Company: AFRM
Filing Date: 2025-05-09
Form Type: 10-Q
Source: 0001820953-25-000052
Chunk: 141

Company: Affirm Holdings, Inc.
Filing Date: 2025-05-09
Form: 10-Q
Item: Part I, Item 2
Chunk 141
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 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 $24.8 million, or 20%, and $117.0 million, or 34%, for the three and nine months ended March 31, 2025, respectively, compared to the same periods in 2024, primarily driven by growth in the volume of loans held for investment. For the three and nine months ended March 31, 2025 and March 31, 2024, the average balance of loans held for investment was $6.7 billion, an increase of $1.4 billion, or 25%, and $6.4 billion, an increase of  $1.4 billion, or 29%, respectively, as compared to the same periods in 2024. The allowance for credit losses as a percentage of loans held for investment was 5.7% as of March 31, 2025, 5.5% as of June 30, 2024, and 5.3% as of March 31, 2024. The increase in the allowance rate from March 31, 2024 is primarily driven by adjustments in our credit criteria in light of increasing interest income generated by our loans and changes in the loan mix.

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 $17.2 million, or 19%, and $70.5 million, or 28%, for the three and nine months ended March 31, 2025, respectively, compared to the same periods in 2024. The increase is primarily due to an increase of funding debt and notes issued by securitization trusts during the three and nine months ended March