First Quarter Highlights:
- Net income of $10.6 million and diluted earnings per share
(EPS) of $0.31, compared to $3.1 million and $0.09 per share,
respectively, for 1Q22
- Core net income(1) of $11.4 million and core diluted EPS(1) of
$0.33, compared to $12.4 million and $0.36 per share, respectively,
for 1Q22
- Loan production volume of $217.0 million in unpaid principal
balance (UPB), a decrease of 62.7% from 1Q22
- Primarily due to management’s strategic decision to reduce
volume
- Total loan portfolio of $3.6 billion as of March 31, 2023, an
increase of 25.0% from March 31, 2022
- Nonperforming loans as a percentage of Held for Investment
(HFI) loans was 8.7% as of March 31, 2023, a decrease from 9.8% as
of March 31, 2022
- Resolutions of nonperforming loans (NPL) and real estate owned
(REO) totaled $38.7 million in UPB, realizing gains of $1.3 million
or 103.5% of UPB resolved
- Portfolio net interest margin (NIM) of 3.23%, compared to 4.25%
for 1Q22
- Completed the VCC 2023-1 securitization totaling $198.7 million
of securities issued
- Liquidity(2) of $45.3 million as of March 31, 2023
- Book value per common share of $12.18 as of March 31, 2023, an
increase from $10.90 as of March 31, 2022
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company),
a leader in business purpose loans, reported net income of $10.6
million and core net income of $11.4 million for 1Q23, compared to
net income of $3.1 million and core net income of $12.4 million in
1Q22. Earnings and core earnings per diluted share were $0.31 and
$0.33, respectively, for 1Q23, compared to $0.09 and $0.36, for
1Q22.
“Velocity’s first quarter results demonstrate the resiliency of
our business model and our ability to deliver strong results in
dynamic market conditions,” said Chris Farrar, President and CEO.
“Our first quarter results included strong portfolio income and
improved fundamentals, setting the stage for continued solid
performance in 2023. Net interest margin increased by 39 basis
points on a sequential-quarter basis, and gains from nonperforming
loan resolutions returned to more normalized levels, resulting in
solid net income growth. We continued to enjoy support from the
capital markets with the April issuance of our VCC 2023-1R
securitization collateralized by retained tranches of previous VCC
securitizations. This transaction provides a new source of
non-mark-to-market liquidity for the company at cost-effective
levels and enhances our ability to capitalize on opportunities for
growth. We expect to increase production from first quarter levels
for the remainder of 2023 and are optimistic regarding our ability
to deliver strong earnings growth in the future.”
(1) Core income and Core EPS are a non-GAAP measures that
exclude nonrecurring and unusual activities from GAAP net
income.
(2) Liquidity includes unrestricted cash reserves of $39.4
million and available liquidity in unfinanced loans of $5.9
million.
First Quarter
Operating Results
KEY PERFORMANCE INDICATORS ($ in thousands)
1Q 2023
1Q 2022
$ Variance
% Variance
Pretax income
$
14,757
$
4,021
$
10,736
267.0
%
Net income
$
10,649
$
3,121
$
7,528
241.2
%
Diluted earnings per share
$
0.31
$
0.09
$
0.22
242.7
%
Core net income(a)
$
11,376
$
12,407
$
(1,031
)
(8.3
)%
Core diluted earnings per share(a)
$
0.33
$
0.36
$
(0.03
)
(7.9
)%
Pretax return on equity
15.27
%
4.55
%
n.a.
235.6
%
Core pretax return on equity(a)
16.20
%
19.02
%
n.a.
(14.8
)%
Net interest margin - portfolio
3.23
%
4.25
%
n.a.
(23.9
)%
Net interest margin - total company
2.76
%
1.69
%
n.a.
63.3
%
Average common equity
$
386,935
$
353,635
$
33,300
9.4
%
(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.
