RICHMOND, Va. -

With only about a month of data and originations in the portfolio, CarMax leaders are still waiting for more seasoning and growth to occur before making a significant evaluation of their new subprime financing initiative they launched at the beginning of the year.

According to its report when CarMax closed the fourth quarter of its fiscal year on Feb. 28, the company originated $9.1 million worth of contracts through CarMax Auto Finance that typically would be financed by its third-party subprime providers. CarMax is looking to originate approximately $70 million of loans during the testing phase.

CarMax indicated third-party subprime financing providers accounted for about 17 percent of the company’s sales in the Q4.

“That’s flat year-over-year which represent some moderation versus the first three quarters where we saw an increase to 5 points in Q1 and 3 points in each of Q2 and Q3,” CarMax senior vice president and chief financial officer Tom Reedy said in a conference call with investment analysts.

“As we said in the press release, we launched our test in January to learn more about originating and servicing customers who would typically be funded by our subprime providers. During the quarter, we originated $9 million. It’s very early in this process, and we will share information and learnings once it is appropriate,” Reedy continued in the call transcript posted by SeekingAlpha.com.

The subprime initiative helped CarMax Auto Finance’s four-quarter income climb 6 percent year-over-year to $80.8 million. The company said the gain also was driven by an increase in auto loan receivables, largely offset by a lower total interest margin.

CAF’s average managed receivables grew 23 percent to $7.04 billion, as the finance company’s loan originations have grown in recent years.

Officials added the total interest margin, which reflects the spread between interest and fees charged to consumers and the company’s funding costs, declined to 6.6 percent of average managed receivables in the current quarter from 7.2 percent in last year’s fourth quarter.

Wall Street observers still pushed CarMax management to determine whether its new subprime program started in response to a pullback by third-party providers, a sentiment chief executive officer Tom Folliard hinted at after the close of the company’s fiscal third quarter.

“We can’t control what our subprime providers do or any of our lenders for that matter since they have all their own models,” Folliard said. “They see these loan applications after they’ve been declined by everybody else. They’re terrific partners they’ve been a great add to our business and they allow us to offer credit terms to a full suite of credit profile that enter our store each and every day.

“How they’ll move going forward, it’s very difficult to say but all we were talking about at the end of the third quarter was we didn’t expect to see continued expansion as it relates to the percent of sales,” he went on to say.