605 ) — — ( 605 ) — —

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

— — — — ( 1,552 ) — — ( 1,552 ) — —

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

— — — — ( 4,109 ) — — ( 4,109 ) — —

Stock option exercises and proceeds related thereto

— — 510,028 — 3,031 — — 3,031 — —

Compensatory stock issuances, net of forfeitures

— — ( 840 ) — — — — — — —

Issuance of series B preferred stock, net

300 — — — 6 — — 6 — —

Stock-based compensation costs

— — — — 908 — — 908 — —

Redemption and retirement of common shares

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

Net income (loss)

— — — — — 25,240 ( 267 ) 24,973 — —

Balance at September 30, 2023

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

See accompanying notes.

2 unchanged sentences

(Dollars in thousands)

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Operating activities

6 unchanged sentences

Changes in fair value of loans

Change in bank partner fees carried at fair value

Amortization of debt issuance costs

Stock-based compensation costs

Lease liability payments

Changes in assets and liabilities:

Decrease in lease liability

Increase in uncollected fees on earning assets

(Decrease) increase in income tax liability

(Decrease) increase in accounts payable and accrued expenses

Increase in income tax liability

Increase (decrease) in accounts payable and accrued expenses

Net cash provided by operating activities

8 unchanged sentences

Noncontrolling interests distributions

Proceeds from issuance of common stock

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

5 unchanged sentences

Repayment of borrowings

Net cash provided by financing activities

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

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

Cash and cash equivalents and restricted cash at beginning of period

Cash and cash equivalents and restricted cash at end of period

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

Net cash (used in) provided by financing activities

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

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

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

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

Unrestricted cash and cash equivalents

Restricted cash and cash equivalents

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

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

Supplemental cash flow information

Cash paid for interest

Net cash income tax payments

Cash paid for income taxes, net of refunds

Accretion of discount associated with issuance of subsidiary equity

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Notes to Condensed Consolidated Financial Statements

September 30, 2024 and 2023

March 31, 2025 and 2024

Description of Our Business

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

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

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

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

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

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

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

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

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

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

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

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

Within our CaaS segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $41 billion in consumer loans over more than 25 years of operating history, to support lenders in offering more inclusive financial services.

In these Notes to Condensed 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 condensed 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 $43 billion in consumer loans over more than 25 years of operating history, to support lenders in offering more inclusive financial services.

These products include private label credit cards using the Fortiva and Curae brand names as well as merchant associated brands.

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

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

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

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

We also report within our CaaS segment:

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

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

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

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

Rules enacted by the Consumer Financial Protection Bureau ("CFPB") which could limit the late fees charged to consumers were vacated in April 2025.

The Courts determined that the CFPB violated the Credit Card Accountability and Disclosure Act's and the Administrative Procedure Act requirement that penalty fees be "reasonable and proportional" to the violation.

In order to mitigate these impacts and continue to serve consumers, our bank partners took 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) which are included in our fair value calculations.

See Note 6 "Fair Values of Assets and Liabilities" for more information on our fair value measurements.

Significant Accounting Policies and Condensed Consolidated Financial Statement Components

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

The unaudited condensed financial statements furnished have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10 -Q and Rule 10 - 01 of Regulation S- X 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 condensed consolidated financial statements, including the condensed notes thereto, are unaudited and exclude some of the disclosures required in audited financial statements.

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

The condensed 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 condensed consolidated financial statements, as well as the reported amounts of revenues and expenses during each reporting period.

1 unchanged sentence

Actual results could differ materially from these estimates.

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

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

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 condensed consolidated balance sheets and condensed 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 condensed consolidated financial statements in prior periods due to the immateriality of this error on prior period results.

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

We also revised the presentation of our condensed consolidated statement of cash flows to ( 1 ) present the income from accretion of discounts associated with loans from amortized cost, net separate from the income from merchant fees associated with loans at fair value, ( 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, 3 ) reclassify lease liability payments to Decrease in lease liability below changes in assets and liabilities and 4 ) present deferred income tax expense separate from changes in income tax liability.

