ATLC

Atlanticus Holdings Corp

NASDAQ · FINANCIALS · PERSONAL CREDIT INSTITUTIONS

91.53

−0.76 −0.82%

USD · close Oct 22

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MKT CAP $1.4BP/E 11.9DIV YIELD —FCF YIELD —REV TTM $2.7B +83.7%NET INCOME $154M +25.3%NET CASH —52W 47.96 – 111.79SEC XBRL · TTM TO Invalid Date

How ATLC rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

72%

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Length

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words, now 14,764

New in FY2025

Our portfolio of receivables has limited diversification and primarily originates from consumers whose creditworthiness is considered less than prime.
In either case, the majority of our receivables are from borrowers represented by credit risks that regulators classify as less than prime.
Our period-end managed receivables balance for private label credit and general purpose credit card receivables grew to $6,953.4 million at December 31, 2025, from $2,724.8 million at December 31, 2024.
Our five largest retail partners accounted for 85% of our outstanding private label credit receivables as of December 31, 2025.
We Operate in a Heavily Regulated Industry Changes in bankruptcy, privacy or other federal or state consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect receivables, or otherwise adversely affect our operations.
In addition, the current regulatory environment could be impacted by future legislative developments that significantly impact financial services companies like ours.
For example, in February and March 2025, bipartisan legislation was introduced in both the United States Senate and House, respectively, seeking to amend the Truth in Lending Act (“TILA”) to cap credit card interest rates at 10% effective January 1, 2031.
Thereafter, in January 2026, the current presidential administration proposed a 10% cap on credit card interest rates for one year.
Additional bills have been introduced in Congress in 2026 that seek to cap interest rates in other ways, such as US S3721, which would amend TILA to cap interest rates on all consumer credit products at the maximum amount permitted in the state where the customer resides, and US S3793, which would extend the Military Lending Act’s 36% military annual percentage rate cap and related protections to all consumers in connection with all consumer credit products subject to only limited exceptions for residential mortgages, certain secured auto loans, and federal credit unions.
Any temporary or permanent implementation of a specific interest rate cap on consumer credit cards or more broadly across all consumer credit products could have a material adverse effect on our business and operations.
New laws and regulations such as these could significantly lower or eliminate the profitability of operations going forward by, among other things, reducing the amount of interest and fees we charge in connection with any financial products that are offered or otherwise available to consumers.
Failure to realize the expected benefits of our acquisition of Mercury could adversely affect our business and the value of our securities.
Although we expect significant benefits to result from the acquisition of Mercury, we may not actually realize any of them or realize them within the anticipated timeframe.
Achieving these benefits will depend, in part, on our ability to integrate Mercury's business successfully and efficiently.
The challenges involved in this integration, which will be complex and time consuming, include the following: • preserving customer and other important relationships of Mercury and attracting new business and operational relationships; • integrating financial forecasting and controls, procedures and reporting cycles; • consolidating and integrating corporate, information technology, finance, compliance and administrative infrastructures; • coordinating marketing efforts to effectively position our capabilities; • coordinating and integrating operations; and • integrating employees and related human resource systems and benefits, maintaining employee morale and retaining key employees.
If we do not successfully manage these risks and the other challenges inherent in integrating an acquired business, then we may not achieve the anticipated benefits of the acquisition of Mercury on our anticipated timeframe or at all and our revenue, expenses, operating results, financial condition and the prices of our securities could be materially adversely affected.
The successful integration of the Mercury business will require significant management attention and may divert it from our business and operational issues.
Risks Related to Our Financial Reporting and Accounting We recently remediated a material weakness in our internal control over financial reporting.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 and concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness described under Part II, Item 9A “Controls and Procedures” on our Form 10-K for the fiscal year ended December 31, 2024.
