Second Quarter Highlights:
- Net income of $14.7 million, up 21.3% from $12.2 million for
2Q23. Diluted EPS of $0.42, up $0.06 from $0.36 per share for
2Q23
- Core net income(1) of $15.9 million, an increase of 23.1% from
$12.9 million for 2Q23. Core diluted EPS(1) of $0.45, up from $0.38
per share for 2Q23
- Loan production of $422.2 million in UPB, an 11.5% and 63.2%
increase from 1Q24 and 2Q23, respectively
- Nonperforming loans as a percentage of Held for Investment
(HFI) loans was 10.5%, up slightly from 10.1% as of March 31, 2024,
and 10.0% as of June 30, 2023, respectively
- Resolutions of nonperforming loans (NPL) and real estate owned
(REO) totaled $80.7 million in UPB
- Realized gains of $1.0 million or 101.3% of UPB resolved
- Portfolio net interest margin (NIM) of 3.54%, an increase of 19
bps Q/Q and an increase of 30 bps from 3.24% for 2Q23
- Completed the VCC 2024-2 and VCC 2024-3 securitizations
totaling $286.2 million and 204.6 million, respectively, of
securities issued
- Resulted in a $0.06 per share EPS reduction from additional
issuance expenses from a second securitization during the
quarter
- Century Health & Housing Capital, LLC acquired $3.6 million
in Mortgage Servicing Rights (MSRs) related to $227.6 million in
UPB of commercial GNMA mortgages
- Liquidity(2) of $83.8 million and total available warehouse
line capacity of $646.5 million as of June 30, 2024
- Recourse debt to equity ratio of 1.1x
- GAAP Book value per common share of $14.52 as of June 30, 2024,
a 15.5% increase from $12.57 as of June 30, 2023
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company),
a leader in business purpose loans, reported net income of $14.7
million and core net income of $15.9 million for 2Q24, compared to
net income of $12.2 million and core net income of $12.9 million
for 2Q23. Earnings and core earnings per diluted share were $0.42
and $0.45, respectively, for 2Q24, compared to $0.36 and $0.38 for
2Q23.
(1) Core income and Core EPS are non-GAAP
measures that exclude nonrecurring and unusual activities from GAAP
net income.
(2) Liquidity includes unrestricted cash
reserves of $47.4 million and available liquidity in unfinanced
loans of $36.4 million.
“Velocity continued to build on its strong momentum in the
second quarter, delivering continued production volume and earnings
growth,” said Chris Farrar, President and CEO. “During the quarter,
we expanded our loan production team and realized the benefits of
earlier investments through higher production volume and market
share growth, which has been particularly robust in our traditional
commercial product. We also saw continued strong investor demand
for Velocity’s asset-backed securities, evidenced by improving
economics on the $490.8 million of new issuance during the quarter.
Our discipline in maintaining higher loan coupons while increasing
production volume has driven our strong earnings results through
stable net interest margin growth and solid net fair market value
gains. Our team has positioned Velocity for continued success, and
we remain on track to achieve our year-end 2024 portfolio target of
$5 billion in UPB.”
Second Quarter
Operating Results
KEY PERFORMANCE INDICATORS ($ in thousands)
2Q 2024
2Q 2023
$ Variance % Variance Pretax income
$
19,873
$
16,824
$
3,049
18
%
Net income
$
14,711
$
12,183
$
2,527
21
%
Diluted earnings per share
$
0.42
$
0.36
$
0
16
%
Core Pretax income
$
21,507
$
17,811
$
3,696
21
%
Core net income(a)
$
15,918
$
12,928
$
2,990
23
%
Core diluted earnings per share(a)
$
0.45
$
0.38
$
0.07
18
%
Pretax return on equity
16.95
%
16.81
%
n.a.
1
%
Core pretax return on equity(a)
18.34
%
17.79
%
n.a.
3
%
Net interest margin - portfolio
3.54
%
3.24
%
n.a.
9
%
Net interest margin - total company
2.98
%
2.78
%
n.a.