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

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

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

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

The changes will take several quarters to fully implement.

Certain disclosures have been revised to conform to current year presentation.

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

4 unchanged sentences

For more information on the Company's VIEs, see Note 7 "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.

Loans, Interest and Fees Receivable We maintain two categories of Loans on our condensed 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 condensed 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 reevaluates 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 condensed 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."

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

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

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

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

We purchased auto loans with outstanding principal of $ 48.1 million and $ 61.0 million for the three months ended March 31, 2025 and 2024, 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 two 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 nonperformance (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 March 31, 2025 and December 31, 2024, the weighted average remaining accretion period for the $ 20.1 million and $ 19.8 million of deferred revenue reflected in the condensed consolidated balance sheets was 23 and 24 months, respectively.

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

For the Three Months Ended September 30,

Allowances for credit losses:

For the Three Months Ended March 31,

Notes Receivable

Allowance for credit losses:

Balance at beginning of period

3 unchanged sentences

— 1.8 1.8 — 1.8 1.8

Balance at end of period

— ( 0.6 ) ( 0.6 ) — ( 0.5 ) ( 0.5 )

For the Nine Months Ended September 30,

Allowances for credit losses:

Balance at beginning of period

$ ( 1.8 ) $ ( 1.6 )

Provision for credit losses

( 9.3 ) ( 1.6 )

( 1.9 ) ( 1.4 )

Balance at end of period

$ ( 5.9 ) $ ( 4.8 ) $ ( 10.7 ) $ — $ ( 3.4 ) $ ( 3.4 )

September 30,

Allowances for credit losses:

Balance at end of period individually evaluated for impairment

Allowance for credit losses:

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

$ ( 5.9 ) $ ( 5.9 )

Balance at end of period collectively evaluated for impairment

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

$ ( 1.1 ) $ ( 1.2 )

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

$ ( 3.7 ) $ ( 3.7 )

Loans at amortized cost:

4 unchanged sentences

$ 104.1 $ 107.5

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 September 30, 2024 and December 31, 2023 is as follows:

September 30,

An aging of our delinquent loans at amortized cost (in millions) as of March 31, 2025 and December 31, 2024 is as follows:

30-59 days past due

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

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

In all periods, the factors that decreased our effective tax rate relative to the statutory rate included ( 1 ) our deduction for income tax purposes of amounts characterized in our condensed consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and ( 2 ) deductions associated with the exercises of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’ grant date values.

Also, in all periods, the factors that increased our effective tax rate relative to the statutory rate included ( 1 ) state and foreign income tax expense, including the effects of law changes enacted in certain states in which we operate, ( 2 ) taxes on global intangible low-taxed income, and ( 3 ) deduction disallowance under Section 162 (m) of the Internal Revenue Code of 1986, as amended, with respect to compensation paid to our covered employees.

We report interest expense associated with our income tax liabilities (including accrued liabilities for uncertain tax positions) within our income tax line item on our condensed consolidated statements of income.

For the three months ended March 31, 2025 and 2024, no Loans at amortized cost qualified as a FDM.

We experienced effective tax rates of 23.6 % and 21.1 % for the three months ended March 31, 2025, and 2024, respectively.

These effective tax expense rates were above the statutory rate principally due to ( 1 ) state and foreign income tax expense, ( 2 ) interest accrued on uncertain tax positions, ( 3 ) taxes on global intangible low-taxed income, and ( 4 ) deduction disallowance under Section 162 (m) of the Internal Revenue Code of 1986, as amended, with respect to compensation paid to our covered employees.

Offsetting the foregoing items were deductions associated with the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’ grant date values.

Another offsetting item of a greater magnitude in the three months ended March 31, 2024, versus the three months ended March 31, 2025, was our deduction of income tax expense on debt for tax purposes that was repaid in the three months ended March 31, 2025, such financial instrument which was characterized in our consolidated financial statements as dividend-paying preferred stock.

