10-Q 1 atlc20240331_10q.htm FORM 10-Q atlc20240331_10q.htm
0001464343 Atlanticus Holdings Corp false --12-31 Q1 2024 177.2 158.0 19.7 20.5 2,107.0 2,128.6 1,795.4 1,795.9 10,000,000 10,000,000 400,000 400,000 400,000 400,000 40 40 0 0 3,300,704 3,300,704 82.5 3,256,561 3,256,561 81.4 0 0 150,000,000 150,000,000 14,792,159 14,792,159 14,603,563 14,603,563 2 6.3 6.3 2,231.7 2,252.9 65 65 December 1, 2026 December 1, 2026 50 50 October 30, 2025 October 30, 2025 100 100 December 15, 2025 December 15, 2025 50 50 July 20, 2025 July 20, 2025 20 20 December 11, 2024 December 11, 2024 250 250 October 15, 2025 October 15, 2025 35 35 July 31, 2026 July 31, 2026 300 300 December 15, 2026 December 15, 2026 75 75 September 1, 2025 September 1, 2025 300 300 May 15, 2026 May 15, 2026 325 325 November 15, 2028 November 15, 2028 100 100 August 5, 2024 August 5, 2024 100 100 March 15, 2027 March 15, 2027 20 20 May 26, 2026 May 26, 2026 300 300 February 15, 2028 February 15, 2028 150 150 May 17, 2027 May 17, 2027 August 26, 2024 August 26, 2024 8.0 8.0 4 3 5 3 5 4.0 0 0 false false false false Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes. Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized. Shares related to unvested share-based payment awards included in our basic and diluted share counts were 293,578 for the three months ended March 31, 2024 compared to 188,384 for the three months ended March 31, 2023. Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations. As of March 31, 2024, the Prime Rate was 8.50% and the Secured Overnight Financing Rate ("SOFR") was 5.34%. Loans are associated with VIEs. See Note 7, "Variable Interest Entities" for more information. Interchange revenue is presented net of customer reward expense. See below for additional information. Creditors do not have recourse against the general assets of the Company but only to the collateral within the VIEs. These notes reflect modifications to either extend the maturity date, increase the loan amount or both, and are treated as accounting modifications. For cash, deposits and investments in equity securities, the carrying amount is a reasonable estimate of fair value. 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Table of Contents

 

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended March 31, 2024

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _______  to _______            

 

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ATLANTICUS HOLDINGS CORPORATION

 

a Georgia Corporation

IRS Employer Identification No. 58-2336689

SEC File Number 0-53717

 

Five Concourse Parkway, Suite 300

Atlanta, Georgia 30328

(770828-2000

 

 Securities registered pursuant to Section 12(b) of the Securities Exchange Act of 1934 (the "Act") 
   
Title of Each ClassTrading Symbol(s)Name of Each Exchange on Which Registered
Common stock, no par value per shareATLCNASDAQ Global Select Market
7.625% Series B Cumulative Perpetual Preferred Stock, no par value per shareATLCPNASDAQ Global Select Market
6.125% Senior Notes due 2026ATLCLNASDAQ Global Select Market
9.25% Senior Notes due 2029ATLCZNASDAQ Global Select Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

  

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b- 2).      Yes    ☒  No

 

As of May 3, 2024, 14,792,092 shares of common stock, no par value, of Atlanticus were outstanding.

 

 

 

 

Table of Contents

Page

PART I. FINANCIAL INFORMATION

 

Item 1.

Financial Statements (Unaudited)

1

 

 

Consolidated Balance Sheets

1

 

 

Consolidated Statements of Income

2

 

 

Consolidated Statement of Shareholders’ Equity and Temporary Equity

3

 

 

Consolidated Statements of Cash Flows

4

 

 

Notes to Consolidated Financial Statements

5

 

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

20

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

38

 

Item 4.

Controls and Procedures

38

 

PART II. OTHER INFORMATION

 

Item 1.

Legal Proceedings

39

 

Item 1A.

Risk Factors

39

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

54

 

Item 3.

Defaults Upon Senior Securities

54

 

Item 4.

Mine Safety Disclosures

54

 

Item 5.

Other Information

55

 

Item 6.

Exhibits

55

 

 

Signatures

56

 

 

 

PART I--FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS

 

 

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Balance Sheets (Unaudited)

(Dollars in thousands)

 

  

March 31,

  

December 31,

 
  

2024

  

2023

 
         

Assets

        

Unrestricted cash and cash equivalents (including $177.2 million and $158.0 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)

 $444,809  $339,338 

Restricted cash and cash equivalents (including $19.7 million and $20.5 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)

  37,494   44,315 

Loans at fair value (including $2,107.0 million and $2,128.6 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)

  2,150,636   2,173,759 

Loans at amortized cost

  100,144   98,425 

Property at cost, net of depreciation

  10,855   11,445 

Operating lease right-of-use assets

  11,313   11,310 

Prepaid expenses and other assets

  31,964   27,853 

Total assets

 $2,787,215  $2,706,445 

Liabilities

        

Accounts payable and accrued expenses

 $59,173  $61,634 

Operating lease liabilities

  20,034   20,180 

Notes payable, net (including $1,795.4 million and $1,795.9 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)

  1,862,518   1,861,685 

Senior notes, net

  199,028   144,453 

Income tax liability

  92,870   85,826 

Total liabilities

  2,233,623   2,173,778 
         

Commitments and contingencies (Note 10)

