Atlanticus Holdings's Business Segments

We are a Georgia corporation formed in 2009, as successor to an entity that commenced operations in 1996. We provide various credit and related financial services and products primarily to or associated with the financially underserved consumer credit market. We utilize proprietary analytics and a flexible technology platform to provide various credit and related financial services and products to or associated with the financially underserved consumer credit market. Currently, within our Credit and Other Investments segment, we are applying the experiences gained and infrastructure built from funding over $25 billion in consumer loans over our 19-year operating history to originate a range of consumer loan products through our primary consumer brand, Fortiva.

As part of this brand, we market Fortiva Retail Credit, Fortiva Personal Loans and Fortiva Credit Cards through multiple channels, including retail point-of-sale, direct mail solicitation, Internet-based marketing and partnerships with third parties who have relationships with our core customers. In our point-of-sale channel, we partner with retailers and service providers in various industries across the U.S. to offer Fortiva Retail Credit to their customers for the purchase of a variety of goods and services including consumer electronics, furniture, elective medical procedures, educational services and home-improvements. Our flexible technology platform allows us to integrate our paperless process and instant decision-making capabilities with our partners technology infrastructure.

Atlanticus Holdings Corp operates through two primary segments: Credit and Other Investments, and Auto Finance. Below is an extensive description of each segment, along with their respective products and services.

Credit and Other Investments Segment

The Credit and Other Investments segment encompasses a diverse range of financial services, primarily focused on providing access to credit for consumers who are often overlooked by traditional lending sources. This segment includes:

1. Fortiva Brand Offerings:
- Fortiva Retail Credit: This product is designed for point-of-sale financing, enabling retail partners to offer flexible credit options to consumers at the moment of purchase. The primary objective is to provide financing solutions to customers with lower credit scores who may be denied credit by conventional lenders.
- Fortiva Personal Loans: These are general-purpose loans offered directly to consumers, allowing individuals to address various financial needs, from unexpected expenses to larger financial goals.
- Fortiva Credit Card: This product allows consumers to access credit through a revolving line of credit, catering to those who may struggle to qualify for mainstream credit cards.

2. Origination Channels:
- The company utilizes a multi-channel approach to reach potential customers, including direct mail campaigns, internet marketing, and partnerships with various retailers and service providers.

3. Analytics and Technology Platform:
- Atlanticus leverages proprietary analytics and a robust technology platform to streamline the application and approval process. This enables fast decision-making and enhances the consumer experience while also driving sales for retail partners.

4. Portfolio Management:
- The segment is focused on the management and servicing of its credit card receivables portfolios, although it is important to note that most of these credit card accounts have not been open to new purchases since 2009. The company continues to service these existing portfolios, allowing them to naturally liquidate over time.

5. Regulatory Compliance:
- Operating in a heavily regulated environment, Atlanticus is committed to adhering to consumer-friendly practices in alignment with evolving regulations. This commitment may lead to changes in operational practices to ensure compliance and maintain industry leadership in ethical lending.

6. Risk Management:
- The products aimed at consumers with lower credit scores inherently come with higher risk, leading to higher pricing to mitigate potential losses. The company is conscious of the greater regulatory scrutiny that accompanies its offerings compared to prime lenders.

Auto Finance Segment

The Auto Finance segment operates primarily through the CAR (Consumer Auto Retail) platform. Key components of this segment include:

1. Loan Purchases and Servicing:
- CAR focuses on purchasing and servicing loans secured by automobiles, working primarily with a network of pre-qualified independent dealers and automotive finance companies in the buy-here, pay-here used car market.

2. Product Offerings:
- Auto Loans: The core service includes the purchase of auto loans, typically at discounts, generating revenue through interest earned and the accretion of discounts over the life of the loan.
- Floor-Plan Financing: This program allows automotive dealers to finance their inventory, enabling them to purchase vehicles for resale. This service was introduced to provide additional financing solutions to the network of dealers.
- Installment Lending Products: Introduced in 2013, this service extends beyond traditional auto loans, offering dealers and customers more versatility in their financing options.

3. Revenue Generation:
- Revenue is generated through the interest from purchased loans, fees for servicing loans on behalf of dealers, and backup servicing for unrelated third-party assets. The CAR platform is essential in attracting borrowers while providing a vital service to dealerships.

4. Market Focus:
- The Auto Finance segment serves the buy-here, pay-here market primarily, reflecting a focus on consumers who require personalized financing options and those with varying credit profiles.

Summary

Atlanticus Holdings Corp demonstrates a strong commitment to empowering consumers with limited credit options through its diverse suite of products and services. By employing advanced analytics and technology to streamline processes, the company enhances both customer experience and operational efficiency while navigating a complex regulatory landscape. Its Auto Finance segment further expands its reach within the automotive market, catering to dealers and consumers alike with tailored financing solutions to suit their needs. As the company continues to evolve, it strategically seeks to optimize returns on assets and capitalize on emerging opportunities within the consumer finance sector.