7
%
Average common equity
$
469,071
$
400,441
$
68,630
17
%
(a) Core income, core diluted earnings per share and core
pretax return on equity are non-GAAP measures. Please see the
reconciliation to GAAP net income at the end of this release. n.a.-
not applicable
Discussion of results:
- Net income in 2Q24 was $14.7 million, compared to $12.2 million
for 2Q23
- Driven by higher production volume, net interest income growth,
and continued strong loan resolution activity
- Core net income(1) was $15.9 million, compared to $12.9 million
for 2Q23
- 2Q24 core adjustments included incentive compensation expenses
and costs related to the Company’s employee stock purchase plan
(ESPP)
- Portfolio NIM for 2Q24 was 3.54%, compared to 3.24% for 2Q23, a
9.4% Y/Y increase driven by HFI portfolio growth and average loan
coupons of more than 11.0% on recent loan production
TOTAL LOAN PORTFOLIO ($ of UPB in millions)
2Q 2024
2Q 2023
$ Variance % Variance Held
for Investment Investor 1-4 Rental
$
2,425
$
2,016
$
409
20
%
Mixed Use
510
452
58
13
%
Multi-Family
336
304
33
11
%
Retail
385
322
63
20
%
Warehouse
288
235
53
23
%
All Other
535
391
144
37
%
Total
$
4,480
$
3,720
$
760
20
%
Held for Sale Investor 1-4
Rental
$
-
$
-
$
-
n.m. Multi-Family
-
-
(17
)
n.m. Warehouse
-
-
-
n.m. All Other
-
-
-
n.m.
Total Managed Loan Portfolio UPB
$
4,480
$
3,720
$
760
20
%
Key loan portfolio metrics: Total loan count
11,582
9,541
Weighted average loan to value
67.4
%
68.2
%
Weighted average coupon
9.25
%
8.40
%
Weighted average total portfolio yield
8.98
%
8.24
%
Weighted average portfolio debt cost
6.01
%
5.58
%
n.m. - non meaningful
Discussion of results:
- Velocity’s total loan portfolio was $4.5 billion in UPB as of
June 30, 2024, an increase of 20.4% from $3.7 billion in UPB as of
June 30, 2023
- Primarily driven by 20.3% Y/Y growth in loans collateralized by
Investor 1-4 Rental properties and 36.9% Y/Y growth in loans
collateralized by “Other” commercial properties
- Loan prepayments totaled $165.8 million in UPB, an increase
from $142.0 million in UPB for 1Q24, and $105.8 million in UPB for
2Q23
- The UPB of Fair Value Option (“FVO”) loans was $1.88 billion,
or 42.0% of total HFI loans, as of June 30, 2024, an increase from
$688.1 million in UPB or 18.5%, as of June 30, 2023
- The weighted average portfolio loan-to-value ratio was 67.4% as
of June 30, 2024, down from 68.2% as of June 30, 2023, and
consistent with the five-quarter trailing average of 67.8%
- The weighted average total portfolio yield was 8.98% as of June
30, 2024, an increase of 74 bps from 2Q23, driven by an 85 bps
increase in weighted average loan coupons from June 30, 2023
- Portfolio-related debt cost as of June 30, 2024, was 6.01%, an
increase of 43 bps from June 30, 2023, driven by higher interest
rates on warehouse financing and recent securitizations
LOAN PRODUCTION VOLUMES ($ in millions)
2Q 2024
2Q 2023
$ Variance % Variance Investor 1-4 Rental
$
184
$
163
$
21
13
%
Traditional Commercial
175
73
101
138
%
Short-term loans
63
22
41
187
%
Total loan production
$
422
$
259
$
164
63
%
Acquisitions
$
3
$
-
Discussion of results:
- Loan production for 2Q24 totaled $422.2 million in UPB, a 63.2%
increase from $258.6 million in UPB for 2Q23
- Driven by continued strong demand for Traditional Commercial
financing. On a Y/Y basis, traditional commercial production volume
rose 137.6%.
