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What changed in Atlanticus Holdings Corp's 10-K — 2024 vs 2025

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Paragraph-level year-over-year comparison of Atlanticus Holdings Corp's 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+387 added−367 removedSource: 10-K (2026-03-12) vs 10-K (2025-03-13)

Top changes in Atlanticus Holdings Corp's 2025 10-K

387 paragraphs added · 367 removed · 260 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

39 edited+12 added−2 removed86 unchanged
Biggest changeIn 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. to assist those lenders with offering products to consumers.
Biggest changeWe 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 and services.
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.
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.
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.
Additionally, we use industry-standard fraud detection software to manage the portfolio. We route accounts to manual work queues and suspend charging privileges if the transaction-based fraud models indicate a probability of fraudulent use. Auto Finance Segment. Our CAR operations manage credit quality and loss mitigation at the dealer portfolio level through the implementation of dealer-specific loss reserve accounts.
Additionally, we use industry-standard fraud detection software to manage the portfolio. We route accounts to manual work queues and suspend charging privileges if the transaction-based fraud models indicate a probability of fraudulent use. 3 Auto Finance Segment. Our CAR operations manage credit quality and loss mitigation at the dealer portfolio level through the implementation of dealer-specific loss reserve accounts.
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.
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.
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.
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. General purpose credit cards use the Aspire, Imagine, Mercury and Fortiva brand names.
As such, it is not always necessary for us to collect the aggregate unpaid gross balance of the underlying receivable to achieve desired returns. General Purpose Credit Cards We work closely with our bank partners to assist them in creating general purpose credit card offers.
As such, it is not always necessary for us to collect the aggregate unpaid gross balance of the underlying receivable to achieve desired returns. 2 General Purpose Credit Cards We work closely with our bank partners to assist them in creating general purpose credit card offers.
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. As a result, the products we support are priced to reflect expected loss rates for our various risk categories.
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.
The output from these collection strategies and techniques is analyzed to identify the strategies and techniques that are most likely to result in curing a delinquent receivable in the most cost-effective manner, rather than treating all delinquent receivables the same based on the mere passage of time. 3 Table of Contents As in all aspects of risk management, the results of each of the above strategies is compared with other collection strategies and resources are devoted to those strategies that yield the best results.
The output from these collection strategies and techniques is analyzed to identify the strategies and techniques that are most likely to result in curing a delinquent receivable in the most cost-effective manner, rather than treating all delinquent receivables the same based on the mere passage of time. 4 Table of Contents As in all aspects of risk management, the results of each of the above strategies is compared with other collection strategies and resources are devoted to those strategies that yield the best results.
This Annual Report on Form 10-K also contains trade names and trademarks of other companies that are the property of their respective owners. 5 Table of Contents Corporate Headquarters and Where to Access Additional Information We are headquartered in Atlanta, Georgia, and our principal executive offices are located at Five Concourse Parkway, Suite 300, Atlanta, Georgia 30328.
This Annual Report on Form 10-K also contains trade names and trademarks of other companies that are the property of their respective owners. 6 Table of Contents Corporate Headquarters and Where to Access Additional Information We are headquartered in Atlanta, Georgia, and our principal executive offices are located at Five Concourse Parkway, Suite 300, Atlanta, Georgia 30328.
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. Account management strategies are adjusted as necessary, based on the results of such analyses.
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 databases for ongoing analysis. Account management strategies are adjusted as necessary, based on the results of such analyses.
We manage our investments in receivables using credit scoring, credit file data, non-credit-bureau attributes, and our proprietary risk evaluation systems developed and refined over more than 25 years of operating history. These strategies include assisting our issuing bank partners with the management of transaction authorizations, account renewals, credit line modifications and collection programs.
We manage our investments in receivables using credit scoring, credit file data, non-credit-bureau attributes, and our proprietary risk evaluation systems developed and refined over more than 30 years of operating history. These strategies include assisting our issuing bank partners with the management of transaction authorizations, account renewals, credit line modifications and collection programs.
Both 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.
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.
None of our employees are represented by a labor union, and we consider our relationships with our employees to be good. Our management team members, on average, have over 11 years of tenure with the Company. This experience through macro-economic cycles guides our customer centric decision making.
None of our employees are represented by a labor union, and we consider our relationships with our employees to be good. Our management team members, on average, have over 16 years of tenure with the Company. This experience through macro-economic cycles guides our customer centric decision making.
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.
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 receivables below market rates, we charge merchant fees to our retail partners to facilitate the transaction and ensure we earn adequate returns.
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 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. for patent infringement.
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 value of our investment in these companies is not material. One of these companies, Fintiv Inc., has sued Apple, Inc. and, Walmart, Inc. for patent infringement.
This collection process has continued to evolve over the course of more than 25 years of operating history, with the utilization of digital and mobile processes helping to both facilitate better communication with the consumer and aid in collections throughout the collection process.
This collection process has continued to evolve over the course of more than 30 years of operating history, with the utilization of digital and mobile processes helping to both facilitate better communication with the consumer and aid in collections throughout the collection process.
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%.
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 consist of a range in APRs of 0% - 36% and a range in merchant fees of 0% - 65%.
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 fair value option also enables us to report generally accepted accounting principles in the U.S. (" GAAP") net income that provides increased transparency into our profitability and asset quality.
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. (" GAAP") net income that provides increased transparency into our profitability and asset quality.
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. 4 Table of Contents Privacy and Data Security Laws and Regulations .
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. 5 Table of Contents Privacy and Data Security Laws and Regulations .
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. Additionally, we report within our CaaS segment: 1) servicing income; and 2) gains or losses associated with notes receivable and equity investments previously made in consumer technology platforms.
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: 1) servicing income; and 2) gains or losses associated with notes receivable and equity investments previously made in consumer technology platforms.
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. Auto Finance Segment.
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.
Individual dealers with access to capital may also compete in this segment through the purchase of receivables from peer dealers in their markets. Human Capital As of December 31, 2024, we had 417 employees, all of whom are employed within the U.S. We also engage temporary employees and consultants as needed to support our operations.
Individual dealers with access to capital may also compete in this segment through the purchase of receivables from peer dealers in their markets. Human Capital As of December 31, 2025, we had 576 employees, all of whom are employed within the U.S. We also engage temporary employees and consultants as needed to support our operations.
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. Competition CaaS Segment.
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.
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.
These offers have varying lines of credit ranging from $350 to $3,000, annual percentage rates (“APRs”) ranging from 19.99% to 36%, annual fees ranging from $0 to $175 and monthly maintenance fees ranging from $0 to $15.
These offers have varying lines of credit ranging from $350 to $5,500, annual percentage rates (“APRs”) ranging from 19.99% to 36%, annual fees ranging from $0 to $175 and monthly maintenance fees ranging from $0 to $15.
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.
As of December 31, 2024, our CAR operations served over 670 dealers in 34 states and two U.S. territories. The core operations continue to achieve consistent profitability and generate positive cash flows. 2 Table of Contents Fair Value Option We account for loans receivable associated with our private label credit and general purpose credit card platform using fair value accounting.
As of December 31, 2025, our CAR operations served over 700 dealers in 33 states and two U.S. territories. 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.
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.
For all products, receivables are charged off within 30 days of notification and confirmation of bankruptcy or death of the obligor. However, in some cases of death, receivables are not charged off if there is a surviving, contractually liable individual or an estate large enough to pay the debt in full.
However, in some cases of death, receivables are not charged off if there is a surviving, contractually liable individual or an estate large enough to pay the debt in full.
We believe this equates to a population of over 100 million everyday Americans in need of access to credit. These consumers often have financial needs that are not effectively met by larger financial institutions.
Market Overview According to data published by Experian, 40% of Americans had FICO® scores of less than 700. We believe this equates to a population of over 100 million Everyday Americans in need of access to credit. These consumers often have financial needs that are not effectively met by larger financial institutions.
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.
We leverage data, analytics, and innovative technology to unlock access to financial solutions for the millions of Americans who would otherwise be underserved. 1 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 $50 billion in consumer loans over more than 30 years of operating history, to support lenders in offering more inclusive financial services.
Interest and fees for most credit products are discontinued when loans, interest and fees receivable become contractually 90 or more days past due. 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.
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. For all products, receivables are charged off within 30 days of notification and confirmation of bankruptcy or death of the obligor.
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 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.
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. 1 Table of Contents 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.
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.
The practice of re-aging an account may affect delinquencies and charge offs, potentially delaying or reducing such delinquencies and charge offs; 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.
The practice of re-aging an account may affect delinquencies and charge offs, potentially delaying or reducing such delinquencies and charge offs; however, this impact generally changes such delinquencies and charge offs by less than 10% and 5%, respectively.
We face substantial competition from both financial service and financial technology companies, the intensity of which varies depending upon economic and liquidity cycles. Our financial performance is, in part, a function of the performance of our investments in receivables and the aggregate outstanding amount of such receivables.
Our financial performance is, in part, a function of the performance of our investments in receivables and the aggregate outstanding amount of such receivables.
Atlanticus is a financial technology company powering more inclusive financial solutions for everyday Americans. We leverage data, analytics, and innovative technology to unlock access to financial solutions for the millions of Americans who would otherwise be underserved.
Atlanticus is a financial technology company powering more inclusive financial solutions for Everyday Americans.
As discussed above, typically, once an account is 90 days or more past due, the account is placed on a non-accrual status.
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.
Removed
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. Market Overview According to data published by Experian, 40% of Americans had FICO® scores of less than 700.
Added
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.
Removed
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
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.
Added
We expect that additional state-level privacy requirements will continue to be implemented in jurisdictions where our customers are located. Competition CaaS Segment. We face substantial competition from both financial service and financial technology companies, the intensity of which varies depending upon economic and liquidity cycles.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

50 edited+29 added−43 removed219 unchanged
Biggest changeIn particular, the terms of the indenture and the 2026 Senior Notes and 2029 Senior Notes do not place any restrictions on our or our subsidiaries’ ability to: ● issue debt securities or otherwise incur additional indebtedness or other obligations, including (1) any indebtedness or other obligations that would be equal in right of payment to the 2026 Senior Notes and 2029 Senior Notes, (2) any indebtedness or other obligations that would be secured and therefore rank effectively senior in right of payment to the 2026 Senior Notes and 2029 Senior Notes to the extent of the value of the assets securing such indebtedness or other obligations, (3) indebtedness of ours that is guaranteed by one or more of our subsidiaries and which therefore would be structurally senior to the 2026 Senior Notes and 2029 Senior Notes and (4) securities, indebtedness or obligations issued or incurred by our subsidiaries that would be senior to our equity interests in our subsidiaries and therefore rank structurally senior to the 2026 Senior Notes and 2029 Senior Notes with respect to the assets of our subsidiaries; ● pay dividends on, or purchase or redeem or make any payments in respect of, capital stock or other securities subordinated in right of payment to the 2026 Senior Notes and 2029 Senior Notes; ● sell assets (other than certain limited restrictions on our ability to consolidate, merge or sell all or substantially all of our assets); ● enter into transactions with affiliates; ● create liens (including liens on the shares of our subsidiaries) or enter into sale and leaseback transactions; ● make investments; or ● create restrictions on the payment of dividends or other amounts to us from our subsidiaries.
Biggest changeThe indenture that governs the 2030 Senior Notes contains restrictive covenants that, among other things, limit our ability and the ability of our restricted subsidiaries to: ● incur more debt; ● issue preferred stock; ● pay dividends or make distributions in respect of capital stock, or purchase or redeem capital stock; ● make certain investments; ● create liens; ● transfer or sell assets; ● merge or consolidate; and ● enter into transactions with our affiliates.
In addition, those features of the Series B preferred stock may have the effect of inhibiting a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of our common stock and Series B preferred stock with the opportunity to realize a premium over the then-current market price or that shareholders may otherwise believe is in their best interests. 16 Table of Contents Holders of Series B preferred stock may be unable to use the dividends-received deduction and may not be eligible for the preferential tax rates applicable to "qualified dividend income." Distributions paid to corporate U.S. holders on the Series B preferred stock may be eligible for the dividends-received deduction, and distributions paid to non-corporate U.S. holders on the Series B preferred stock may be subject to tax at the preferential tax rates applicable to "qualified dividend income," if we have current or accumulated earnings and profits, as determined for U.S. federal income tax purposes.
In addition, those features of the Series B preferred stock may have the effect of inhibiting a third party from making an acquisition proposal for our Company or of delaying, deferring or preventing a change of control of the Company under circumstances that otherwise could provide the holders of our common stock and Series B preferred stock with the opportunity to realize a premium over the then-current market price or that shareholders may otherwise believe is in their best interests. 17 Table of Contents Holders of Series B preferred stock may be unable to use the dividends-received deduction and may not be eligible for the preferential tax rates applicable to "qualified dividend income." Distributions paid to corporate U.S. holders on the Series B preferred stock may be eligible for the dividends-received deduction, and distributions paid to non-corporate U.S. holders on the Series B preferred stock may be subject to tax at the preferential tax rates applicable to "qualified dividend income," if we have current or accumulated earnings and profits, as determined for U.S. federal income tax purposes.
