Consecutive quarters of growth in revenue
coupled with continued growth in customers served
Atlanticus Holdings Corporation (NASDAQ: ATLC) (“Atlanticus,”
“the Company”, “we,” “our” or “us”), a financial technology company
which enables its bank, retail and healthcare partners to offer
more inclusive financial services to millions of everyday
Americans, today announced its financial results for the third
quarter ended September 30, 2022. An accompanying earnings
presentation is available in the “Investors” section of the
Company’s website at www.atlanticus.com or by clicking here.
Third Quarter 2022 Highlights (all comparisons to the prior
year period)
- Total operating revenue increased 36.3% to $277.9 million.
- Purchase volume increased 13.5% to $692.9 million.
- Total number of accounts serviced(1) at period end increased
28.1% to 3.3 million.
- Over 80,000 new serviced accounts added during the
quarter.
- Managed receivables(2) increased 41.8% to $2.1 billion, and
27.3% from December 31
- Net income attributable to common shareholders of $26.3
million, or $1.41 per diluted common share.
- Repurchased and retired 313,893 shares of our common stock at
an aggregate cost of $10.9 million.
(1) In our calculation of total accounts serviced, we include
all accounts with account activity and accounts that have open
lines of credit at the end of the referenced period. (2) Managed
receivables is a non-GAAP financial measure and excludes the
results of our Auto Finance receivables. See “Non-GAAP Financial
Measures” for important additional information.
Management Commentary
Jeff Howard, President and Chief Executive Officer at Atlanticus
stated, "We are pleased to have another consecutive quarter of
growth in revenue, managed receivables, and customers served during
the third quarter of 2022. Additionally, we achieved another
milestone as managed receivables now exceed $2 billion. We have
continued to report strong growth across all of our main operating
lines – private label credit, general purpose credit cards and,
more modestly, our Auto Finance platform.
As we monitor consumer behavior and the impacts of inflation, we
have deliberately slowed our growth in receivables and new
customers served on behalf of our bank partner by tactically
tightening underwriting standards beginning in the second quarter.
We have seen a strong correlation between consumer behavior and
rising prices, particularly gas which has declined meaningfully
since peaking in June. We believe we are well-positioned in
the event of an economic downturn given our longstanding history of
navigating economic volatility combined with our capital
availability and largely fixed-rate funding structures.
We are proud to serve more than 3 million customers and provide
them with invaluable financial tools to empower better financial
outcomes. As part of that ongoing commitment, we recently launched
the Aspire Banking platform, enabling the offering of banking
services through our partner bank as a tool for new consumers to
gain access to credit. This unique offering will provide a path to
credit for millions more everyday Americans and create a more
engaging experience for customers we currently serve.
With our experience, strong capital position, proven growth, and
ongoing strategic initiatives, we are excited about our long-term
value creation potential.”
For the Three Months Ended
September 30,
($ In Thousands)
2022
2021
% Change
Total operating revenue
$
277,874
$
203,917
36.3
Other non-operating revenue
80
32
nm
Total Revenue
277,954
203,949
36.3
Interest expense
(21,514)
(12,370)
nm
Provision for losses on loans, interest
and fees receivable recorded at net realizable value
(381)
(9,238)
nm
Changes in fair value of loans, interest
and fees receivable and notes payable associated with structured
financings recorded at fair value
(163,624)
(58,727)
nm
Net margin
92,435
123,614
(25.2)
Total Operating Expense
53,119
49,552
7.2
Loss on repurchase and redemption of
convertible senior notes
—
16,184
nm
Net income
32,370
47,097
(31.3)
Net loss attributable to noncontrolling
interests
201
(123)
nm
Net income attributable to controlling
interests
32,571
46,974
(30.7)
Preferred dividends and discount
accretion
(6,296)
(6,629)
(5.0)
Net income attributable to common
shareholders
26,275
40,345
(34.9)
Per Share Data
Net income attributable to common
shareholders per common share - basic
1.81
2.67
(32.2)
Net income attributable to common
shareholders per common share - diluted
$
1.41
$
1.96
(28.1)
*nm = not meaningful
Managed Receivables
Managed receivables increased 41.8% to $2.1 billion in the
quarter, as total accounts serviced increased 28.1% to 3.3 million.
