What changed in this filing

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Item 1. Business

2026-03-12 compared with 2025-03-13 · 37 added, 25 removed, 216 unchanged (22% of the section changed)

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We provide technology and other support services to lenders who offer an array of financial products and services to consumers.

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

Both private label and general purpose card products are originated by The Bank of Missouri, WebBank and First Bank and Trust (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.

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Atlanticus’ decisioning platform is enhanced by machine learning, enabling lenders to make fast, sound decisions when it matters most.

In this Report, "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.

We are principally engaged as a program manager, providing a technology platform and corresponding products and 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.

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.

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

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

In this Report, "receivables" or "loans" typically refer to receivables we have purchased from our bank partners or from other third parties.

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 and 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.

On September 11, 2025, we closed the acquisition of all outstanding equity interests of Mercury, a leading data- and tech-centric credit card platform utilized by bank partners to provide credit cards to near-prime consumers in the U.S.

The acquisition aligns with Atlanticus’ strategic objective to expand its consumer credit offerings and increase scale within its credit card operations.

At the closing, Mercury became a wholly owned subsidiary of Atlanticus.

The acquisition of Mercury adds an established top 25 credit card program to the suite of programs that Atlanticus manages on behalf of its bank partners.

Mercury’s credit card offerings, including Mercury-branded and co-branded programs, complement Atlanticus’ general purpose credit card, retail credit, patient financing, and dealer solutions products.

The total purchase consideration was approximately $166.5 million in cash with an opportunity, for the seller, under the purchase agreement to receive earn out payments based on the performance of the acquired receivables over a limited period of time.

As a result of the acquisition, we added approximately $3.2 billion in gross credit card receivables and increased the number of customers served on behalf of our bank partners by 1.3 million.

These receivables have been included with our existing general purpose credit card receivables in our reported results of operations and other discussions below.

Market Overview

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Credit as a Service Segment

Currently, within our CaaS segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $42 billion in consumer loans over more than 25 years of operating history, to support lenders in offering more inclusive financial services.

Currently, within our CaaS segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing $50 billion in consumer loans over more than 30 years of operating history, to support lenders in offering more inclusive financial services.

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

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

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

General purpose credit cards use the Aspire, Imagine, Mercury 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 infrastructure and technology, we also provide loan servicing, including risk management and customer service outsourcing, for third parties.

Also, through our CaaS segment, we engage in testing and limited investment in consumer technology platforms as we seek to capitalize on our expertise and infrastructure.

We further engage in testing and limited investment in consumer technology platforms as we seek to capitalize on our expertise and infrastructure.

Additionally, we report within our CaaS segment:

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None of these companies are publicly-traded and the carrying value of our investment in these companies is not material.

One of these companies, Fintiv Inc., has sued Apple, Inc., Walmart, Inc., and PayPal Holdings, Inc.

One of these companies, Fintiv Inc., has sued Apple, Inc.

and, Walmart, Inc.

for patent infringement.

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In light of the uncertainty around these lawsuits, we will continue to carry these investments on our books at cost minus impairment, if any, plus or minus changes resulting from observable price changes.

The recurring cash flows we receive within our CaaS segment principally include those associated with (1) private label credit and general purpose credit card receivables, (2) servicing compensation and (3) credit card receivables portfolios that are unencumbered or where we own a portion of the underlying structured financing facility.

As discussed above, our bank partners continue to provide ongoing account management and oversight for both our Private label credit and General purpose credit card receivables, for which we compensate the bank partners monthly.

All finance charges, fees and merchant fees are recognized into earnings through our Consumer loans, including past due fees (consisting of interest income, including finance charges, late payment fees on loans and merchant fees), Fees and related income on earning assets (for annual or monthly maintenance fees, cash advance fees and other fees directly associated with the extension of credit) and Other revenue (for servicing income, service charges and other customer related fees), on our Consolidated Statements of Income when they are billed to consumers or, in the case of merchant fees, upon completion of our services, which coincides with the funding of the loan by our bank partners.

We value these loan and fee receivables within Changes in fair value of loans on our Consolidated Statements of Income to reflect our best estimate of ongoing economics and cash flows associated with existing consumer accounts including future estimates of finance and fee billings and consumer payment rates typical of the assumptions a market participant would use to calculate fair value.