We may in the future have difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may cause us to reduce the volume of receivables we purchase or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows. 6 Table of Contents Our Financial Performance Is, in Part, a Function of the Aggregate Amount of Receivables That Are Outstanding The aggregate amount of outstanding receivables is a function of many factors including purchase rates, payment rates, interest rates, seasonality, general economic conditions, competition from credit card issuers and other sources of consumer financing, access to funding, and the timing and extent of our receivable purchases.
We may in the future have difficulty accessing debt and equity capital on attractive terms, or at all, and a severe disruption and instability in the global financial markets or deteriorations in credit and financing conditions may cause us to reduce the volume of receivables we purchase or otherwise have a material adverse effect on our business, financial condition, results of operations and cash flows. 7 Table of Contents Our Financial Performance Is, in Part, a Function of the Aggregate Amount of Receivables That Are Outstanding The aggregate amount of outstanding receivables is a function of many factors including purchase rates, payment rates, interest rates, seasonality, general economic conditions, competition from credit card issuers and other sources of consumer financing, access to funding, and the timing and extent of our receivable purchases.
In addition to the foregoing enhanced data security requirements, 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 varying levels of consumer notification in the event of a security breach.
In addition to the foregoing enhanced privacy and data security requirements, various federal banking regulatory agencies, and all 50 states, the District of Columbia, Puerto Rico and the Virgin Islands, have enacted privacy and data security regulations and laws requiring varying levels of consumer notification in the event of a security breach.
Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to products and services and led to the expansion of competition in digital payment and consumer loan options such as pay-over-time solutions. 10 Table of Contents We face competition in areas such as compliance capabilities, commercial financing terms and costs of capital, interest rates and fees (and other financing terms) available to consumers from our bank partners, approval rates, model efficiency, speed and simplicity of loan origination, ease-of-use, marketing expertise, service levels, products and services, technological capabilities and integration, borrower experience, brand and reputation.
Technological advances and the continued growth of e-commerce activities have increased consumers’ accessibility to products and services and led to the expansion of competition in digital payment and consumer loan options such as pay-over-time solutions. 11 Table of Contents We face competition in areas such as compliance capabilities, commercial financing terms and costs of capital, interest rates and fees (and other financing terms) available to consumers from our bank partners, approval rates, model efficiency, speed and simplicity of loan origination, ease-of-use, marketing expertise, service levels, products and services, technological capabilities and integration, borrower experience, brand and reputation.
If we experienced rising credit or fraud losses this would significantly reduce our earnings and profit margins and could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows. 13 Table of Contents Risks Relating to an Investment in Our Securities The prices of our securities may fluctuate significantly, and this may make it difficult for you to resell our securities when you want or at prices you find attractive.
If we experienced rising credit or fraud losses this would significantly reduce our earnings and profit margins and could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows. 14 Table of Contents Risks Relating to an Investment in Our Securities The prices of our securities may fluctuate significantly, and this may make it difficult for you to resell our securities when you want or at prices you find attractive.
Our obligations to the holders of Series A preferred stock and Series B preferred stock also could limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition and the value of our common stock. 14 Table of Contents Our outstanding Series A preferred stock has anti-dilution protection that, if triggered, could cause substantial dilution to our then-existing holders of common stock, which could adversely affect our stock price.
Our obligations to the holders of Series A preferred stock and Series B preferred stock also could limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition and the value of our common stock. 15 Table of Contents Our outstanding Series A preferred stock has anti-dilution protection that, if triggered, could cause substantial dilution to our then-existing holders of common stock, which could adversely affect our stock price.
There is a risk that we would not be able to enter into similar outsourcing arrangements with alternate providers on terms that we consider favorable or in a timely manner without disruption of our business. 11 Table of Contents Failure to keep up with the rapid technological changes in financial services and e-commerce could harm our business.
There is a risk that we would not be able to enter into similar outsourcing arrangements with alternate providers on terms that we consider favorable or in a timely manner without disruption of our business. 12 Table of Contents Failure to keep up with the rapid technological changes in financial services and e-commerce could harm our business.
("GAAP"), laws, regulations or the interpretations thereof that affect our various business activities and segments; • general domestic or international economic, market and political conditions; • changes in ownership by executive officers, directors and parties related to them who control a majority of our common stock; • additions or departures of key personnel; • the annual yield from distributions on the Series B Preferred Stock or interest on the 2026 Senior Notes and 2029 Senior Notes as compared to yields on other financial instruments; and • global pandemics (such as the COVID-19 pandemic).
("GAAP"), laws, regulations or the interpretations thereof that affect our various business activities and segments; ● general domestic or international economic, market and political conditions; ● changes in ownership by executive officers, directors and parties related to them who control a majority of our common stock; ● additions or departures of key personnel; ● the annual yield from distributions on the Series B preferred stock or interest on the 2026 Senior Notes and the 2029 Senior Notes as compared to yields on other financial instruments; and ● government reactions to epidemics and global pandemics (such as the COVID-19 pandemic).
Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold the 2026 Senior Notes and 2029 Senior Notes.
Ratings only reflect the views of the issuing rating agency or agencies and such ratings could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency. A rating is not a recommendation to purchase, sell or hold the senior notes.
We Operate in a Heavily Regulated Industry Changes in bankruptcy, privacy or other consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect receivables, or otherwise adversely affect our operations.
We Operate in a Heavily Regulated Industry Changes in bankruptcy, privacy or other federal or state consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect receivables, or otherwise adversely affect our operations.
In such case, the trading price of our common stock or other securities could decline, and you could lose part or all of your investment. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
In such case, the trading price of our common stock or other securities could decline, and you could lose part or all of your investment. We expressly disclaim any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. 19 Table of Contents
The 2026 Senior Notes and 2029 Senior Notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future. The 2026 Senior Notes and 2029 Senior Notes are not secured by any of our assets or any of the assets of our subsidiaries.
Our senior notes are unsecured and therefore are effectively subordinated to any secured indebtedness that we currently have or that we may incur in the future. Our senior notes are not secured by any of our assets or any of the assets of our subsidiaries.
Ratings do not reflect market prices or suitability of a security for a particular investor and the ratings of the 2026 Senior Notes and 2029 Senior Notes may not reflect all risks related to us and our business, or the structure or market value of the 2026 Senior Notes and 2029 Senior Notes.
Ratings do not reflect market prices or suitability of a security for a particular investor and the ratings of the senior notes may not reflect all risks related to us and our business, or the structure or market value of the senior notes.
In the event that we do not receive distributions or other payments from our subsidiaries, we may be unable to make required payments on our indebtedness. An increase in market interest rates could result in a decrease in the value of the 2026 Senior Notes and 2029 Senior Notes.
In the event that we do not receive distributions or other payments from our subsidiaries, we may be unable to make required payments on our indebtedness. An increase in market interest rates could result in a decrease in the value of the senior notes.
As a result, the 2026 Senior Notes and 2029 Senior Notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future to the extent of the value of the assets securing such indebtedness.
As a result, the senior notes are effectively subordinated to any secured indebtedness that we or our subsidiaries have currently outstanding or may incur in the future to the extent of the value of the assets securing such indebtedness.
Historically, we have invested in receivables in one of two ways—we have either (i) invested in receivables originated by lenders who utilize our services or (ii) invested in or purchased pools of receivables from other issuers. In either case, substantially all of our receivables are from borrowers represented by credit risks that regulators classify as less than prime.
Historically, we have invested in receivables in one of two ways—we have either (i) invested in receivables originated by lenders who utilize our services or (ii) invested in or purchased pools of receivables from other issuers. In either case, the majority of our receivables are from borrowers represented by credit risks that regulators classify as less than prime.
Deterioration in these factors would adversely impact our business. In addition, to the extent we have over-estimated collectability, in all likelihood we have over-estimated our financial performance. Some of these concerns are discussed more fully below. Our portfolio of receivables is not diversified and primarily originates from consumers whose creditworthiness is considered less than prime.
Deterioration in these factors would adversely impact our business. In addition, to the extent we have over-estimated collectability, in all likelihood we have over-estimated our financial performance. Some of these concerns are discussed more fully below. Our portfolio of receivables has limited diversification and primarily originates from consumers whose creditworthiness is considered less than prime.
Reliance upon relationships with a few large retailers in the private label credit operations may adversely affect our revenues and operating results from these operations. Our five largest retail partners accounted for over 75% of our outstanding private label credit receivables as of December 31, 2024.
Reliance upon relationships with a few large retailers in the private label credit operations may adversely affect our revenues and operating results from these operations. Our five largest retail partners accounted for 85% of our outstanding private label credit receivables as of December 31, 2025.
Because a significant portion of our reported income is based on management ’ s estimates of the future performance of receivables, differences between actual and expected performance of the receivables may cause fluctuations in net income.
Because a significant portion of our reported income is based on management’s estimates of the future performance of receivables, differences between actual and expected performance of the receivables may cause fluctuations in net income.
Our Articles of Incorporation authorize us to issue up to 10,000,000 shares of preferred stock in one or more series on terms determined by our board of directors, and as of December 31, 2024, we had outstanding 400,000 shares of Series A preferred stock and 3,301,179 shares of Series B preferred stock.
Our Articles of Incorporation authorize us to issue up to 10,000,000 shares of preferred stock in one or more series on terms determined by our board of directors, and as of December 31, 2025, we had outstanding 400,000 shares of Series A preferred stock and 3,584,131 shares of Series B preferred stock.
Our Articles of Incorporation authorize us to issue up to 10,000,000 shares of preferred stock in one or more series on terms determined by our board of directors, and as of December 31, 2024, we had outstanding 400,000 shares of Series A preferred stock and 3,301,179 shares of Series B preferred stock.
Our Articles of Incorporation authorize us to issue up to 10,000,000 shares of preferred stock in one or more series on terms determined by our board of directors, and as of December 31, 2025, we had outstanding 400,000 shares of Series A preferred stock and 3,584,131 shares of Series B preferred stock.
The recent growth of our investments in private label credit and general purpose credit card receivables may not be indicative of our ability to grow such receivables in the future. Our period-end managed receivables balance for private label credit and general purpose credit card receivables grew to $2,724.8 million at December 31, 2024, from $2,411.3 million at December 31, 2023.
The recent growth of our investments in private label credit and general purpose credit card receivables may not be indicative of our ability to grow such receivables in the future. Our period-end managed receivables balance for private label credit and general purpose credit card receivables grew to $6,953.4 million at December 31, 2025, from $2,724.8 million at December 31, 2024.
As of December 31, 2024, we could issue up to 6,298,821 additional shares of preferred stock. 15 Table of Contents In addition, the Series B preferred stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries.
As of December 31, 2025, we could issue up to 6,015,869 additional shares of preferred stock. 16 Table of Contents In addition, the Series B preferred stock effectively ranks junior to all existing and future indebtedness and other liabilities of (as well as any preferred equity interests held by others in) our existing subsidiaries and any future subsidiaries.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 and concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness described under Part II, Item 9A “Controls and Procedures” in this Annual Report on Form 10-K.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 and concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness described under Part II, Item 9A “Controls and Procedures” on our Form 10-K for the fiscal year ended December 31, 2024.
In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of the 2026 Senior Notes and 2029 Senior Notes. 17 Table of Contents The 2026 Senior Notes and 2029 Senior Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries.
In any liquidation, dissolution, bankruptcy or other similar proceeding, the holders of any of our existing or future secured indebtedness and the secured indebtedness of our subsidiaries may assert rights against the assets pledged to secure that indebtedness and may consequently receive payment from these assets before they may be used to pay other creditors, including the holders of our senior notes.
If we incur any additional indebtedness that ranks equally with the 2026 Senior Notes and 2029 Senior Notes, the holders of that debt will be entitled to share ratably with holders of the 2026 Senior Notes and 2029 Senior Notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution.
If we incur any additional indebtedness that ranks equally with our exiting senior notes, the holders of that new debt will be entitled to share ratably with holders of our existing senior notes in any proceeds distributed in connection with any insolvency, liquidation, reorganization or dissolution.
Higher interest rates often lead to higher payment obligations, which may reduce the ability of consumers to remain current on their obligations and, therefore, lead to increased delinquencies, defaults, customer bankruptcies and charge-offs, and decreased recoveries, all of which could have an adverse effect on our business.
Higher interest rates often lead to higher payment obligations, which may reduce the ability of consumers to remain current on their obligations and, therefore, lead to increased delinquencies, defaults, customer bankruptcies and charge-offs, and decreased recoveries, all of which could have an adverse effect on our business. We are a holding company with no operations of our own.
Repayment of our indebtedness, to a certain degree, is also dependent on the generation of cash flows by our subsidiaries (none of which are guarantors of the 2026 Senior Notes and 2029 Senior Notes) and their ability to make such cash available to us, by dividend, loan, debt repayment, or otherwise.
Repayment of our indebtedness, to a certain degree, is also dependent on the generation of cash flows by our subsidiaries and their ability to make such cash available to us, by dividend, loan, debt repayment, or otherwise.
Treasury issued proposed income tax regulations in regard to the taxability of changes in conversion rights that will apply to the Series B preferred stock when published in final form and may be applied to us before final publication in certain instances.