We report interest expense associated with our income tax liabilities (including accrued liabilities for uncertain tax positions) within our income tax line item on our consolidated statements of income.

We likewise report within such line item the reversal of interest expense associated with our accrued liabilities for uncertain tax positions to the extent we resolve such liabilities in a manner favorable to our accruals therefor.

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

Such interest expense was de minimis in both the three months ended March 31, 2025, and 2024.

Revenue Recognition and Revenue from Contracts with Customers

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

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

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

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

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

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

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

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

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

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

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

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

Fees and Related Income on Earning Assets

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

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

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

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

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

We recognize these fees as income when they are billed to the customers’ accounts.

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

Other revenue

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

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

We recognize these fees as income in the period earned.

Other non-operating revenue

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

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

Revenue from contracts with customers is included in Other revenue on our condensed consolidated statements of income.

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

For the Three Months Ended September 30, 2024

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.

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 condensed consolidated statements of income.

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

For the Three Months Ended March 31, 2025

Interchange revenues, net (1)

4 unchanged sentences

10,018 9 10,027

Total revenue from contracts with customers

$ 16,794 $ 199 $ 16,993

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

For the Nine Months Ended September 30, 2024

Interchange revenues, net (1)

$ 14,448 $ — $ 14,448

Servicing income

Total Other revenue

18,698 179 18,877

Service charges and other customer related fees

Merchant fees (2)

33,577 — 33,577

1 unchanged sentence

$ 52,275 $ 179 $ 52,454

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

For the Three Months Ended September 30, 2023

For the Three Months Ended March 31, 2024

Interchange revenues, net (1)

4 unchanged sentences

5,679 17 5,696

Total revenue from contracts with customers

$ 10,180 $ 198 $ 10,378

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

For the Nine Months Ended September 30, 2023

Interchange revenues, net (1)

$ 15,409 $ — $ 15,409

Servicing income

Total Other revenue

11,678 217 11,895

Service charges and other customer related fees

Merchant fees (2)

24,264 — 24,264

2 unchanged sentences

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

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

Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023 - 09, "Income Taxes (Topic 740 ):

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" ).

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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 ):

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

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

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Retrospective adoption to all periods presented is required, 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.

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.

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 condensed consolidated financial statements for additional information.

Segment Reporting

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CaaS and Auto Finance.

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

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

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

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

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

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

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

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

and all revenue is generated within the U.S.

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

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

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

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

Three Months Ended September 30, 2024

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:

Three Months Ended March 31, 2025

Revenue and other income:

Consumer loans, including past due fees

4 unchanged sentences

18,698 179 18,877

Total operating revenue

340,677 10,277 350,954

Other non-operating revenue

Total operating revenue and other income

335,524 9,349 344,873

Total revenue

Other non-operating income

Total revenue and other income

335,531 9,635 345,166

6 unchanged sentences

110,177 8,046 118,223

Income (loss) before income taxes

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

Income tax (expense) benefit

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

Nine Months Ended September 30, 2024

Consumer loans, including past due fees

$ 697,385 $ 30,727 $ 728,112

Fees and related income on earning assets

185,921 62 185,983

Other revenue

42,052 622 42,674

Total operating revenue

925,358 31,411 956,769

Other non-operating revenue

Operating expenses:

Salaries and benefits

( 14,286 ) ( 1,217 ) ( 15,503 )

Total revenue

Card and loan servicing

( 28,857 ) ( 3,295 ) ( 32,152 )

Interest expense

Marketing and solicitation

( 20,327 ) ( 7 ) ( 20,334 )

Provision for credit losses

( 778 ) ( 19 ) ( 797 )

Changes in fair value of loans

( 7,534 ) ( 1,035 ) ( 8,569 )

Total operating expenses

( 71,782 ) ( 5,573 ) ( 77,355 )

1 unchanged sentence

$ 38,395 $ 2,473 $ 40,868

Income tax expense

$ 3,185,715 $ 86,450 $ 3,272,165

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

Three Months Ended September 30, 2023

Three Months Ended March 31, 2024

Revenue and other income:

Consumer loans, including past due fees

4 unchanged sentences

11,677 218 11,895

Total operating revenue

284,607 10,306 294,913

Other non-operating revenue

Total operating revenue and other income

279,601 10,573 290,174

Total revenue

Other non-operating income

Total revenue and other income

279,883 10,823 290,706

6 unchanged sentences

86,476 7,052 93,528

Income before income taxes

$ 28,455 $ 3,303 $ 31,758

Income tax expense

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

Nine Months Ended September 30, 2023

Consumer loans, including past due fees

$ 625,393 $ 29,032 $ 654,425

Fees and related income on earning assets

167,022 62 167,084

Other revenue

24,522 615 25,137

Total operating revenue

Operating expenses:

Salaries and benefits

( 11,891 ) ( 1,421 ) ( 13,312 )

Other non-operating revenue

Total revenue

Card and loan servicing

( 23,458 ) ( 3,364 ) ( 26,822 )

Interest expense

Marketing and solicitation

( 10,396 ) ( 32 ) ( 10,428 )

Provision for credit losses

( 636 ) ( 18 ) ( 654 )

Changes in fair value of loans

( 8,281 ) ( 1,210 ) ( 9,491 )

Total operating expenses

( 54,662 ) ( 6,045 ) ( 60,707 )

1 unchanged sentence

$ 31,814 $ 1,007 $ 32,821

Income tax expense

$ 2,682,189 $ 105,026 $ 2,787,215

$ 2,493,946 $ 102,955 $ 2,596,901

Shareholders’ Equity and Preferred Stock

During the three and nine months ended September 30, 2024 and 2023, we repurchased and contemporaneously retired 11,193 shares, 78,429 shares, 285,906 shares and 463,707 shares of our common stock at an aggregate cost of $ 0.3 million, $ 2.1 million, $ 9.4 million and $ 14.3 million, respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.

During the three months ended March 31, 2025 and 2024, we repurchased and contemporaneously retired 27,252 shares and 18,033 shares of our common stock at an aggregate cost of $ 1.2 million and $ 0.5 million, respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.

Preferred Stock

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

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

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

No shares of Series B Preferred Stock were repurchased in the three months ended March 31, 2025 and 2024.

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

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

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

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

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

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

During the three months ended March 31, 2025 and 2024, we sold 13,661 shares and 44,143 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $ 0.3 million and $ 1.1 million, respectively.

During the three months ended March 31, 2025 and 2024, no 2026 Senior Notes were sold under the Company's Preferred Stock ATM Program.

During the three months ended March 31, 2025 and 2024, we sold $ 17.7 million and $ 0 , respectively, principal amount of our 2029 Senior Notes under our Preferred Stock ATM Program for net proceeds of $ 17.4 million and $ 0 , respectively.

During the three months ended March 31, 2025 and 2024, we sold 200,000 and 0 common shares, respectively, under the Company’s Common Stock ATM Program for net proceeds of $ 11.6 million and $ 0 , respectively.

Redeemable Preferred Stock

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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.

The units carried a 16 % preferred return to be paid quarterly.

The units had both call and put rights and were subject to various covenants including a minimum book value.

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

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

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.

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.

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.

In periods where present, we have included the issuance of these Class B preferred units as temporary noncontrolling interest on the condensed consolidated balance sheets.

Dividends paid on the Class B preferred units were deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders.

See Note 11, "Net Income Attributable to Controlling Interests Per Common Share" for more information.

