ATLANTA, May 10, 2024 (GLOBE NEWSWIRE) -- 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 first quarter ended March 31, 2024. An accompanying earnings presentation is available in the Investors section of the Company's website at www.atlanticus.com or by clicking here. Financial and Operating Highlights First Quarter 2024 Highlights (all comparisons to the First Quarter 2023) Managed receivables2 increased 12.8% to $2.3 billion Total operating revenue increased 11.2% to $290.2 million. Return on average shareholders' equity of 19.6%3 Purchase volume of $594.9 million. Over 250,000 new accounts served during the quarter, 3.5 million total accounts served1 Net income attributable to common shareholders of $19.9 million, or $1.09 per diluted common share 1 ) In our calculation of total accounts served, 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 calculation of Non-GAAP Financial Measures for important additional information.3) Return on average shareholders' equity is calculated using Net Income attributable to common shareholders as the numerator and the average of Total shareholders' equity as of March 31, 2024 and December 31, 2023 as the denominator, annualized. Management Commentary Jeff Howard, President and Chief Executive Officer at Atlanticus stated, "We are pleased with our results this quarter as we continue to produce both good profitability and reasonable growth. Our focus, as always, is on achieving target returns on assets, which leads to an adequate return for our shareholders. Although the consumers we serve seem to have found greater financial stability, it is at a somewhat higher rate of delinquency than existed prior to the pandemic. As such, we have maintained a more conservative credit posture which has led to slower, but respectable, double-digit growth in both managed receivables and revenue. We are also seeing increased opportunities for our credit as a service platform in the retail credit channel, largely driven by the pullback from "prime", or "first-look" providers. "A major focus of this quarter has been planning for the late fee safe-harbor rule change. While an injunction has been granted which stays the implementation, and litigation may ultimately reverse the rule, we, along with our bank partners, have been planning for the potential change for months. These plans include increasing APR's, increasing certain fees including annual and monthly fees, shifting offers, introducing paper statement fees, and offering new features for the customers we serve. We believe our plans provide for the complete recovery over time of the estimated impact from the new rule, if implemented. "As we look ahead, we are excited about the long-term opportunities for our platform. Our ongoing investments in technology, growing breadth of product offerings, data driven decision making, and extensive experience position us well to expand our capabilities and provide a truly best in class experience to the consumers we serve."     For the Three Months Ended Financial Results   March 31, (Dollars in thousands, except per share data)     2024       2023     % Change               Total operating revenue   $ 290,174     $ 260,982     11.2 % Other non-operating revenue     532       59     nm   Total revenue     290,706       261,041     11.4 % Interest expense     (35,063 )     (24,234 )   44.7 % Provision for credit losses     (2,944 )     (704 )   nm   Changes in fair value of loans     (159,171 )     (149,822 )   6.2 % Net margin   $ 93,528     $ 86,281     8.4 %               Total operating expenses   ($ 60,707 )   ($ 52,199 )   16.3 %               Net income   $ 25,819     $ 25,894     nm                 Net income attributable to controlling interests   $ 26,170     $ 26,212     nm   Preferred stock and preferred unit dividends and discount accretion   (6,292 )     (6,227 )   nm   Net income attributable to common shareholders   $ 19,878     $ 19,985     nm                 Net income attributable to common shareholders per common share—basic $ 1.35     $ 1.38     (2.2 %)               Net income attributable to common shareholders per common share—diluted $ 1.09     $ 1.08     0.9 % *nm = not meaningful Managed Receivables Managed receivables increased 12.8% to $2.3 billion with over $262.4 million in net receivables growth from March 31, 2023, largely driven by growth both in the private label credit and general purpose credit card products offered by our bank partners. Total accounts served increased 10.2% to 3.5 million. While some of our merchant partners continue to face year-over-year growth challenges, others are still benefiting from continued consumer spending and a growing economy. Our general purpose credit card portfolio continues to grow in terms of total customers served and therefore we continue to experience growth in total managed receivables. We expect continued growth in our managed receivables when compared to prior periods in 2023 which were restricted due to tightened underwriting standards adopted during the second quarter 2022 (and continued in subsequent quarters). Total Operating 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.  