          
         

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

        

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

  40,000   40,000 

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

  100,325   100,250 
         

Shareholders' Equity

        

Series B preferred stock, no par value, 3,300,704 shares issued and outstanding at March 31, 2024 (liquidation preference - $82.5 million); 3,256,561 shares issued and outstanding at December 31, 2023 (liquidation preference - $81.4 million) (1)

      

Common stock, no par value, 150,000,000 shares authorized: 14,792,159 and 14,603,563 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively

      

Paid-in capital

  88,883   87,415 

Retained earnings

  327,138   307,260 

Total shareholders’ equity

  416,021   394,675 

Noncontrolling interests

  (2,754)  (2,258)

Total equity

  413,267   392,417 

Total liabilities, shareholders' equity and temporary equity

 $2,787,215  $2,706,445 

 

(1) Both the Series A preferred stock and the Series B preferred stock have no par value and are part of the same aggregate 10,000,000 shares authorized.

 

See accompanying notes.

 

 

 

 

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Income (Unaudited)

(Dollars in thousands, except per share data)

 

 

   

For the Three Months Ended

 
   

March 31,

 
   

2024

   

2023

 

Revenue:

               

Consumer loans, including past due fees

  $ 230,374     $ 209,701  

Fees and related income on earning assets

    47,905       44,357  

Other revenue

    11,895       6,924  

Total operating revenue

    290,174       260,982  

Other non-operating revenue

    532       59  

Total revenue

    290,706       261,041  
                 

Interest expense

    (35,063 )     (24,234 )

Provision for credit losses

    (2,944 )     (704 )

Changes in fair value of loans

    (159,171 )     (149,822 )

Net margin

    93,528       86,281  
                 

Operating expenses:

               

Salaries and benefits

    (13,312 )     (10,604 )

Card and loan servicing

    (26,822 )     (24,335 )

Marketing and solicitation

    (10,428 )     (10,406 )

Depreciation

    (654 )     (618 )

Other

    (9,491 )     (6,236 )

Total operating expenses

    (60,707 )     (52,199 )

Income before income taxes

    32,821       34,082  

Income tax expense

    (7,002 )     (8,188 )

Net income

    25,819       25,894  

Net loss attributable to noncontrolling interests

    351       318  

Net income attributable to controlling interests

    26,170       26,212  

Preferred stock and preferred unit dividends and discount accretion

    (6,292 )     (6,227 )

Net income attributable to common shareholders

  $ 19,878     $ 19,985  

Net income attributable to common shareholders per common share—basic

  $ 1.35     $ 1.38  

Net income attributable to common shareholders per common share—diluted

  $ 1.09     $ 1.08  

 

 

 

See accompanying notes.

 

 

 

Atlanticus Holdings Corporation and Subsidiaries

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

For the Three Months Ended March 31, 2024 and March 31, 2023

(Dollars in thousands)

 

 

   

Series B Preferred Stock

   

Common Stock

                                   

Temporary Equity

 
   

Shares Issued

   

Amount

   

Shares Issued

   

Amount

   

Paid-In Capital

   

Retained Earnings

   

Noncontrolling Interests

   

Total Equity

   

Series A Preferred Stock

   

Class B Preferred Units

 

Balance at January 1, 2024

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

Accretion of discount associated with issuance of subsidiary equity

                                  (75 )           (75 )           75  

Preferred stock and preferred unit dividends

                                  (6,217 )           (6,217 )            

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  

 

   

Series B Preferred Stock

   

Common Stock

                                   

Temporary Equity

 
   

Shares Issued

   

Amount

   

Shares Issued

   

Amount

   

Paid-In Capital

   

Retained Earnings

   

Noncontrolling Interests

   

Total Equity

   

Series A Preferred Stock

   

Class B Preferred Units

 

Balance at January 1, 2023

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

Accretion of discount associated with issuance of subsidiary equity

                            (75 )                 (75 )           75  

Discount associated with repurchase of preferred stock

                            16                   16              

Preferred dividends

                            (6,168 )                 (6,168 )            

Stock option exercises and proceeds related thereto

                1,258             19                   19              

Compensatory stock issuances, net of forfeitures

                146,227                                            

Issuance of series B preferred stock, net

    51,327                         1,069                   1,069              

Contributions by owners of noncontrolling interests

                                        4       4              

Stock-based compensation costs

                            931                   931              

Redemption and retirement of preferred shares

    (1,806 )                       (45 )                 (45 )            

Redemption and retirement of shares

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

Net income (loss)

                                  26,212       (318 )     25,894              

Balance at March 31, 2023

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

 

See accompanying notes.

