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Loans Held for Investment and Allowance for Credit Losses
 6 Months Ended
Dec. 31, 2024
Receivables [Abstract]  
Loans Held for Investment and Allowance for Credit Losses Loans Held for Investment and Allowance for Credit Losses
    Loans held for investment consisted of the following (in thousands):
December 31, 2024June 30, 2024
Unpaid principal balance$6,814,032 $5,697,965 
Accrued interest receivable76,096 62,796 
Premiums on loans held for investment9,472 7,822 
Less: Discount due to loss on loan purchase commitment(74,099)(63,682)
Less: Discount due to loss on directly originated loans(29,326)(34,829)
Less: Fair value adjustment on loans acquired through business combination(8)(16)
Total loans held for investment$6,796,167 $5,670,056 

Loans held for investment includes loans originated through our originating bank partners and directly originated loans. The majority of the loans that are underwritten using our technology platform and originated by our originating bank partners are later purchased by us. We purchased loans from our originating bank partners in the amount of $8.1 billion and $14.5 billion during the three and six months ended December 31, 2024, respectively, and $5.9 billion and $10.5 billion during the three and six months ended December 31, 2023, respectively. We directly originated $1.7 billion and $3.0 billion of loans during the three and six months ended December 31, 2024, respectively, and $1.3 billion and $2.2 billion of loans during the three and six months ended December 31, 2023, respectively.

Our portfolio consists of interest bearing and non-interest bearing consumer loans with original term lengths of up to sixty months originated in markets including the U.S., U.K, and Canada, with the majority of loans originated within the U.S. Given that our loan portfolio focuses on one product segment, unsecured consumer installment loans, we generally evaluate the entire portfolio as a single homogeneous loan portfolio to predict future losses, considering factors such as country of origin, loan product, origination channel, merchant and various borrower characteristics.

We closely monitor credit quality for our loan receivables to manage and evaluate our related exposure to credit risk. Credit risk management begins with initial underwriting, where loan applications are assessed against the credit underwriting policy and procedures for our directly originated loans and originating bank partner loans, and continues through to full repayment of a loan. To assess a consumer who requests a loan, we use, among other indicators, internally developed risk models using detailed information from external sources, such as credit bureaus where available, and internal historical experience, including the consumer’s prior repayment history on our platform as well as other measures. We combine these factors to establish a proprietary score as a credit quality indicator.

Our proprietary score (“ITACs”) is assigned to most loans facilitated through our technology platform, ranging from zero to 100, with 100 representing the highest credit quality and therefore the lowest likelihood of loss. The ITACs model analyzes the characteristics of a consumer's attributes that are shown to be predictive of both willingness and ability to repay including, but not limited to: basic features of a consumer's credit profile, a consumer's prior repayment performance with other creditors, current credit utilization, and legal and policy changes. When a consumer passes both fraud and credit policy checks, the application is assigned an ITACs score. ITACs is also used for portfolio performance monitoring. Our credit risk team closely tracks the distribution of ITACs at the portfolio level, as well as ITACs at the individual loan level to monitor for signs of a changing credit profile within the portfolio. Repayment performance within each ITACs band is also monitored to support both the integrity of the risk scoring models and to measure possible changes in consumer behavior amongst various credit tiers.
The following tables present an analysis of the credit quality, by ITACs score, of the amortized cost basis excluding accrued interest receivable, by fiscal year of origination on loans held for investment and loans held for sale as of December 31, 2024 and June 30, 2024 (in thousands):

December 31, 2024
Amortized Costs Basis by Fiscal Year of Origination
20252024202320222021PriorTotal
96+$3,468,048 $907,243 $85,925 $6,645 $203 $11 $4,468,075 
94 – 961,381,171 366,485 5,615 475 7 5 1,753,758 
90 – 94329,415 59,203 891 289 4 1 389,803 
<9065,999 8,168 11 112 2 1 74,293 
No score (1)
2,114 5,707 22,509 3,675 110 27 34,142 
Total amortized cost basis$5,246,747 $1,346,806 $114,951 $11,196 $326 $45 $6,720,071 

June 30, 2024
Amortized Costs Basis by Fiscal Year of Origination
20242023202220212020PriorTotal
96+$3,438,135 $183,210 $10,026 $186 $10 $5 $3,631,572 
94 – 961,509,125 29,227 463 8 2 4 1,538,829 
90 – 94287,499 3,575 263 3 1 1 291,342 
<9045,009 46 309 2 1 — 45,367 
No score (1)
20,680 66,680 12,391 217 94 124 100,186 
Total amortized cost basis$5,300,448 $282,738 $23,452 $416 $108 $134 $5,607,296 
(1)This balance represents loan receivables without sufficient data available for use by the Affirm scoring methodology including new markets and certain developing products.  

The following table presents net charge-offs by fiscal year of origination as of December 31, 2024 (in thousands):
December 31, 2024
Net Charge-offs by Fiscal Year of Origination
20252024202320222021PriorTotal
Current period charge-offs(14,524)(231,104)(17,470)(951)(171)(140)(264,360)
Current period recoveries199 7,829 6,300 2,289 466 137 17,220 
Current period net charge-offs(14,325)(223,275)(11,170)1,338 295 (3)(247,140)

Loan receivables are defined as past due if either the principal or interest have not been received within four calendars days of when they are due in accordance with the agreed upon contractual terms. The following table presents an aging analysis of the amortized cost basis excluding accrued interest receivable of loans held for investment and loans held for sale by delinquency status (in thousands):
December 31, 2024June 30, 2024
Non-delinquent loans$6,361,896 $5,331,462 
4 – 29 calendar days past due175,272 134,434 
30 – 59 calendar days past due73,513 55,021 
60 – 89 calendar days past due56,471 47,764 
90 – 119 calendar days past due(1)
52,919 38,615 
Total amortized cost basis$6,720,071 $5,607,296 
(1)Includes $52.7 million and $38.6 million of loan receivables as of December 31, 2024 and June 30, 2024, respectively, that are 90 days or more past due, but are not on non-accrual status. 

