Atlanticus (ATLC)2025-03-13 21:15Collection Strategies - The company employs various collection strategies, including reducing or eliminating contractual interest and waiving fees based on payment history, to improve collections and customer service [46]. - Collection strategies are regularly monitored and adjusted based on customer satisfaction, delinquency rates, expected losses, and costs to collect, leading to better collection experiences and lower bad debt losses [49]. - Accounts that are 90 days or more past due are placed on non-accrual status, which may result in reduced interest and fees if certain payment conditions are met [54]. - The company utilizes re-aging techniques for accounts that meet specific criteria, potentially delaying or reducing delinquencies and charge-offs by less than 10% and 5%, respectively [52]. - The company has over 25 years of experience in customer service and collections, which helps mitigate credit and payment risks [336][341]. Workforce and Employment - The company has 417 employees as of December 31, 2024, with an average tenure of over 11 years, indicating a stable workforce [63]. Competition and Market Environment - The auto finance segment faces competition from both national and regional companies, as well as smaller private firms, creating a fragmented market [62]. - The company faces substantial competition from financial service and fintech companies, impacting its financial performance based on the performance of investments in receivables [61]. Credit Loss and Financial Risks - The company establishes an allowance for credit losses based on loan performance, delinquency data, and economic trends, which could materially affect operations if actual results differ from estimates [331]. - A 10% increase in credit loss rates could result in a pre-tax earnings loss of 88.2 million [337]. - The company is exposed to market return risk through loans, interest, and fees receivable, which are measured at fair value using a discounted cash flow methodology [338][339]. Interest Rate Risk - The company has (4.1) million if interest rates increase by 100 basis points [335]. - The Auto Finance segment's loans receivable are fixed rate amortizing loans, exposing the company to interest rate risks due to structured financing facilities priced over floating rate benchmarks [334]. - The company mitigates interest rate risk by maintaining the majority of its debt facilities at fixed interest rates [333]. - The fair value of loans at December 31, 2024, is estimated at (56.6) million on pre-tax earnings if discount rates increase by 10% [340]. - A 10% change in payment rates could lead to a pre-tax earnings impact of (201.5) million if they decrease [342]. - Total borrowings associated with loans at fair value and amortized cost amount to $2.2 billion as of December 31, 2024 [343]. Sensitivity Analysis - The sensitivity analysis assumes an immediate hypothetical change in market interest rates and credit loss rates, indicating potential volatility in earnings [335][337].