 

 

 

Atlanticus Holdings Corporation and Subsidiaries

Consolidated Statements of Cash Flows (Unaudited)

(Dollars in thousands)

 

   

For the Three Months Ended March 31,

 
   

2024

   

2023

 

Operating activities

               

Net income

  $ 25,819     $ 25,894  

Adjustments to reconcile net income to net cash provided by operating activities:

               

Depreciation, amortization and accretion, net

    1,251       844  

Provision for credit losses

    2,944       704  

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

    (30,475 )     (34,002 )

Changes in fair value of loans

    159,171       149,822  

Amortization of debt issuance costs

    2,171       1,442  

Stock-based compensation costs

    940       931  

Lease liability payments

    (747 )     (180 )

Changes in assets and liabilities:

               

Increase in uncollected fees on earning assets

    (42,766 )     (49,211 )

Decrease in income tax liability

    7,044       8,156  

Decrease in accounts payable and accrued expenses

    (2,417 )     (1,866 )

Other

    (4,139 )     (836 )

Net cash provided by operating activities

    118,796       101,698  
                 

Investing activities

               

Proceeds from recoveries on charged off receivables

    11,854       16,380  

Investments in earning assets

    (559,768 )     (545,464 )

Proceeds from earning assets

    480,443       478,419  

Purchases and development of property

    (64 )     (2,765 )

Net cash used in investing activities

    (67,535 )     (53,430 )
                 

Financing activities

               

Noncontrolling interests contributions

    3       4  

Noncontrolling interests distributions

    (148 )      

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

    1,071       1,069  

Preferred stock and preferred unit dividends

    (6,259 )     (6,253 )

Proceeds from exercise of stock options

          19  

Purchase and retirement of outstanding stock

    (543 )     (1,976 )

Proceeds from issuance of Senior notes, net of issuance costs

    54,560        

Proceeds from borrowings

    107,356       55,464  

Repayment of borrowings

    (108,651 )     (95,278 )

Net cash provided by (used for) financing activities

    47,389       (46,951 )

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

          3  

Net increase in cash and cash equivalents and restricted cash

    98,650       1,320  

Cash and cash equivalents and restricted cash at beginning of period

    383,653       433,192  

Cash and cash equivalents and restricted cash at end of period

  $ 482,303     $ 434,512  

Supplemental cash flow information

               

Cash paid for interest

  $ 33,262     $ 23,103  

Net cash income tax (refunds) payments

  $ (42 )   $ 32  

Accretion of discount associated with issuance of subsidiary equity

  $ 75     $ 75  

Decrease in accrued and unpaid preferred stock and preferred unit dividends

  $ (42 )   $ (85 )

 

See accompanying notes.

 

 

Atlanticus Holdings Corporation and Subsidiaries

Notes to Consolidated Financial Statements

March 31, 2024 and 2023

 

 

1.

Description of Our Business

 

Our accompanying consolidated financial statements include the accounts of Atlanticus Holdings Corporation (the "Company") and those entities we control. We are a purpose driven financial technology company. We are primarily focused on facilitating consumer credit through the use of our financial technology and related services. Through our subsidiaries, we provide technology and other support services to lenders who offer an array of financial products and services to consumers who may have been declined by other providers of credit.

 

We are principally engaged in providing products and services to lenders in the U.S. and, in most cases, we invest in the receivables originated by lenders who utilize our technology platform and other related services. From time to time, we also purchase receivables portfolios from third parties. In these Notes to Consolidated Financial Statements, "receivables" or "loans" typically refer to receivables we have purchased from our bank partners or from third parties.

 

Within our Credit as a Service ("CaaS") segment, we apply our technology solutions, in combination with the experiences gained, and infrastructure built from servicing over $39 billion in consumer loans over more than 25 years of operating history, to support lenders in offering more inclusive financial services. These products include private label credit and general purpose credit cards originated by lenders through multiple channels, including retailers and healthcare providers, direct mail solicitation, digital marketing and partnerships with third parties. The services of our bank partners are often extended to consumers who may not have access to financing options with larger financial institutions. Our flexible technology solutions allow our bank partners to integrate our paperless process and instant decisioning platform with the existing infrastructure of participating retailers, healthcare providers and other service providers. Using our technology and proprietary predictive analytics, lenders can make instant credit decisions utilizing hundreds of inputs from multiple sources and thereby offer credit to consumers overlooked by many providers of financing who focus exclusively on consumers with higher FICO scores. Atlanticus’ underwriting process is enhanced by artificial intelligence and machine learning, enabling fast, sound decision-making when it matters most.

 

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. These include investments in companies engaged in mobile technologies, marketplace lending and other financial technologies. None of these companies are publicly-traded and the carrying values of our investments in these companies are not material.

 

Within our Auto Finance segment, our CAR subsidiary operations principally purchase and/or service loans secured by automobiles from or for, and also provide floor plan financing for, a pre-qualified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here, used car business. We purchase auto loans at a discount and with dealer retentions or holdbacks that provide risk protection. Also within our Auto Finance segment, we are providing certain installment lending products in addition to our traditional loans secured by automobiles. 

 

 

2.

Significant Accounting Policies and Consolidated Financial Statement Components

 

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

 

We maintain two categories of Loans on our consolidated balance sheets: those that are carried at fair value (Loans at fair value) and those that are carried at net amortized cost (Loans at amortized cost). 

Loans at fair value. Loans at fair value represent receivables for which we have elected the fair value option (the "Fair Value Receivables"). 

 

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

 

5

 

Loans at amortized cost. Our loans at amortized cost, currently consist of receivables associated with our Auto Finance segment’s operations. We purchased auto loans with outstanding principal of $61.0 million and $65.0 million for the three months ended March 31, 2024 and 2023, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

 

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, 2024 and December 31, 2023, the weighted average remaining accretion period for the $18.7 million and $17.9 million of deferred revenue reflected in the consolidated balance sheets was 25 and 26 months, respectively.

