Company: AFRM
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0001820953-25-000012
Chunk: 102

Company: Affirm Holdings, Inc.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 1
Chunk 102
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. The ultimate collectability of a substantial portion of the loan portfolio is susceptible to changes in economic and market conditions. To manage this risk, we utilize our proprietary underwriting models to make lending decisions, score, and price loans in a manner that we believe is reflective of the credit risk. Other credit levers, such as user limits and/or down payment requirements, are used to determine the likelihood of a consumer being able to pay.

To monitor portfolio performance, we utilize a wide range of internal and external metrics to review user and loan populations. Each week, management reviews performance for each consumer segment, typically split by ITACs model score, financial product originated, age of loan, and delinquency status. Internal performance trendlines are measured against external factors such as unemployment, CPI, and consumer sentiment to determine what changes, if any, in risk strategy is warranted.  

As of December 31, 2024 and June 30, 2024, we were exposed to credit risk on $6.8 billion and $5.7 billion, respectively, of loans held on our interim condensed consolidated balance sheet. Loan receivables are diversified geographically. As of both December 31, 2024 and June 30, 2024, approximately 11% of loan receivables related to customers residing in the state of California, and approximately 10% of loan receivables related to customers residing in the state of Texas as of December 31, 2024 and did not exceed 10% as of June 30, 2024. No other states or provinces exceeded 10%. In addition, we have credit risk exposure in relation to certain off-balance sheet loans sold to third parties where we have entered into risk sharing arrangements and through our retained interests in unconsolidated securitization trusts. As of December 31, 2024 and June 30, 2024, we have sold $6.8 billion and $4.2 billion, respectively, unpaid principal balance of loans which are subject to risk sharing arrangements, of which our maximum exposure to losses was $85.1 million and $81.2 million, respectively. This amount includes our maximum potential loss with respect to risk sharing liabilities of $40.1 million and the fair value of risk sharing assets of $45.0 million, as of December 31, 2024. The fair value of notes receivable and residual trust certificate retained interests in unconsolidated securitization trusts was $69