Treasury issued proposed income tax regulations in regard to the taxability of changes in conversion rights that will apply to the Series B preferred stock when published in final form and may be applied to us before final publication in certain instances. The indentures governing our indebtedness do not prohibit us from incurring additional indebtedness, subject to certain limitations.
In 2022, inflation reached a four-decade high and continues to adversely impact the economy. The Federal Reserve has raised interest rates to combat inflation. Increased interest rates adversely impact the spending levels of consumers and their ability and willingness to borrow money.
The Federal Reserve has raised interest rates to combat inflation. Increased interest rates adversely impact the spending levels of consumers and their ability and willingness to borrow money.
Our business and operations may be negatively affected by rising prices and interest rates. Our financial performance and consumers’ ability to repay indebtedness may be affected by uncertain economic conditions, including inflation, government shutdowns and changing interest rates. Higher inflation increases the costs of goods and services, reduces consumer spending power and may negatively affect our ability to purchase receivables.
Our financial performance and consumers’ ability to repay indebtedness may be affected by uncertain economic conditions, including inflation, government shutdowns and changing interest rates. Higher inflation increases the costs of goods and services, reduces consumer spending power and may negatively affect our ability to purchase receivables. In 2022, inflation reached a four-decade high and continues to adversely impact the economy.
The 2026 Senior Notes and 2029 Senior Notes are obligations exclusively of Atlanticus and not of any of our subsidiaries.
The 2026 Senior Notes and 2029 Senior Notes are structurally subordinated to the indebtedness and other liabilities of our subsidiaries. The 2026 Senior Notes and 2029 Senior Notes are obligations exclusively of Atlanticus and not of any of our subsidiaries.
If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or the market value of the 2026 Senior Notes and 2029 Senior Notes.
We may elect to issue other securities for which we may seek to obtain a rating in the future. If we issue other securities with a rating, such ratings, if they are lower than market expectations or are subsequently lowered or withdrawn, could adversely affect the market for or the market value of the existing senior notes.
If the banks that originate loans utilizing our technology platform were subject to such a lawsuit, they may elect to terminate their relationships with us voluntarily or at the direction of their regulators, and if they lost the lawsuit, they could be forced to modify or terminate such relationships.
If the banks that originate loans utilizing our technology platform were subject to such a lawsuit, they may elect to terminate their relationships with us voluntarily or at the direction of their regulators, and if they lost the lawsuit, they could be forced to modify or terminate such relationships. 8 Table of Contents We support banks that market general purpose credit cards and certain other credit products directly to consumers.
As of December 31, 2024, we could issue up to 6,298,821 additional shares of preferred stock.
As of December 31, 2025, we could issue up to 6,015,869 additional shares of preferred stock.
The indenture governing the 2026 Senior Notes and 2029 Senior Notes does not prohibit us or our subsidiaries from incurring additional indebtedness in the future or granting liens on our assets or the assets of our subsidiaries to secure any such additional indebtedness.
The indentures governing the terms of our senior notes do not prohibit us or our subsidiaries from incurring additional indebtedness in the future or granting liens on our assets or the assets of our subsidiaries to secure any such additional indebtedness, subject to certain limitations.
While our practices are in compliance with these changes, some of the changes (e.g., limitations on the ability to assess up-front fees) have significantly affected the viability of certain credit products within the U.S.
While our practices are in compliance with these changes, some of the changes (e.g., limitations on the ability to assess up-front fees) have significantly affected the viability of certain credit products within the U.S. In addition, the current regulatory environment could be impacted by future legislative developments that significantly impact financial services companies like ours.
This may have the effect of reducing the amount of proceeds paid to holders of 2026 Senior Notes and 2029 Senior Notes. Incurrence of additional debt would also further reduce the cash available to invest in operations, as a result of increased debt service obligations.
This may have the effect of reducing the amount of proceeds paid to holders of existing senior notes. Incurrence of additional debt would also further reduce the cash available to invest in operations, as a result of increased debt service obligations. If new debt is added to our current debt levels, the related risks that we now face could intensify.
Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control.
If we experience additional material weaknesses in the future, our business may be harmed. Our management is responsible for establishing and maintaining adequate internal control over financial reporting and for evaluating and reporting on the effectiveness of our system of internal control.
If we fail to make a payment on the 2026 Senior Notes and 2029 Senior Notes, we could be in default on the 2026 Senior Notes and 2029 Senior Notes, and this default could cause us to be in default on other indebtedness, to the extent outstanding.
Our operations may not generate sufficient cash to enable us to service our debt. If we fail to make a payment on our existing senior notes, we could be in default on such senior notes, and this default could cause us to be in default on other indebtedness, to the extent outstanding.
The institution of any litigation of this nature, or any judgment against us or any other industry participant in any litigation of this nature, could adversely affect our business and financial condition in a variety of ways. 7 Table of Contents The regulatory landscape in which we operate is continually changing due to new rules, regulations and interpretations, as well as various legal actions that have been brought against others that have sought to re-characterize certain loans made by federally insured banks as loans made by third parties.
The regulatory landscape in which we operate is continually changing due to new rules, regulations and interpretations, as well as various legal actions that have been brought against others that have sought to re-characterize certain loans made by federally insured banks as loans made by third parties.
Risks Related to Our Financial Reporting and Accounting We are remediating a material weakness in our internal control over financial reporting. If we experience additional material weaknesses in the future, our business may be harmed.
If we identify material weaknesses in our internal control over financial reporting in the future, our business may be harmed.
In addition, future debt and security agreements entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the transfer by our subsidiaries of assets pledged as collateral.
In addition, future debt and security agreements entered into by our subsidiaries may contain various restrictions, including restrictions on payments by our subsidiaries to us and the transfer by our subsidiaries of assets pledged as collateral. 18 Table of Contents We may not be able to generate sufficient cash to service all of our debt, and may be forced to take other actions to satisfy our obligations under such indebtedness, which may not be successful.
Also, a party that is able to circumvent our security measures could misappropriate proprietary information, cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and business. 12 Table of Contents Regulation in the areas of privacy and data security could increase our costs.
Our ability to service our clients’ needs over the Internet would be severely impeded if consumers become unwilling to transmit confidential information online. Also, a party that is able to circumvent our security measures could misappropriate proprietary information, cause interruption in our operations, damage our computers or those of our users, or otherwise damage our reputation and business.
Any such failure to adapt to changes could have a material adverse effect on our business, prospects, results of operations, financial condition or cash flows. If we are unable to protect our information systems against service interruption, our operations could be disrupted and our reputation may be damaged.
Any of these risks could adversely affect our business, expose us to liability or other adverse legal or regulatory consequences, or otherwise adversely affect our financial results. If we are unable to protect our information systems against service interruption, our operations could be disrupted and our reputation may be damaged.
The most direct impact is likely to be an increase in energy costs, adversely impacting consumers and their ability to incur and repay indebtedness.
The most direct impact is likely to be an increase in energy costs, adversely impacting consumers and their ability to incur and repay indebtedness. We use estimates in determining the fair value of our loans. If our estimates prove incorrect, we may be required to write down the value of these assets, adversely affecting our results of operations.
In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value. Consequently, if market interest rates increase, the market value of the 2026 Senior Notes and 2029 Senior Notes may decline. We may issue additional notes.
In general, as market interest rates rise, notes bearing interest at a fixed rate decline in value. Consequently, if market interest rates increase, the market value of the senior notes may decline. The ratings for the senior notes could at any time be revised downward or withdrawn entirely at the discretion of the issuing rating agency.
The indenture governing the 2026 Senior Notes and 2029 Senior Notes does not prohibit us or our subsidiaries from incurring additional secured (or unsecured) indebtedness in the future.
Under the indentures governing the terms of the senior notes, we and our subsidiaries can incur additional secured (or unsecured) indebtedness in the future, subject to certain limitations.
Remediation efforts place a significant burden on management and add increased pressure on our financial resources and processes. If we identify material weaknesses in our internal control over financial reporting in the future, our business may be harmed.
Based on the successful monitoring of these remediation efforts, the Company concluded that the material weakness identified above was remediated, as disclosed in the September 30, 2025 Form 10-Q. Remediation efforts place a significant burden on management and add increased pressure on our financial resources and processes.
Removed
In addition to true lender challenges, a question regarding the applicability of state usury rates may arise when a loan is sold from a bank to a non-bank entity. In Madden v. Midland Funding, LLC, the U.S.
Added
The institution of any litigation of this nature, or any judgment against us or any other industry participant in any litigation of this nature, could adversely affect our business and financial condition in a variety of ways.
Removed
Court of Appeals for the Second Circuit held that the federal preemption of state usury laws did not extend to the purchaser of a loan issued by a national bank. In its brief urging the U.S. Supreme Court to deny certiorari, the U.S.
Added
For example, in February and March 2025, bipartisan legislation was introduced in both the United States Senate and House, respectively, seeking to amend the Truth in Lending Act (“TILA”) to cap credit card interest rates at 10% effective January 1, 2031.
Removed
Solicitor General, joined by the Office of the Comptroller of the Currency ("OCC"), noted that the Second Circuit (Connecticut, New York and Vermont) analysis was incorrect. On remand, the U.S.
Added
Thereafter, in January 2026, the current presidential administration proposed a 10% cap on credit card interest rates for one year.
Removed
District Court for the Southern District of New York concluded on February 27, 2017, that New York’s state usury law, not Delaware’s state usury law, was applicable and that the plaintiff’s claims under the FDCPA and state unfair and deceptive acts and practices could proceed. To that end, the court granted Madden’s motion for class certification.
Added
Additional bills have been introduced in Congress in 2026 that seek to cap interest rates in other ways, such as US S3721, which would amend TILA to cap interest rates on all consumer credit products at the maximum amount permitted in the state where the customer resides, and US S3793, which would extend the Military Lending Act’s 36% military annual percentage rate cap and related protections to all consumers in connection with all consumer credit products subject to only limited exceptions for residential mortgages, certain secured auto loans, and federal credit unions.
Removed
At this time, it is unknown whether Madden will be applied outside of the defaulted debt context in which it arose. The facts in Madden are not directly applicable to our business, as we do not engage in practices similar to those at issue in Madden.
Added
Any temporary or permanent implementation of a specific interest rate cap on consumer credit cards or more broadly across all consumer credit products could have a material adverse effect on our business and operations.
Removed
However, to the extent that the holding in Madden is broadened to cover circumstances applicable to our business, or if other litigation on related theories were brought against us or others and were successful, or we otherwise were found to be the "true lender," we could become subject to state usury limits and state licensing laws, in addition to the state consumer protection laws to which we are already subject, in a greater number of states, loans in such states could be deemed void and unenforceable, and we could be subject to substantial penalties in connection with such loans.
Added
New laws and regulations such as these could significantly lower or eliminate the profitability of operations going forward by, among other things, reducing the amount of interest and fees we charge in connection with any financial products that are offered or otherwise available to consumers.
Removed
In response to the uncertainty Madden created as to the validity of interest rates of bank-originated loans sold in the secondary market, in May 2020 and June 2020, the OCC and the FDIC, respectively, issued final rules that reaffirmed the "valid when made" doctrine and clarified that when a bank sells, assigns, or otherwise transfers a loan, the interest rates permissible prior to the transfer continue to be permissible following the transfer.
Added
Failure to realize the expected benefits of our acquisition of Mercury could adversely affect our business and the value of our securities. Although we expect significant benefits to result from the acquisition of Mercury, we may not actually realize any of them or realize them within the anticipated timeframe.
Removed
In the summer of 2020, a number of state attorneys general filed suits against the OCC and the FDIC, challenging these "valid when made" rules. In February 2022, the U.S. District Court for the Northern District of California entered two orders granting summary judgement in favor of the OCC and the FDIC.
Added
Achieving these benefits will depend, in part, on our ability to integrate Mercury's business successfully and efficiently.
Removed
The court held that the bank regulators had the power to issue the rules reaffirming the "valid when made" doctrine. Although the practical consequences of Madden have diminished since the initial ruling, uncertainty remains in this area of law.
Added
The challenges involved in this integration, which will be complex and time consuming, include the following: • preserving customer and other important relationships of Mercury and attracting new business and operational relationships; • integrating financial forecasting and controls, procedures and reporting cycles; • consolidating and integrating corporate, information technology, finance, compliance and administrative infrastructures; • coordinating marketing efforts to effectively position our capabilities; • coordinating and integrating operations; and • integrating employees and related human resource systems and benefits, maintaining employee morale and retaining key employees.
Removed
The CFPB recently issued a final rule regarding credit card late fees, which represents a significant departure from the rules that are currently in effect.
Added
If we do not successfully manage these risks and the other challenges inherent in integrating an acquired business, then we may not achieve the anticipated benefits of the acquisition of Mercury on our anticipated timeframe or at all and our revenue, expenses, operating results, financial condition and the prices of our securities could be materially adversely affected.
Removed
Should this rule be implemented, the rule would have an adverse impact on our business, results of operations and financial condition for at least the short term and, depending on the effectiveness of our actions taken in response to the rule, potentially over the long term.
Added
The successful integration of the Mercury business will require significant management attention and may divert it from our business and operational issues. 10 Table of Contents Risks Related to Our Financial Reporting and Accounting We recently remediated a material weakness in our internal control over financial reporting.
