Company: KMX
Filing Date: 2025-04-11
Form Type: 10-K
Source: 0001170010-25-000024
Chunk: 73

Company: CARMAX INC
Filing Date: 2025-04-11
Form: 10-K
Item: Item 7
Chunk 73
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 for distinct higher prime and non-prime issuances, with higher prime generally representing FICO scores greater than 650 and non-prime generally representing FICO scores below 650.  We believe this strategy will enable CAF to efficiently fund incremental originations and support future CAF growth across the credit spectrum by creating additional funding capacity, driving additional finance income for the business over time.  In June 2024, CAF closed on its first non-prime securitization deal.  CAF closed on three higher prime securitization deals under this expanded funding strategy during the remainder of fiscal 2025.

We are continuously exploring opportunities to help our customers through adjustments in our account servicing strategies.  One such example is with payment extensions, which have historically impacted less than 1% of our portfolio on an account basis in any given month and been below industry levels.  We believe this tool has proven successful in helping customers navigate temporary challenges.  During the third quarter of fiscal 2025, we began testing an enhancement to our policy that further empowers delinquent customers to take advantage of a payment extension and more aligns with industry levels.  This testing has brought payment extensions to slightly above 1% of our portfolio on an account basis in a given month.  While early performance results are encouraging, we recognize that some customers will eventually return to delinquency and result in a charge-off.  We believe our estimate of the allowance for loan losses appropriately incorporates the impact of our enhanced extension policy.  We will continue to evaluate the performance results and make further adjustments to our account servicing strategies as needed.

CAF income does not include any allocation of indirect costs.  Although CAF benefits from certain indirect overhead expenditures, we have not allocated indirect costs to CAF to avoid making subjective allocation decisions.  Examples of indirect costs not allocated to CAF include retail store expenses and corporate expenses.

See Note 3 for additional information on CAF income and Note 4 for information on auto loans receivable, including credit quality.

SELECTED CAF FINANCIAL INFORMATION

 Years Ended February 28 or 29(In millions)2025% (1)2024% (1)2023% (1)Interest margin:Interest and fee income$1,853.9 10.5 $1,677.4 9.7 $1,441.5 8.8 Interest expense(763.2)(4.3)(638.7)(3.7)(