Company: AFRM
Filing Date: 2025-02-06
Form Type: 10-Q
Source: 0001820953-25-000012
Chunk: 146

Company: Affirm Holdings, Inc.
Filing Date: 2025-02-06
Form: 10-Q
Item: Part I, Item 2
Chunk 146
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 or below market interest rates that we are required to purchase. In these instances, we may be required to purchase the loan for a price in excess of the fair market value of such loans, which results in a loss. These losses are recognized as loss on loan purchase commitment in our interim condensed consolidated statements of operations and comprehensive income (loss). These costs are incurred on a per loan basis.

Loss on loan purchase commitment increased by $16.6 million, or 31%, and $36.0 million, or 41%, for the three and six months ended December 31, 2024, respectively, compared to the same periods in 2023, primarily due to an increase in total volume of loans purchased. During the three and six months ended December 31, 2024, we purchased $8.1 billion and $14.5 billion, respectively, of loans from our originating bank partners, compared to $5.9 billion and $10.5 billion, respectively, in the same period in 2023, representing an increase of 36% and 38%, respectively.

Provision for credit losses

Provision for credit losses generally represents the amount of expense required to maintain the allowance for credit losses on our interim condensed 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 $32.1 million, or 27%, and $92.2 million, or 42%, for the three and six months ended December 31, 2024, respectively, compared to the same periods in 2023, primarily driven by growth in the volume of loans held for investment. Loans held for investment as of December 31, 2024 was $6.8 billion, an increase of $1.6 billion, or 30%, as compared to the same periods in 2023. The allowance for credit losses as a percentage of loans held for investment increased from 5.0% as of December 31, 2023 to 5.4% as of