 

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

 

For the Three Months Ended March 31,

 

2024

  

2023

 

Allowances for credit losses:

        

Balance at beginning of period

 $(1.8) $(1.6)

Provision for credit losses

  (2.9)  (0.7)

Charge-offs

  1.8   1.0 

Recoveries

  (0.5)  (0.4)

Balance at end of period

 $(3.4) $(1.7)

 

  

March 31,

  

December 31,

 

As of

 

2024

  

2023

 

Allowances for credit losses:

        

Balance at end of period individually evaluated for impairment

 $(1.6) $ 

Balance at end of period collectively evaluated for impairment

 $(1.8) $(1.8)

Loans at amortized cost:

        

Loans at amortized cost

 $122.3  $118.0 

Loans at amortized cost individually evaluated for impairment

 $2.4  $ 

Loans at amortized cost collectively evaluated for impairment

 $119.9  $118.0 

 

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

 

  

March 31,

  

December 31,

 

As of

 

2024

  

2023

 

30-59 days past due

 $7.8  $9.4 

60-89 days past due

  3.0   3.4 

90 or more days past due

  3.2   3.5 

Delinquent loans at amortized cost

  14.0   16.3 

Current loans at amortized cost

  108.3   101.7 

Total loans at amortized cost

 $122.3  $118.0 

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

 $2.1  $2.6 

 

Loan Modifications and Restructurings

 

We review our Loans at amortized cost to determine if any modifications for borrowers experiencing financial difficulty were made that would qualify the receivable as a Financial Difficulty Modification ("FDM"). 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 three months ended March 31, 2024, no Loans at amortized cost qualified as a FDM. 

 

Income Taxes

 

We experienced effective tax rates of 21.1% and 23.8% for the three months ended March 31, 2024 and 2023, respectively. Our effective tax rates for the three months ended March 31, 2024, and 2023, were above the statutory rate to varying degrees between the two periods 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 (1) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and (2) 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.

 

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 interest expense was de minimis in the three months ended March 31, 2024, and $0.9 million in the three months ended March 31, 2023.

 

 

6

 

Revenue from Contracts with Customers

 

Revenue from contracts with customers is included in Other revenue on our consolidated statements of income. Components (in thousands) of our revenue from contracts with customers is as follows:

 

             

For the Three Months Ended March 31, 2024

 

CaaS

  

Auto Finance

  

Total

 

Interchange revenues, net (1)

 $4,664  $  $4,664 

Servicing income

  1,335   200   1,535 

Service charges and other customer related fees

  5,679   17   5,696 

Total revenue from contracts with customers

 $11,678  $217  $11,895 

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

 

             

For the Three Months Ended March 31, 2023

 

CaaS

  

Auto Finance

  

Total

 

Interchange revenues, net (1)

 $4,616  $  $4,616 

Servicing income

  705   191   896 

Service charges and other customer related fees

  1,393   19   1,412 

Total revenue from contracts with customers

 $6,714  $210  $6,924 

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

 

Recent Accounting Pronouncements

 

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("Topic 740"). Topic 740 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income (loss) from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). Topic 740 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This guidance should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our financial statement disclosures.

 

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segments Disclosures" ("Topic 280"). Topic 280 enhances disclosures of significant segment expenses and other segment items regularly provided to the chief operating decision maker ("CODM"), extends certain annual disclosures to interim periods and permits more than one measure of segment profit (loss) to be reported under certain conditions. The amendments are effective in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption to all periods presented is required, and early adoption of the amendments is permitted. 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.

 

 

 

3.

Segment Reporting

 

We operate primarily within one industry consisting of two reportable segments by which we manage our business. Our two reportable segments are: CaaS and Auto Finance.

 

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. 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 March 31, 2024

 

CaaS

  

Auto Finance

  

Total

 

Revenue:

            

Consumer loans, including past due fees

 $220,039  $10,335  $230,374 

Fees and related income on earning assets

  47,885   20   47,905 

Other revenue

  11,677   218   11,895 

Total operating revenue

  279,601   10,573   290,174 

Other non-operating revenue

  282   250   532 

Total revenue

  279,883   10,823   290,706 

Interest expense

  (34,236)  (827)  (35,063)

Provision for credit losses

     (2,944)  (2,944)

Changes in fair value of loans

  (159,171)     (159,171)

Net margin

 $86,476  $7,052  $93,528 

Income before income taxes

 $31,814  $1,007  $32,821 

Income tax expense

 $(6,741) $(261) $(7,002)

Total assets

 $2,682,189  $105,026  $2,787,215 
 

Three Months Ended March 31, 2023

 

CaaS

  

Auto Finance

  

Total

 

Revenue:

            

Consumer loans, including past due fees

 $200,529  $9,172  $209,701 

Fees and related income on earning assets

  44,339   18   44,357 

Other revenue

  6,715   209   6,924 

Total operating revenue

  251,583   9,399   260,982 

Other non-operating revenue

  14   45   59 

Total revenue

  251,597   9,444   261,041 

Interest expense

  (23,460)  (774)  (24,234)

Provision for credit losses

     (704)  (704)

Changes in fair value of loans

  (149,822)     (149,822)

Net margin

 $78,315  $7,966  $86,281 

Income before income taxes

 $31,853  $2,229  $34,082 

Income tax expense

 $(7,567) $(621) $(8,188)

Total assets

 $2,276,140  $99,155  $2,375,295 
 

 

8

 
 

4.

