Company: ATLCL
Filing Date: 2025-02-25
Form Type: CORRESP
Source: 0001437749-25-005072
Chunk: 4

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-25
Form: CORRESP
Chunk 4
---
 for the reader. The staff correctly points out that the recognition of merchant fees does not impact the fair value of loans. In future filings, we will remove this footnote to avoid confusion.

Critical Accounting Estimates - Measurements for Loans at Fair Value, page 37

| 5. | We note your response to prior comment 5 and that you include expected subsequent purchases in your fair value measurement for receivables. Please tell us how you considered whether your contractual right to purchase future receivables from bank partners is eligible for the fair value option. Specifically tell us how you considered whether this contractual right was a recognized financial asset under ASC 825-10-15-4 or was otherwise eligible. If you do not believe it is eligible, please explain to us how that determination would impact your financial statements. |

Company Response:

In our fair value models for general purpose credit cards and private label credit, we include future purchases and (for our private label credit models) future merchant fees associated with consumers that have outstanding receivables as of the measurement date. Both of these products are designed to provide similar overall returns (through different pricing strategies) and we base the input variables in our fair value models on historical purchase rates. In general, subsequent purchases for consumers associated with retail credit receivables tend to be much lower than those associated with our general purpose credit card receivables. We acquire these general purpose credit cards and private label credit receivables on a daily basis from our bank partner.

We believe that the inclusion of these subsequent purchases (and associated merchant fees when applicable) is necessary in order to fairly value the asset. This determination is based on our management team’s years of experience in the industry and direct observations of similar asset transactions. For instance, we regularly review portfolios available for sale, work with third party firms on valuations and prepare our own internal valuations for bidding purposes. These models include subsequent purchases.

We do not believe that we have a contractual right that would be eligible for fair value measurement under ASC 825. Instead, we believe that purchasers of the portfolio would consider their ability to access the underlying consumer base and their ability to continue providing lending utility in the form of the same or similar lending products. This ability to provide consumers ongoing financial access is an important part of the value of the receivables and one that is considered by all acquirers. Market participants would either directly have the ability to continue this ongoing financial access to consumers (with an existing bank charter) or indirectly (through an existing bank relationship).

Referring