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Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2024
Accounting Policies [Abstract]  
Consolidation, Policy [Policy Text Block]

Consolidation The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company’s policy is to consolidate the financial statements of entities in which it has a controlling financial interest. The Company determines whether it has a controlling financial interest in an entity by evaluating whether the entity is a voting interest entity or variable interest entity ("VIE") and if the accounting guidance requires consolidation. For more information on the Company's VIEs, see Note 7 "Variable Interest Entities."

 
Receivable [Policy Text Block]

Loans at fair value. Loans at fair value represent receivables for which we have elected the fair value option (the "Fair Value Receivables"). Further details concerning our loans at fair value are presented within Note 6, "Fair Values of Assets and Liabilities."

 

Loans at amortized cost, net. Our loans at amortized cost, net, currently consist of receivables associated with our Auto Finance segment’s operations and are presented in the condensed consolidated balance sheets net of the related allowance for credit losses and deferred revenue. We purchased auto loans with outstanding principal of $48.9 million, $161.1 million, $59.0 million and $179.3 million for the three and nine months ended September 30, 2024 and 2023, respectively, through our pre-qualified network of independent automotive dealers and automotive finance companies.

 

Certain of our loans at amortized cost, net, also contain components of deferred revenue related to loan discounts on the purchase of our auto finance receivables. As of September 30, 2024 and December 31, 2023, the weighted average remaining accretion period for the $16.9 million and $17.9 million of deferred revenue reflected in the condensed consolidated balance sheets was 24 and 26 months, respectively.

 

A roll-forward (in millions) of our allowance for credit losses by class of receivable is as follows:

 

For the Three Months Ended September 30,

 

2024

  

2023

 

Allowances for credit losses:

        

Balance at beginning of period

 $(2.4) $(1.7)

Provision for credit losses

  (4.6)  (0.5)

Charge-offs

  3.1   0.9 

Recoveries

  (0.7)  (0.5)

Balance at end of period

 $(4.6) $(1.8)

 

For the Nine Months Ended September 30,

 

2024

  

2023

 

Allowances for credit losses:

        

Balance at beginning of period

 $(1.8) $(1.6)

Provision for credit losses

  (9.3)  (1.6)

Charge-offs

  8.4   2.8 

Recoveries

  (1.9)  (1.4)

Balance at end of period

 $(4.6) $(1.8)

 

  

September 30,

  

December 31,

 

As of

 

2024

  

2023

 

Allowances for credit losses:

        

Balance at end of period individually evaluated for impairment

 $(0.6) $— 

Balance at end of period collectively evaluated for impairment

 $(4.0) $(1.8)

Loans at amortized cost:

        

Loans at amortized cost

 $110.6  $118.0 

Loans at amortized cost individually evaluated for impairment

 $3.4  $— 

Loans at amortized cost collectively evaluated for impairment

 $107.2  $118.0 

 

We consider loan delinquencies a key indicator of credit quality because this measure provides the best ongoing estimate of how a particular class of receivables is performing. An aging of our delinquent loans at amortized cost (in millions) as of September 30, 2024 and December 31, 2023 is as follows:

 

  

September 30,

  

December 31,

 

As of

 

2024

  

2023

 

30-59 days past due

 $8.9  $9.4 

60-89 days past due

  3.8   3.4 

90 or more days past due

  5.3   3.5 

Delinquent loans at amortized cost

  18.0   16.3 

Current loans at amortized cost

  92.6   101.7 

Total loans at amortized cost

 $110.6  $118.0 

Balance of loans greater than 90-days delinquent still accruing interest and fees

 $3.8  $2.6 

 

Loan Modifications and Restructurings

 

We review our Loans at amortized cost, net, associated with our Auto Finance segment’s operations to determine if any modifications for borrowers experiencing financial difficulty were made that would qualify the receivable as a Financial Difficulty Modification ("FDM"). This could include a restructuring of the loan terms to alleviate the burden of the borrower's near-term cash requirements, such as a modification of terms to reduce or defer cash payments to help the borrower attempt to improve its financial condition. For the nine months ended September 30, 2024, no Loans at amortized cost qualified as a FDM. 

 
Income Tax, Policy [Policy Text Block]

Income Taxes

 

We experienced effective tax rates of 21.5% and 19.7% for the three and nine months ended September 30, 2024, respectively, compared to 21.2% and 22.5% for the three and nine months ended September 30, 2023, respectively. In all periods, the factors that decreased our effective tax rate relative to the statutory rate included (1) our deduction for income tax purposes of amounts characterized in our condensed consolidated financial statements as dividends on a preferred stock issuance, such amounts constituting deductible interest expense on a debt issuance for tax purposes and (2) deductions associated with the exercises of stock options and the vesting of restricted stock at times when the fair value of our stock exceeded such share-based awards’ grant date values. Also, in all periods, the factors that increased our effective tax rate relative to the statutory rate included (1) state and foreign income tax expense, including the effects of law changes enacted in certain states in which we operate, (2) taxes on global intangible low-taxed income, and (3) deduction disallowance under Section 162(m) of the Internal Revenue Code of 1986, as amended, with respect to compensation paid to our covered employees.

 

We report interest expense associated with our income tax liabilities (including accrued liabilities for uncertain tax positions) within our income tax line item on our condensed consolidated statements of income. We likewise report within such line item the reversal of interest expense associated with our accrued liabilities for uncertain tax positions to the extent we resolve such liabilities in a manner favorable to our accruals therefor. Our net interest expense reflected within our income tax line item was $140,000 for the nine months ended September 30, 2024, and $1.4 million for the nine months ended September 30, 2023.