Shareholders’ Equity and Preferred Stock

 

During the three months ended March 31, 2024 and 2023, we repurchased and contemporaneously retired 18,033 shares and 72,354 shares of our common stock at an aggregate cost of $0.5 million and $1.9 million, respectively, pursuant to both open market and private purchases and the return of stock by holders of equity incentive awards to pay tax withholding obligations.


Preferred Stock

 

In June and July 2021, we issued an aggregate of 3,188,533 shares of 7.625% Series B Cumulative Perpetual Preferred Stock, liquidation preference of $25.00 per share (the "Series B preferred stock"), for net proceeds of approximately $76.5 million after deducting underwriting discounts and commissions, but before deducting expenses and the structuring fee. We pay cumulative cash dividends on the Series A Preferred Stock, when and as declared by our Board of Directors, in the amount of 6% of the $100.00 liquidation preference per share annually. We pay cumulative cash dividends on the Series B preferred stock, when and as declared by our Board of Directors, in the amount of $1.90625 per share each year, which is equivalent to 7.625% of the $25.00 liquidation preference per share.

 

During the three months ended March 31, 2023, we repurchased and contemporaneously retired 1,806 shares of Series B preferred stock at an aggregate cost of $29,000No shares of Series B preferred stock were repurchased in the three months ended March 31, 2024.

 

ATM Programs

 

On August 10, 2022, the Company entered into an At Market Issuance Sales Agreement (the "Preferred Stock Sales Agreement") providing for the sale by the Company of up to an aggregate offering price of $100.0 million of our (i) Series B preferred stock and (ii) 2026 Senior Notes, from time to time through a sales agent, in connection with the Company's Series B preferred stock and 2026 Senior Notes "at-the-market" offering program (the "Preferred Stock ATM Program"). Further, on December 29, 2023, the Company entered into an At-The-Market Sales Agreement (the "Common Stock Sales Agreement") providing for the sale by the Company of its common stock, no par value per share, up to an aggregate offering price of $50.0 million, from time to time to or through a sales agent, in connection with the Company’s common stock ATM Program ("Common Stock ATM Program"). Sales pursuant to both the Preferred Stock Sales Agreement and Common Stock Sales Agreement, if any, may be made in transactions that are deemed to be "at-the-market offerings" as defined in Rule 415 under the Securities Act of 1933, as amended (the "Securities Act"), including sales made directly on or through the NASDAQ Global Select Market. The sales agents will make all sales using commercially reasonable efforts consistent with their normal trading and sales practices up to the amount specified in, and otherwise in accordance with the terms of, the placement notices.

 

During the three months ended March 31, 2024 and 2023, we sold 44,143 shares and 51,327 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $1.1 million and $1.1 million, respectively. During the three months ended March 31, 2024 and 2023, no 2026 Senior Notes were sold under the Company's Preferred Stock ATM Program. During the three months ended March 31, 2024, no common shares were sold under the Company’s Common Stock ATM Program.

 

 

5.

Redeemable Preferred Stock

 

On  November 26, 2014, we and certain of our subsidiaries entered into a Loan and Security Agreement with Dove Ventures, LLC, a Nevada limited liability company ("Dove"). The agreement provided for a senior secured term loan facility in an amount of up to $40.0 million at any time outstanding. On December 27, 2019, the Company issued 400,000 shares of its Series A Preferred Stock with an aggregate initial liquidation preference of $40.0 million, in exchange for full satisfaction of the $40.0 million that the Company owed Dove under the Loan and Security Agreement. Dividends on the preferred stock are 6% per annum (cumulative, non-compounding) and are payable as declared, and in preference to any dividends on common stock and Series B preferred stock, in cash. The Series A Preferred Stock is perpetual and has no maturity date. The Company may, at its option, redeem the shares of Series A Preferred Stock on or after January 1, 2025 at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends. At the request of holders of a majority of the shares of Series A Preferred Stock, the Company shall offer to redeem all of the Series A Preferred Stock at a redemption price equal to $100 per share, plus any accumulated and unpaid dividends, at the option of the holders thereof, on or after January 1, 2024. Upon the election by the holders of a majority of the shares of Series A Preferred Stock, each share of the Series A Preferred Stock is convertible into the number of shares of the Company’s common stock as is determined by dividing (i) the sum of (a) $100 and (b) any accumulated and unpaid dividends on such share by (ii) an initial conversion price equal to $10 per share, subject to certain adjustment in certain circumstances to prevent dilution. Given the redemption rights contained within the Series A Preferred Stock, we account for the outstanding preferred stock as temporary equity in the consolidated balance sheets. Dividends paid on the Series A Preferred Stock are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. The common stock issuable upon conversion of Series A Preferred Stock is included in our calculation of Net income attributable to common shareholders per share—diluted. See Note 11, "Net Income Attributable to Controlling Interests Per Common Share" for more information.

 

Dove is a limited liability company owned by three trusts. David G. Hanna is the sole shareholder and the President of the corporation that serves as the sole trustee of one of the trusts, and David G. Hanna and members of his immediate family are the beneficiaries of this trust. Frank J. Hanna, III is the sole shareholder and the President of the corporation that serves as the sole trustee of the other two trusts, and Frank J. Hanna, III and members of his immediate family are the beneficiaries of these other two trusts.