We maintain an allowance for credit losses at a level sufficient to absorb expected credit losses based on evaluating known and inherent risks in our loan portfolio. The allowance for credit losses reflects our estimate of expected lifetime credit losses, which consider the remaining contractual term, historical credit losses, consumer payment trends, estimated recoveries, and future payment expectations as of each balance sheet date. Adjustments to the allowance for changes in our estimate of lifetime expected credit losses are recognized in earnings through the provision for credit losses presented on our interim condensed consolidated statements of operations and comprehensive income (loss). When available information confirms that specific loans or portions thereof are uncollectible, identified amounts are charged off against the allowance for credit losses. Loans are charged off in accordance with our charge-off policy, as the contractual principal becomes 120 days past due. Subsequent recoveries of the unpaid principal balance, if any, are credited to the allowance for credit losses.

The following table details activity in the allowance for credit losses, including charge-offs, recoveries and provision for loan losses (in thousands):
Three Months Ended December 31,Six Months Ended December 31,
2024202320242023
Balance at beginning of period$350,606 $232,068 $309,097 $204,531 
Provision for loan losses147,069 116,160 301,874 208,988 
Charge-offs(142,912)(91,633)(264,360)(162,476)
Recoveries of charged-off receivables9,068 5,609 17,220 11,161 
Balance at end of period$363,831 $262,204 $363,831 $262,204 

Loan Modifications for Borrowers Experiencing Financial Difficulty

We have a loan modification program for borrowers experiencing financial difficulty if certain eligibility criteria are met. A loan is evaluated for modification program eligibility when a borrower self-reports financial hardship, either when a borrower contacts us directly or upon making contact with the borrower to determine eligibility when a loan payment is past due. The objectives of the loan modification program are to offer borrowers assistance during times of financial stress, increase collections, and minimize losses.

We have two primary loan modification strategies: payment deferrals and loan re-amortization. A payment deferral provides the borrower relief by extending the due date for the next payment due. While a borrower may obtain more than one deferral, the total deferral period may not exceed three months. A loan re-amortization provides the borrower relief by lowering monthly payments through extending the term length of the loan; however, the total remaining term may not exceed twenty-four months. In addition, the total interest due from the consumer will not exceed the initial total interest due prior to modification, and a loan may not be re-amortized more than once.
The following tables present the amortized cost basis of loans excluding accrued interest receivable that were modified for borrowers experiencing financial difficulty during the three and six months ended December 31, 2024 and 2023, by type of modification (in thousands):

Three Months Ended December 31,
2024
2023(1)
Payment deferral$10,189 $20,899 
Loan re-amortization170 663 
Total$10,359 $21,561 
% of total loan receivables outstanding0.15 %0.42 %

Six Months Ended December 31,
2024
2023(1)
Payment deferral$16,096 $28,960 
Loan re-amortization274 1,132 
Total$16,370 $30,092 
% of total loan receivables outstanding0.24 %0.58 %
(1)Amounts previously disclosed excluded modifications made to borrowers where the loan was less than 30 days delinquent at the time of modification.

With respect to borrowers who received payment deferrals during the three and six months ended December 31, 2024 and 2023, the length of each deferral period was one month.

With respect to borrowers who received a loan re-amortization during the three and six months ended December 31, 2024 and 2023, the payment amount was reduced by half and the term of the loan was extended between one month and twelve months.

During the modification process, the loans are made current, and payment schedules for these loans are updated according to the modified terms. We closely monitor the performance of loans that are modified for borrowers experiencing financial difficulty to understand the effectiveness of our modification efforts. We hold an allowance for credit losses for modified loans classified as held for investment. Our allowance estimate considers whether a loan has been modified, the delinquency status of the loan on the date of modification, and the increased likelihood that such loan may become delinquent or charge-off in the future.

The following tables present the delinquency status as of December 31, 2024 and 2023, by amortized cost basis excluding accrued interest receivable, of loan receivables that have been modified within the last 12 months where the borrower was experiencing financial difficulty at the time of modification (in thousands):

December 31, 2024
Payment DeferralLoan Re-amortizationTotal
Non-delinquent loans$11,021 $217 $11,238 
4 – 29 calendar days past due3,085 67 3,152 
30 – 59 calendar days past due1,878 35 1,913 
60 – 89 calendar days past due1,632 32 1,664 
90 – 119 calendar days past due1,789 31 1,820 
Total amortized cost basis$19,405 $382 $19,787 
December 31, 2023 (1)
Payment DeferralLoan Re-amortizationTotal
Non-delinquent loans$17,879 $506 $18,385 
4 – 29 calendar days past due5,549 249 5,798 
30 – 59 calendar days past due2,775 158 2,933 
60 – 89 calendar days past due1,972 125 2,097 
90 – 119 calendar days past due1,639 112 1,751 
Total amortized cost basis$29,814 $1,150 $30,964 
(1)Amounts previously disclosed excluded modifications made to borrowers where the loan was less than 30 days delinquent at the time of modification
With respect to modifications during the 12 months preceding December 31, 2024 and 2023, respectively, where the borrower was experiencing financial difficulty at the time of modification, the amortized cost basis of loans which have been charged off was $17.1 million and $1.8 million, respectively.