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

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

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

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

2 unchanged sentences

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

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

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

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

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

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

Assets – As of September 30, 2024 (1)

The table below summarizes (in thousands) by fair value hierarchy the March 31, 2025 and December 31, 2024 fair values and carrying amounts of ( 1 ) our assets that are carried at fair value in our condensed consolidated financial statements and ( 2 ) our assets not carried at fair value, but for which fair value disclosures are required:

Assets – As of March 31, 2025 (1)

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

6 unchanged sentences

$ — $ — $ 2,668,503 $ 2,668,503

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

Assets – As of December 31, 2024 (1)

8 unchanged sentences

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

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

For Level 3 assets carried at fair value measured on a recurring basis using significant unobservable inputs, the following table presents (in thousands) a reconciliation of the beginning and ending balances for the three and nine months ended September 30, 2024 and 2023:

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 three months ended March 31, 2025 and 2024, we estimate the portion of fair value changes considered to be attributable to changes in instrument-specific credit risk to be $ 9.3 million and $( 6.5 ) million, respectively.

Loans at Fair Value

3 unchanged sentences

55,164 72,508

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

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

( 163,533 ) ( 167,956 )

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

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

( 69,976 ) ( 63,723 )

5 unchanged sentences

( 685,340 ) ( 642,122 )

Balance at September 30,(2)

Balance at March 31,(3)

$ 2,668,503 $ 2,150,636

Aggregate unpaid gross balance of loans carried at fair value

$ 2,706,264 $ 2,318,104

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

$ 55,164 $ 72,508

( 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 condensed consolidated statements of income.

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

( 3 ) As of March 31, 2025 and March 31, 2024, the aggregate unpaid principal balance included within loans at fair value was $ 2,462 million and $ 2,105 million, respectively.

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

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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.

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

The changes will take several quarters to fully implement.

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

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

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

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

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 condensed 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 condensed consolidated statements of income.

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

As such, it is not always necessary for us to collect the aggregate unpaid gross balance of the underlying receivable to achieve desired returns.

Valuations and Techniques for Liabilities

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 September 30, 2024 and December 31, 2023 fair values and carrying amounts of our liabilities not carried at fair value, but for which fair value disclosures are required:

Liabilities – As of September 30, 2024

The table below summarizes (in thousands) by fair value hierarchy the March 31, 2025 and December 31, 2024 fair values and carrying amounts of our liabilities not carried at fair value, but for which fair value disclosures are required:

Liabilities – As of March 31, 2025

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

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Carrying Amount of Liabilities

Loan purchase commitment

$ — $ — $ 327 $ 327

Bank partner fees carried at fair value

$ — $ — $ 14,158 $ 14,158

Liabilities not carried at fair value

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Carrying Amount of Liabilities

Loan purchase commitment

$ — $ — $ 285 $ 285

Bank partner fees carried at fair value

$ — $ — $ 13,644 $ 13,644

Liabilities not carried at fair value

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$ 281,703 $ — $ — $ 281,552

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

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

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

Bank partner fees carried at fair value in accordance with ASC 815, "Derivatives and Hedging", reflect the estimated fair value of future compensation we owe our bank partners associated with the regulatory oversight and other services 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 condensed consolidated statements of income on the date we acquire the underlying receivable.

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 9, "Notes Payable," for further discussion on our other notes payable.

Other Relevant Data

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

As of September 30, 2024

Loans at Fair Value

Other relevant data (in thousands) as of March 31, 2025 and December 31, 2024 concerning certain assets we carry at fair value are as follows:

Loans at Fair Value Pledged as Collateral under Structured Financings

Aggregate unpaid gross balance of loans at fair value

$ 338 $ 2,653,774

Aggregate unpaid principal balance included within loans at fair value

$ 335 $ 2,420,070

Aggregate fair value of loans at fair value

$ 338 $ 2,511,281

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

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

$ 4 $ 141,035

As of March 31, 2025

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 at fair value

Aggregate unpaid gross balance of loans carried at fair value

$ 2,706,264 $ 2,724,782

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

$ 30,102 $ 32,781

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Variable Interest Entities

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

September 30, 2024

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 responsibility to service the receivables (in accordance with defined servicing procedures on behalf of our bank partner), 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 condensed 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):

March 31, 2025

December 31, 2024

Unrestricted cash and cash equivalents

$ 147.3 $ 158.0

Restricted cash and cash equivalents

Loans at fair value

2,189.4 2,128.6

Total Assets held by VIEs

$ 2,358.7 $ 2,307.1

Notes Payable, net held by VIEs

$ 1,802.6 $ 1,795.9

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 Three Months Ended September 30,

