Company: ATLCL
Filing Date: 2025-04-09
Form Type: CORRESP
Source: 0001437749-25-011567
Chunk: 8

Company: Atlanticus Holdings Corp
Filing Date: 2025-04-09
Form: CORRESP
Chunk 8
---
 006

As demonstrated by the following graph, historical direct operating expense to service acquired receivables (as an annualized percentage of Aggregate unpaid gross balance of loans carried at fair value) has been consistent over time and is forecast to remain consistent (direct operating expense to service acquired receivables include those costs associated with servicing and collecting on receivables):

[*****]

| ● | As demonstrated below, performance of segment vintages has been similar between the two segments (in thousands). |

Omitted and provided under separate cover to the Staff pursuant to Rule 83

Confidential Treatment Requested by Atlanticus Holdings Corporation

AHC3 - 007

[*****]

| ● | Investments in infrastructure are aligned to provide benefit to the consumer regardless of product type through a common digital customer service center and customer call center. |

| ● | With substantially all consumers falling in the less than prime category, the underlying receivable performance is generally impacted by the same macro-economic characteristics. The customer base for the product offerings has similar economic overlap such that macro events impacting one segment will often result in similar performance improvements/degradation across both segments. |

| ● | Capital costs in the asset backed securities markets are similar between the two segments. |

Our analysis of the similarity of the operating segments’ IRR, margins and direct operating expenses considered historical and forecasted performance over a multi-year period. For the historical and forecast periods analyzed, our analysis demonstrated a tight range differential (within the low single-digit range) for IRRs. The slightly higher IRR performance noted in General Purpose Credit Cards for 2024 and beyond was driven by pricing changes taken during 2024 in anticipation of CFPB rule changes regarding late fees. These changes were not as impactful on our Private Label Credit products. Additionally, over the time periods presented in the graph above, the General Purpose Credit Card and the Private Label Credit IRRs moved in tandem based on macro-economic factors in each period. We believe these analyses support the conclusion that the General Purpose Credit Card and Private Label Credit operating segments are expected to have similar long-term economic characteristics.

As discussed above, all offers, presented by our bank partners to consumers, represent unsecured forms of revolving consumer lending to U.S. based consumers. Both segments contain receivables associated with a range of these offers, all of which are designed to produce a similar IRR. Whether the consumer applies online, in a retail storefront or other means of an inbound account application, the consumer goes through a similar decisioning process and,