- The weighted average coupon (WAC) on 2Q24 HFI loan production
was 11.0%, essentially unchanged from 2Q23
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS ($ in thousands)
2Q 2024
2Q 2023
$ Variance % Variance Nonperforming loans(a)
$
470,649
$
371,154
$
99,495
27
%
Average Nonperforming Loans (b)
$
319,342
$
328,897
$
(9,555
)
(3
)%
Average Loans HFI
$
4,345,962
$
3,634,093.1
$
711,869
20
%
Nonperforming loans % total HFI Loans
10.5
%
10.0
%
n.a.
4
%
Total Charge Offs
$
245
$
717
$
(472
)
(66
)%
Charge-offs as a % of Avg. Nonperforming Loans(c)
0.31
%
0.87
%
n.a.
(65
)%
Loan Loss Reserve
$
5,240
$
4,626
$
614
13
%
(a) Total HFI nonperforming/nonaccrual loans include loans
90+ days past due, loans in foreclosure, bankruptcy and on
nonaccrual. (b) Reflects monthly average nonperforming loans held
for investment, excluding FVO loans, during the period. (c)
Reflects the annualized quarter-to-date charge-offs to average
nonperforming loans for the period. n.a.- not applicable
Discussion of results:
- Nonperforming loans (NPL) totaled $470.6 million in UPB as of
June 30, 2024, or 10.5% of loans HFI, compared to $371.2 million
and 10.0% as of June 30, 2023
- Driven by the growth of loans in foreclosure
- Charge-offs for 2Q24 totaled $244.6 thousand, compared to
$716.6 thousand for 2Q23
- The trailing five-quarter charge-off average was $461.0
thousand
- The loan loss reserve totaled $5.2 million as of June 30, 2024,
a 13.3% increase from $4.6 million as of June 30, 2023
- Primarily resulting from an increase in the individually
assessed component of the CECL reserve
- Loans carried at fair value or held for sale are not subject to
a CECL reserve
NET REVENUES ($ in thousands)
2Q 2024
2Q 2023
$ Variance % Variance Interest income
$
97,760
$
74,897
$
22,863
31
%
Interest expense - portfolio related
(59,188
)
(45,451
)
(13,737
)
30
%
Net Interest Income - portfolio related
38,572
29,446
9,126
31
%
Interest expense - corporate debt
(6,155
)
(4,139
)
(2,016
)
49
%
Loan loss provision
(218
)
(298
)
80
(27
)%
Net interest income after provision for loan losses
$
32,199
$
25,009
$
7,190
29
%
Gain on disposition of loans
3,168
1,237
1,931
156
%
Unrealized (loss) gain on fair value loans
17,123
2,413
14,710
610
%
Unrealized gain (loss) on fair value of securitized debt
(4,643
)
5,560
(10,203
)
(184
)%
Unrealized gain/(loss) on mortgage servicing rights
(373
)
302
(675
)
(223
)%
Origination income(a)
5,072
2,735
2,337
85
%
Bank interest income
1,731
1,189
542
46
%
Other operating income (expense)
483
601
(118
)
(20
)%
Total Other operating income (expense)
$
22,561
$
14,037
$
8,524
61
%
Net Revenue
$
54,760
$
38,749
$
16,011
41
%
(a) 2Q23 includes a reclass of production fees to expenses
Discussion of results:
- Net Revenue for 2Q24 was $54.8 million, an increase of 41.3%
compared to $38.7 million for 2Q23
- Driven by increased production volume and disciplined focus on
maintaining spreads with 11.0% rates on loan originations since
2Q23
- Total net interest income for 2Q24, including corporate debt
interest expense and loan loss provision, was $32.2 million, a
28.7% increase from $25.0 million for 2Q23
- Portfolio net Interest income was $38.6 million for 2Q24, an
increase of 31.0% from 2Q23 resulting from portfolio growth and a
30bps increase in NIM
- Total other operating income was $22.6 million for 2Q24, an
increase from $14.0 million for 2Q23
- Net unrealized FVO gains on loans and securitized debt were
$12.4 million, resulting from fair value gains on new 2Q24 loan
production, partially offset by fair value losses on securitized
