Company: ATLCL
Filing Date: 2025-02-25
Form Type: CORRESP
Source: 0001437749-25-005072
Chunk: 3

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-25
Form: CORRESP
Chunk 3
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 expect this weighted average rate to decrease over the next several quarters (when compared to similar periods in prior years) before stabilizing.

Discount Rate – Our weighted average discount rate has remained relatively consistent over the past several quarters (and is expected to continue to remain consistent ). Primarily impacting modest changes in our weighted average discount rate are mix shifts in the type of receivables acquired, as different receivable types (general purpose credit card receivables versus private label credit receivables) have different expected return requirements used by third-party market participants. 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 , 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.

Company Response:

In the disclosure on page 29 of the September 30, 2024 Form 10-Q, we discuss the underlying cause for increases in the fair value mark for the period recognized on the income statement. For our credit card receivables, we acquire the receivables for the face amount of the underlying principal, based on contracts with our bank partners. We do not record a gain on the initial acquisition of these receivables. At the end of each quarterly measurement period, we apply certain assumptions concerning future expectations of finance and fee billings based on the behavior of the individual receivable when compared to similar receivables. In future filings, we will modify our disclosure within Management's Discussion and Analysis of Financial Condition and Results of Operations - Changes in fair value of loans, to include the proposed disclosure provided in our response to Comment 1 above.

| 4. | We note that footnote (3) in your proposed disclosure in response to prior comment 4 appears to indicate that merchant fees are included in the “Purchases” line-item in the roll forward of loans at fair value and result in an increase in fair value. Please explain to us why the recognition of merchant fees impacts the fair value of loans considering the journal entries provided in response to prior comment 2 related to the recognition of merchant fees do not show any impact on the fair value of loans. Alternatively, please provide us an updated proposed disclosure and revise your roll forward as needed, explaining the changes to us. |

Company Response:

We included footnote 3 regarding merchant fees as supplemental information