All finance charges, fees and merchant fees are recognized into earnings through our Consumer loans, including past due fees (consisting of interest income, including finance charges, late payment fees on loans and merchant fees), Fees and related income on earning assets (consisting of annual or monthly maintenance fees, cash advance fees, and other fees directly associated with the extension of credit) and Other revenue (consisting of servicing income, service charges and other customer related fees), on our consolidated statements of income when they are billed to consumers or, in the case of merchant fees, upon completion of our services, which coincides with the funding of the loan by our bank partners.

We value these loans and fee receivables within Changes in fair value of loans on our consolidated statements of income to reflect our best estimate of ongoing economics and cash flows associated with existing consumer accounts including future estimates of finance and fee billings and consumer payment rates typical of the assumptions a market participant would use to calculate fair value.

Our credit and other operations are heavily regulated, potentially causing us to change how we conduct our operations either in response to regulation or in keeping with our goal of leading the industry in adherence to consumer-friendly practices.

We have made meaningful changes to our practices over the past several years, and because our account management practices are evolutionary and dynamic, it is possible that we may make further changes to these practices, some of which may produce positive, and others of which may produce adverse, effects on our operating results and financial position.

Customers at the lower end of the credit score range intrinsically have higher loss rates than do customers at the higher end of the credit score range.

Customers at the lower end of the credit score range intrinsically have higher loss rates than customers at the higher end of the credit score range.

As a result, the products we support are priced to reflect expected loss rates for our various risk categories.

See "Consumer and Debtor Protection Laws and Regulations—CaaS Segment" below and "We operate in a heavily regulated industry" in Part I, Item 1A, "Risk Factors" contained in this Report.

Subject to possible disruptions caused by inflation, rising interest rates, and supply chain interruptions, we believe that our private label credit and general purpose credit card receivables are generating, and will continue to generate, attractive returns on assets, thereby facilitating debt financing under terms and conditions (including advance rates and pricing) that will support attractive returns on equity, and we continue to pursue growth in this area.

Subject to possible disruptions caused by the uncertain economic environment, we believe that our private label credit and general purpose credit card receivables are generating, and will continue to generate, attractive returns on assets, thereby facilitating debt financing under terms and conditions (including advance rates and pricing) that will support attractive returns on equity, and we continue to pursue growth in this area.

Private Label Credit

Our bank partners work with both us and with our retail partners to provide financing options to retail consumers.

These financing options vary by retail partner and consists of a range in APRs of 0% - 36% and a range in merchant fees of 0% - 65%.

These financing options vary by retail partner and consist of a range in APRs of 0% - 36% and a range in merchant fees of 0% - 65%.

Merchant fees, which vary by retail partner, offset the purchase price our bank partners remit to the retail partner on a consumer transaction.

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

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

In cases where we acquire receivables below market rates, 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.

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As of December 31, 2025, our CAR operations served over 700 dealers in 33 states and two U.S.

The core operations continue to achieve consistent profitability and generate positive cash flows.

The core operations continue to achieve profitability and generate positive cash flows.

Fair Value Option

We account for loans receivable associated with our private label credit and general purpose credit card platform using fair value accounting.

We believe the use of fair value for these receivables more closely approximates the true economics of these receivables, better matching the yields and corresponding charge-offs.

We believe the use of fair value for these receivables closely approximates the true economics of these receivables, better matching the yields and associated charge-offs.

We believe the fair value option also enables us to report generally accepted accounting principles in the U.S.

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We have incorporated our proprietary risk scores into this control system, in addition to standard credit behavior scores used widely in the industry, in order to segment, evaluate and manage the receivables.

We believe that by combining external credit file data along with historical and current customer activity, we are able to better predict the true risk associated with current and delinquent receivables.

We believe that by combining external credit file data along with historical and current customer activity, we are better able to predict the true risk associated with current and delinquent receivables.

For our private label credit and general purpose credit card finance activities as well as the accounts that are open to purchases, we generally assist our issuing bank partners with managing credit lines to reward customers who are performing well and to mitigate losses from delinquent customer segments.