Based on the successful monitoring of these remediation efforts, the Company concluded that the material weakness identified above was remediated, as disclosed in the September 30, 2025 Form 10-Q.
Our existing and future levels of indebtedness could adversely affect our financial health, our ability to obtain financing in the future, our ability to react to changes in our business and our ability to fulfill our obligations under the existing indebtedness.
As of December 31, 2025, we had $934.9 million of recourse indebtedness outstanding and $5,629.6 million of indebtedness outstanding under warehouse facilities and asset backed securities, all of which is non-recourse indebtedness.
Our level of indebtedness could: • make it more difficult for us to satisfy our obligations with respect to our indebtedness, resulting in possible defaults on and acceleration of such indebtedness; • require us to dedicate a substantial portion of our cash flow from operations to the payment of principal and interest on our indebtedness, thereby reducing the availability of such cash flows to fund working capital, acquisitions, capital expenditures and other general corporate purposes; • limit our ability to obtain additional financing for working capital, acquisitions, capital expenditures, debt service requirements and other general corporate purposes; • limit our ability to refinance indebtedness or cause the associated costs of such refinancing to increase; • restrict the ability of our subsidiaries to pay dividends or otherwise transfer assets to us, which could limit our ability to, among other things, make required payments on our debt; • increase our vulnerability to general adverse economic and industry conditions; and • place us at a competitive disadvantage compared to other companies with proportionately less debt or comparable debt at more favorable interest rates who, as a result, may be better positioned to withstand economic downturns.
Any of the foregoing impacts of our level of indebtedness could have a material adverse effect on our business, financial condition and results of operations.
Recently, the financial services industry has experienced rapid developments in artificial intelligence, including agentic artificial intelligence.
The use of artificial intelligence models developed by third parties introduces risks related to how those models are developed, trained, and deployed, including unauthorized material in training data and limited visibility into risk mitigation steps.
The legal and regulatory environment for artificial intelligence is uncertain and rapidly evolving, potentially increasing compliance costs and risks of noncompliance.
We may be exposed to the risk that generative artificial intelligence models may produce incorrect outputs, release confidential information, reflect biases, or otherwise cause harm.
Their complexity may make it challenging to understand all outputs and comply with documentation or explanation requirements.
Any of these risks could adversely affect our business, expose us to liability or other adverse legal or regulatory consequences, or otherwise adversely affect our financial results.
We use models in our business, and we could be adversely affected if our design, implementation, or use of models is flawed.
The use of statistical and quantitative models and other quantitatively based analyses is central to our operations.
We use quantitative models to price products and services, measure risk, calculate the quantitative portion of our allowance for loan losses, assess liquidity, create financial forecasts, and otherwise conduct our business and operations.
We anticipate that model-derived insights will penetrate further into our decision-making processes, and particularly our risk management efforts.
While these quantitative techniques and approaches improve our decision-making, they also create the possibility that faulty data or flawed quantitative approaches could yield adverse outcomes or regulatory scrutiny.
Additionally, because of the complexity inherent in these approaches, misunderstanding or misuse of their outputs could similarly result in suboptimal decision-making.
Some models we use employ methodologies based on artificial intelligence or machine learning.
These models may have unique complexities when compared to more traditional models, such as the need for large and representative datasets for training, the increased potential for bias, and the difficulty in interpreting model decisions and implementing model adjustments.
We also rely on model inputs that are provided by third parties.
To the extent that any flawed models or inaccurate model outputs are used in reports to regulatory agencies or the public, we could be subjected to supervisory actions, private litigation, and other proceedings that may adversely affect our business, financial condition, and results of operations.

