Company: AFRM
Filing Date: 2025-11-06
Form Type: 10-Q
Source: 0001628280-25-050295
Chunk: 76

Company: Affirm Holdings, Inc.
Filing Date: 2025-11-06
Form: 10-Q
Item: Part I, Item 1
Chunk 76
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 balance of loans held for investment during the three months ended  September 30, 2025 compared to the same period in 2024, and a year over year increase in the allowance rate from to 5.6% as of September 30, 2024 to 5.9% as of September 30, 2025. The allowance rate increased as a result of changes in loan mix, including holding a higher percentage of seasoned and longer term loans on our balance sheet as of September 30, 2025. The impact of the increase in average loan balance and a higher allowance rate was offset by an increase in recoveries during the three months ended September 30, 2025 relative to the same period during the prior year.

Funding costs

Funding costs consist of interest expense and the amortization of fees for certain borrowings collateralized by our loans including warehouse credit facilities and consolidated securitizations, sale and repurchase agreements collateralized by our retained securitization interests, and other costs incurred in connection with funding the purchases and originations of loans. Funding costs for a given period are driven by the average outstanding balance of funding debt and notes issued by securitization trusts as well as our contractual interest rate and distribution of loans across funding facilities, net of the impact of any designated cash flow hedges. 

Funding costs increased by $5.9 million, or 6%, for the three months ended September 30, 2025, compared to the same period in 2024. The increase is primarily due to an increase of funding debt and notes issued by securitization trusts during the three months ended September 30, 2025. The average total of funding debt from warehouses and securitizations for the three months ended September 30, 2025 was $6.5 billion, compared to $5.4 billion during the same period in 2024, an increase of $1.1 billion, or 21%. This was partially offset by favorable repricing within our securitizations. The increase was also attributable to a larger volume of on-balance sheet loans being retained during the period. The average on-balance sheet loan balance was $7.1 billion for the three months ended September 30, 2025, an increase of 19% compared to $6.0 billion during the same period in 2024.  

Processing and servicing

Processing and servicing expense consists primarily of payment processing fees, third-party customer support