 

On November 14, 2019, a wholly-owned subsidiary issued 50.5 million Class B preferred units at a purchase price of $1.00 per unit to an unrelated third party. The units carry a 16% preferred return to be paid quarterly, with up to 6 percentage points of the preferred return to be paid through the issuance of additional units or cash, at our election. The units have both call and put rights and are also subject to various covenants including a minimum book value, which if not satisfied, could allow for the securities to be put back to the subsidiary. In March 2020, the subsidiary issued an additional 50.0 million Class B preferred units under the same terms. A holder of the Class B preferred units may, at its election and with notice, require the Company to redeem part or all of such holder’s Class B preferred units for cash at $1.00 per unit, on or after October 14, 2024. The proceeds from the transaction are being used for general corporate purposes. The Company has the right to redeem the Class B preferred units at any time with notice. We have included the issuance of these Class B preferred units as temporary noncontrolling interest on the consolidated balance sheets. Dividends paid on the Class B preferred units are deducted from Net income attributable to controlling interests to derive Net income attributable to common shareholders. See Note 11, "Net Income Attributable to Controlling Interests Per Common Share" for more information.

 

9

 
 

6.

Fair Values of Assets and Liabilities

 

Fair value is defined as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

 

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

 

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

 Receivables are recorded at their fair value, not their principal and fee balance or cost basis;
 The fair value of the loans takes into consideration net charge-offs for the remaining life of the loans with no separate allowance for credit loss calculation;
 Certain fee billings (such as annual or merchant fees) and expenses of loans are no longer deferred but recognized (when billed or incurred) in income or expense, respectively;
 The net present value of cash flows associated with future fee billings on existing receivables are included in fair value;
 Changes in the fair value of loans impact net margins; and
 Net charge-offs are recognized as they occur rather than through the establishment of an allowance and provision for credit losses for those loans, interest and fees receivable carried at amortized cost.

 

For receivables that are carried at net amortized cost, we include disclosures of the fair value of such receivables to the extent practicable within the disclosures below.

 

Where applicable, we account for our financial assets and liabilities at fair value based upon a three-tiered valuation system. In general, fair values determined by Level 1 inputs use quoted prices (unadjusted) in active markets for identical assets or liabilities that we have the ability to access. Fair values determined by Level 2 inputs use inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability. Where inputs used to measure fair value may fall into different levels of the fair value hierarchy, the level in the fair value hierarchy within which the fair value measurement in its entirety has been determined is based on the lowest level input that is significant to the fair value measurement in its entirety.


Valuations and Techniques for Assets

 

Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The table below summarizes (in thousands) by fair value hierarchy the March 31, 2024 and December 31, 2023 fair values and carrying amounts of (1) our assets that are required to be carried at fair value in our 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, 2024 (1)

 

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

  

Significant Other Observable Inputs (Level 2)

  

Significant Unobservable Inputs (Level 3)

  

Carrying Amount of Assets

 

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

 $  $  $105,470  $100,144 

Loans at fair value

 $  $  $2,150,636  $2,150,636 

 

Assets – As of December 31, 2023 (1)

 

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

  

Significant Other Observable Inputs (Level 2)

  

Significant Unobservable Inputs (Level 3)

  

Carrying Amount of Assets

 

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

 $  $  $105,409  $98,425 

Loans at fair value

 $  $  $2,173,759  $2,173,759 

 

 

(1)

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

 

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

 

10

 

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 months ended March 31, 2024 and 2023:

 

  

Loans at Fair Value

 
  

2024

  

2023

 

Balance at January 1,

 $2,173,759  $1,817,976 

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

  72,508   42,061 

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

  (167,956)  (130,175)

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

  (63,723)  (61,708)

Purchases

  530,095   516,523 

Finance and fees, added to the account balance

  248,075   219,668 

Settlements

  (642,122)  (608,756)

Balance at March 31,

 $2,150,636  $1,795,589 

 

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

 

Loans at Fair Value. The fair value of Loans at fair value is based on the present value of future cash flows using a valuation model of expected cash flows and the estimated cost to service and collect those cash flows. We estimate the present value of these future cash flows using internally-developed estimates of assumptions third-party market participants would use in determining fair value, including estimates of credit losses, payment rates, servicing costs, discount rates and yields earned on credit card receivables. 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.

 

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 March 31, 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 March 31, 2024

 

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

  

Significant Other Observable Inputs (Level 2)

  

Significant Unobservable Inputs (Level 3)

  

Carrying Amount of Liabilities

 

Liabilities not carried at fair value

                

Revolving credit facilities

 $  $  $1,839,521  $1,839,521 

Amortizing debt facilities

 $  $  $22,997  $22,997 

Senior notes, net

 $193,003  $  $  $199,028 

 

Liabilities – As of December 31, 2023

 

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

  

Significant Other Observable Inputs (Level 2)

  

Significant Unobservable Inputs (Level 3)

  

Carrying Amount of Liabilities

 

Liabilities not carried at fair value

                

Revolving credit facilities

 $  $  $1,838,647  $1,838,647 

Amortizing debt facilities

 $  $  $23,038  $23,038 

Senior notes, net

 $138,229  $  $  $144,453 

 

For our notes payable where market prices are not available, we assess the fair value of these liabilities based on our estimate of future cash flows generated from their underlying credit card receivables collateral, net of servicing compensation required under the note facilities, and to the extent that such cash flow estimates change from period to period, any such changes are considered to be attributable to changes in instrument-specific credit risk. We have evaluated the fair value of our third party debt by analyzing the expected repayment terms and credit spreads included in our recent financing arrangements obtained with similar terms. These recent financing arrangements provide positive evidence that the underlying data used in our assessment of fair value has not changed relative to the general market and therefore the fair value of our debt continues to be the same as the carrying value. See Note 9, "Notes Payable," for further discussion on our other notes payable.