Managed receivables also increased 27.3% or $439.4 million from
December 31, 2021. This increase is primarily due to strong
consumer spending behavior on private label and general-purpose
credit cards during the third quarter of 2022. We currently expect
this trend of period over period growth to continue into 2023,
albeit at a slower pace when compared to earlier periods. Growth in
future periods largely is dependent on the addition of new retail
partners to the private label credit origination platform, the
timing and size of solicitations within the general purpose credit
card platform by our bank partner, as well as purchase activity of
consumers, and our ongoing assessment of consumer risk which drives
changes in underwriting.
Total revenue
Total operating revenue consists of: 1) interest income, finance
charges and late fees on consumer loans, 2) other fees on credit
products including annual and merchant fees and 3) ancillary,
interchange and servicing income on loan portfolios.
Total operating revenue increased 36.3% to $277.9 million in the
quarter. This revenue increase was primarily driven by growth in
private label credit and general purpose credit card receivables,
resulting in net period-over-period growth in our total interest
income and related fees. We continue to experience higher growth in
our acquisitions of general purpose credit card receivables (which
tend to have higher yields and corresponding charge-offs) than in
our acquisitions of private label credit receivables. As we
tightened our stance on underwriting starting in the second quarter
of 2022, we expect period over period revenue growth to slow over
the next few quarters as we focus on acquiring higher quality
assets in the near term which tend to have lower yields with
correspondingly lower charge-off rates.
Interest expense
Interest expense was $21.5 million for the quarter, compared to
$12.4 million in the prior year period. As expected, these
variations are due to new borrowings associated with the growth in
private label credit, general purpose credit card receivables and
CAR operations. Offsetting these increases was the repayment of our
debt facilities, commensurate with net liquidations of the
underlying credit card, auto finance and installment loan
receivables that serve as collateral for the facilities.
Outstanding notes payable, net of unamortized debt issuance
costs and discounts, associated with our private label credit and
general purpose credit card receivables increased 56.0% to $1,473.1
million as of September 30, 2022. The majority of this increase in
outstanding debt relates to the addition of multiple revolving
credit facilities during 2021 and 2022. Additionally, the issuance
of $150.0 million of senior notes in November 2021 (included on our
consolidated balance sheet as "Senior notes, net") will serve to
increase interest expense over prior periods.
Recent increases in the federal funds rate have thus far had a
minimal impact on our interest expense as over 90% of interest
rates on our outstanding debt are fixed. We anticipate additional
debt financing over the next few quarters as we continue to grow
coupled with increased effective interest rates resulting from
recent and additional anticipated federal funds rate increases. As
such we expect our quarterly interest expense to be above that
experienced in the prior periods for these operations.
Provision for losses on loans, interest and fees receivable
recorded at net realizable value
Provision for losses on loans, interest and fees receivable
recorded at net realizable value decreased to $0.4 million for the
quarter, compared to $9.2 million in the prior year period. This
reduction is due to the adoption of fair value accounting for the
majority of our outstanding receivables. We expect that our
provision for losses on loans will continue to diminish when
compared to similar periods in 2021 as the amount of underlying
receivables that continue to be recorded at net realizable value
has been significantly reduced.
Changes in fair value of loans, interest and fees receivable
and notes payable associated with structured financings recorded at
fair value
Changes in fair value of loans, interest and fees receivable and
notes payable associated with structured financings recorded at
fair value increased to $163.6 million in the quarter, compared to
$58.7 million in the prior year period, largely driven by growth in
underlying receivables coupled with increased fee billings on those
receivables.
Fee billings on our fair value receivables increased from $234.4
million for the nine months ended September 30, 2021 to $642.2
million for the nine months ended September 30, 2022, inclusive of
our forecasted market degradation to reflect the possibility of
delinquency rates increasing above the level that historical and
current trends would suggest.
Total operating expense
Total operating expense increased 7.2% to $53.1 million for the
quarter primarily driven by increases in salaries, reflecting
growth in number of employees and labor cost increases associated
with retaining and recruiting employees. We expect some continued
increase in this cost for the remainder of 2022 as we modestly
increase our number of employees to support our ongoing growth.