debt
- Origination income totaled $5.1 million, resulting from fee
income realized from 2Q24 new loan production
- Gain on disposition of loans totaled $3.2 million for 2Q24,
driven by loans transferred to Real Estate Owned (REO)
OPERATING EXPENSES ($ in thousands)
2Q 2024
2Q 2023
$ Variance % Variance Compensation and employee
benefits
$
16,562
$
10,670
$
5,892
55
%
Origination (income)/expense(a)
749
123
626
510
%
Securitization expenses
6,232
2,699
3,533
131
%
Rent and occupancy
617
458
159
35
%
Loan servicing
5,160
4,267
893
21
%
Professional fees
1,718
1,056
662
63
%
Real estate owned, net
1,355
1,018
337
33
%
Other expenses
2,494
1,931
563
29
%
Total operating expenses
$
34,887
$
22,222
$
12,665
57
%
(a) 2Q23 includes a reclass of production fees to expenses
Discussion of results:
- Operating expenses totaled $34.9 million for 2Q24, an increase
of 57.0% from 2Q23, primarily driven by the continued growth of our
origination platform and increased securitization expenses from
issuing two transactions in the quarter
- Compensation expense totaled $16.6 million, compared to $10.7
million for 2Q23
- Primarily driven by higher commissions on increased production
volume and growth of the production team
- Securitization expenses totaled $6.2 million, resulting from
issuance of the VCC 2024-2 and 2024-3 securitizations during the
quarter, compared to costs of $2.7 million for one securitization
during 2Q23.
- Loan servicing expense totaled $5.2 million, a 20.9% increase
from $4.3 million for 2Q23, driven by the growth in our
portfolio
- Professional fees totaled $1.7 million, a 62.7% increase from
$1.1 million for 2Q23, driven by growth in accounting and legal
fees necessary to support the Company’s growth
- REO expenses totaled $1.4 million, a 33.1% increase from $1.0
million for 2Q23, driven by higher asset preservation expenses
SECURITIZATIONS ($ in thousands)
Securities
Balance at Balance at Trusts Issued
6/30/2024 W.A. Rate 6/30/2023 W.A. Rate
2016-1 Trust
319,809
$ 17,704
9.29%
2017-2 Trust
245,601
39,444
4.08%
51,930
3.95%
2018-1 Trust
176,816
29,170
4.09%
36,882
4.07%
2018-2 Trust
307,988
67,437
4.41%
87,984
4.51%
2019-1 Trust
235,580
69,189
4.09%
83,435
4.04%
2019-2 Trust
207,020
54,005
3.40%
76,284
3.45%
2019-3 Trust
154,419
53,431
3.32%
63,278
3.29%
2020-1 Trust
248,700
99,102
2.87%
121,074
2.86%
2020-2 Trust
96,352
40,293
4.67%
53,309
4.61%
2021-1 Trust
251,301
160,668
1.76%
183,089
1.76%
2021-2 Trust
194,918
133,508
2.02%
156,681
2.03%
2021-3 Trust
204,205
146,569
2.47%
167,652
2.46%
2021-4 Trust
319,116
223,950
3.26%
257,369
3.22%
2022-1 Trust
273,594
227,222
3.93%
246,883
3.93%
2022-2 Trust
241,388
200,677
5.06%
226,763
5.10%
2022-MC1 Trust
84,967
20,213
6.87%
39,862
6.90%
2022-3 Trust
296,323
244,398
5.73%
268,008
5.69%
2022-4 Trust
308,357
255,922
6.25%
289,929
6.25%
2022-5 Trust
188,754
147,377
7.05%
177,075
7.07%
2023-1 Trust
198,715
161,344
7.01%
189,763
7.02%
2023-1R Trust
64,833
51,383
7.61%
63,390
7.73%
2023-2 Trust
202,210
162,932
7.25%
199,864
7.17%
2023-RTL1 Trust
81,608
81,608
8.24%
2023-3 Trust
234,741
213,787
7.86%
2023-4 Trust
202,890
208,449
8.35%
2024-1 Trust
209,862
195,460
7.64%
2024-2 Trust
286,235
280,139
7.15%
2024-3 Trust
204,599
203,662
7.24%
$ 6,040,901
$ 3,771,339
5.62%
$ 3,058,208
4.72%
Discussion of results
- The company completed two securitizations during 2Q24 totaling
$490.8 million of securities issued
- The 2024-2 securitization was completed in April and totaled
$286.2 million of securities issued with a weighted average rate of
7.15%
- The 2024-3 securitization was completed in June and totaled