Removed
In March 2024, the CFPB published a final rule that would significantly reduce the safe harbor amount for late fees that credit card issuers are authorized to charge. This rule is currently on hold, pending litigation.
Added
Our existing and future levels of indebtedness could adversely affect our financial health, our ability to obtain financing in the future, our ability to react to changes in our business and our ability to fulfill our obligations under the existing indebtedness.
Removed
The rule, if implemented, would: (i) decrease the safe harbor amount for credit card late fees to $8 and eliminate a higher safe harbor dollar amount for subsequent late payments; and (ii) eliminate the annual inflation adjustments that currently exist for the late fee safe harbor dollar amounts.
Added
As of December 31, 2025, we had $934.9 million of recourse indebtedness outstanding and $5,629.6 million of indebtedness outstanding under warehouse facilities and asset backed securities, all of which is non-recourse indebtedness.
Removed
The "safe harbor" dollar amounts referenced in the CFPB’s rulemaking refer to the amounts that credit card issuers may charge as late fees under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act") without reference to the issuer’s cost to collect.
Added
Our level of indebtedness could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, resulting in possible defaults on and acceleration of such indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of such cash flows to fund working capital, acquisitions, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing for working capital, acquisitions, capital expenditures, debt service requirements and other general corporate purposes; • limit our ability to refinance indebtedness or cause the associated costs of such refinancing to increase; • restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us, which could limit our ability to, among other things, make required payments on our debt; • increase our vulnerability to general adverse economic and industry conditions; and • place us at a competitive disadvantage compared to other companies with proportionately less debt or comparable debt at more favorable interest rates who, as a result, may be better positioned to withstand economic downturns.
Removed
Under the CARD Act, these safe harbor amounts, since their initial implementation, have been subject to annual adjustment based on changes in the Consumer Price Index, and the safe harbor amounts are currently set at $30 for an initial late fee and $41 for subsequent late fees incurred in one of the next six billing cycles.
Added
Any of the foregoing impacts of our level of indebtedness could have a material adverse effect on our business, financial condition and results of operations. Our business and operations may be negatively affected by rising prices and interest rates.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Removed
ITEM 1C. CYBERSECURITY Risk Management Strategy We have developed and implemented cybersecurity risk management processes intended to protect the confidentiality, integrity and availability of our critical systems and information.
Added
Item 1C. Cybersecurity 20 Item 2. Properties 21 Item 3. Legal Proceedings 21 Item 4. Mine Safety Disclosure 21 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 22 Item 6. [Reserved] 23 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 23 Item 7A.
Removed
While everyone at our company plays a part in managing cybersecurity risks, primary cybersecurity oversight responsibility is shared by our Board of Directors, the audit committee of the Board of Directors ("Audit Committee") and senior management.
Added
Quantitative and Qualitative Disclosures About Market Risk 43 Item 8. Financial Statements and Supplementary Data 44 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 44 Item 9A. Controls and Procedures 45
Removed
Our cybersecurity risk management program is integrated into our overall enterprise risk management program. 19 Table of Contents Our cybersecurity risk management program includes: ● physical, technological and administrative controls intended to support our cybersecurity and data governance framework, including controls designed to protect the confidentiality, integrity and availability of our key information systems and customer, employee, bank partner and other third -party information stored on those systems, such as access controls, encryption, data handling requirements and other cybersecurity safeguards, and internal policies that govern our cybersecurity risk management and data protection practices; ● a defined procedure for timely incident detection, containment, response and remediation, including a written security incident response plan that includes procedures for responding to cybersecurity incidents; ● cybersecurity risk assessment processes designed to help identify material cybersecurity risks to our critical systems, information, products, services and broader enterprise Information Technology ("IT") environment; ● a security team responsible for managing our cybersecurity risk assessment processes and security controls; ● the use of external consultants or other third -party experts and service providers, where considered appropriate, to assess, test or otherwise assist with aspects of our cybersecurity controls; ● annual cybersecurity and privacy training of employees, including incident response personnel and senior management, and specialized training for certain teams depending on their role and/or access to certain types of information, such as consumer information; and ● a third -party risk management process that includes internal vetting of certain third -party vendors and service providers with whom we may share data and processes designed to oversee, identify, and reduce the potential impact of a cybersecurity incident at a third -party vendor or service provider or otherwise implicating the third -party technology and systems used.
Removed
We have not identified risks from known cybersecurity threats, including as a result of any previous cybersecurity incidents, that have materially affected or are reasonably likely to materially affect us, including our business strategy, results of operations or financial condition.
Removed
We will continue to monitor and assess our cybersecurity risk management program as well as invest in and seek to improve such systems and processes as appropriate. If we were to experience a material cybersecurity incident in the future, such incident may have a material effect, including on our business strategy, results of operations or financial condition.
Removed
For more information regarding cybersecurity risks that we face and potential impacts on our business related thereto, refer to Part I, Item 1A "Risk Factors." Cybersecurity Governance With oversight from our Board of Directors, the Audit Committee is primarily responsible for assisting our Board of Directors in fulfilling its ultimate oversight responsibilities relating to risk assessment and management, including relating to cybersecurity and other information technology risks.
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The Audit Committee oversees management’s implementation of our cybersecurity risk management program, including processes and policies for determining risk tolerance, and reviews management’s strategies for adequately mitigating and managing identified risks, including risks relating to cybersecurity threats.
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The Audit Committee receives updates from our Chief Information Officer on our cybersecurity risks on a periodic basis or more frequently if needed, and reviews metrics about cyber threat response preparedness, program maturity milestones, risk mitigation status, third party service providers and the current and emerging threat landscape.
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In addition, management updates the Audit Committee, as necessary, regarding any material cybersecurity threats or incidents, as well as any incidents with lesser impact potential. The Audit Committee reports to our Board of Directors regarding its activities, including those related to key cybersecurity risks, mitigation strategies and ongoing developments, on a periodic basis or more frequently as needed.
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The Board of Directors also receives updates from our Chief Information Officer on our cyber risk management program and other matters relating to our data privacy and cybersecurity approach, including risk mitigations to bolster and enhance our data protection and data governance framework.
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Members of our Board of Directors receive presentations that include cybersecurity topics and the management of key cybersecurity risks from our Chief Information Officer as part of the continuing education of our Board of Directors on topics that impact public companies.
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Our management team, including our Chief Information Officer, is responsible for assessing and managing our material risks from cybersecurity threats and for our overall cybersecurity risk management program on a day-to-day basis, and supervises both our internal cybersecurity personnel and the relationship with our retained external cybersecurity consultants.
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Our Chief Information Officer’s experience includes over 10 years of working in the cybersecurity field in various industries, including the financial services industry.
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Our management team supervises efforts to prevent, detect, mitigate, and remediate cybersecurity risks and incidents through various means, including briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeOur Auto Finance segment principally operates from 2,670 square feet of leased office space in Lake Mary, Florida, with additional offices and branch locations in various states and territories. We believe that our facilities are suitable to our business and that we will be able to lease or purchase additional facilities as our needs, if any, require.
Biggest changeWe believe that our facilities are suitable to our business and that we will be able to lease or purchase additional facilities as our needs, if any, require.
Added
Our Auto Finance segment principally operates from 2,670 square feet of leased office space in Lake Mary, Florida, with additional offices and branch locations in various states and territories. As part of our recent acquisition of Mercury, we assumed two separate operating leases for offices in Wilmington, Delaware and Austin, Texas. The leases cover approximately 30,000 square feet.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeDividends We have no current plans to pay dividends to holders of our common stock. As we continue to pursue our growth strategy, we will assess our cash flow, the long-term capital needs of our business and other uses of cash.
Biggest changeAs we continue to pursue our growth strategy, we will assess our cash flow, the long-term capital needs of our business and other uses of cash. Payment of any cash dividends in the future will depend upon, among other things, our results of operations, financial condition, cash requirements and contractual restrictions.
There were 0 such shares returned to us during the three months ended December 31, 2024. (3) Pursuant to a share repurchase plan authorized by our Board of Directors on May 7, 2024, we are authorized to repurchase 2,000,000 shares of our common stock through June 30, 2026.
There were 298 such shares returned to us during the three months ended December 31, 2025. (3) Pursuant to a share repurchase plan authorized by our Board of Directors on May 7, 2024, we are authorized to repurchase 2,000,000 shares of our common stock through June 30, 2026.
ISSUER PURCHASES OF EQUITY SECURITIES The following table sets forth information with respect to our repurchases of common stock during the three months ended December 31, 2024.
ISSUER PURCHASES OF EQUITY SECURITIES The following table sets forth information with respect to our repurchases of common stock during the three months ended December 31, 2025.
There were 925 such shares returned to us during the three months ended December 31, 2024. (2) Because withholding stock repurchases related to stock option exercise prices are permitted outside the scope of our 5,000,000 share Board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of stock option exercise prices on exercised grants.
There were 465 such shares returned to us during the three months ended December 31, 2025. (2) Because withholding stock repurchases related to stock option exercise prices are permitted outside the scope of our 5,000,000 share Board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of stock option exercise prices on exercised grants.
The following table sets forth information with respect to our repurchases of Series B Preferred Stock during the three months ended December 31, 2024.
The following table sets forth information with respect to our repurchases of Series B Preferred Stock during the three months ended December 31, 2025.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NASDAQ Global Select Market under the symbol "ATLC." As of February 21, 2025, there were 254 record holders of our common stock, which does not include persons whose stock is held in nominee or "street name" accounts through brokers, banks and intermediaries.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is traded on the NASDAQ Global Select Market under the symbol "ATLC." As of February 20, 2026, there were 250 record holders of our common stock, which does not include persons whose stock is held in nominee or "street name" accounts through brokers, banks and intermediaries.
For additional information, see Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity, Funding and Capital Resources." 21 Table of Contents
For additional information, see Part II, Item 7 "Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity, Funding and Capital Resources."
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.
Furthermore, dividends on our Series A preferred stock and Series B preferred stock are payable in preference to any common stock dividends. 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 will continue to evaluate our common stock price and Series B preferred stock price relative to other investment opportunities and, to the extent we believe that the repurchase of our common stock or Series B preferred stock represents an appropriate return of capital, we will repurchase shares of our common stock or Series B preferred stock.
We will continue to evaluate our common stock price and Series B preferred stock price relative to other investment opportunities and, to the extent we believe that the repurchase of our common stock or Series B preferred stock represents an appropriate return of capital, we will repurchase shares of our common stock or Series B preferred stock. 22 Table of Contents Dividends We have no current plans to pay dividends to holders of our common stock.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (2) October 1 - October 31 — $ — — 1,941,950 November 1 - November 30 887 $ 35.94 — 1,941,950 December 1 - December 31 38 $ 64.10 — 1,941,950 Total 925 $ 37.09 — 1,941,950 (1) Because withholding tax-related stock repurchases are permitted outside the scope of our 5,000,000 share Board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of withholding tax requirements on exercised stock options and vested stock grants.
Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) (2) Maximum Number of Shares that May Yet Be Purchased under the Plans or Programs (3) October 1 - October 31 220,404 $ 54.49 220,220 1,680,957 November 1 - November 30 541 $ 51.70 — 1,680,957 December 1 - December 31 73,375 $ 59.21 73,337 1,607,620 Total 294,320 $ 55.66 293,557 1,607,620 (1) Because withholding tax-related stock repurchases are permitted outside the scope of our 5,000,000 share Board-authorized repurchase plan, these amounts exclude shares of stock returned to us by employees in satisfaction of withholding tax requirements on exercised stock options and vested stock grants.
Removed
Payment of any cash dividends in the future will depend upon, among other things, our results of operations, financial condition, cash requirements and contractual restrictions. Furthermore, dividends on our Series A preferred stock and Series B preferred stock are payable in preference to any common stock dividends.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

148 edited+83 added−47 removed130 unchanged
Biggest changeResults of our legacy credit card receivables portfolios are excluded: Private Label Credit - At or for the Three Months Ended 2024 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 1,231,750 $ 1,205,714 $ 1,013,529 $ 907,367 30-59 days past due $ 33,664 2.7 % $ 34,658 2.9 % $ 36,477 3.6 % $ 32,209 3.5 % 60-89 days past due $ 29,297 2.4 % $ 30,216 2.5 % $ 29,766 2.9 % $ 27,094 3.0 % 90 or more days past due $ 75,294 6.1 % $ 70,190 5.8 % $ 67,368 6.6 % $ 74,414 8.2 % Average APR 12.9 % 13.3 % 15.8 % 17.1 % Receivables purchased during period $ 241,442 $ 396,900 $ 316,304 $ 191,106 Private Label Credit - At or for the Three Months Ended 2023 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 939,389 $ 944,197 $ 892,387 $ 835,541 30-59 days past due $ 36,540 3.9 % $ 35,830 3.8 % $ 31,597 3.5 % $ 25,774 3.1 % 60-89 days past due $ 31,284 3.3 % $ 29,387 3.1 % $ 24,776 2.8 % $ 21,036 2.5 % 90 or more days past due $ 79,056 8.4 % $ 71,200 7.5 % $ 56,209 6.3 % $ 62,609 7.5 % Average APR 17.1 % 16.2 % 17.0 % 17.5 % Receivables purchased during period $ 202,168 $ 244,571 $ 260,281 $ 201,375 31 Table of Contents General Purpose Credit Card - At or for the Three Months Ended 2024 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 1,493,032 $ 1,448,060 $ 1,401,168 $ 1,410,281 30-59 days past due $ 70,358 4.7 % $ 71,645 4.9 % $ 63,141 4.5 % $ 62,173 4.4 % 60-89 days past due $ 68,656 4.6 % $ 66,454 4.6 % $ 58,777 4.2 % $ 60,664 4.3 % 90 or more days past due $ 178,216 11.9 % $ 157,222 10.9 % $ 150,839 10.8 % $ 169,402 12.0 % Average APR 28.6 % 28.9 % 27.4 % 27.1 % Receivables purchased during period $ 370,269 $ 373,231 $ 360,425 $ 342,834 General Purpose Credit Card - At or for the Three Months Ended 2023 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 1,471,358 $ 1,370,445 $ 1,280,979 $ 1,219,429 30-59 days past due $ 73,918 5.0 % $ 65,987 4.8 % $ 65,067 5.1 % $ 50,355 4.1 % 60-89 days past due $ 67,088 4.6 % $ 62,969 4.6 % $ 56,698 4.4 % $ 67,486 5.5 % 90 or more days past due $ 168,555 11.5 % $ 145,927 10.6 % $ 114,046 8.9 % $ 134,799 11.1 % Average APR 27.4 % 27.3 % 27.2 % 26.4 % Receivables purchased during period $ 426,939 $ 402,978 $ 380,509 $ 315,148 The following discussion relates to the tables above.