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Gone since FY2024

Our portfolio of receivables is not diversified and primarily originates from consumers whose creditworthiness is considered less than prime.
In either case, substantially all of our receivables are from borrowers represented by credit risks that regulators classify as less than prime.
Our period-end managed receivables balance for private label credit and general purpose credit card receivables grew to $2,724.8 million at December 31, 2024, from $2,411.3 million at December 31, 2023.
Our five largest retail partners accounted for over 75% of our outstanding private label credit receivables as of December 31, 2024.
We Operate in a Heavily Regulated Industry Changes in bankruptcy, privacy or other consumer protection laws, or to the prevailing interpretation thereof, may expose us to litigation, adversely affect our ability to collect receivables, or otherwise adversely affect our operations.
In addition to true lender challenges, a question regarding the applicability of state usury rates may arise when a loan is sold from a bank to a non-bank entity.
Court of Appeals for the Second Circuit held that the federal preemption of state usury laws did not extend to the purchaser of a loan issued by a national bank.
Supreme Court to deny certiorari, the U.S.
Solicitor General, joined by the Office of the Comptroller of the Currency ("OCC"), noted that the Second Circuit (Connecticut, New York and Vermont) analysis was incorrect.
District Court for the Southern District of New York concluded on February 27, 2017, that New York’s state usury law, not Delaware’s state usury law, was applicable and that the plaintiff’s claims under the FDCPA and state unfair and deceptive acts and practices could proceed.
To that end, the court granted Madden’s motion for class certification.
At this time, it is unknown whether Madden will be applied outside of the defaulted debt context in which it arose.
The facts in Madden are not directly applicable to our business, as we do not engage in practices similar to those at issue in Madden.
However, to the extent that the holding in Madden is broadened to cover circumstances applicable to our business, or if other litigation on related theories were brought against us or others and were successful, or we otherwise were found to be the "true lender," we could become subject to state usury limits and state licensing laws, in addition to the state consumer protection laws to which we are already subject, in a greater number of states, loans in such states could be deemed void and unenforceable, and we could be subject to substantial penalties in connection with such loans.
In response to the uncertainty Madden created as to the validity of interest rates of bank-originated loans sold in the secondary market, in May 2020 and June 2020, the OCC and the FDIC, respectively, issued final rules that reaffirmed the "valid when made" doctrine and clarified that when a bank sells, assigns, or otherwise transfers a loan, the interest rates permissible prior to the transfer continue to be permissible following the transfer.
In the summer of 2020, a number of state attorneys general filed suits against the OCC and the FDIC, challenging these "valid when made" rules.
District Court for the Northern District of California entered two orders granting summary judgement in favor of the OCC and the FDIC.
The court held that the bank regulators had the power to issue the rules reaffirming the "valid when made" doctrine.
Although the practical consequences of Madden have diminished since the initial ruling, uncertainty remains in this area of law.
The CFPB recently issued a final rule regarding credit card late fees, which represents a significant departure from the rules that are currently in effect.
Should this rule be implemented, the rule would have an adverse impact on our business, results of operations and financial condition for at least the short term and, depending on the effectiveness of our actions taken in response to the rule, potentially over the long term.
In March 2024, the CFPB published a final rule that would significantly reduce the safe harbor amount for late fees that credit card issuers are authorized to charge.
This rule is currently on hold, pending litigation.
The rule, if implemented, would: (i) decrease the safe harbor amount for credit card late fees to $8 and eliminate a higher safe harbor dollar amount for subsequent late payments; and (ii) eliminate the annual inflation adjustments that currently exist for the late fee safe harbor dollar amounts.
The "safe harbor" dollar amounts referenced in the CFPB’s rulemaking refer to the amounts that credit card issuers may charge as late fees under the Credit Card Accountability Responsibility and Disclosure Act of 2009 (the "CARD Act") without reference to the issuer’s cost to collect.
Under the CARD Act, these safe harbor amounts, since their initial implementation, have been subject to annual adjustment based on changes in the Consumer Price Index, and the safe harbor amounts are currently set at $30 for an initial late fee and $41 for subsequent late fees incurred in one of the next six billing cycles.
Accordingly, the $8 safe harbor amount on late fees (and the elimination of the annual inflation-based adjustment thereto) would represent a significant decrease from the current safe harbor amounts.
The final rule was slated to become effective on May 14, 2024, subject to any court-imposed injunction resulting from litigation.
Shortly after the final rule was published, a lawsuit was filed in U.S.
District Court for the Northern District of Texas (Ft.
Chamber of Commerce, the American Bankers Association and various other parties, challenging the rule and seeking a preliminary injunction enjoining the rule from becoming effective during the pendency of the litigation.
The lawsuit asserts that the rule would ultimately harm those consumers the CFPB is charged with protecting and seeks to have the rule vacated on various grounds, including that the CFPB (i) violated the CARD Act by preventing issuers from collecting reasonable and proportional late fees when cardholders do not pay their bills on time, and (ii) violated the Administrative Procedure Act by promulgating a final rule that is arbitrary and capricious, relying on inappropriate, incomplete and non-public data.
An injunction against implementation was entered on May 10, 2024.
Assuming these legal challenges are not successful and the CFPB’s final rule becomes effective, this rule would represent an approximately 75% reduction in the amount of late fees that may be charged under the CARD Act safe harbor.
We have already executed on a number of strategies designed to limit the impact of the final rule on us and we continue to evaluate various other mitigating strategies, but it may not be feasible for us to fully implement these strategies in the short term, and these efforts ultimately may not be successful even if and when fully implemented.
Moreover, the final rule (and certain of our mitigating strategies) may present other risks and adverse impacts to our business, results of operations and financial condition, which could include, without limitation, the loss of customers due to tightened underwriting standards or negative customer response to higher rates and fees, impacts to customer payment behavior due to decreased incentives to pay, further regulatory action in response to mitigating strategies that may be employed by us or other credit card issuers, adverse impacts to or disputes with our brand partners, strategic non-renewals of certain brand partner relationships that cease to be profitable, and balance sheet impairments, including of goodwill, long-lived assets and other prepaid or intangible assets.
Risks Related to Our Financial Reporting and Accounting We are remediating a material weakness in our internal control over financial reporting.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024 and concluded that our internal control over financial reporting was not effective as of December 31, 2024 due to a material weakness described under Part II, Item 9A “Controls and Procedures” in this Annual Report on Form 10-K.
Over the last two years, prices for energy and food have been particularly volatile in light of Russia’s invasion of Ukraine and the resulting trade restrictions and sanctions imposed on Russia by the U.S. and other countries.
These events have increased inflationary pressures.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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