For the Nine Months Ended September 30,

For the Three Months Ended March 31,

Operating lease cost, gross

$ 635 $ 643 $ 1,899 $ 1,919

Sublease income

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Net Operating lease cost

$ 610 $ 618 $ 1,826 $ 1,847

Cash paid under operating leases, gross

$ 754 $ 755 $ 2,253 $ 1,116

Weighted average remaining lease term - months

Weighted average discount rate

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

As of March 31, 2025 , scheduled payments of lease liabilities were as follows (in thousands):

Gross Lease Payment

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

The remaining total commitment under this lease is approximately $ 25.1 million and is included in the table above.

In connection with the commencement of this lease, we discontinued most of the subleasing arrangements with third parties for space at our corporate headquarters.

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

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

The Expansion space 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 $ 31.9 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 condensed consolidated financial statements.

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

As of March 31, 2025, we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

Notes Payable

Notes Payable, at Face Value

Other notes payable outstanding as of September 30, 2024 and December 31, 2023 that are secured by the financial and operating assets of either the borrower, another of our subsidiaries or both, include the following, scheduled (in millions); except as otherwise noted, the assets of our holding company (Atlanticus Holdings Corporation) are subject to creditor claims under these scheduled facilities:

September 30, 2024

Other notes payable outstanding as of March 31, 2025 and December 31, 2024 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:

March 31, 2025

December 31, 2024

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

Revolving credit facilities at a weighted average interest rate equal to 7.1 % as of March 31, 2025 ( 7.0 % as of December 31, 2024) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $ 2,792.5 million as of March 31, 2025 ($ 2,723.5 million as of December 31, 2024)

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

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

Revolving credit facility, not to exceed $ 20.0 million (expiring December 11, 2024 ) (2) (3) (4) (5)

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

Revolving credit facility, not to exceed $ 40.0 million (expiring April 7, 2028 ) (2) (3) (4) (5)

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

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

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

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

Revolving credit facility, not to exceed $ 150.0 million (expired April 28, 2025 ) (2) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 32.8 million (expired April 28, 2025 ) (2) (3) (4)

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

Revolving credit facility, not to exceed $ 200.0 million (expiring September 15, 2028 ) (3) (4) (5) (6)

Revolving credit facility, not to exceed $ 200.0 million (expiring September 15, 2027 ) (3) (4) (5) (6)

Other facilities

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

Total notes payable before unamortized debt issuance costs and discounts

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

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

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 September 30, 2024 ).

As of March 31, 2025 , the Prime Rate was 7.50 %, the Term Secured Overnight Financing Rate ("Term SOFR") was 4.32 % and the Secured Overnight Financing Rate ("SOFR") was 4.41 %.

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to SOFR plus 3.0 %.

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

In October 2016, we (through a wholly owned subsidiary) entered a revolving credit facility available to the extent of outstanding eligible principal receivables of our CAR subsidiary (of which $ 34.4 million was drawn as of September 30, 2024 ).

This facility is secured by the financial and operating assets of CAR and accrues interest at an annual rate equal to SOFR plus a range between 2.25 % and 2.6 % based on certain ratios.

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

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

As of March 31, 2025, the facility's borrowing limit was $ 65.0 million and the facility matures on December 1, 2026.

There were no other material changes to the existing terms or conditions as a result of these amendments and the new maturity date and borrowing limit are reflected in the table above.

In December 2017, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 50.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 24.7 million was drawn as of September 30, 2024 ).

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

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

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 $ 66.8 million was drawn as of March 31, 2025).

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

In 2018, we (through a wholly owned subsidiary) entered a revolving credit facility to sell up to an aggregate $ 100.0 million of notes that are secured by the receivables and other assets of the trust (of which $ 0.0 million was outstanding as of March 31, 2025) 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 September 30, 2024 , the aggregate borrowing limit was $ 100.0 million.

