Company: AFRM
Filing Date: 2025-08-28
Form Type: 10-K
Source: 0001820953-25-000080
Chunk: 130

Company: Affirm Holdings, Inc.
Filing Date: 2025-08-28
Form: 10-K
Item: Item 7
Chunk 130
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 $30.0 billion of loans from our originating bank partners, compared to $21.5 billion in the same period in 2024, representing an increase of 40%. Additionally, 0% APR installment loans represented $4.4 billion of the total loans purchased during the year ended June 30, 2025, an increase of 65% compared to the same period in 2024.

Provision for Credit Losses

Provision for credit losses generally represents the amount of expense required to maintain the allowance for credit losses within our consolidated balance sheet, which represents management’s estimate of future losses. In the event that our loans outperform expectation and/or we reduce our expectation of credit losses in future periods, we may release reserves and thereby reduce the allowance for credit losses, yielding income in the provision for credit losses. The provision is determined based on our estimate of expected future losses on loans originated during the period and held for investment on our balance sheet, changes in our estimate of future losses on loans outstanding as of the end of the period and the net charge-offs incurred in the period.

Provision for credit losses increased by $156.1 million, or 34%, for the year ended June 30, 2025 compared to the same period in 2024, primarily driven by growth in the volume of loans held for investment. For the year ended June 30, 2025, the average balance of loans held for investment was $6.5 billion, an increase of $1.4 billion, or 28%, as compared to the same period in 2024. The allowance for credit losses as a percentage of loans held for investment increased from 5.5% as of June 30, 2024 to 5.6% as of June 30, 2025. The increase in the allowance rate year over year is primarily driven by an increase in loans held on our balance sheet as well as a change in the loan mix when compared to June 30, 2024, in line with expected credit performance.

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