We are currently experiencing continued period-over-period growth in private label credit and general purpose credit card receivables and to a lesser extent in our CAR receivables—growth that we expect to result in net period-over-period growth in our total interest income and related fees for these operations for 2024. Future periods' growth is also dependent on the addition of new retail partners to expand the reach of private label credit operations as well as growth within existing partnerships and the level of marketing investment for the general purpose credit card operations. During the quarter ended March 31, 2024, total operating revenue increased 11.2% to $290.2 million. We experienced 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. This relative mix of receivables led to an increase in our corresponding yield. Recent rules enacted by the Consumer Financial Protection Bureau ("CFPB"), which, if implemented, will limit the late fees charged to consumers in most instances, is expected to significantly impact the revenue recognized on our receivables. In order to mitigate these changes, our bank partners have taken a number of steps, from modifying products and policies (such as further tightening the criteria used to evaluate new loans) to changing prices (including increasing interest rates and fees charged to consumers). While we believe these product, policy and pricing changes will offset the negative impact of a reduced late fee, the changes will take time to be fully incorporated into our existing portfolios of receivables. Interest Expense Interest expense was $35.1 million for the quarter ended March 31, 2024, compared to $24.2 million for the quarter ended March 31, 2023. The higher expenses were primarily driven by the planned increases in outstanding debt in proportion to growth in our receivables coupled with increases in the cost of borrowing. Outstanding notes payable, net of unamortized debt issuance costs and discounts, associated with our private label credit and general purpose credit card platform increased to $1,795.4 million as of March 31, 2024 from $1,543.8 million as of March 31, 2023. The majority of this increase in outstanding debt relates to the addition of multiple revolving credit facilities during 2023. Recent increases in the effective interest rates on debt have started to increase our interest expense as we have raised additional capital (or replaced existing facilities) over the last two years. We anticipate additional debt financing over the next few quarters as we continue to grow coupled with increased effective interest rates. As such, we expect our quarterly interest expense for these operations to increase compared to prior periods. However, we do not expect our interest expense to increase significantly in the short term (absent raising additional capital) because over 90% of interest rates on our outstanding debt are fixed. Adding to interest expense in 2024, in January and February, 2024, we sold a combined $57.2 million aggregate principal amount of 9.25% Senior Notes due 2029.  Changes in Fair Value of Loans Changes in fair value of loans, interest and fees receivable recorded at fair value increased to $159.2 million for the quarter ended March 31, 2024, respectively, compared to $149.8 million for the quarter ended March 31, 2023, respectively. This increase was largely driven by growth in underlying receivables as well as changes in assumptions due to recent rules enacted by the CFPB, which will limit the late fee charged to consumers in most instances. We include asset performance degradation in our forecasts to reflect the possibility of delinquency rates increasing in the near term (and the corresponding increase in charge-offs and decrease in payments) above the level that current trends would suggest. Based on observed asset performance and improvement in U.S. economic expectations, some expected degradation has been removed in recent periods. Additionally, as receivables associated with both 1) assets acquired prior to our tightened underwriting standards (mentioned above) and 2) those assets negatively impacted by inflation, gradually become a smaller percentage of the portfolio, we expect to see overall improvements in the measured fair value of our portfolios of acquired receivables. Total Operating Expenses Total operating expenses increased 16.3% in the quarter when compared to the same period in 2023. For the quarter, operating expenses increased, driven primarily by increases in variable servicing costs associated with growth in our receivables as well as growth in both the number of employees and inflationary compensation pressure. Certain other nonrecurring accounting and legal expenditures also contributed to increases for the quarter. We expect increased levels of expenditures associated with anticipated growth in private label credit and general purpose credit card operations. These expenses will primarily relate to the variable costs of marketing efforts and card and loan servicing expenses associated with new receivable acquisitions. In addition, as we continue to adjust our underwriting standards to reflect changes in fee and finance assumptions on new receivables, we expect period over period marketing costs for 2024 to increase relative to those experienced in 