$204.6 million of securities issued with a weighted average rate of
7.24%
- The weighted average rate on Velocity’s outstanding
securitizations was 5.62% as of June 30, 2024, an increase of 90
bps from June 30, 2023
RESOLUTION ACTIVITIES LONG-TERM LOANS RESOLUTION
ACTIVITY SECOND QUARTER 2024 SECOND QUARTER 2023
($ in thousands)
UPB $ Gain / (Loss) $ UPB $
Gain / (Loss) $ Paid in full
$
26,119
$
793
$
13,485
$
965
Paid current
35,292
188
19,771
280
REO sold (a)
7,859
(202
)
4,836
(382
)
Total resolutions
$
69,270
$
779
$
38,092
$
863
Resolutions as a % of nonperforming UPB
101.1
%
102.3
%
SHORT-TERM AND FORBEARANCE
LOANS RESOLUTION ACTIVITY SECOND
QUARTER 2024 SECOND QUARTER 2023 ($ in thousands)
UPB
$ Gain / (Loss) $ UPB $ Gain / (Loss) $
Paid in full
$
4,545
$
93
$
7,004
$
318
Paid current
2,689
1
3,290
89
REO sold
4,176
165
1,672
222
Total resolutions
$
11,410
$
259
$
11,966
$
629
Resolutions as a % of nonperforming UPB
102.3
%
105.3
%
Grand total resolutions
$
80,680
$
1,037
$
50,058
$
1,492
Grand total resolutions as a % of nonperforming UPB
101.3
%
103.0
%
Discussion of results:
- NPL resolution totaled $80.7 million in UPB, realizing 101.3%
of UPB resolved compared to $50.1 million in UPB and realization of
103.0% of UPB resolved for 2Q23
- 2Q24 NPL resolutions represented 18.7% of nonperforming loan
UPB as of March 31, 2024
- The UPB of loan resolutions in 2Q24 was in line with the recent
five-quarter resolution average of $64.4 million in UPB, and the
realization of 102.0% of UPB resolved
Velocity’s executive management team will host a conference call
and webcast on August 1st, 2024, at 2:00 p.m. Pacific Time / 5:00
p.m. Eastern Time to review 2Q24 financial results.
Webcast Information
The conference call will be webcast live in listen-only mode and
can be accessed through the Events and Presentations section of the
Velocity Financial Investor Relations website:
https://www.velfinance.com/events-and-presentations. To listen to
the webcast, please visit Velocity’s website at least 15 minutes
before the call to register, download, and install any needed
software. An audio replay of the call will also be available on
Velocity’s website after the conference call is completed.
Conference Call Information
To participate by phone, please dial in 15 minutes before the
start time to allow for wait times to access the conference call.
The live conference call will be accessible by dialing
1-833-316-0544 in the U.S. and Canada and 1-412-317-5725 for
international callers. Callers should ask to join the Velocity
Financial, Inc. conference call.
A replay of the call will be available through midnight on
August 30, 2024, and can be accessed by dialing 1-877-344-7529 in
the U.S. and 855-669-9658 in Canada or 1-412-317-0088
internationally. The passcode for the replay is #8011693. The
replay will also be available on the Investor Relations section of
the Company's website under "Events and Presentations.”
About Velocity Financial, Inc.
Based in Westlake Village, California, Velocity is a vertically
integrated real estate finance company that primarily originates
and manages business purpose loans secured by 1-4 unit residential
rental and small commercial properties. Velocity originates loans
nationwide across an extensive network of independent mortgage
brokers built and refined over 20 years.
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance
with United States generally accepted accounting principles (GAAP),
the Company uses non-GAAP core net income and core diluted EPS,
which are non-GAAP financial measures.