Biggest changeResults of our legacy credit card receivables portfolios are excluded: Private Label Credit - At or for the Three Months Ended 2025 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 1,856,811 $ 1,725,708 $ 1,524,399 $ 1,253,215 30-59 days past due $ 37,727 2.0 % $ 30,336 1.8 % $ 29,981 2.0 % $ 27,166 2.2 % 60-89 days past due $ 33,588 1.8 % $ 25,988 1.5 % $ 23,745 1.6 % $ 23,938 1.9 % 90 or more days past due $ 74,940 4.0 % $ 62,066 3.6 % $ 58,146 3.8 % $ 67,414 5.4 % Average APR 9.6 % 9.4 % 10.3 % 11.9 % Receivables purchased during period $ 413,988 $ 436,711 $ 506,738 $ 265,360 Private Label Credit - At or for the Three Months Ended 2024 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 1,231,750 $ 1,205,714 $ 1,013,529 $ 907,367 30-59 days past due $ 33,664 2.7 % $ 34,658 2.9 % $ 36,477 3.6 % $ 32,209 3.5 % 60-89 days past due $ 29,297 2.4 % $ 30,216 2.5 % $ 29,766 2.9 % $ 27,094 3.0 % 90 or more days past due $ 75,294 6.1 % $ 70,190 5.8 % $ 67,368 6.6 % $ 74,414 8.2 % Average APR 12.9 % 13.3 % 15.8 % 17.1 % Receivables purchased during period $ 241,442 $ 396,900 $ 316,304 $ 191,106 General Purpose Credit Card - At or for the Three Months Ended 2025 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 5,096,634 $ 4,874,427 $ 1,522,078 $ 1,453,049 30-59 days past due $ 168,522 3.3 % $ 149,003 3.1 % $ 70,490 4.6 % $ 61,966 4.3 % 60-89 days past due $ 154,733 3.0 % $ 132,214 2.7 % $ 61,866 4.1 % $ 60,621 4.2 % 90 or more days past due $ 370,535 7.3 % $ 312,584 6.4 % $ 152,779 10.0 % $ 165,791 11.4 % Average APR 28.2 % 28.7 % 29.4 % 28.7 % Receivables purchased during period $ 1,347,982 $ 701,557 $ 442,957 $ 347,550 General Purpose Credit Card - At or for the Three Months Ended 2024 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Managed Receivables % of Period-end managed receivables Period-end managed receivables $ 1,493,032 $ 1,448,060 $ 1,401,168 $ 1,410,281 30-59 days past due $ 70,358 4.7 % $ 71,645 4.9 % $ 63,141 4.5 % $ 62,173 4.4 % 60-89 days past due $ 68,656 4.6 % $ 66,454 4.6 % $ 58,777 4.2 % $ 60,664 4.3 % 90 or more days past due $ 178,216 11.9 % $ 157,222 10.9 % $ 150,839 10.8 % $ 169,402 12.0 % Average APR 28.6 % 28.9 % 27.4 % 27.1 % Receivables purchased during period $ 370,269 $ 373,231 $ 360,425 $ 342,834 The following discussion relates to the tables above. 34 Managed receivables levels.
As we continue to acquire newer private label credit and general purpose credit card receivables, we expect our delinquency rates to marginally increase when compared to the same periods in prior years due to a planned shift in our general purpose and private label credit receivables originated as our bank partners expand product offerings to a broader range of consumers.
As we continue to acquire newer private label credit and general purpose credit card receivables, we expect our delinquency rates to marginally increase when compared to the same periods in prior years due to a planned shift in our general purpose and private label credit receivables originated as our bank partners continue to expand product offerings to a broader range of consumers.
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.
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. General purpose credit cards use the Aspire, Imagine, Mercury and Fortiva brand names.
As we have acquired a higher number of receivables associated with our private label credit accounts for which we have limited loss exposure due to agreements with retail partners, particularly in the second and third quarters of 2024, our Expected net principal credit loss rate has decreased.
As we have acquired a higher number of receivables associated with our private label credit accounts for which we have limited loss exposure due to agreements with retail partners, particularly in the second and third quarters of 2024 and 2025, our Expected net principal credit loss rate has decreased.
This was particularly influenced by strong growth in the aforementioned private label credit receivables acquired during the second and third quarters of 2024 that have limited loss exposure and tend to have longer associated terms and lower effective payment rates.
This was particularly influenced by strong growth in the aforementioned private label credit receivables acquired during the second and third quarters of 2024 and 2025 that have limited loss exposure and tend to have longer associated terms and lower effective payment rates.
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. As a result, the products we support are priced to reflect expected loss rates for our various risk categories.
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.
(3) Interest expense ratio, annualized is calculated using the annualized interest expense associated with the CaaS segment (See Note 3, "Segment Reporting" to our consolidated financial statements) as the numerator and period-end average managed receivables as the denominator.
(3) Interest expense ratio, annualized is calculated using the annualized interest expense associated with the CaaS segment (See Note 4, "Segment Reporting" to our consolidated financial statements) as the numerator and period-end average managed receivables as the denominator.
We have experienced marginal declines in our weighted-average, Gross yield, net of finance charge charge-offs rate used in our fair value calculations as of December 31, 2024, when compared to rates used as of December 31, 2023 largely due to a shift in the overall portfolio mix towards private label credit receivables acquired that tend to have lower effective yields but also for which we have limited loss exposure due to agreements with retail partners.
We have experienced marginal declines in our weighted-average, Gross yield, net of finance charge charge-offs rate used in our fair value calculations of our private label credit receivables as of December 31, 2025, when compared to rates used as of December 31, 2024 largely due to a shift in the overall portfolio mix towards private label credit receivables acquired that tend to have lower effective yields but also for which we have limited loss exposure due to agreements with retail partners.
See Note 2, "Significant Accounting Policies and Consolidated Financial Statement Components" to our consolidated financial statements for additional information related to this revenue from contracts with customers. Interchange fees are earned when customers we serve use their cards over established card networks. We earn a portion of the interchange fee the card networks charge merchants for the transaction.
See Note 3, "Significant Accounting Policies and Consolidated Financial Statement Components" to our consolidated financial statements for additional information related to this revenue from contracts with customers. Interchange fees are earned when customers we serve use their cards over established card networks. We earn a portion of the interchange fee the card networks charge merchants for the transaction.
The increase in the combined principal net charge-off ratio, annualized throughout 2023 and the first two quarters of 2024 is a reflection of increased delinquencies noted as consumer behavior reverted to historical norms (similar to those experienced in periods prior to COVID-19) and decreases in the acquisition of new general purpose credit card receivables.
The increase in the combined principal net charge-off ratio, annualized in the first two quarters of 2024 is a reflection of increased delinquencies noted as consumer behavior reverted to historical norms (similar to those experienced in periods prior to COVID-19) and decreases in the acquisition of new general purpose credit card receivables.
(4) Net interest margin ratio, annualized is calculated using the Total managed yield ratio, annualized less the Combined principal net charge-off ratio, annualized less the Interest expense ratio, annualized. 30 Table of Contents The following table presents additional trends and data with respect to our private label credit and general purpose credit card receivables (dollars in thousands).
(4) Net interest margin ratio, annualized is calculated using the Total managed yield ratio, annualized less the Combined principal net charge-off ratio, annualized less the Interest expense ratio, annualized. 33 Table of Contents The following table presents additional trends and data with respect to our private label credit and general purpose credit card receivables (dollars in thousands).
Further details concerning the above debt facilities and other debt facilities we use to fund the acquisition of receivables are provided in Note 10, "Notes Payable," to our consolidated financial statements included herein. In November 2021, we issued $150.0 million aggregate principal amount of 6.125% Senior Notes due 2026 (the "2026 Senior Notes").
Further details concerning the above debt facilities and other debt facilities we use to fund the acquisition of receivables are provided in Note 11, "Notes Payable," to our consolidated financial statements included herein. In November 2021, we issued $150.0 million aggregate principal amount of 6.125% Senior Notes due 2026 (the "2026 Senior Notes").
Delinquency rates also tend to fluctuate based on seasonal trends and historically are lower in the second quarter of each year as seen above due to the benefits of strong payment patterns associated with tax refunds for many consumers. Total managed yield ratio, annualized.
Delinquency rates also tend to fluctuate based on inflationary pressures and seasonal trends and historically are lower in the second quarter of each year as seen above due to the benefits of strong payment patterns associated with tax refunds for many consumers. Total managed yield ratio, annualized.
Our average APRs for Private label credit fell throughout 2024 due to a shift in the overall portfolio mix towards private label credit receivables acquired that tend to have lower effective yields but also for which we have limited loss exposure due to agreements with retail partners.
Our average APRs for private label credit fell throughout 2024 and in 2025 due to a shift in the overall portfolio mix towards private label credit receivables acquired that tend to have lower effective yields but also for which we have limited loss exposure due to agreements with retail partners.
For a qualitative summary of how certain key inputs (derived from the above assumptions) to our valuation model have changed since December 31, 2023, refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, both included in this report.
For a qualitative summary of how certain key inputs (derived from the above assumptions) to our valuation model have changed since December 31, 2024, refer to Item 7, Management's Discussion and Analysis of Financial Condition and Results of Operations, both included in this report.
See Note 6, "Fair Values of Assets and Liabilities" to our consolidated financial statements included herein for further discussion of assumptions underlying this calculation. (2) Total managed receivables are equal to the Aggregate unpaid gross balance of loans carried at fair value.
See Note 7, "Fair Values of Assets and Liabilities" to our consolidated financial statements included herein for further discussion of assumptions underlying this calculation. (2) Total managed receivables are equal to the Aggregate unpaid gross balance of loans carried at fair value.
See Note 6, "Fair Value of Assets and Liabilities" to our consolidated financial statements included herein for further discussion of the Aggregate unpaid gross balance of loans carried at fair value. (3) The Fair value to Total managed receivables ratio is calculated using Loans at fair value as the numerator, and Total managed receivables as the denominator.
See Note 7, "Fair Value of Assets and Liabilities" to our consolidated financial statements included herein for further discussion of the Aggregate unpaid gross balance of loans carried at fair value. (3) The Fair value to Total managed receivables ratio is calculated using Loans at fair value as the numerator, and Total managed receivables as the denominator.
Our delinquency rates for our general purpose credit cards receivables were higher in the first quarter of 2024 due to both a reduction in the growth of our managed receivables and accounts that were enrolled in short-term payment deferrals, due to hardship claims resulting from COVID-19.
Delinquency rates for our general purpose credit card receivables were higher in the first quarter of 2024 due to both a reduction in the growth of our managed receivables and accounts that were enrolled in short-term payment deferrals, due to hardship claims resulting from COVID-19.
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 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. for patent infringement.
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 value of our investment in these companies is not material. One of these companies, Fintiv Inc., has sued Apple, Inc., and Walmart, Inc. for patent infringement.
Our charge-off ratio has also been impacted due to (and will continue to be impacted by): 1) higher expected charge-off rates on the private label credit and general purpose credit card receivables corresponding with higher yields on these receivables, (2) continued testing of receivables with higher risk profiles, leading to periodic increases in combined principal net charge offs, (3) the aforementioned tightened underwriting standards that will slow the pace of growth in our receivables base, and (4) negative impacts on some consumers' ability to make payments on outstanding loans and fees receivable as a result of inflation pressures.
Our charge-off ratio has also been impacted due to (and will continue to be impacted by): (1) higher expected charge-off rates on the private label credit and general purpose credit card receivables associated with higher yields on these receivables, (2) continued testing of receivables with higher risk profiles, leading to periodic increases in combined principal net charge-offs, (3) the aforementioned tightened underwriting standards that slowed the pace of growth in our receivables base, and (4) negative impacts on some consumers' ability to make payments on outstanding loans and fees receivable as a result of inflation pressures.
