
	September 30, 2022		June 30, 2022
Gross amount of acquired card receivables	$	365,282	$	261,806
Less: allowance for credit losses	(7,541)		(5,414)
Total	$	357,741	$	256,392

Certain lines of credit and acquired card receivable balances are collateralized by cash deposits held by the Issuing Banks. Before an account is charged off, the Company obtains any available cash collateral from the Issuing Banks. As of September 30, 2022, approximately $131.8 million of the acquired card receivable balance served as collateral for the Company’s borrowings from the Revolving Credit Facility (see Note 8).

The Company also incurred losses related to card transactions disputed by spending businesses. The amount was not material during the three months ended September 30, 2022 and 2021.

The acquired card receivable balances above do not include purchases of card receivables from the Issuing Banks that have not cleared at the end of the reporting period. Purchases of card receivables that have not cleared as of September 30, 2022 totaled $55.9 million. The Company recognized an immaterial amount of expected credit losses on the purchased card receivables that have not cleared yet as of September 30, 2022 and 2021 (see Note 13).

The Company regularly reviews collection experience, delinquencies, and net charge-offs in determining allowance for credit losses related to acquired card receivables. Historical collections rates have shown that days past due is the primary indicator of the likelihood of loss. The Company elected to use the delinquency trends or past due status of the acquired card receivables as the credit quality indicator. Acquired card receivables are considered past due if full payment is not received on the bill date or within a grace period,

which is generally limited to five days. Below is a summary of the acquired card receivables by class (i.e., past due status) as of the dates presented (in thousands):


	September 30, 2022		June 30, 2022
Current and less than 30 days past due	$	360,638	$	257,618
30 ~ 59 days past due	2,661		1,677
60 ~ 89 days past due	1,125		1,199
90 ~ 119 days past due	813		1,186
Over 119 days past due	45		126
Total	$	365,282	$	261,806

As part of its collection efforts, the Company may modify card receivables terms with spending businesses that are experiencing financial difficulty; such modifications may include principal forgiveness, late fee forgiveness, or an extension of payment terms. Modifications were not material during the three months ended September 30, 2022 and 2021. The amount of outstanding balance of acquired card receivables that is (i) 90 days or more past due that continue to accrue fees and have an allowance for outstanding balance and fees, and (ii) classified as nonperforming was not material as of September 30, 2022 and June 30, 2022.


	Three Months Ended September 30,
	2022		2021
Balance, beginning	$	5,414	$	1,740
Initial allowance for credit losses on purchased card receivables with credit deterioration	10		14
Provision for expected credit losses	6,583		4,035
Charge-off amounts	(5,033)		(2,276)
Recoveries collected	567		204
Balance, end of period	$	7,541	$	3,717

Card receivables acquired from the Issuing Banks and held for investment during the three months ended September 30, 2022 and 2021 were 2.7 billion and 1.2 billion, respectively. The allowance for credit losses related to acquired card receivables increased during the three months ended September 30, 2022 due to portfolio growth.

Gross charge-off amounts for the three months ended September 30, 2022 consisted of $4.6 million originated in the year ended June 30, 2022 and $0.4 million originated in the three months ended September 30, 2022.

The Company previously sold a portion of acquired card receivables to a Purchasing Bank at a discount. Effective August 2022, the Company ceased selling acquired card receivables.

Card receivables held for sale, which are carried at the lower of cost or estimated market value at the individual user account level and included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets, were zero and $8.7 million as of September 30, 2022 and June 30, 2022, respectively.

•the financial asset is isolated from the transferor and its consolidated affiliates as well as its creditors, even in bankruptcy or other receivership;

The card receivables that the Company transferred to the Purchasing Bank during the three months ended September 30, 2022 and 2021 met all of the requirements described above; therefore, the Company accounted for the transfer as a sale of financial assets. Accordingly, the Company measures gain or loss on the sales of financial assets as the net proceeds less the carrying amount of the card receivables sold. The net proceeds represent the fair value of any assets obtained or liabilities incurred as part of the transfer, including, but not limited to, servicing assets, servicing liabilities, or beneficial interest derivatives.

Under the agreement with the Purchasing Bank, the Company has continuing involvement as servicer, and by retaining a beneficial interest derivative in the form of a deferred purchase price. The beneficial interest derivative represents the Company’s right to receive a portion of collections based on the performance of each cohort of card receivables sold to the Purchasing Bank. The fair value of the beneficial interest derivative, which is included in prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets, was immaterial as of September 30, 2022 and June 30, 2022. The servicing fee income was not material during the three months ended September 30, 2022 and 2021.

Below is a summary of the fair value of consideration received from the transfer of card receivables accounted for as a sale during the periods presented (in thousands):


	Three Months Ended September 30,
	2022		2021
Initial fair value of consideration received:
Cash	$	316,477	$	258,501
Beneficial interest derivative	1,682		1,194
Total	$	318,159	$	259,695

Below is a summary of outstanding transferred card receivables by class (i.e., past due status) that have not been charged-off and have not been recorded on the Company's condensed consolidated balance


	September 30, 2022		June 30, 2022
Current and less than 30 days past due	$	340	$	56,162
30 ~ 59 days past due	537		292
60 ~ 89 days past due	634		375
90 ~ 119 days past due	547		422
Over 119 days past due	1		30
Total	$	2,059	$	57,281

The difference between the outstanding balance of transferred card receivables as of September 30, 2022 and June 30, 2022 and the amount derecognized for which the Company has a continuing involvement as service as of September 30, 2022 and June 30, 2022 was not material.