Non-GAAP core net income and non-GAAP core diluted EPS are
non-GAAP financial measures that represent our net income (loss)
and net income (loss) per diluted share, adjusted to eliminate the
effect of certain costs incurred from activities that are not
normal recurring operating expenses, such as COVID-stressed charges
and recoveries of loan loss provision, nonrecurring debt
amortization, the impact of operational measures taken to address
the COVID-19 pandemic and workforce reduction costs, and costs
associated with acquisitions. To calculate non-GAAP core diluted
EPS, we use the weighted average number of shares of common stock
outstanding that is used to calculate net income per diluted share
under GAAP.
We have included non-GAAP core net income, and non-GAAP core
diluted EPS because they are key measures used by our management to
evaluate our operating performance, generate future operating
plans, and make strategic decisions, including those relating to
operating expenses and the allocation of internal resources.
Accordingly, we believe that non-GAAP core net income and non-GAAP
core diluted EPS provide useful information to investors and others
in understanding and evaluating our operating results in the same
manner as our management and board of directors. In addition, they
provide useful measures for period-to-period comparisons of our
business, as they remove the effect of certain items that we expect
to be nonrecurring.
These non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. These non-GAAP financial measures
are not based on any standardized methodology prescribed by GAAP
and are not necessarily comparable to similarly titled measures
presented by other companies.
For more information on Core Income, please refer to the section
of this press release below titled “Adjusted Financial Metric
Reconciliation to GAAP Net Income” at the end of this press
release.
Forward-Looking Statements
Some of the statements contained in this press release may
constitute forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements relate to
anticipated results, expectations, projections, plans and
strategies, anticipated events or trends, and similar expressions
concerning matters that are not historical facts. In some cases,
you can identify forward-looking statements by the use of
forward-looking terminology such as “may,” “will,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “goal,” ”position,” or “potential” or the negative of
these words and phrases or similar words or phrases that are
predictions of or indicate future events or trends and which do not
relate solely to historical matters. You can also identify
forward-looking statements by discussions of strategy, plans, or
intentions.
The forward-looking statements contained in this press release
reflect our current views about future events and are subject to
numerous known and unknown risks, uncertainties, assumptions, and
changes in circumstances that may cause actual results to differ
significantly from those expressed or contemplated in any
forward-looking statement. While forward-looking statements reflect
our good faith projections, assumptions, and expectations, they are
not guarantees of future results. Furthermore, we disclaim any
obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors,
new information, data or methods, future events, or other changes,
except as required by applicable law. Factors that could cause our
results to differ materially include, but are not limited to, (1)
the continued course and severity of the COVID-19 pandemic and its
direct and indirect impacts, (2) general economic and real estate
market conditions, including the risk of recession (3) regulatory
and/or legislative changes, (4) our customers' continued interest
in loans and doing business with us, (5) market conditions and
investor interest in our future securitizations, and (6) the
continued conflict in Ukraine and Israel and (7) changes in federal
government fiscal and monetary policies.
Additional information relating to these and other factors that
could cause future results to differ materially from those
expressed or contemplated in any forward-looking statements can be
found in the section titled ‘‘Risk Factors” in our Form 10-Q filed
with the SEC on May 14, 2020, as well as other cautionary
statements we make in our current and periodic filings with the
SEC. Such filings are available publicly on our Investor Relations
web page at www.velfinance.com.
Velocity Financial,
Inc.