We also assist our issuing bank partners with employing strategies to reduce otherwise open credit lines for customers demonstrating indicators of increased credit or bankruptcy risk.

Data relating to account performance are captured and loaded into our proprietary database for ongoing analysis.

Data relating to account performance are captured and loaded into our proprietary databases for ongoing analysis.

Account management strategies are adjusted as necessary, based on the results of such analyses.

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We believe that routinely testing, measuring and adjusting collection strategies results in a better collection experience, lower bad debt losses and operating expenses.

Interest and fees for most credit products are discontinued when loans, interest and fees receivable become contractually 90 or more days past due.

We discontinue the recognition of interest and fees for most credit products when loans, interest and fees receivable become contractually 90 or more days past due and typically place the account on a non-accrual status.

Loans, interest and fees receivable are charged off when they become contractually more than 180 days past due or 120 days past due if they are enrolled in an installment loan product.

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however, this impact generally changes such delinquencies and charge offs by less than 10% and 5%, respectively.

We anticipate that further investments in large language models will enable us to refine our customer-centric approach to customer service and collections.

We continually assess our collection strategies as new technologies and practices evolve and anticipate that further investments in large language models will enable us to refine our customer-centric approach to customer service and collections.

As discussed above, typically, once an account is 90 days or more past due, the account is placed on a non-accrual status.

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These laws, rules and regulations, among other things, impose disclosure requirements when consumer products are advertised, when an account is opened, when monthly billing statements are sent and when consumer obligations are collected.

In addition, various statutes limit the liability of consumers for unauthorized use, prohibit discriminatory practices in consumer transactions, impose limitations on the types of charges that may be assessed and restrict the use of consumer credit reports and other account-related information.

In addition, various statutes limit the liability of consumers for unauthorized use, prohibit discriminatory practices in consumer transactions, impose limitations on the types of charges that may be assessed, impose certain restrictions on how accounts are serviced and collected, and restrict the use of consumer credit reports and other account-related information.

Many of our issuing bank partners' products are designed for customers at the lower end of the credit score range.

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If regulators, including the FDIC (which regulates bank lenders), the CFPB and the FTC, object to the terms of these products, or to the marketing or collection practices used, we and our issuing bank partners could be required to modify or discontinue certain products or practices.

Many of the states in which this segment operates have various licensing requirements and impose certain financial or other conditions in connection with these licensing requirements that may apply directly or indirectly.

Auto Finance Segment.

This segment is regulated directly and indirectly under various federal and state consumer protection and other laws, rules and regulations, including the federal TILA, the federal Equal Credit Opportunity Act, the federal Fair Credit Reporting Act, the federal Fair Debt Collection Practices Act, Dodd-Frank, the federal Gramm-Leach-Bliley Act and the federal Telemarketing and Consumer Fraud and Abuse Prevention Act.

In addition, various state statutes limit the interest rates and fees that may be charged, limit the types of interest computations (e.g., interest bearing or pre-computed) and refunding processes, prohibit discriminatory practices in extending credit, impose limitations on fees and other customer related charges and restrict the use of consumer credit reports and other account-related information.

In addition, various state statutes limit the interest rates and fees that may be charged, limit the types of interest computations (e.g., interest bearing or pre-computed) and refunding processes, prohibit discriminatory practices in extending credit, impose limitations on fees and other customer related charges, impose certain restrictions on how accounts are serviced and collected, and restrict the use of consumer credit reports and other account-related information.

Many of the states in which this segment operates have various licensing requirements and impose certain financial or other conditions in connection with these licensing requirements.

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Additionally, various federal banking regulatory agencies, and all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted data security regulations and laws requiring customer notification in the event of a security breach.

We are subject to various laws related to the privacy of consumer information, including federal laws that require periodic disclosures of our policies and practices with respect to the sharing of nonpublic customer information with our affiliates and others and the confidentiality and security of that information.

We also are subject to certain state laws, including for example the California Consumer Privacy Act, that gives individuals expanded rights to access and delete personal information, opt out of certain information sharing, and receive detailed information about how their information is used and shared.

We expect that additional state-level privacy requirements will continue to be implemented in jurisdictions where our customers are located.

CaaS Segment.

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

What changed 10-K

Item 1. Business