Additionally, card and loan servicing expenses including
marketing and solicitation costs and other third-party expenses
increased the total operating expense in the quarter due to
continued growth in accounts serviced. We expect marginal increases
in these costs as we continue to grow our receivable
portfolios.
Net Income Attributable to Common Shareholders
Net income attributable to common shareholders decreased 34.9%
to $26.3 million. Net income attributable to common shareholders
per basic common share decreased 32.2% to $1.81. Net income
attributable to common shareholders per common share diluted
decreased 28.1% to $1.41.
Share Repurchases
During the three months ended September 30, 2022, we repurchased
313,893 of our common stock at an aggregate cost of $10.9 million.
We will continue to evaluate our common stock price relative to
other investment opportunities and, to the extent we believe that
the repurchase of our common stock represents an appropriate return
of capital, we will repurchase shares of our common stock.
We repurchased 3,500 shares of Series B Preferred Stock for $70
thousand during the three months ended September 30, 2022.
About Atlanticus Holdings Corporation
Empowering Better Financial Outcomes for Everyday Americans
Atlanticus’ technology allows bank, retail, and healthcare
partners to offer more inclusive financial services to everyday
Americans through the use of proprietary analytics. We apply the
experience gained and infrastructure built from servicing over 18
million customers and $27 billion in consumer loans over our
25-plus year operating history to support lenders that originate a
range of consumer loan products. These products include retail and
healthcare private label credit and general purpose credit cards
marketed through our omnichannel platform, including retail
point-of-sale, healthcare-point of-care, direct mail solicitation,
internet-based marketing, and partnerships with third parties.
Additionally, through our CAR subsidiary, Atlanticus serves the
individual needs of automotive dealers and automotive non-prime
financial organizations with multiple financing and service
programs.
Forward-Looking Statements
This press release contains forward-looking statements that
reflect the Company's current views with respect to, among other
things, its business, operations, financial performance, revenue,
amount and pace of growth of managed receivables, total interest
income and related fees and charges, debt financing, liquidity,
interest expense, operating expense, interest rates, underwriting,
asset quality, asset yields, charge-off rates, consumer performance
trends and economic developments. You generally can identify these
statements by the use of words such as “outlook,” “potential,”
“continue,” “may,” “seek,” “approximately,” “predict,” “believe,”
“expect,” “plan,” “intend,” “estimate” or “anticipate” and similar
expressions or the negative versions of these words or comparable
words, as well as future or conditional verbs such as “will,”
“should,” “would,” “likely” and “could.” These statements are
subject to certain risks and uncertainties that could cause actual
results to differ materially from those included in the
forward-looking statements. These risks and uncertainties include
those risks described in the Company's filings with the Securities
and Exchange Commission and include, but are not limited to, risks
related to the extent and duration of the COVID-19 pandemic and its
impact on the Company, bank partners, merchant partners, consumers,
loan demand, the capital markets, labor availability, supply chains
and the economy in general; the Company's ability to retain
existing, and attract new, merchant partners and funding sources;
changes in market interest rates; increases in loan delinquencies;
its ability to operate successfully in a highly regulated industry;
the outcome of litigation and regulatory matters; the effect of
management changes; cyberattacks and security vulnerabilities in
its products and services; and the Company's ability to compete
successfully in highly competitive markets. The forward-looking
statements speak only as of the date on which they are made, and,
except to the extent required by federal securities laws, the
Company disclaims any obligation to update any forward-looking
statement to reflect events or circumstances after the date on
which the statement is made or to reflect the occurrence of
unanticipated events. In light of these risks and uncertainties,
there is no assurance that the events or results suggested by the
forward-looking statements will in fact occur, and you should not
place undue reliance on these forward-looking statements.