2023, particularly towards the third and fourth quarters of 2024 , although the frequency and timing of increased marketing efforts could vary and are dependent on macroeconomic factors such as national unemployment rates and federal funds rates. Net Income Attributable to Common Shareholders Net income attributable to common shareholders decreased 0.5% to $19.9 million, or $1.09 per diluted share for the quarter ended March 31, 2024. Share Repurchases We repurchased and retired 18,033 shares of our common stock at an aggregate cost of $0.5 million, in the quarter ended March 31, 2024. We will continue to evaluate the best use of our capital to increase shareholder value over time. About Atlanticus Holdings Corporation Empowering Better Financial Outcomes for Everyday Americans Atlanticus™ technology enables 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 20 million customers and over $39 billion in consumer loans over more than 25 years of 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 Auto Finance 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, long-term growth plans and opportunities, operations, financial performance, revenue, amount and pace of growth of managed receivables, underwriting approach, total interest income and related fees and charges, the new CFPB late fee rules and our response thereto, debt financing, liquidity, interest rates, interest expense, operating expense, fair value of receivables, credit conditions, consumer spending, and the economy. 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 COVID-19 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. Contact:Investor Relations(770) Atlanticus Holdings Corporation and Subsidiaries Consolidated Balance Sheets (Unaudited) (Dollars in thousands)                 March 31, 2024       December 31, 2023   Assets         Unrestricted cash and cash equivalents (including $177.2 million and $158.0 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively) $ 444,809     $ 339,338   Restricted cash and cash equivalents (including $19.7 million and $20.5 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)   37,494       44,315   Loans at fair value (including $2,107.0 million and $2,128.6 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)   2,150,636       2,173,759   Loans at amortized cost     100,144       98,425   Property at cost, net of depreciation     10,855       11,445   Operating lease right-of-use assets     11,313       11,310   Prepaid expenses and other assets     31,964       27,853   Total assets   $ 2,787,215     $ 2,706,445             Liabilities         Accounts payable and accrued expenses   $ 59,173     $ 61,634   Operating lease liabilities     20,034       20,180   Notes payable, net (including $1,795.4 million and $1,795.9 million associated with variable interest entities at March 31, 2024 and December 31, 2023, respectively)   1,862,518       1,861,685   Senior notes, net     199,028       144,453   Income tax liability     92,870       85,826   Total liabilities     2,233,623       2,173,778             Commitments and contingencies         Preferred stock, no par value, 10,000,000 shares authorized:     Series A preferred stock, 400,000 shares issued and outstanding (liquidation preference - $40.0 million) at March 31, 2024 and December 31, 2023 (1)   40,000       40,000   Class B preferred units issued to noncontrolling interests   100,325       100,250             Shareholders' Equity         Series B preferred stock, no par value, 3,300,704 shares issued and outstanding at March 31, 2024 (liquidation preference - $82.5 million); 3,256,561 shares issued and outstanding at December 31, 2023 (liquidation preference - $81.4 million) (1)   –       –   Common stock, no par value, 150,000,000 shares authorized: 14,792,159 and 14,603,563 shares issued and outstanding at March 31, 2024 and December 31, 2023, respectively   –       –   Paid-in capital     88,883       87,415   Retained earnings     327,138       307,260   Total shareholders' equity     416,021       394,675   Noncontrolling interests     (2,754 )     (2,258 ) Total equity     413,267       392,417   Total liabilities, shareholders' equity and temporary equity $ 2,787,215     $ 2,706,445             (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.   Atlanticus Holdings Corporation and Subsidiaries Consolidated Statements of Income (Unaudited) (Dollars in thousands, except per share data)     For the Three Months Ended     March 31,       2024       2023   Revenue:         Consumer loans, including past due fees   $ 230,374     $ 209,701   Fees and related income on earning assets     47,905       44,357   Other revenue     11,895       6,924   Total operating revenue     290,174       260,982   Other non-operating revenue     532       59   Total revenue     290,706       261,041             Interest expense     (35,063 )     (24,234 ) Provision for credit losses     (2,944 )     (704 ) Changes in fair value of loans     (159,171 )     (149,822 ) Net margin     93,528       86,281             Operating expenses:         Salaries and benefits     (13,312 )     (10,604 ) Card and loan servicing     (26,822 )     (24,335 ) Marketing and solicitation     (10,428 )     (10,406 ) Depreciation