Consolidated Balance
Sheet
Quarter Ended 6/30/2024 3/31/2024
12/31/2023 9/30/2023 6/30/2023
Unaudited Unaudited Audited Unaudited
Unaudited (In thousands)
Assets Cash and cash
equivalents
$
47,366
$
34,829
$
40,566
$
29,393
$
33,987
Restricted cash
32,293
24,216
21,361
17,703
16,786
Loans held for sale, net
-
-
-
-
-
Loans held for sale, at fair value
-
-
17,590
19,536
-
Loans held for investment, at fair value
1,971,683
1,649,540
1,306,072
951,990
705,330
Loans held for investment
2,619,619
2,727,518
2,828,123
2,945,840
3,057,940
Total loans, net
4,591,302
4,377,058
4,151,785
3,917,366
3,763,270
Accrued interest receivables
31,124
29,374
27,028
24,756
22,602
Receivables due from servicers
82,359
87,523
85,077
70,139
63,896
Other receivables
6,566
2,113
8,763
236
1,306
Real estate owned, net
50,757
46,280
44,268
29,299
20,388
Property and equipment, net
1,912
2,013
2,785
2,861
3,023
Deferred tax asset
1,144
1,580
2,339
705
1,878
Mortgage Servicing Rights, at fair value
12,229
9,022
8,578
9,786
9,445
Derivative assets
-
1,967
-
1,261
-
Goodwill
6,775
6,775
6,775
6,775
6,775
Other assets
9,566
5,468
5,248
7,028
7,789
Total Assets
$
4,873,393
$
4,628,218
$
4,404,573
$
4,117,308
$
3,951,145
Liabilities and members' equity Accounts payable and
accrued expenses
$
138,032
$
123,988
$
121,969
$
97,869
$
95,344
Secured financing, net
283,909
283,813
211,083
210,774
210,464
Securitized debt, net
2,228,941
2,329,906
2,418,811
2,504,334
2,622,547
Securitized debt, at fair value
1,509,952
1,073,843
877,417
669,139
381,799
Warehouse & repurchase facilities
237,437
360,216
334,755
215,176
235,749
Derivative liability
374
-
3,665
0
0
Total Liabilities
4,398,646
4,171,766
3,967,700
3,697,292
3,545,903
Stockholders' Equity Stockholders' equity
471,323
452,941
433,444
416,398
401,707
Noncontrolling interest in subsidiary
3,424
3,511
3,429
3,618
3,535
Total equity
474,747
456,452
436,873
420,016
405,242
Total Liabilities and members' equity
$
4,873,393
$
4,628,218
$
4,404,573
$
4,117,308
$
3,951,145
Book value per share
$
14.52
$
14.01
$
13.49
$
13.00
$
12.57
Shares outstanding
32,701(1)
32,574(2)
32,395(3)
32,314(4)
32,239(5)
(1)
Based on 32,701,185 common shares
outstanding as of June 30, 2024, and excludes unvested shares of
common stock authorized for incentive compensation totaling
397,450.
(2)
Based on 32,574,498 common shares
outstanding as of March 31, 2024, and excludes unvested shares of
common stock authorized for incentive compensation totaling
411,296.
(3)
Based on 32,395,423 common shares
outstanding as of December 31, 2023, and excludes unvested shares
of common stock authorized for incentive compensation totaling
470,413.
(4)
Based on 32,313,744 common shares
outstanding as of September 30, 2023, and excludes unvested shares
of common stock authorized for incentive compensation totaling
589,634.
(5)
Based on 32,238,715 common shares
outstanding as of June 30, 2023, and excludes unvested shares of
common stock authorized for incentive compensation totaling
502,913.
Velocity Financial,
Inc.
Consolidated Statements of
Income (Quarters)
Quarter Ended ($ in thousands)
6/30/2024
3/31/2024 12/31/2023 9/30/2023
6/30/2023 Unaudited Unaudited Unaudited
Unaudited Unaudited Revenues Interest income
$
97,760
$
90,529
$
86,269
$
79,088
$
74,897
Interest expense - portfolio related
59,188
55,675
51,405
47,583
45,451
Net interest income - portfolio related
38,572
34,854
34,864
31,505
29,446
Interest expense - corporate debt
6,155
5,380
4,140
4,138
4,139
Net interest income
32,417
29,474
30,724
27,367
25,307
Provision for loan losses
218
1,002
827
154
298
Net interest income after provision for loan losses
32,199
28,472
29,897
27,213
25,009
Other operating income Gain on disposition of loans
3,168
1,699
1,482
3,606
1,237
Unrealized gain (loss) on fair value loans
17,123
18,925
39,367
(1,284
)
2,413
Unrealized gain (loss) on fair value securitized debt
(4,643
)
(2,318
)
(24,085
)
9,692
5,560
Unrealized gain/(loss) on mortgage servicing rights
(373
)
444
(1,208
)
341
302
Origination income
5,072
4,986
3,981
3,323
2,735
Bank interest income
1,731
1,631
1,716
1,342
1,189
Other income (expense)
483
408
418
340
601
Total other operating income
22,561
25,775
21,670
17,360
14,037
Net revenue
54,760
54,247
51,567
44,573
39,047
Operating expenses Compensation and employee benefits
16,562
15,357
15,143
12,523
10,670
Origination expenses
749
646
173
273
123
Securitizations expenses
6,232
2,874
2,709
4,930
2,699
Rent and occupancy
617
498
551
472
458
Loan servicing
5,160
4,824
4,636
4,901
4,267
Professional fees
1,718
2,115
1,733
854
1,056
Real estate owned, net
1,355
2,455
2,068
1,239
1,018
Other operating expenses
2,494
2,242
2,248
2,142
1,931
Total operating expenses
34,887
31,011
29,260
27,334
22,222
Income before income taxes
19,873
23,236
22,307
17,239
16,824
Income tax expense
5,162
5,903
5,141
5,070
4,602
Net income
14,711
17,333
17,166
12,169
12,222
Net income attributable to noncontrolling interest
(67
)
82
(189
)
83
39
Net income attributable to Velocity Financial, Inc.
