Company: ATLCL
Filing Date: 2025-04-09
Form Type: CORRESP
Source: 0001437749-25-011567
Chunk: 2

Company: Atlanticus Holdings Corp
Filing Date: 2025-04-09
Form: CORRESP
Chunk 2
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 the reasons for changes at the pool level and impact on earnings. |

Company Response:

When we calculate the fair value of our loans at fair value, we forecast the performance of the underlying receivables using pools of homogenous loans. These pools are typically based on individual offer type (for both general purpose credit cards and private label credit). Each offer is designed in collaboration with our bank partners to match a consumer’s risk profile and to meet certain return requirements. This approach generally creates pools of receivables that perform in a similar manner. For offer types/retail partners that have an immaterial amount of loans at fair value, we may aggregate the receivables into a single pool for fair value calculation purposes. Currently, we forecast using 41 different pools, which further include monthly vintages within each pool. Each pool is then valued based on the historical performance of receivables within each pool. The expected cash flows from each of these pools are then discounted using discount rates applicable to each pool and which best reflect return requirements used by third-party market participants. We re-assess our identified pools quarterly to determine whether they should continue to be individually considered, further disaggregated or combined with other similar pools. Given the large number of pools, we do not believe that discussion of assumptions at the pool level would be meaningful in disclosing the results of operations (except in situations where the underlying performance of a particular pool changes significantly and then such discussion would be included) and instead believe that discussion of macro impacts driving weighted average shifts in inputs provide the best measure, as changes in the reported performance of fair value receivables are more often driven by macro shifts that may impact multiple pools. For instance, changes in consumer delinquency behavior are generally noted across all pools, as are consumer payment patterns and are impacted by seasonal behavior shifts and macro-economic events (like inflation). Conversely, certain metrics we report on a weighted basis may simply be impacted by a change in the underlying mix of receivables instead of changes in performance specific to a pool of receivables. For example, increases in the Total managed yield ratio may be driven by increases in the acquisition of receivables associated with an individual pool that consists of higher yielding receivables, thus becoming a larger percentage of the aggregated pools.

Confidential Treatment Requested by Atlanticus Holdings Corporation

AHC3 - 002

In future filings, we will modify our disclosure within Critical Accounting Estimates – Measurements for Loans at Fair value, to include the following:

Our valuation of loans at fair value is