Company: ATLCL
Filing Date: 2025-02-06
Form Type: CORRESP
Source: 0001437749-25-002991
Chunk: 3

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-06
Form: CORRESP
Chunk 3
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 purchased from our retail partners and considers factors such as the consumer’s credit risk and the terms of our bank partner’s related product offering.

We independently negotiate each agreement with separate counterparties and consider ourselves the principal in each agreement with our bank partners and retail partners. As such, we view the economic substance of our relationship with our retail partners as a service contract, and therefore, we recognize the merchant fee as income upon completion of our services. We acknowledge others in the industry who apply ASC 606 in accounting for similar fee arrangements. By analogy, we believe we have a single performance obligation to facilitate the transaction between the retail partner and its consumer and the merchant fee is recognized into income when the retail partner successfully confirms the transaction, as no remaining obligations exist under the contract. Each subsequent transaction (if any) represents a separate service under the contract with the retail partner and is subject to the same recognition criteria.

In future filings we will revise our disclosures to remove the reference to “origination fees” when describing the accounting for our merchant fees and include discussion of our merchant fees within Revenue from Contracts with Customers in Note 2 “Significant Accounting Policies and Consolidated Financial Statement Components”.

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

Changes in fair value of loans, page 25

Company Response:

The information provided in the rollforward in Note 6 “Fair Values of Assets and Liabilities” includes the impact of current period principal and finance chargeoffs that occurred during the period and that impact the balance sheet (and, by association, the consolidated statements of income). These chargeoffs are presented to provide additional information to the reader on the current period performance of the underlying receivables. These chargeoffs do not directly impact the calculation of fair value. The information provided on page 29 discusses the assumptions used in our fair value model that impact the ending value of the receivables based upon future expectations. We include a discussion on current period chargeoffs on page 35 under “Combined principal net charge-off ratio, annualized”.

In future filings, the Company will revise as follows to include this information below the table:

|                                                                                                                                     |     | Loans at Fair Value |     2024 |   |     |   |            |   |     |     |     2023 |   |     |   |            |
|:------------------------------------------------------------------------------------------------------------------------------------|:----|:--------------------|---------:|:--|:----|:--|-----------:|:--|:----|:----|---------:|:--