We do not currently expect that these contingent commitments will result in any material amounts being paid by us. See Note 11, "Commitments and Contingencies," to our consolidated financial statements included herein for further discussion of these matters.
We do not currently expect that these contingent commitments will result in any material amounts being paid by us. See Note 12, "Commitments and Contingencies," to our consolidated financial statements included herein for further discussion of these matters.
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”).
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, WebBank and First Bank and Trust (collectively, our “bank partners”).
Unknown ongoing potential impacts related to the aforementioned inflation and other global disruptions could result in more variability in these expenses and could impair our ability to acquire new receivables, resulting in increased costs despite our efforts to manage costs effectively. Noncontrolling interests.
Unknown ongoing potential impacts related to potential inflation and other global disruptions could result in more variability in these expenses and could impair our ability to acquire new receivables, resulting in increased costs despite our efforts to manage costs effectively. Noncontrolling interests.
When coupled with increases in interchange revenues which are largely impacted by growth in our receivables, this resulted in an increase in this category of revenues for the year ended December 31, 2024, when compared to the same period in 2023.
When coupled with increases in interchange revenues, which are largely impacted by growth in our receivables, this resulted in an increase in this category of revenues for the year ended December 31, 2025, when compared to the same period in 2024.
Represents an annualized fraction, the numerator of which is the aggregate consolidated amounts of principal losses from consumers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased consumers, less current-period recoveries (including recoveries from dealer reserve offsets for our CAR operations), as reflected in Note 2 "Significant Accounting Policies and Consolidated Financial Statement Components" and Note 6 "Fair Values of Assets and Liabilities" and the denominator of which is average managed receivables.
Represents an annualized fraction, the numerator of which is the aggregate consolidated amounts of principal losses from consumers unwilling or unable to pay their receivables balances, as well as from bankrupt and deceased consumers, less current-period recoveries (including recoveries from dealer reserve offsets for our CAR operations), as reflected in Note 3 "Significant Accounting Policies and Consolidated Financial Statement Components" and Note 7 "Fair Values of Assets and Liabilities" and the denominator of which is average managed receivables.
Increases in the federal funds borrowing rate in 2022 and 2023 have led to an increase in spreads for newly-originated debt and for that portion of debt which does not have fixed rates.
Increases in the federal funds borrowing rate in 2022 and 2023 have led to an increase in interest rates for newly-originated debt and for that portion of debt which does not have fixed rates.
This increase in cash used is primarily due to marginal increases in the level of net investments in private label credit and general purpose credit card receivables relative to the same period in 2023.
This increase in cash used is primarily due to marginal increases in the level of net investments in private label credit and general purpose credit card receivables relative to the same period in 2024.
Auto Finance Segment CAR, our auto finance platform acquired in April 2005, principally purchases and/or services loans secured by automobiles from or for, and also provides floor-plan financing for, a prequalified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business.
Auto Finance Segment CAR, our auto finance platform acquired in April 2005, principally purchases and/or services loans secured by automobiles from or for, and also provides floorplan financing for, a prequalified network of independent automotive dealers and automotive finance companies in the buy-here, pay-here used car business.
While we have experienced recent increases in our delinquency rates (and related charge-offs), we do not believe they will have a significantly adverse impact on our results of operations in 2025 as we have established appropriate reserves for these losses.
While we have experienced some recent increases in our delinquency rates (and related charge-offs), we do not believe they will have a significantly adverse impact on our results of operations in 2026 as we have established appropriate reserves for these losses.
Our beliefs for future delinquency rates are predicated on the assumption that the slowing rate of inflation will continue and our recent tightened underwriting standards will prove effective at reducing account delinquencies. Total managed yield ratio, annualized. As discussed above, growth in higher yielding assets has resulted in higher charge-off and delinquency rates in some periods.
Our beliefs for future delinquency rates are predicated on the assumption that the slowing rate of inflation will continue and prove effective at reducing account delinquencies. Total managed yield ratio, annualized. As discussed above, growth in higher yielding assets has resulted in higher charge-off and delinquency rates in some periods.
Our effective income tax expense rate for the year ended December 31, 2024, is below the statutory rate principally due to (1) our deduction for income tax purposes of amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and (2) a loss related to our unrecovered investment in a foreign subsidiary which ceased operations during the year and with respect to which we had used “permanently reinvested earnings” accounting in our consolidated financial statements.
Our effective income tax rate for the year ended December 31, 2024, is below the statutory rate principally due to the tax effects of deductions associated with (1) amounts characterized in our consolidated financial statements as dividends on a preferred stock issuance, such amounts constituted which deductible interest expense on debt for tax purposes and (2) a loss related to our unrecovered investment in a foreign subsidiary which ceased operations during the year and with respect to which we had used “permanently reinvested earnings” accounting in our consolidated financial statements.
As a result, in periods where we have declines in rates of growth of these general purpose credit card receivables, as was noted in 2024 (relative to growth in private label credit receivables), we expect to have slightly lower total managed yield ratios.
As a result, in periods where we have slower rates of growth of general purpose credit card receivables, as was noted in 2024 (relative to growth in private label credit receivables), we expect to have slightly lower total managed yield ratios.
Increases in the first and second quarters of 2024 in our Private label credit receivables were largely due to a mix shift in receivables acquired to certain receivables that have higher observed delinquencies but correspondingly higher yields.
Increases in delinquencies in the first and second quarters of 2024 in our private label credit receivables were largely due to a mix shift in receivables acquired to certain receivables that have higher observed delinquencies and higher associated yields.
General purpose credit card receivables tend to have higher total yields than private label credit receivables (and corresponding higher charge off rates).
General purpose credit card receivables tend to have higher total yields than private label credit receivables (and higher associated charge-off rates).
We reflect the ownership interests of noncontrolling holders of equity in our majority-owned subsidiaries as noncontrolling interests in our consolidated statements of income. In November 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.
We reflect the ownership interests of noncontrolling holders of equity in our majority-owned subsidiaries as noncontrolling interests in our consolidated statements of income. In November 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 carried a 16% preferred return paid quarterly.
However, a number of our operating costs are fixed. As we have significantly grown our managed receivables levels over the past two years with minimal increase in the fixed portion of our card and loan servicing expenses as well as our salaries and benefits costs, we have realized greater operating efficiency.
As we have significantly grown our managed receivables levels over the past two years with minimal increase in the fixed portion of our card and loan servicing expenses as well as our salaries and benefits costs, we have realized greater operating efficiency.
To the extent that actual results differ from our estimates of credit losses on loans at amortized cost, our results of operations and liquidity could be materially affected. 39 Table of Contents
To the extent that actual results differ from our estimates of credit losses on loans at amortized cost, our results of operations and liquidity could be materially affected.
Combined principal net charge-off ratio, annualized. We charge off our CaaS segment receivables when they become contractually more than 180 days past due or 120 days past due if they are enrolled in an installment loan product. For all of our products, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death.
We charge off our CaaS segment receivables when they become contractually more than 180 days past due or 120 days past due if they are enrolled in an installment loan product. For all of our products, we charge off receivables within 30 days of notification and confirmation of a customer’s bankruptcy or death.
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 year ended December 31, 2024 and 2023 totaled $1.4 million and $1.4 million, respectively.
We are amortizing fees associated with the issuance of the 2026 Senior Notes into interest expense over the expected life of such notes. Amortization of these fees for the years ended December 31, 2025 and 2024 totaled $1.4 million and $1.4 million, respectively.
If the Federal Reserve continues to decrease interest rates or we observe a corresponding decrease in return requirements used by third-party market participants, we may further reduce our weighted average discount rate. 26 Table of Contents Total operating expenses.
If the Federal Reserve continues to decrease interest rates or we observe a corresponding consistent decrease in return requirements used by third-party market participants, we may further reduce our weighted average discount rate. Total operating expenses.
When coupled with increased delinquencies associated with the underlying consumers loans, we have experienced period over period declines in our managed receivables for the third and fourth quarter of 2024.
When coupled with increased delinquencies associated with the underlying consumers loans, we have experienced period over period declines in our managed receivables for the third and fourth quarter of 2024 and the first and second quarters of 2025.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 2, "Significant Accounting Policies and Consolidated Financial Statement Components," to our consolidated financial statements included herein for a discussion of recent accounting pronouncements. 38 Table of Contents CRITICAL ACCOUNTING ESTIMATES We have prepared our financial statements in accordance with GAAP.
RECENT ACCOUNTING PRONOUNCEMENTS See Note 3, "Significant Accounting Policies and Consolidated Financial Statement Components," to our consolidated financial statements included herein for a discussion of recent accounting pronouncements. CRITICAL ACCOUNTING ESTIMATES We have prepared our consolidated financial statements in accordance with GAAP.
We currently expect private label credit receivable acquisitions in 2025 to be consistent with those in 2024, although the timing of the receivable acquisitions may vary based on seasonal spending patterns by consumers and our retail partners overall sales cycles.
We currently expect private label credit receivable acquisitions in the first quarter of 2026 to be consistent with those in the same period of 2025, although the timing of the receivable acquisitions may vary based on seasonal spending patterns by consumers and our retail partners overall sales cycles.
At December 31, 2024, we had $375.4 million in unrestricted cash held by our various business subsidiaries. Because the characteristics of our assets and liabilities change, liquidity management is a dynamic process for us, driven by the pricing and maturity of our assets and liabilities.
At December 31, 2025, we had $621.1 million in unrestricted cash held by our various business subsidiaries. Because the characteristics of our assets and liabilities change, liquidity management is a dynamic process for us, driven by the pricing and maturity of our assets and liabilities.
This decline in payment rates is not evident in our credit card portfolio, which maintained relatively stable payment rates for the years ended December 31, 2024 and 2023. Servicing Rate – Our servicing rate has fluctuated marginally over time as we continue to implement processes and strategies to more efficiently and effectively service the accounts underlying our outstanding receivables portfolios.
This decline in payment rates is not evident in our credit card portfolio, which has maintained relatively stable payment rates for all periods in 2025 and 2024. Servicing Rate – Our servicing rate has fluctuated marginally over time as we continue to implement processes and strategies to more efficiently and effectively service the accounts underlying our outstanding receivables portfolios.
As we continue to grow our receivables base, we would expect for purchases of new receivables to outpace payments thereon throughout 2025. • During the year ended December 31, 2024, we generated $393.6 million of cash from financing activities, compared to our generating $163.3 million of cash from financing activities during the year ended December 31, 2023.
As we continue to grow our receivables base, we would expect for purchases of new receivables to outpace payments thereon throughout 2026. • During the year ended December 31, 2025, we generated $1,141.7 million of cash from financing activities, compared to our generating $393.6 million of cash from financing activities during the year ended December 31, 2024.
The relative mix of receivable acquisitions can lead to some variation in our corresponding revenue as general purpose credit card receivables typically generate higher gross yields than private label credit receivables do.
The relative mix of receivable acquisitions can lead to some variation in our corresponding revenue as general purpose credit card receivables typically generate higher gross yields than private label credit receivables do. We experienced period-over-period increases in private label credit and general purpose credit card receivables.
As many of the expenses associated with our card and loan servicing efforts are now variable based on the amount of underlying receivables, we would expect this number to continue to grow in 2025 commensurate with growth in our receivables.
As many expenses associated with our card and loan servicing efforts are now variable based on the amount of underlying receivables, we would expect certain expenses to continue to grow in 2026 commensurate with growth in our receivables balances.
We are amortizing fees associated with the issuance of the 2029 Senior Notes into interest expense over the expected life of such notes. Amortization of these fees for the year ended December 31, 2024 totaled $0.8 million.
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 years ended December 31, 2025 and 2024 totaled $0.9 million and $0.8 million, respectively.
Details concerning our cash flows for the years ended December 31, 2024 and 2023 are as follows: • During the year ended December 31, 2024, we generated $469.4 million of cash flows from operations compared to our generation of $459.3 million of cash flows from operations during the year ended December 31, 2023.
Details concerning our cash flows for the years ended December 31, 2025 and 2024 are as follows: • During the year ended December 31, 2025, we generated $638.0 million of cash flows from operations compared to our generation of $469.4 million of cash flows from operations during the year ended December 31, 2024.
As we continue to adjust our underwriting standards to reflect changes in fee and finance assumptions on new receivables, and allow for overall increases in the cost to successfully market to consumers, we expect period over period marketing costs for 2025 to increase relative to those experienced in 2024, although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates; and • other expenses primarily relate to costs associated with occupancy or other third party expenses that are largely fixed in nature.
As we continue to adjust our underwriting standards to reflect changes in fee and finance assumptions on new receivables, continue to expand under our newly acquired Mercury brand and allow for overall increases in the cost to successfully market to consumers, we expect period over period marketing costs for 2025 to increase relative to those experienced in 2024, although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates; and • increases in other expenses for the year ended December 31, 2025, when compared to the same period in 2024, primarily related to costs associated with occupancy or other third party expenses that are largely fixed in nature.
We include the Class B preferred units as temporary noncontrolling interests on the consolidated balance sheets and the associated dividends are included as a reduction of our net income attributable to common shareholders on the consolidated statements of income. Income Taxes.