 

11

 

Other Relevant Data

 

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

 

As of March 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

 $456  $2,317,648 

Aggregate unpaid principal balance included within loans at fair value

 $442  $2,104,637 

Aggregate fair value of loans at fair value

 $456  $2,150,180 

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)

 $  $28,203 

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

 $12  $147,037 
  

As of December 31, 2023

 

Loans at Fair Value

  

Loans at Fair Value Pledged as Collateral under Structured Financings

 

Aggregate unpaid gross balance of loans at fair value

 $507  $2,410,748 

Aggregate unpaid principal balance included within loans at fair value

 $491  $2,176,845 

Aggregate fair value of loans at fair value

 $508  $2,173,251 

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

 $  $29,149 

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

 $9  $147,803 
  
 

7.

Variable Interest Entities

 

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

 

  

As of

 
  

March 31, 2024

  

December 31, 2023

 

Unrestricted cash and cash equivalents

 $177.2  $158.0 

Restricted cash and cash equivalents

  19.7   20.5 

Loans at fair value

  2,107.0   2,128.6 

Total Assets held by VIEs

 $2,303.9  $2,307.1 

Notes Payable, net held by VIEs

 $1,795.4  $1,795.9 

Maximum exposure to loss due to involvement with VIEs

 $2,069.7  $2,099.0 

 

 

12

 

 

8.

Leases

 

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 March 31,

 
  

2024

  

2023

 

Operating lease cost, gross

 $627  $639 

Sublease income

  (24)  (24)

Net Operating lease cost

 $603  $615 

Cash paid under operating leases, gross

 $747  $180 
         

Weighted average remaining lease term - months

  119   134 

Weighted average discount rate

  6.6%  6.5%
 

As of March 31, 2024, maturities of lease liabilities were as follows (in thousands):

  

Gross Lease Payment

  

Payments received from Sublease

  

Net Lease Payment

 

2024 (excluding the three months ended March 31, 2024)

 $2,246  $(16) $2,230 

2025

  2,878      2,878 

2026

  2,744      2,744 

2027

  2,618      2,618 

2028

  2,590      2,590 

Thereafter

  14,865      14,865 

Total lease payments

  27,941   (16)  27,925 

Less imputed interest

  (7,907)        

Total

 $20,034         
 

In  August 2021, we entered into an operating lease agreement for our corporate headquarters in Atlanta, Georgia with an unaffiliated third party. This lease covers approximately 73,000 square feet and commenced in June 2022 for a 146 month term. The total commitment under this lease is approximately $27.8 million and is included in the table above. In connection with the commencement of this lease, we discontinued most of the subleasing arrangements with third parties for space at our corporate headquarters. A right-of-use asset and liability was recorded at the commencement date of this lease.

 

In addition, we occasionally lease certain equipment under cancelable and non-cancelable leases, which are accounted for as capital leases in our consolidated financial statements. As of March 31, 2024, we had no material non-cancelable capital leases with initial or remaining terms of more than one year.

 

13

 
 
9.

Notes Payable

 

Notes Payable, at Face Value

 

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

 

  

As of

 
  

March 31, 2024

  

December 31, 2023

 

Revolving credit facilities at a weighted average interest rate equal to 6.3% as of March 31, 2024 (6.3% as of December 31, 2023) secured by the financial and operating assets of CAR and/or certain receivables and restricted cash with a combined aggregate carrying amount of $2,231.7 million as of March 31, 2024 ($2,252.9 million as of December 31, 2023)

        

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

 $44.1  $42.7 

Revolving credit facility, not to exceed $50.0 million (expiring October 30, 2025) (2) (3) (4) (5)

  29.8   38.6 

Revolving credit facility, not to exceed $100.0 million (expiring December 15, 2025) (2) (3) (4) (5) (6)

      

Revolving credit facility, not to exceed $50.0 million (expiring July 20, 2025) (2) (3) (4) (5)

  37.9   47.5 

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

  10.9   14.3 

Revolving credit facility, not to exceed $250.0 million (expiring October 15, 2025) (3) (4) (5) (6)

  250.0   250.0 

Revolving credit facility, not to exceed $35.0 million (expiring July 31, 2026) (2) (3) (4) (5)

  15.0   15.0 

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

  300.0   300.0 

Revolving credit facility, not to exceed $75.0 million (expiring September 1, 2025) (2) (3) (4) (5) (6)

      

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

  300.0   300.0 

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

 325.0   250.0 

Revolving credit facility, not to exceed $100.0 million (expiring August 5, 2024) (3) (4) (5) (6)

     50.0 

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

  100.0   100.0 

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

      

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

  300.0   300.0 

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

  150.0   150.0 

Other facilities

        

Other debt

  5.6   5.6 

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

  17.4   17.4 

Total notes payable before unamortized debt issuance costs and discounts

  1,885.7   1,881.1 

Unamortized debt issuance costs and discounts

  (23.2)  (19.4)

Total notes payable outstanding, net

 $1,862.5  $1,861.7 

 

(1)

Loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance by our CAR Auto Finance operations.