Atlanticus Holdings
Corporation and Subsidiaries
Consolidated Statements of
Income (Unaudited)
(Dollars in thousands, except
per share data)
For the Three Months
Ended
For the Nine Months
Ended
September 30,
September 30,
2022
2021
2022
2021
Revenue:
Consumer loans, including past due
fees
$
218,016
$
141,177
$
574,369
$
366,127
Fees and related income on earning
assets
48,518
54,085
169,055
140,658
Other revenue
11,340
8,655
34,016
20,546
Total operating revenue, net
277,874
203,917
777,440
527,331
Other non-operating revenue
80
32
380
3,458
Total revenue
277,954
203,949
777,820
530,789
Interest expense
(21,514
)
(12,370
)
(57,849
)
(38,458
)
Provision for losses on loans, interest
and fees receivable recorded at net realizable value
(381
)
(9,238
)
(710
)
(24,469
)
Changes in fair value of loans, interest
and fees receivable and notes payable associated with structured
financings recorded at fair value
(163,624
)
(58,727
)
(414,863
)
(144,981
)
Net margin
92,435
123,614
304,398
322,881
Operating expense:
Salaries and benefits
10,363
8,455
31,888
24,577
Card and loan servicing
24,775
19,239
71,447
54,838
Marketing and solicitation
11,053
16,462
51,857
40,441
Depreciation
488
268
1,630
900
Other
6,440
5,128
28,086
16,068
Total operating expense
53,119
49,552
184,908
136,824
Loss on repurchase and redemption of
convertible senior notes
—
16,184
—
29,439
Income before income taxes
39,316
57,878
119,490
156,618
Income tax expense
(6,946
)
(10,781
)
(8,568
)
(28,668
)
Net income
32,370
47,097
110,922
127,950
Net loss (income) attributable to
noncontrolling interests
201
(123
)
684
(25
)
Net income attributable to controlling
interests
32,571
46,974
111,606
127,925
Preferred dividends and discount
accretion
(6,296
)
(6,629
)
(18,759
)
(16,054
)
Net income attributable to common
shareholders
$
26,275
$
40,345
$
92,847
$
111,871
Net income attributable to common
shareholders per common share—basic
$
1.81
$
2.67
$
6.32
$
7.41
Net income attributable to common
shareholders per common share—diluted
$
1.41
$
1.96
$
4.85
$
5.43
Atlanticus Holdings
Corporation and Subsidiaries
Consolidated Statements of
Cash Flows (Unaudited)
(Dollars in thousands)
For the Nine Months Ended
September 30,
2022
2021
Operating activities
Net income
$
110,922
$
127,950
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and accretion,
net
4,094
448
Provision for losses on loans, interest
and fees receivable
710
24,469
Interest expense from accretion of
discount on notes
—
453
Income from accretion of merchant fees and
discount associated with receivables purchases
(109,312
)
(130,166
)
Changes in fair value of loans, interest
and fees receivable and notes payable associated with structured
financings recorded at fair value
414,863
144,981
Amortization of deferred loan costs
3,646
3,761
Income from equity-method investments
—
(16
)
Loss on repurchase and redemption of
convertible senior notes
—
29,439
Deferred stock-based compensation
costs
3,227
2,324
Lease liability payments
(3,845
)
(7,837
)
Gain on sale of property
—
(599
)
Changes in assets and liabilities:
Increase in uncollected fees on earning
assets
(182,379
)
(70,980
)
Increase in income tax liability
4,326
12,085
Increase in accounts payable and accrued
expenses
3,011
2,127
Other
(3,623
)
957
Net cash provided by operating
activities
245,640
139,396
Investing activities
Investments in equity-method investee
—
(398
)
Proceeds from equity-method investee
—
560
Proceeds from recoveries on charged off
receivables
21,490
9,110
Investments in earning assets
(1,946,759
)
(1,432,768
)
Proceeds from earning assets
1,402,124
1,128,653
Sale of property
—
1,100
Purchases and development of property, net
of disposals
(1,299
)
(144
)
Net cash used in investing activities
(524,444
)
(293,887
)
Financing activities
Noncontrolling interests contributions
4
4
Proceeds from issuance of Series B
preferred stock, net of issuance costs
191
75,270
Preferred dividends
(18,559
)
(15,582
)
Proceeds from exercise of stock
options
3,629
1,742
Purchase and retirement of outstanding
stock
(89,008
)
(5,794
)
Proceeds from borrowings
481,236
507,227
Repayment of borrowings
(218,565
)
(452,554
)
Net cash provided by financing
activities
158,928
110,313
Effect of exchange rate changes on
cash
(61
)
(9
)
Net decrease in cash and cash equivalents
and restricted cash
(119,937
)
(44,187
)
Cash and cash equivalents and restricted
cash at beginning of period
506,628
258,961
Cash and cash equivalents and restricted
cash at end of period
$
386,691
$
214,774
Supplemental cash flow
information
Cash paid for interest
$
53,463
$
35,203
Net cash income tax payments
$
4,242
$
16,584
(Decrease) increase in accrued and unpaid