In June 2019, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 20.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 16.8 million was drawn as of September 30, 2024 ).

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

The facility matures on December 11, 2024.

As of March 31, 2025, 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) $ 40.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $ 12.5 million was drawn as of March 31, 2025).

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 2.85 %.

The facility matures on April 7, 2028.

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 September 30, 2024 ) that is available to the extent of outstanding eligible principal receivables.

In January 2021, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $ 50.0 million borrowing limit (of which $ 49.7 million was drawn as of March 31, 2025) that is available to the extent of outstanding eligible principal receivables.

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

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The weighted average interest rate on the securities is fixed at 4.24 %.

In November 2021, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026).

In November 2021, we (through a wholly owned subsidiary) sold $ 300.0 million of ABS (of which $ 233.3 million was outstanding as of March 31, 2025) 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 September 30, 2024 ) secured by certain credit card receivables (expiring November 15, 2028).

In May 2022, we (through a wholly owned subsidiary) entered a (as subsequently amended) $ 325.0 million ABS agreement (of which $ 325.0 million was drawn as of March 31, 2025) secured by certain credit card receivables (expiring November 15, 2028).

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

The weighted average interest rate on the securities is fixed at 6.33 %.

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

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 March 31, 2025) 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 %.

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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 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 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 September 30, 2024 ).

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

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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 were invested in the acquisition of receivables.

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

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

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

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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 $ 100.0 million was drawn as of September 30, 2024.

In July 2024, we (through a wholly owned subsidiary) sold $ 150.0 million of ABS secured by certain private label credit receivables of which $ 0.0 million was drawn as of March 31, 2025.

The facility matured on (as subsequently amended) April 28, 2025.

The proceeds were invested in the acquisition of receivables.

This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the Term SOFR plus 2.15 %.

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

In conjunction with this financing, we (through as wholly owned subsidiary) also entered a revolving credit facility with a $ 32.8 million revolving limit of which $ 0.0 million was drawn as of March 31, 2025.

The facility matured on (as subsequently amended) April 28, 2025.

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

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

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 %.

In March 2025, we (through a wholly owned subsidiary) sold $ 200.0 million of ABS secured by certain private label credit receivables (expiring September 15, 2028).

The terms of the ABS allow for a 25 -month revolving structure with an 18 -month amortization period.

The interest rate on the securities is fixed at 6.60 %.

In March 2025, we (through a wholly owned subsidiary) entered a $ 200.0 million ABS agreement secured by certain private label credit card receivables (of which $ 10.0 million was outstanding as of March 31, 2025) that can be drawn upon to the extent of outstanding eligible receivables.

The interest rate on the notes is based on a commercial paper rate plus 2.00 %.

The facility matures on September 15, 2027.

As of March 31, 2025, we were in compliance with the covenants underlying our various notes payable and credit facilities.

Senior Notes, net

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

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

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

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

Amortization of these fees for the three months ended March 31, 2025 and 2024 totaled $ 0.4 million and $ 0.4 million, respectively.

We repurchased $ 0.0 and $ 0.4 million of the outstanding principal amount of these 2026 Senior Notes in the three months ended March 31, 2025 and 2024, respectively.

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

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

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

Amortization of these fees for the three months ended March 31, 2025 and 2024 totaled $ 0.3 million and $ 0.1 million, respectively.

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

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

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

Unfunded commitments under these products aggregated $ 2.6 billion at March 31, 2025.

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

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

As of September 30, 2024 , CAR had unfunded outstanding floor-plan financing commitments totaling $ 9.8 million.

As of March 31, 2025, CAR had unfunded outstanding floor-plan financing commitments totaling $ 9.6 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 $ 19.6 million remains pledged as of September 30, 2024 to support various ongoing contractual obligations.

Under agreements with third -party originating and other financial institutions, we have pledged security (collateral) related to their issuance of consumer credit and purchases thereunder, of which $ 22.7 million remains pledged as of March 31, 2025 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 September 30, 2024 , we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote.

