Company: ATLCL
Filing Date: 2025-04-09
Form Type: CORRESP
Source: 0001437749-25-011567
Chunk: 6

Company: Atlanticus Holdings Corp
Filing Date: 2025-04-09
Form: CORRESP
Chunk 6
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 losses, our weighted average discount rate has decreased marginally. We have assigned a lower discount rate when assessing the fair value of these receivables to reflect the significantly lower risk and return characteristics. As a result, our weighted average discount rate has decreased marginally. We consider asset specific financing costs associated with our receivables (coupled with our internal cost of equity capital in agreements that require credit enhancements) as the best indicator of return requirements used by third-party market participants. 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.

Note 3. Segment Reporting, page F-14

| 3. | Please tell us the two operating segments that are aggregated into the CaaS reportable segment. Additionally, please provide us your analysis detailing how aggregation is consistent with the objective and basic principles of ASC 280-10, how the segments have similar economic characteristics, and how the segments are similar in the areas detailed in ASC 280-10-50-11. Specific to the two operating segments having similar economic characteristics, please tell us in detail how you determined each segment would have similar long-term financial performance and provide quantified information detailing historical and current financial performance. Please provide appropriate commentary to support your quantified information. |

Company Response:

As part of its review of operating segments, the Company identified three operating segments. These three segments included our Private Label Credit, General Purpose Credit Cards and Auto Finance operations. The Company then carefully evaluated ASC 280-10-50-11 to determine whether the General Purpose Credit Card and Private Label Credit segments met the aggregation criteria.

Within our Private Label Credit and General Purpose Credit Cards segments, Atlanticus’ bank partners offer multiple forms of credit lending to consumers either through direct/indirect solicitation or through our various retail partnerships. Each consumer offer is designed in collaboration with our bank partners to match a consumer’s risk profile and to meet certain return requirements for the receivables we ultimately purchase from our bank partners. While all of these consumer offers have distinct terms (consisting of over 40 pools used in our modeling, as noted above), they all represent consumer lending (primarily to less than prime consumers), have the same back office operations and interaction methods with consumers, are designed to provide a similar unlevered internal rate of return (“IRR”) and follow our bank partners’ modeling governance, policies, and procedures.

Confidential Treatment Requested by Atlanticus Holdings Corporation

A