preferred dividends
$
(7
)
$
247
Atlanticus Holdings
Corporation and Subsidiaries
Consolidated Balance Sheets
(Unaudited)
(Dollars in thousands)
September 30,
December 31,
2022
2021
Assets
Unrestricted cash and cash equivalents
(including $186.6 million and $209.5 million associated with
variable interest entities at September 30, 2022 and December 31,
2021, respectively)
$
352,908
$
409,660
Restricted cash and cash equivalents
(including $15.8 million and $75.9 million associated with variable
interest entities at September 30, 2022 and December 31, 2021,
respectively)
33,783
96,968
Loans, interest and fees receivable:
Loans, interest and fees receivable, at
fair value (including $1,618.2 million and $925.5 million
associated with variable interest entities at September 30, 2022
and December 31, 2021, respectively)
1,728,091
1,026,424
Loans, interest and fees receivable, gross
(including $369.6 million associated with variable interest
entities at December 31, 2021)
107,410
470,293
Allowances for uncollectible loans,
interest and fees receivable (including $55.1 million associated
with variable interest entities at December 31, 2021)
(1,766
)
(57,201
)
Deferred revenue (including $8.2 million
associated with variable interest entities at December 31,
2021)
(16,560
)
(29,281
)
Net loans, interest and fees
receivable
1,817,175
1,410,235
Property at cost, net of depreciation
7,004
7,335
Operating lease right-of-use assets
12,047
4,016
Prepaid expenses and other assets
29,414
15,649
Total assets
$
2,252,331
$
1,943,863
Liabilities
Accounts payable and accrued expenses
$
43,490
$
42,287
Operating lease liabilities
19,959
4,842
Notes payable, net (including $1,473.0
million and $1,223.4 million associated with variable interest
entities at September 30, 2022 and December 31, 2021,
respectively)
1,544,108
1,278,864
Senior notes, net
144,027
142,951
Income tax liability
54,603
47,770
Total liabilities
1,806,187
1,516,714
Commitments and contingencies
Preferred stock, no par value, 10,000,000
shares authorized:
Series A preferred stock, 400,000 shares
issued and outstanding at September 30, 2022 (liquidation
preference - $40.0 million); 400,000 shares issued and outstanding
at December 31, 2021 (1)
40,000
40,000
Class B preferred units issued to
noncontrolling interests
99,875
99,650
Shareholders' Equity
Series B preferred stock, no par value,
3,193,262 shares issued and outstanding at September 30, 2022
(liquidation preference - $79.8 million); 3,188,533 shares issued
and outstanding at December 31, 2021 (1)
—
—
Common stock, no par value, 150,000,000
shares authorized: 14,445,295 and 14,804,408 shares issued and
outstanding at September 30, 2022 and December 31, 2021,
respectively
—
—
Paid-in capital
127,025
227,763
Retained earnings
180,424
60,236
Total shareholders’ equity
307,449
287,999
Noncontrolling interests
(1,180
)
(500
)
Total equity
306,269
287,499
Total liabilities, preferred stock and
equity
$
2,252,331
$
1,943,863
(1) Both the Series A preferred stock and the Series B preferred
stock have no par value and are part of the same aggregate
10,000,000 shares authorized.
Additional Information
Additional trends and data with respect to our private label
credit and general purpose credit card receivables can be found in
our latest 10-Q filing with the Securities and Exchange Commission
(SEC) under Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.
Calculation of Non-GAAP Financial
Measures
This press release presents information about managed
receivables, which is a non-GAAP financial measure provided as a
supplement to the results provided in accordance with accounting
principles generally accepted in the United States of America
(“GAAP”). In addition to financial measures presented in accordance
with GAAP, we present managed receivables, total managed yield,
total managed yield ratio, combined principal net charge-off ratio,
percent of managed receivables 30-59 days past due, percent of
managed receivables 60-89 days past due and percent of managed
receivables 90 or more days past due, all of which are non-GAAP
financial measures. These non-GAAP financial measures aid in the
evaluation of the performance of our credit portfolios, including
our risk management, servicing and collection activities and our
valuation of purchased receivables. The credit performance of our
managed receivables provides information concerning the quality of
loan originations and the related credit risks inherent with the
portfolios. Management relies heavily upon financial data and
results prepared on the “managed basis” in order to manage our
business, make planning decisions, evaluate our performance and
allocate resources.
