Company: ATLCL
Filing Date: 2025-02-06
Form Type: CORRESP
Source: 0001437749-25-002991
Chunk: 4

Company: Atlanticus Holdings Corp
Filing Date: 2025-02-06
Form: CORRESP
Chunk 4
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2,654,112 |   |     |     |          |   |     | $ |  2,315,206 |
| Change in unrealized losses for the period included in earnings (or changes in net assets) for assets held at the end of the period |     |                     |          |   |     | $ |    101,035 |   |     |     |          |   |     | $ |     39,877 |

| (1) | Reflects the current period charge-offs (net of recoveries) of loans at fair value.                                                                                                                                              |
| (2) | Total Changes in fair value of loans is included in our Condensed Consolidated Statements of Income.                                                                                                                             |
| (3) | Included in Purchases in the above table are merchant fees of $112,970 and $101,501 that were recognized in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2024 and 2023, respectively. |
| (4) | As of September 30, 2024 and September 30, 2023, the aggregate unpaid principal balance included within loans at fair value was $2,420 million and $2,096 million, respectively.                                                 |

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

Company Response:

As part of the assessment of fair value for both our private label credit and general purpose credit card receivables, we follow the guidance of ASC 820-10-35-9. This guidance suggests that the inclusion of subsequent purchases in our valuation assessment would be appropriate as participants in the principal market (which would include banks or other licensed lenders within the same industry) would consider subsequent purchases as an assumption in pricing the asset. In our scenario, market participants include banks or other investors with access to banking relationships that would continue to acquire new receivables associated with the existing accounts. The acquirer would likely bifurcate their purchase price of the asset between the receivables they acquired and the perceived value of the acquired relationships. We do not believe we have an existing intangible asset associated with a right to purchase future receivables under ASC 310 absent this valuation (i.e. this intangible would be created by the purchaser upon sale of the assets). We do believe that the guidance in ASC 820 directs us to assume that the acquirer of the receivables would include this perceived value for those future purchase assumptions in order to maximize value. As such,