In periods where present, we include the Class B preferred units as temporary noncontrolling interests on the consolidated balance sheets and the associated dividends are included as a reduction of our net income attributable to common shareholders on the consolidated statements of income. 30 Table of Contents Income Taxes.
Our Net interest margin ratio, annualized represents the difference between our Total managed yield ratio, annualized, our Combined principal net charge-off ratio, annualized and our Interest expense ratio, annualized. Recent declines in this ratio, when compared to corresponding prior periods, relate primarily to recent increases in our principal net charge-offs as noted above.
Our Net interest margin ratio, annualized represents the difference between our Total managed yield ratio, annualized, our Combined principal net charge-off ratio, annualized and our Interest expense ratio, annualized. Declines in this ratio in 2024 relate primarily to increases in our principal net charge-offs in those periods, as noted above.
We expect some continued improvements in our average APRs as newly acquired receivables with higher APRs become a larger part of our overall portfolio of receivables.
We expect some continued improvements in our general purpose credit card receivable average APRs as newly acquired receivables with higher APRs become a larger part of our overall portfolio of receivables.
(4) The Recovery ratio, annualized is calculated using annualized Recoveries as the numerator and Period-end average managed receivables as the denominator. Managed receivables. Recent stress noted at some dealer locations has resulted in higher than anticipated credit losses associated with floorplan loans.
(4) The Recovery ratio, annualized is calculated using annualized Recoveries as the numerator and Period-end average managed receivables as the denominator. 38 Table of Contents Managed receivables. Stress noted at some dealer locations resulted in higher than anticipated credit losses associated with floorplan loans during 2024.
Period-over-period results primarily relate to growth in private label credit and general purpose credit card products, the receivables of which increased to $2,724.8 million as of December 31, 2024, from $2,411.3 million as of December 31, 2023.
Period-over-period results primarily relate to growth in private label credit and general purpose credit card products, the receivables of which increased to $6,953.4 million as of December 31, 2025, from $2,724.8 million as of December 31, 2024.
We repurchased $0.4 million and $1.4 million of the outstanding principal amount of these 2026 Senior Notes in the year ended December 31, 2024 and 2023, respectively. In January and February 2024, we issued an aggregate of $57.2 million aggregate principal amount of 2029 Senior Notes.
We repurchased $12.5 million and $0.4 million of the outstanding principal amount of these 2026 Senior Notes in the years ended December 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.
These offers have varying lines of credit ranging from $350 to $3,000, annual percentage rates (“APRs”) ranging from 19.99% to 36%, annual fees ranging from $0 to $175 and monthly maintenance fees ranging from $0 to $15.
These offers have varying lines of credit ranging from $750 to $5,500, annual percentage rates (“APRs”) ranging from 19.99% to 36%, annual fees ranging from $0 to $175 and monthly maintenance fees ranging from $0 to $15.
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 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.
During the years ended December 31, 2024 and 2023, we sold 44,618 shares and 53,727 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $1.1 million and $1.1 million, respectively.
During the years ended December 31, 2025 and 2024, we sold 282,952 shares and 44,618 shares, respectively, of our Series B preferred stock under our Preferred Stock ATM Program for net proceeds of $6.3 million and $1.1 million, respectively.
Represents an annualized fraction, the numerator of which is the annualized interest expense associated with the CaaS segment (See Note 3, "Segment Reporting" to our consolidated financial statements) and the denominator of which is average managed receivables. Net interest margin ratio, annualized.
Recoveries typically have represented less than 5% of average managed receivables. Interest expense ratio, annualized. Represents an annualized fraction, the numerator of which is the annualized interest expense associated with the CaaS segment (See Note 4, "Segment Reporting" to our consolidated financial statements) and the denominator of which is average managed receivables. Net interest margin ratio, annualized.
During the years ended December 31, 2024 and 2023, no 2026 Senior Notes were sold under the Company's Preferred Stock ATM Program. During years ended December 31, 2024 and 2023, we sold $24.9 million and $0, respectively, principal amount of our 2029 Senior Notes under our Preferred Stock ATM Program for net proceeds of $24.6 million and $0, respectively.
During the years ended December 31, 2025 and 2024, we sold $38.9 million and $24.9 million, respectively, principal amount of our 2029 Senior Notes under our Preferred Stock ATM Program for net proceeds of $38.2 million and $24.6 million, respectively.
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.
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. 24 Table of Contents Private Label Credit Our bank partners work with both us and with our retail partners to provide financing options to retail consumers.
As we have acquired a higher number of receivables associated with our private label credit accounts for which we have limited loss exposure due to agreements with retail partners that reimburse us for credit losses, our weighted average discount rate has decreased marginally.
As we have acquired a higher number of receivables associated with our private label credit accounts for which we have limited loss exposure due to agreements with retail partners that reimburse us for credit losses, we would expect our weighted average discount rate to decrease marginally as these receivables have appropriately lower expected return requirements.
We currently expect increases in the acquisition of receivables and correspondingly higher period-over-period operating revenue and other income for 2025 although the timing of these acquisitions could result in some fluctuations of our Total managed yield ratio, annualized when comparing quarterly rates in 2025 to corresponding quarterly periods in 2024.
We currently expect increases in the rates of acquisition of our general purpose credit card receivables relative to private label credit receivables and higher associated period-over-period operating revenue and other income for 2026 although the timing of these acquisitions and impact of the Mercury acquisition could result in some fluctuations of our Total managed yield ratio, annualized when comparing quarterly rates in 2026 to corresponding quarterly periods in 2025.
As these product policy and pricing changes continue to further impact both newly acquired and existing private label credit receivables and general purpose credit card receivables, we expect our gross yield, net of finance charge charge-offs rate to increase over time although the pace and timing of purchases for new general purpose credit card receivables, relative to those of private label credit receivables, could result in near term declines in this rate.
We expect our gross yield, net of finance charge charge-offs rate to increase over time although the pace and timing of purchases for new general purpose credit card receivables, relative to those of private label credit receivables, could result in near term declines in this rate.
During the year ended December 31, 2024, we sold 125,000 common shares under the Company’s Common Stock ATM Program for net proceeds of $7.1 million.
During the years ended December 31, 2025 and 2024, we sold 200,000 common shares and 125,000 common shares, respectively, under the Company’s Common Stock ATM Program for net proceeds of $11.6 and $7.1 million, respectively.
Managed receivables levels. We continue to experience overall period-over-period quarterly receivables growth with over $314.1 million in net receivables growth associated with the private label credit and general purpose credit card products offered by our bank partners from December 31, 2023 to December 31, 2024.
We continue to experience overall period-over-period quarterly receivables growth with over $4,228.7 million in net receivables growth associated with the private label credit and general purpose credit card products offered by our bank partners between December 31, 2025 and December 31, 2024.
As of December 31, 2024, our CAR operations served over 670 dealers in 34 states and two U.S. territories.
As of December 31, 2025, our CAR operations served over 700 dealers in 33 states and two U.S. territories.
Growth in future periods for our private label credit receivables largely is dependent on the addition of new retail partners to the private label credit origination platform, the timing and size of solicitations within the general purpose credit card platform by our bank partners, as well as purchase activity of consumers.
Growth in future periods receivables is dependent on the addition of new retail partners to the private label credit origination platform, the timing and size of solicitations within the general purpose credit card platform by our bank partners, as well as purchase activity of consumers. Similarly, the loss of existing retail partner relationships could adversely affect new loan acquisition levels.
For the year ended December 31, 2024, we purchased $2.6 billion in private label and general purpose credit card receivables compared to $2.4 billion for the year ended December 31, 2023.
For the year ended December 31, 2025, we purchased $4,436.2 million in private label and general purpose credit card receivables compared to $2,628.9 million for the year ended December 31, 2024.
A reconciliation of our operating revenues and other income to comparable amounts used in our calculation of Total managed yield ratios follows (in millions): At or for the Three Months Ended 2024 2023 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Consumer loans, including past due fees $ 9.6 $ 10.0 $ 10.4 $ 10.3 $ 10.1 $ 10.1 $ 9.7 $ 9.2 Fees and related income on earning assets — 0.1 — — 0.1 — — — Other income 0.2 0.2 0.2 0.2 0.2 0.2 0.2 0.2 Total operating revenue and other income 9.8 10.3 10.6 10.5 10.4 10.3 9.9 9.4 Finance charge-offs — — — — — — — — Total managed yield $ 9.8 $ 10.3 $ 10.6 $ 10.5 $ 10.4 $ 10.3 $ 9.9 $ 9.4 The calculation of Combined principal net charge-offs used in our Combined principal net charge-off ratio, annualized follows (in millions): At or for the Three Months Ended 2024 2023 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Gross charge-offs $ 1.5 $ 3.1 $ 3.5 $ 1.8 $ 1.1 $ 0.9 $ 0.8 $ 1.0 Finance charge-offs (1) — — — — — — — — Recoveries (0.6 ) (0.7 ) (0.7 ) (0.5 ) (0.5 ) (0.5 ) (0.5 ) (0.4 ) Combined principal net charge-offs $ 0.9 $ 2.4 $ 2.8 $ 1.3 $ 0.6 $ 0.4 $ 0.3 $ 0.6 (1) Finance charge-offs are included as a component of our Provision for credit losses in the accompanying consolidated statements of income. 34 Table of Contents Financial, operating and statistical metrics for our Auto Finance segment are detailed (in thousands; percentages of total) in the following tables: At or for the Three Months Ended 2024 Dec. 31 % of Period-end managed receivables Sep. 30 % of Period-end managed receivables Jun. 30 % of Period-end managed receivables Mar. 31 % of Period-end managed receivables Period-end managed receivables (1) $ 108,982 $ 110,638 $ 117,951 $ 122,321 30-59 days past due $ 7,590 7.0 % $ 8,873 8.0 % $ 9,200 7.8 % $ 7,796 6.4 % 60-89 days past due $ 3,217 3.0 % $ 3,801 3.4 % $ 3,834 3.3 % $ 3,031 2.5 % 90 or more days past due $ 4,723 4.3 % $ 5,305 4.8 % $ 4,944 4.2 % $ 3,220 2.6 % Average managed receivables $ 109,810 $ 114,295 $ 120,136 $ 120,183 Total managed yield ratio, annualized (2) 35.7 % 36.0 % 35.3 % 34.9 % Combined principal net charge-off ratio, annualized (3) 3.3 % 8.4 % 9.3 % 4.3 % Recovery ratio, annualized (4) 2.2 % 2.4 % 2.3 % 1.7 % At or for the Three Months Ended 2023 Dec. 31 % of Period-end managed receivables Sep. 30 % of Period-end managed receivables Jun. 30 % of Period-end managed receivables Mar. 31 % of Period-end managed receivables Period-end managed receivables (1) $ 118,045 $ 118,007 $ 115,055 $ 113,367 30-59 days past due $ 9,421 8.0 % $ 8,627 7.3 % $ 8,070 7.0 % $ 6,145 5.4 % 60-89 days past due $ 3,373 2.9 % $ 3,278 2.8 % $ 3,047 2.6 % $ 1,977 1.7 % 90 or more days past due $ 3,542 3.0 % $ 2,607 2.2 % $ 1,699 1.5 % $ 1,942 1.7 % Average managed receivables $ 118,026 $ 116,531 $ 114,211 $ 109,317 Total managed yield ratio, annualized (2) 35.2 % 35.4 % 34.7 % 34.4 % Combined principal net charge-off ratio, annualized (3) 2.0 % 1.7 % 1.1 % 2.2 % Recovery ratio, annualized (4) 1.7 % 1.7 % 1.8 % 1.5 % (1) Period-end managed receivables equal the corresponding amount of loans at amortized cost included in Note 2 "Significant Accounting Policies and Consolidated Financial Statement Components" in our consolidated financial statements.