These non-GAAP financial measures are presented for supplemental
informational purposes only. These non-GAAP financial measures have
limitations as analytical tools and should not be considered in
isolation from, or as a substitute for, GAAP financial measures.
These non-GAAP financial measures may differ from the non-GAAP
financial measures used by other companies. A reconciliation of
non-GAAP financial measures to the most directly comparable GAAP
financial measures or the calculation of the non-GAAP financial
measures are provided below for each of the fiscal periods
indicated.
These non-GAAP financial measures include only the performance
of those receivables underlying consolidated subsidiaries (for
receivables carried at amortized cost basis and fair value) and
exclude the performance of receivables held by our former equity
method investee. As the receivables underlying our former equity
method investee reflect a small and diminishing portion of our
overall receivables base, we do not believe their inclusion or
exclusion in the overall results is material. Additionally, we
calculate average managed receivables based on the quarter-end
balances.
The comparison of non-GAAP managed receivables to our GAAP
financial statements requires an understanding that managed
receivables reflect the face value of loans, interest and fees
receivable without any consideration for potential loan losses or
other adjustments to reflect fair value.
Below are (i) the reconciliation of Loans, interest and fees
receivable, at fair value to Loans, interest and fees receivable,
at face value and (ii) the calculation of managed receivables:
At or for the Three Months
Ended
2022
2021
2020
(in Millions)
Sep. 30 (1)
Jun. 30 (1)
Mar. 31 (1)
Dec. 31 (1)
Sep. 30 (1)
Jun. 30 (1)
Mar. 31 (1)
Dec. 31 (1)
Loans, interest and fees receivable, at
fair value
$
1,728.1
$
1,616.9
$
1,405.8
$
1,026.4
$
846.2
$
644.7
$
481.4
$
417.1
Fair value mark against receivable (2)
$
322.3
$
293.0
$
272.9
$
208.9
$
182.2
$
148.6
$
112.3
$
99.0
Loans, interest and fees receivable, at
face value
$
2,050.4
$
1,909.9
$
1,678.7
$
1,235.3
$
1,028.4
$
793.3
$
593.7
$
516.1
(1)
We elected the fair value option to account for certain loans
receivable associated with our private label credit and general
purpose credit card platform that were acquired on or after January
1, 2020, and we elected the fair value option under ASU 2016-13 for
those private label credit and general purpose credit card
receivables that were previously accounted for under the amortized
cost method.
(2)
The fair value mark against receivables reflects the difference
between the face value of a receivable and the net present value of
the expected cash flows associated with that receivable.
At or for the Three Months
Ended
2022
2021
2020
(in Millions)
Sep. 30 (1)
Jun. 30 (1)
Mar. 31 (1)
Dec. 31
Sep. 30
Jun. 30
Mar. 31
Dec. 31
Loans, interest and fees receivable,
gross
$
—
$
—
$
—
$
375.7
$
417.8
$
454.2
$
498.8
$
574.3
Loans, interest and fees receivable, gross
from fair value reconciliation above
2,050.4
1,909.9
1,678.7
1,235.3
1,028.4
793.3
593.7
516.1
Total managed receivables
$
2,050.4
$
1,909.9
$
1,678.7
$
1,611.0
$
1,446.2
$
1,247.5
$
1,092.5
$
1,090.4
(1)
On January 1, 2022, we elected the fair value option under ASU
2016-13 for those private label credit and general purpose credit
card receivables that were accounted for under the amortized cost
method.
As discussed above, our managed receivables data differ in
certain aspects from our GAAP data. First, managed receivables data
are based on billings and actual charge-offs as they occur without
regard to any changes in our allowance for uncollectible loans,
interest and fees receivable (in periods where applicable). Second,
for managed receivables data, we amortize certain fees (such as
annual and merchant fees) and expenses (such as marketing expenses)
associated with our Fair Value Receivables over the expected life
of the corresponding receivable and recognize other costs, such as
claims made under credit deferral programs, when paid. Under fair
value accounting, these fees are recognized when billed or upon
receivable acquisition and marketing expenses are recognized when
incurred. Third, managed receivables data excludes the impacts of
equity in income of equity method investees. As of January 1, 2022,
we changed the names of combined net charge-offs to combined
principal net charge-offs and the combined net charge-off ratio,
annualized to combined principal net charge-off ratio, annualized.