Discussion of results:
- Net income in 1Q23 was $10.6 million, compared to $3.1 million
for 1Q22
- Driven by higher net interest income resulting from increased
loan yields and portfolio growth
- Net income in 1Q22 includes $12.8 million of deal cost
write-off related to the refinancing of the Company’s corporate
debt
- Other operating income in 1Q23 was $12.5 million, compared to
$5.6 million for 1Q22
- Core net income(1) was $11.4 million, compared to $12.4 million
for 1Q22
- 1Q22 core net income reflects after-tax adjustments of $9.3
million from the write-off of costs related to the refinancing of
the Company’s corporate debt in 1Q22
- Portfolio NIM in 1Q23 was 3.23%, compared to 4.25% for 1Q22,
resulting from increased interest expense, partially offset by
increased portfolio yields due to higher loan coupons on recent
loan production
- The GAAP pretax return on equity was 15.26% in 1Q23
TOTAL LOAN PORTFOLIO ($ of UPB in millions)
1Q 2023
1Q 2022
$ Variance
% Variance
Held for Investment Investor
1-4 Rental
$
1,905
$
1,319
$
586
44.4
%
Mixed Use
450
380
70
18.4
%
Multi-Family
304
279
25
9.0
%
Retail
308
278
30
10.8
%
Warehouse
221
201
20
10.1
%
All Other
391
343
48
13.9
%
Total
$
3,579
$
2,800
779
27.8
%
Held for Sale Multi-Family
$
17
$
77
$
(59
)
(77.4
)%
Total Managed Loan Portfolio UPB
$
3,596
$
2,877
$
719
25.0
%
Key loan portfolio metrics: Total loan count
9,147
7,365
Weighted average loan to value
68.1
%
67.9
%
Weighted average coupon
8.15
%
7.50
%
Weighted average total portfolio yield
8.00
%
7.76
%
Weighted average portfolio debt cost
5.33
%
4.00
%
Discussion of results:
- Velocity’s total loan portfolio was $3.6 billion in UPB as of
March 31, 2023, an increase of 25.0% from $2.9 billion in UPB as of
March 31, 2022
- Primarily driven by growth in loans collateralized by Investor
1-4 Rental and Multifamily Properties
- Loan prepayments totaled $86.9 million, a 3.1% Q/Q increase,
and a 37.3% decrease Y/Y
- The UPB of FVO loans was $436.6 million in UPB, or 12.2% of
total HFI loans, as of March 31, 2023, an increase from $1.3
million in UPB, or 0.05% as of March 31, 2022
- The company elected fair value accounting treatment for new HFI
loan originations effective October 1, 2022
- The weighted average portfolio loan-to-value ratio was 68.1% as
of March 31, 2023, consistent with the 67.9% as of March 31, 2022,
and the five-quarter trailing average of 68.2%
- The weighted average total portfolio yield was 8.00% in 1Q23,
an increase of 24 bps from 1Q22, driven by higher loan coupons
- Portfolio-related debt cost in 1Q23 was 5.33%, an increase of
133 bps from 1Q22 driven by higher interest rates
LOAN PRODUCTION VOLUMES ($ in millions)
1Q 2023
1Q 2022
$ Variance
% Variance
Investor 1-4 Rental
$
116
$
293
$
(177
)
(60.4
)%
Traditional Commercial
80
272
(192
)
(70.6
)%
Short-term loans
21
16
5
28.1
%
Total loan production
$
217
$
581
$
(364
)
(62.7
)%
Acquisitions
$
-
$
4
Discussion of results:
- Loan production in 1Q23 totaled $217.0 million in UPB, a 62.7%
decrease from $581.4 million in UPB in 1Q22
- Driven by management’s strategic decision to reduce volume
- The weighted average coupon (WAC) on 1Q23 HFI loan production
was 11.1%, an increase of 473 bps from 1Q22
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS ($ in thousands)
1Q 2023
1Q 2022
$ Varience
$ Varience
Nonperforming loans(a)
$
309,937
$
275,487
$
34,450
12.5
%
Average Nonperforming Loans
$
298,703
$
278,349
$
20,354
7.3
%
Nonperforming loans % total HFI Loans
8.7
%
9.8
%
n.a.
