Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 112

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 8
Chunk 112
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 loss data on the receivables to-date, along with forward loss curves, in estimating future performance.  Once the receivables have 18 months of performance history, the net loss estimate reflects actual loss experience of those receivables to-date, along with forward loss curves, to predict future performance.  The forward loss curves are constructed using historical performance data and show the average timing of losses over the course of a receivable’s life.  The net loss estimate is calculated by applying the loss rates developed using the methods described above to the amortized cost basis of the managed receivables at inception of the loan.The output of the method is adjusted to take into account reasonable and supportable forecasts about the future.  Specifically, the change in U.S. unemployment rates and the National Automobile Dealers Association used vehicle price index are used to predict changes in gross loss and recovery rates, respectively.  An economic adjustment factor, based upon a single macroeconomic scenario, is developed to capture the relationship between changes in these forecasts and changes in gross loss and recovery rates.  This factor is applied to the output of the method for the reasonable and supportable forecast period of two years.  After the end of this two-year period, we revert to historical experience on a straight-line basis over a period of 12 months.  We periodically consider whether the use of alternative metrics would result in improved model performance and revise the models when appropriate.  We also consider whether qualitative adjustments are necessary for factors that are not reflected in the quantitative methods but impact the measurement of estimated credit losses.  Such adjustments include the uncertainty of the impacts of recent economic trends on customer behavior.  The change in the allowance for loan losses is recognized through an adjustment to the provision for loan losses.Allowance for Loan Losses As of February 28, 2025(In millions)Tier 1Tier 2 & Tier 3Total%  (1)Balance as of beginning of year$389.7 $93.1 $482.8 2.78 Charge-offs(494.7)(94.5)(589.2) Recoveries (2)201.5 28.9 230.4  Provision for loan losses281.6 53.1 334.7  Balance as of end of year$378.1 $80.6 $458.7 2.61  

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 As of February 29, 2024(In millions)Tier 1Tier