These changes reflect that we now subtract finance charge-offs in
the calculation of combined principal net charge-offs and the
related ratio. We believe this revised calculation is more in line
with the calculations used by our peers. All prior periods have
been restated to reflect this new methodology. A reconciliation of
our operating revenues, net of finance and fee charge offs, to
comparable amounts used in our calculation of Total managed yield
ratios is as follows:
At or for the Three Months
Ended
2022
2021
2020
(in Millions)
Sep. 30
Jun. 30
Mar. 31
Dec. 31
Sep. 30
Jun. 30
Mar. 31
Dec. 31
Consumer loans, including past due
fees
$
208.9
$
182.8
$
156.5
$
144.1
$
132.7
$
114.3
$
94.1
$
95.7
Fees and related income on earning
assets
48.5
65.8
54.7
53.8
54.1
49.5
37.0
31.4
Other revenue
11.1
12.2
10.0
9.7
8.4
7.0
4.2
4.8
Adjustments due to acceleration of
merchant fee discount amortization under fair value accounting
(7.9
)
(12.1
)
1.8
(3.4
)
(14.7
)
(18.6
)
(5.5
)
(6.6
)
Adjustments due to acceleration of annual
fees recognition under fair value accounting
10.0
(6.6
)
(1.3
)
(4.4
)
(12.0
)
(12.3
)
(4.6
)
(1.1
)
Removal of expense accruals under GAAP
—
—
—
—
0.2
(0.4
)
0.2
(0.1
)
Removal of finance charge-offs
(45.3
)
(41.2
)
(32.5
)
(28.1
)
(16.3
)
(14.1
)
(10.7
)
(9.8
)
Total managed yield
$
225.3
$
200.9
$
189.2
$
171.7
$
152.4
$
125.4
$
114.7
$
114.3
As of January 1, 2022, we changed the names of combined net
charge-offs to combined principal net charge-offs and the combined
net charge-off ratio, annualized to combined principal net
charge-off ratio, annualized. These changes reflect that we now
subtract finance charge-offs in the calculation of combined
principal net charge offs and the related ratio. We believe this
revised calculation is more in line with the calculations used by
our peers. All prior periods have been restated to reflect this new
methodology. The calculation of Combined principal net charge offs
used in our Combined principal net charge-off ratio, annualized is
as follows:
At or for the Three Months
Ended
2022
2021
2020
(in Millions)
Sep. 30 (1)
Jun. 30 (1)
Mar. 31 (1)
Dec. 31
Sep. 30
Jun. 30
Mar. 31
Dec. 31
Net losses on impairment of loans,
interest and fees receivable recorded at fair value
$
134.4
$
126.5
$
101.3
$
46.7
$
25.6
$
22.7
$
14.3
$
8.6
Gross charge-offs on non-fair value
accounts
—
—
—
38.7
27.1
27.6
26.3
30.6
Finance charge-offs (2)
(45.3
)
(41.2
)
(32.5
)
(28.1
)
(16.3
)
(14.1
)
(10.7
)
(9.8
)
Recoveries on non-fair value accounts
—
—
—
(4.1
)
(2.7
)
(5.7
)
(3.4
)
(4.3
)
Combined principal net charge-offs
$
89.1
$
85.3
$
68.8
$
53.2
$
33.7
$
30.5
$
26.5
$
25.1
(1)
We implemented the fair value method under ASU 2016-13 for those
private label credit and general purpose credit card receivables
that were previously accounted for under the amortized cost method.
(2)
Finance charge offs are included as a component of our Provision
for losses on loans, interest and fees receivable recorded at net
realizable value and Changes in fair value of loans, interest and
fees receivable and notes payable associated with structured
financings recorded at fair value in the Company’s consolidated
statements of income.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221108006035/en/
Investor Relations Karin Daly, Vice President, The Equity Group
Inc. (212) 836-9623 kdaly@equityny.com
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