As of March 31, 2025, we have assessed the likelihood of any potential payments related to the aforementioned contingencies as remote.

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

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

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

As an acquirer of receivables, our potential exposure under this program, if all eligible participants applied for this benefit, was $ 106.2 million as of March 31, 2025.

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

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

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

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

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

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

Purchases for the Three Months Ended September 30,

Purchases for the Nine Months Ended September 30,

Our top five retail partnerships accounted for over 75 % of our private label receivables outstanding as of March 31, 2025.

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 three months ended March 31, 2025 and 2024, we had receivable purchases from our top five retail partners of the following (in millions):

Gross Purchases

For the Three Months Ended March 31,

Largest Retail Partners

4 unchanged sentences

5 $ 17.6 $ 11.7

$ 11.5 $ 11.6 $ 31.2 $ 37.0

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

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

As of March 31, 2025 , only one state (Texas) had receivables concentration in excess of 10% of our total pool of receivables.

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

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For the Three Months Ended

For the Nine Months Ended

September 30,

Net income attributable to controlling interests

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Effect of dilutive preferred stock dividends and discount accretion

604 605 1,797 1,795

Net income attributable to common shareholders—diluted

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Effect of dilutive stock compensation arrangements and exchange of preferred stock

4,048 4,411 4,046 4,479

Diluted (including unvested share-based payment awards) (1)

4 unchanged sentences

$ 1.49 $ 1.09

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

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

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

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

Shares related to unvested share-based payment awards included in our basic and diluted share counts were 352,266 for the three months ended March 31, 2025 compared to 293,578 for the three months ended March 31, 2024, respectively.

There were no such anti-dilutive stock options for the three months ended March 31, 2025.

For the three months ended March 31, 2025 and 2024, we included 4.0 million shares of common stock for each period in our outstanding diluted share counts associated with our Series A Preferred Stock.

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

Stock-Based Compensation

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

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 shares of our common stock to members of our Board of Directors, employees, consultants and advisors.

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

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

As of September 30, 2024 , 43,361 shares remained available for issuance under the ESPP and 1,947,592 shares remained available for issuance under the Fourth Amended 2014 Plan.

Exercises and vestings under our stock-based compensation plans resulted in no income tax-related charges to paid-in capital during the three and nine months ended September 30, 2024 and 2023.

As of March 31, 2025, 41,169 shares remained available for issuance under the ESPP and 1,970,518 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 three months ended March 31, 2025 and 2024.

Restricted Stock and Restricted Stock Units

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

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

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

During the three months ended March 31, 2025 and 2024, we granted 9,003 shares and 206,629 shares of restricted stock and restricted stock units (net of any forfeitures), respectively, with aggregate grant date fair values of $ 0.4 million and $ 6.4 million, respectively.

We incurred expenses of $ 0.9 million and $ 0.9 million during the three months ended March 31, 2025 and 2024, respectively, related to restricted stock awards.

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

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

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

As of March 31, 2025, our unamortized deferred compensation costs associated with non-vested restricted stock awards were $ 6.0 million with a weighted-average remaining amortization period of 3.3 years.

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

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( 489 ) $ 30.75

Outstanding at September 30, 2024

Outstanding at March 31, 2025

307,736 $ 31.90

Stock Options

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

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

We had expense of $ 0 million and $ 0.1 million related to stock option-related compensation costs during the three months ended March 31, 2025 and 2024, respectively.

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

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Expired/Forfeited

( 2,000 ) $ 15.30

Outstanding at September 30, 2024

Outstanding at March 31, 2025

160,091 $ 31.33 1.0 $ 3,173,576

Exercisable at September 30, 2024

Exercisable at March 31, 2025

160,091 $ 31.33 1.0 $ 3,173,576

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

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

No options were issued during the three months ended March 31, 2025 and 2024.

We had no unamortized deferred compensation costs associated with non-vested stock options at both March 31, 2025 and December 31, 2024.

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

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

What changed 10-Q

Item 1. Financial Statements