 
Revenue from Contract with Customer [Policy Text Block]

Revenue Recognition and Revenue from Contracts with Customers

 

Consumer Loans, Including Past Due Fees

 

Consumer loans, including past due fees reflect interest income, including finance charges, and late fees on loans in accordance with the terms of the related customer agreements. Discounts received associated with auto loans that are not included as part of our Fair Value Receivables are deferred and amortized over the average life of the related loans using the effective interest method. Premiums, discounts, and merchant fees paid or received associated with Fair Value Receivables are recognized upon receivable acquisition. Finance charges and fees, net of amounts that we consider uncollectible, are included in loans, interest and fees receivable and revenue when the fees are earned based upon the contractual terms of the loans.

 

Fees and Related Income on Earning Assets

 

Fees and related income on earning assets primarily include fees associated with credit products such as annual fee billings and cash advance fees, among others. These fees are assessed on the receivables underlying the private label and general purpose credit cards we service.

 

Fees are assessed on private label and general purpose credit card accounts underlying our credit card receivables according to the terms of the related agreements and we recognize these fees as income when they are charged to the customers’ accounts. Fees and related income on earning assets, net of amounts that we consider uncollectible, are included in loans, interest and fees receivable and revenue when the fees are earned based upon the contractual terms of the loans.

 

Other revenue

 

Other revenue includes revenue from contracts with customers, which includes interchange revenues, servicing income and ancillary product offerings (primarily associated with a credit protection program offered by our issuing bank partner). We recognize these fees as income in the period earned.

 

Other non-operating revenue

 

Other non-operating revenue includes revenues not associated with our ongoing business operations. 

 

Revenue from Contracts with Customers

 

Revenue from contracts with customers is included in Other revenue on our condensed consolidated statements of income. Components (in thousands) of our revenue from contracts with customers are as follows:

 

             

For the Three Months Ended September 30, 2024

 

CaaS

  

Auto Finance

  

Total

 

Interchange revenues, net (1)

 $5,001  $—  $5,001 

Servicing income

  2,871   186   3,057 

Service charges and other customer related fees

  8,922   13   8,935 

Total revenue from contracts with customers

 $16,794  $199  $16,993 

(1) Interchange revenue is presented net of customer reward expense.

 

             

For the Nine Months Ended September 30, 2024

 

CaaS

  

Auto Finance

  

Total

 

Interchange revenues, net (1)

 $14,448  $—  $14,448 

Servicing income

  6,055   576   6,631 

Service charges and other customer related fees

  21,549   46   21,595 

Total revenue from contracts with customers

 $42,052  $622  $42,674 

(1) Interchange revenue is presented net of customer reward expense.

 

             

For the Three Months Ended September 30, 2023

 

CaaS

  

Auto Finance

  

Total

 

Interchange revenues, net (1)

 $5,790  $—  $5,790 

Servicing income

  943   179   1,122 

Service charges and other customer related fees

  3,447   19   3,466 

Total revenue from contracts with customers

 $10,180  $198  $10,378

(1) Interchange revenue is presented net of customer reward expense.

 

             

For the Nine Months Ended September 30, 2023

 

CaaS

  

Auto Finance

  

Total

 

Interchange revenues, net (1)

 $15,409  $—  $15,409 

Servicing income

  2,284   559   2,843 

Service charges and other customer related fees

  6,829   56   6,885 

Total revenue from contracts with customers

 $24,522  $615  $25,137 

(1) Interchange revenue is presented net of customer reward expense.

 
New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Pronouncements

 

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax Disclosures" ("Topic 740"). Topic 740 modifies the rules on income tax disclosures to require entities to disclose (i) specific categories in the rate reconciliation, (ii) the income (loss) from continuing operations before income tax expense or benefit (separated between domestic and foreign) and (iii) income tax expense or benefit from continuing operations (separated by federal, state and foreign). Topic 740 also requires entities to disclose their income tax payments to international, federal, state and local jurisdictions, among other changes. The guidance is effective for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This guidance should be applied on a prospective basis, but retrospective application is permitted. We are currently evaluating the potential impact of adopting this new guidance on our financial statement disclosures.

 

In November 2023, the FASB issued ASU 2023-07, "Segment Reporting (Topic 280): Improvements to Reportable Segments Disclosures" ("Topic 280"). Topic 280 enhances disclosures of significant segment expenses and other segment items regularly provided to the chief operating decision maker ("CODM"), extends certain annual disclosures to interim periods and permits more than one measure of segment profit (loss) to be reported under certain conditions. The amendments are effective in fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Retrospective adoption to all periods presented is required, and early adoption of the amendments is permitted. We are currently evaluating the potential impact of adopting this new guidance on our financial statement disclosures.

 

On March 31, 2022, the FASB issued ASU 2022-02, Financial Instruments - Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures. Topic 326 eliminates the accounting guidance for troubled debt restructurings by creditors while adding disclosures for certain loan restructurings by creditors when a borrower is experiencing financial difficulty. This guidance requires an entity to determine whether a modification results in a new loan or a continuation of an existing loan. Additionally, Topic 326 requires disclosure of current period gross write-offs by year of origination for financing receivables. The disclosures required by Topic 326 are required for receivables held at amortized cost and exclude those accounted for using fair value. The Company adopted Topic 326 on January 1, 2023. As the significant majority of the Company's receivables are held at fair value, the adoption of Topic 326 did not have a material impact on the Company's financial results and accompanying disclosures.