14,778
17,251
17,355
12,086
12,183
Less undistributed earnings attributable to participating
securities
182
217
225
183
185
Net earnings attributable to common shareholders
$
14,596
$
17,034
$
17,130
$
11,903
$
11,998
Basic earnings (loss) per share
$
0.45
$
0.52
$
0.53
$
0.37
$
0.37
Diluted earnings (loss) per common share
$
0.42
$
0.49
$
0.50
$
0.35
$
0.36
Basic weighted average common shares outstanding
32,585
32,541
32,326
32,275
32,122
Diluted weighted average common shares outstanding
35,600
35,439
34,991
34,731
34,140
Velocity Financial,
Inc.
Net Interest Margin ‒
Portfolio Related and Total Company
(Unaudited)
Quarters:
Quarter Ended June 30, 2024 Quarter Ended June 30,
2023 Interest Average Interest
Average Average Income / Yield /
Average Income / Yield / ($ in
thousands) Balance Expense Rate(1)
Balance Expense Rate(1) Loan portfolio:
Loans held for sale
$
9,979
$
3,477
Loans held for investment
4,345,962
3,634,093
Total loans
$
4,355,942
$
97,760
8.98
%
$
3,637,570
$
74,897
8.24
%
Debt: Warehouse and repurchase facilities
$
263,029
6,116
9.30
%
$
238,027
5,910
9.93
%
Securitizations
3,678,478
53,072
5.77
%
3,020,624
39,541
5.24
%
Total debt - portfolio related
3,941,506
59,188
6.01
%
3,258,651
45,451
5.58
%
Corporate debt
290,000
6,155
8.49
%
215,000
4,139
7.70
%
Total debt
$
4,231,506
$
65,343
6.18
%
$
3,473,651
$
49,590
5.71
%
Net interest spread - portfolio related (2)
2.97
%
2.66
%
Net interest margin - portfolio related
3.54
%
3.24
%
Net interest spread - total company (3)
2.80
%
2.53
%
Net interest margin - total company
2.98
%
2.78
%
(1) Annualized. (2) Net interest spread — portfolio related
is the difference between the rate earned on our loan portfolio and
the interest rates paid on our portfolio-related debt. (3) Net
interest spread — total company is the difference between the rate
earned on our loan portfolio and the interest rates paid on our
total debt.
Velocity Financial,
Inc.
Adjusted Financial Metric
Reconciliation to GAAP Net Income
(Unaudited)
Quarters:
Core Net Income Quarter Ended ($ in
thousands) 6/30/2024 3/31/2024 12/31/2023
9/30/2023 6/30/2023 Net Income
$
14,778
$
17,251
$
17,355
$
12,086
$
12,183
Tax liability reduction
-
-
(1,866
)
-
-
Equity award & ESPP costs
1,140
998
673
832
745
Core Net Income
$
15,918
$
18,249
$
16,161
$
12,918
$
12,928
Diluted weighted average common shares outstanding
35,600
35,439
34,991
34,731
34,140
Core diluted earnings per share
$
0.45
$
0.51
$
0.46
$
0.37
$
0.38
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801859924/en/
Investors and Media: Chris Oltmann (818) 532-3708
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