(2)

These notes reflect modifications to either extend the maturity date, increase the loan amount or both, and are treated as accounting modifications.

(3)

See below for additional information.
(4)Loans are subject to certain affirmative covenants tied to default rates and other performance metrics the failure of which could result in required early repayment of the remaining unamortized balances of the notes. 

(5)

Loans are associated with VIEs. See Note 7, "Variable Interest Entities" for more information.

(6)

Creditors do not have recourse against the general assets of the Company but only to the collateral within the VIEs.
*As of March 31, 2024, the Prime Rate was 8.50% and the Secured Overnight Financing Rate ("SOFR") was 5.34%.

 

14

 

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 $29.8 million was drawn as of March 31, 2024). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to SOFR plus 3.0%. The facility matures on October 30, 2025 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The facility is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

 

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 $44.1 million was drawn as of March 31, 2024). This facility is secured by the financial and operating assets of CAR and accrues interest at an annual rate equal to SOFR plus a range between 2.25% and 2.6% based on certain ratios. The loan is subject to certain affirmative covenants, including a coverage ratio, a leverage ratio and a collateral performance test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. In periods subsequent to October 2016, we amended the original agreement to either extend the maturity date and/or expand the capacity of this revolving credit facility. As of March 31, 2024, the facility's borrowing limit was $65.0 million and the facility matures on December 1, 2026. There were no other material changes to the existing terms or conditions as a result of these amendments and the new maturity date and borrowing limit are reflected in the table above.

 

In December 2017, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $50.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $37.9 million was drawn as of March 31, 2024). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to Term Secured Overnight Financing Rate ("Term SOFR") plus 3.6%. An amendment was completed in July 2023 that extended the maturity to July 20, 2025. There were no other material changes to the existing terms. The facility is subject to certain affirmative covenants, including payment, delinquency and charge-off tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance. 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 March 31, 2024) that can be drawn upon to the extent of outstanding eligible receivables. The interest rate on the notes equals the SOFR plus 3.75%. The facility matures on December 15, 2025, and is subject to certain affirmative covenants and collateral performance tests, the failure of which could result in required early repayment of all or a portion of the outstanding balance of notes. As of March 31, 2024, the aggregate borrowing limit was $100.0 million.

 

In June 2019, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $20.0 million revolving borrowing limit that is available to the extent of outstanding eligible principal receivables (of which $10.9 million was drawn as of March 31, 2024). This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the Prime Rate. The facility matures on December 11, 2024. The note is guaranteed by Atlanticus.

 

In August 2019, Atlanticus Holdings Corporation issued a $17.4 million term note, which bears interest at a fixed rate of 8.0% and is due in August 2024.

 

In October 2020, we (through a wholly owned subsidiary) sold $250.0 million of ABS secured by certain private label credit receivables. A portion of the proceeds from the sale was used to pay down our existing term ABS associated with our private label credit receivables, noted above, and the remaining proceeds were used to fund the acquisition of receivables. The terms of the ABS allow for a 41-month revolving structure with an 18-month amortization period, and the securities mature between August 2025 and October 2025. The weighted average interest rate on the securities is fixed at 4.1%.

 

In January 2021, we (through a wholly owned subsidiary) entered a revolving credit facility with a (as subsequently amended) $35.0 million borrowing limit (of which $15.0 million was drawn as of March 31, 2024) that is available to the extent of outstanding eligible principal receivables. This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to the greater of the Prime Rate or 4%. The facility matures on July 31, 2026 and is subject to certain affirmative covenants, including a liquidity test and an eligibility test, the failure of which could result in required early repayment of all or a portion of the outstanding balance. The note is guaranteed by Atlanticus, which is required to maintain certain minimum liquidity levels.

 

15

 

In  June 2021, we (through a wholly owned subsidiary) sold $300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026 through December 15, 2026). The terms of the ABS allow for a four-year revolving structure with a subsequent 11-month to 18-month amortization period. The weighted average interest rate on the securities is fixed at 4.24%.

 

In September 2021, we (through a wholly owned subsidiary) entered a term facility with a $75.0 million limit (of which $0 was outstanding as of March 31, 2024) that is available to the extent of outstanding eligible principal receivables. This facility is secured by the loans, interest and fees receivable and related restricted cash and accrues interest at an annual rate equal to Term SOFR plus 2.75%. The terms of the facility allow for a 24-month revolving structure with an 18-month amortization period and the facility matures in (as subsequently amended) September 2025.

 

In November 2021, we (through a wholly owned subsidiary) sold $300.0 million of ABS secured by certain credit card receivables (expiring May 15, 2026). 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 March 31, 2024) secured by certain credit card receivables (expiring November 15, 2028). The terms of the ABS allow for a five-year revolving structure with a subsequent 18-month amortization period. The weighted average interest rate on the securities is fixed at 6.33%.

 

In August 2022, we (through a wholly owned subsidiary) entered a $100.0 million ABS agreement secured by certain credit card receivables (of which $0 was outstanding as of March 31, 2024) that can be drawn upon to the extent of outstanding eligible receivables. The interest rate on the notes is based on the Term SOFR plus 1.8%. The facility matures on August 5, 2024.

 

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