A reconciliation of our operating revenues and other income to comparable amounts used in our calculation of Total managed yield ratios follows (in millions): At or for the Three Months Ended 2025 2024 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Consumer loans, including past due fees $ 9.8 $ 9.4 $ 9.1 $ 9.2 $ 9.6 $ 10.0 $ 10.4 $ 10.3 Fees and related income on earning assets 0.3 1.1 — — — 0.1 — — Other income 0.3 0.1 0.2 0.2 0.2 0.2 0.2 0.2 Total operating revenue and other income 10.4 10.6 9.3 9.4 9.8 10.3 10.6 10.5 Finance charge-offs 0.1 — — — — — — — Total managed yield $ 10.5 $ 10.6 $ 9.3 $ 9.4 $ 9.8 $ 10.3 $ 10.6 $ 10.5 The calculation of Combined principal net charge-offs used in our Combined principal net charge-off ratio, annualized follows (in millions): At or for the Three Months Ended 2025 2024 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Dec. 31 Sep. 30 Jun. 30 Mar. 31 Gross charge-offs $ 2.1 $ 1.9 $ 1.7 $ 1.8 $ 1.5 $ 3.1 $ 3.5 $ 1.8 Finance charge-offs (1) 0.1 — — — — — — — Recoveries (0.7 ) (0.7 ) (0.6 ) (0.6 ) (0.6 ) (0.7 ) (0.7 ) (0.5 ) Combined principal net charge-offs $ 1.5 $ 1.2 $ 1.1 $ 1.2 $ 0.9 $ 2.4 $ 2.8 $ 1.3 (1) Finance charge-offs are included as a component of our Provision for credit losses in the accompanying consolidated statements of income. 37 Table of Contents Financial, operating and statistical metrics for our Auto Finance segment are detailed (in thousands; percentages of total) in the following tables: At or for the Three Months Ended 2025 Dec. 31 % of Period-end managed receivables Sep. 30 % of Period-end managed receivables Jun. 30 % of Period-end managed receivables Mar. 31 % of Period-end managed receivables Period-end managed receivables (1) $ 107,093 $ 111,068 $ 106,632 $ 106,099 30-59 days past due $ 9,056 8.5 % $ 8,430 7.6 % $ 6,576 6.2 % $ 6,344 6.0 % 60-89 days past due $ 3,198 3.0 % $ 2,545 2.3 % $ 2,391 2.2 % $ 2,061 1.9 % 90 or more days past due $ 3,040 2.8 % $ 3,214 2.9 % $ 3,741 3.5 % $ 4,221 4.0 % Average managed receivables $ 109,081 $ 108,850 $ 106,366 $ 107,541 Total managed yield ratio, annualized (2) 38.5 % 39.0 % 35.0 % 35.0 % Combined principal net charge-off ratio, annualized (3) 5.5 % 4.4 % 4.1 % 4.5 % Recovery ratio, annualized (4) 2.6 % 2.6 % 2.3 % 2.2 % At or for the Three Months Ended 2024 Dec. 31 % of Period-end managed receivables Sep. 30 % of Period-end managed receivables Jun. 30 % of Period-end managed receivables Mar. 31 % of Period-end managed receivables Period-end managed receivables (1) $ 108,982 $ 110,638 $ 117,951 $ 122,321 30-59 days past due $ 7,590 7.0 % $ 8,873 8.0 % $ 9,200 7.8 % $ 7,796 6.4 % 60-89 days past due $ 3,217 3.0 % $ 3,801 3.4 % $ 3,834 3.3 % $ 3,031 2.5 % 90 or more days past due $ 4,723 4.3 % $ 5,305 4.8 % $ 4,944 4.2 % $ 3,220 2.6 % Average managed receivables $ 109,810 $ 114,295 $ 120,136 $ 120,183 Total managed yield ratio, annualized (2) 35.7 % 36.0 % 35.3 % 34.9 % Combined principal net charge-off ratio, annualized (3) 3.3 % 8.4 % 9.3 % 4.3 % Recovery ratio, annualized (4) 2.2 % 2.4 % 2.3 % 1.7 % (1) Period-end managed receivables equal the corresponding amount of loans at amortized cost included in Note 3 "Significant Accounting Policies and Consolidated Financial Statement Components" in our consolidated financial statements.
We believe that the quality of our new receivables should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attracting new lending relationships, albeit at increased costs due to the aforementioned recent interest rate increases.
We believe that the quality of our new receivables should allow us to raise more capital through increasing the size of our facilities with our existing lenders and attracting new lending relationships.
As delinquent accounts tend to have a higher cost of servicing, recent trending declines in our receivables that are 90 or more days past due also has resulted in lower expected future costs. We expect our servicing rate will remain relatively consistent over the next several quarters.
As delinquent accounts tend to have a higher cost of servicing, recent trending declines in our receivables that are 90 or more days past due also has resulted in lower expected future costs.
As such, we have seen our Interest expense ratio, annualized increase throughout 2023 and 2024 and we expect the Interest expense ratio to increase when compared to prior quarters into 2025 as we replace existing financing arrangements with new ones at a higher cost of capital. 33 Table of Contents Net interest margin ratio, annualized.
As such, we have seen our Interest expense ratio, annualized increase throughout 2024 and 2025 and we expect the Interest expense ratio to marginally increase as we replace existing financing arrangements with new ones at a higher cost of capital.
Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform increased to $2,157.8 million as of December 31, 2024, from $1,796.0 million as of December 31, 2023.
Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform (including those associated with the Mercury acquisition) increased to $5,788.6 million as of December 31, 2025, from $2,157.8 million as of December 31, 2024.
Further details related to the above are reflected in Note 12, "Income Taxes". We report income tax-related interest and penalties (including those associated with both our accrued liabilities for uncertain tax positions and unpaid tax liabilities) within our income tax line item on our consolidated statements of income.
We report income tax-related interest and penalties (including those associated with both our accrued liabilities for uncertain tax positions and unpaid tax liabilities) within our income tax line item on our consolidated statements of income.
Total operating expenses variances for the year ended December 31, 2024, relative to the year ended December 31, 2023, reflect the following: • increases in salaries and benefit costs related to both the growth in the number of employees and inflationary compensation pressure.
Total operating expenses variances for the year ended December 31, 2025, relative to the year ended December 31, 2024, reflect the following: • increases in salaries and benefit costs related to both the growth in the number of employees, including those added as part of our acquisition of Mercury, and increases in related compensation.
Payment Rate – Our total portfolio payment rate has declined marginally over time largely due to the increased relative weight of acquisitions of private label credit receivables to our overall pool of receivables.
Payment Rate – Our total portfolio payment rate has declined marginally over time largely due to the increased relative weight of acquisitions of private label credit receivables to our overall pool of receivables and did not contribute meaningfully to shifts in the fair value of receivables noted above.
Increases in new and existing retail partnerships and the expansion of our investments in general purpose credit card finance products have resulted in year-over-year growth of total managed receivables levels, and we expect growth to continue in the coming quarters. 36 Table of Contents Accordingly, we will continue to focus on (i) obtaining the funding necessary to meet capital needs required by the growth of our receivables, (ii) adding new retail partners to our platform to continue growth of the private label credit receivables, (iii) growing general purpose credit card receivables, (iv) effectively managing costs, and (v) repurchasing outstanding shares of our common and preferred stock.
Accordingly, we will continue to focus on (i) obtaining the funding necessary to meet capital needs required by the growth of our receivables, (ii) adding new retail partners to our platform to continue growth of the private label credit receivables, (iii) growing general purpose credit card receivables, (iv) effectively managing costs, and (v) repurchasing outstanding shares of our common and preferred stock.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

12 edited+0 added−0 removed20 unchanged
Biggest changeActual results could differ materially from these estimates: Impact if Credit Loss Rates: As of December 31, 2024 Increase 10 Percent Decrease 10 Percent Loans at fair value $ 2,630.3 $ 2,542.6 $ 2,718.0 Loans at amortized cost, net $ 84.3 $ 83.8 $ 84.8 Income (loss) before income taxes $ (88.2 ) $ 88.2 Market Return Risk We are exposed to the risk of loss that may result from changes in required market rates of return.
Biggest changeActual results could differ materially from these estimates: Impact if Credit Loss Rates: As of December 31, 2025 Increase 10 Percent Decrease 10 Percent Loans at fair value $ 6,647.9 $ 6,481.9 $ 6,813.8 Loans at amortized cost, net $ 82.9 $ 82.7 $ 83.0 Income (loss) before income taxes $ (166.2 ) $ 166.0 43 Market Return Risk We are exposed to the risk of loss that may result from changes in required market rates of return.
The sensitivity does not factor in other associative impacts that could occur in such a scenario. This could include both active and passive account actions including limiting purchases, assessments of additional fees or increases in interest rates.
The sensitivity does not factor in other associative impacts that could occur in such a scenario. This could include both active and passive account actions including limiting purchases, assessments of additional fees or increases in interest rates.
The following table summarizes (in millions) the potential effect on pre-tax earnings and the potential effect on the fair values of loans on our consolidated balance sheet as of December 31, 2024, based on a sensitivity analysis performed by management assuming an immediate hypothetical change in credit loss rates by 10% for the next 12 months.
The following table summarizes (in millions) the potential effect on pre-tax earnings and the potential effect on the fair values of loans on our consolidated balance sheet as of December 31, 2025, based on a sensitivity analysis performed by management assuming an immediate hypothetical change in credit loss rates by 10% for the next 12 months.
The following table summarizes (in millions) the potential effect on pre-tax earnings and the potential effect on the fair values of loans on our consolidated balance sheet as of December 31, 2024, based on a sensitivity analysis performed by management assuming an immediate hypothetical change in payment rates by 10% for the next 12 months.
The following table summarizes (in millions) the potential effect on pre-tax earnings and the potential effect on the fair values of loans on our consolidated balance sheet as of December 31, 2025, based on a sensitivity analysis performed by management assuming an immediate hypothetical change in payment rates by 10% for the next 12 months.
The following table summarizes (in millions) the potential effect on pre-tax earnings and the potential effect on the fair values of loans on our consolidated balance sheet as of December 31, 2024, based on a sensitivity analysis performed by management assuming an immediate hypothetical change in required market rates of return by 10%.
The following table summarizes (in millions) the potential effect on pre-tax earnings and the potential effect on the fair values of loans on our consolidated balance sheet as of December 31, 2025, based on a sensitivity analysis performed by management assuming an immediate hypothetical change in required market rates of return by 10%.
Conversely, increases in the payment rate shorten the time period to collect the underlying cash flows, potentially increasing the fair value of the receivable . Similar to our credit risk, we believe this risk is mitigated by our deep experience in customer service and collections from over 25 years of operations.
Conversely, increases in the payment rate shorten the time period to collect the underlying cash flows, potentially increasing the fair value of the receivable . Similar to our credit risk, we believe this risk is mitigated by our deep experience in customer service and collections from over 30 years of operations.
We minimize this risk through a robust underwriting and fraud detection process designed to minimize losses and comply with applicable laws and our standards. In addition, we believe this risk is mitigated by our deep experience in customer service and collections from more than 25 years of operations.
We minimize this risk through a robust underwriting and fraud detection process designed to minimize losses and comply with applicable laws and our standards. In addition, we believe this risk is mitigated by our deep experience in customer service and collections from more than 30 years of operations.
Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity, Funding and Capital Resources" and Note 10 "Notes Payable" to our consolidated financial statements included herein for further information on our outstanding Notes Payable.
Refer to Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations – Liquidity, Funding and Capital Resources" and Note 11 "Notes Payable" to our consolidated financial statements included herein for further information on our outstanding Notes Payable.
Actual results could differ materially from these estimates: Impact on Pre-Tax earnings if Interest Rates: As of December 31, 2024 Increase 100 Basis Points Decrease 100 Basis Points Notes payable subject to interest rate risk $ 407.5 $ (4.1 ) $ 4.1 Credit Risk Credit risk is the risk of default that results from a consumer who is unwilling or unable to pay his or her receivable balance.
Actual results could differ materially from these estimates: Impact on Pre-Tax earnings if Interest Rates: As of December 31, 2025 Increase 100 Basis Points Decrease 100 Basis Points Notes payable subject to interest rate risk $ 1,742.4 $ (17.4 ) $ 17.4 Credit Risk Credit risk is the risk of default that results from a consumer who is unwilling or unable to pay his or her receivable balance.
We seek to mitigate this risk by ensuring that we have sufficient borrowing capacity with a variety of well-established counterparties to meet our funding needs. As of December 31, 2024, we had total borrowings associated with our loans at fair value and our loans at amortized cost of $2.2 billion.
We seek to mitigate this risk by ensuring that we have sufficient borrowing capacity with a variety of well-established counterparties to meet our funding needs. As of December 31, 2025, we had total borrowings associated with our loans at fair value and our loans at amortized cost of $5.8 billion.
Actual results could differ materially from these estimates: Impact if Discount Rates: As of December 31, 2024 Increase 10 Percent Decrease 10 Percent Loans at fair value $ 2,630.3 $ 2,573.7 $ 2,689.1 Income (loss) before income taxes $ (56.6 ) $ 58.8 40 Table of Contents Payment Risk Payment risk reflects the risk that changes in the economy could result in reduced payment rates on our receivables, impacting the timing of expected payments from consumers.
Actual results could differ materially from these estimates: Impact if Discount Rates: As of December 31, 2025 Increase 10 Percent Decrease 10 Percent Loans at fair value $ 6,647.9 $ 6,575.1 $ 6,722.7 Income (loss) before income taxes $ (72.8 ) $ 74.8 Payment Risk Payment risk reflects the risk that changes in the economy could result in reduced payment rates on our receivables, impacting the timing of expected payments from consumers.
Actual results could differ materially from these estimates: Impact if Payment Rates: As of December 31, 2024 Increase 10 Percent Decrease 10 Percent Loans at fair value $ 2,630.3 $ 2,831.8 $ 2,428.8 Income (loss) before income taxes $ 201.5 $ (201.5 ) Counterparty Risk We are subject to risk if a counterparty chooses not to renew a borrowing agreement and we are unable to obtain financing to acquire loans.
Actual results could differ materially from these estimates: Impact if Payment Rates: As of December 31, 2025 Increase 10 Percent Decrease 10 Percent Loans at fair value $ 6,647.9 $ 7,050.1 $ 6,245.7 Income (loss) before income taxes $ 402.2 $ (402.2 ) Counterparty Risk We are subject to risk if a counterparty chooses not to renew a borrowing agreement and we are unable to obtain financing to acquire loans.

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