(12.0
)%
Total Charge Offs
$
484
$
328
$
156
47.5
%
Charge-offs as a % of Avg. Nonperforming Loans(b)
0.65
%
0.47
%
n.a.
n.m Loan Loss Reserve
$
5,045
$
4,664
$
381
8.2
%
(a) Nonperforming/Nonaccrual loans include loans 90+ days
past due, loans in foreclosure, bankruptcy and on nonaccrual. (b)
Reflects the annualized quarter-to-date charge-offs to average
nonperforming loans for the period. n.m. - non meaningful
Discussion of results:
- Nonperforming loans (NPL) totaled $309.9 million in UPB as of
March 31, 2023, or 8.7% of loans HFI, compared to $278.3 million
and 9.8%, respectively, as of March 31, 2022
- Charge-offs in 1Q23 totaled $484.2 thousand, compared to $328.1
thousand in 1Q22
- The trailing five-quarter charge-off average was $200.8
thousand
- The loan loss reserve totaled $5.0 million as of March 31,
2023, an 8.2% increase from $4.7 million as of March 31, 2022
- The Q/Q increase resulted from modest growth in the reserve’s
macroeconomic component, partially offset by run-off of the
amortized cost HFI loan portfolio
- Loans carried at fair value are not subject to a CECL
reserve
NET REVENUES ($ in thousands)
1Q 2023
1Q 2022
$ Variance
% Variance
Interest income
$
70,521
$
52,049
$
18,472
35.5
%
Interest expense - portfolio related
(42,029
)
(23,556
)
(18,473
)
78.4
%
Net Interest Income - portfolio related
28,492
28,493
(1
)
(0.0
)%
Interest expense - corporate debt
(4,139
)
(17,140
)
13,001
(75.9
)%
Net Interest Income
$
24,353
$
11,353
$
13,000
114.5
%
Loan loss provision
(636
)
(730
)
94
(12.9
)%
Gain on disposition of loans
1,913
4,540
(2,627
)
(57.9
)%
Unrealized gain on fair value loans
7,354
11
7,343
n.m Unrealized loss on fair securitizations
(170
)
-
(170
)
n.m Other operating income (expense)
3,460
1,097
2,363
215.4
%
Net Revenue
$
36,275
$
16,271
$
20,004
122.9
%
n.m. - non meaningful
Discussion of results:
- Net Revenue in 1Q23 was $36.3 million, compared to $16.3
million for 1Q22
- Total net interest income, including corporate debt interest
expense, increased by $13.0 million from 1Q22
- Net Interest income was $28.5 million in 1Q23, essentially
unchanged from 1Q22
- 1Q22 corporate debt interest expense includes $12.8 million of
deal cost write-off related to the corporate debt refinancing
- Total other operating income, includes gains on disposition of
loans, unrealized gain/(loss) on fair value loans, and other
operating income, and totaled $12.6 million in 1Q23 compared to
$5.6 million in 1Q22
- Gain on disposition of loans includes gains from loan sales and
transfer of loans. In 1Q23, gains on transfer to REO totaled $1.2
million, and loan sales realized gains of $679.7 thousand on $20.8
million in UPB sold
- Other operating income in 1Q23 totaled $3.3 million, compared
to $1.1 million for 1Q22, driven by a $2.1 million increase in
origination fees and $0.95 million increase in bank deposit
earnings. Origination fees were deferred prior to our election of
fair value accounting treatment for new HFI loan originations,
effective October 1, 2022.
OPERATING EXPENSES ($ in thousands)
1Q 2023
1Q 2022
$ Variance % Variance Compensation and employee
benefits
$
10,008
$
5,323
$
4,685
88.0
%
Origination (income)/expense
(334
)
310
(644
)
n.m Securitization issuance expense
2,584
-
2,584
n.m Rent and occupancy
446
442
4
1.0
%
Loan servicing
3,828
2,450
1,378
56.2
%
Professional fees
955
1,362
(407
)
(29.8
)%
Real estate owned, net
1,829
(175
)
2,004
n.m Other expenses
2,202
2,227
(25
)
(1.1
)%
Total operating expenses
$
21,518
$
12,250
$
9,268
75.7
%
n.m. - non meaningful
Discussion of results:
- Operating expenses totaled $21.5 million in 1Q23, an increase
of 75.7% from 1Q22. The variance to prior year results is mostly
attributable to our FVO accounting election
- Compensation expense totaled $10.0 million, compared to $5.3
million for 1Q22. In 1Q23, compensation expense related to loan
originations was expensed as incurred under fair value accounting
rather than deferred over the life of the loan under amortized cost
accounting in 1Q22.
- Origination (income)/expenses improved by $644 thousand
compared to the prior year resulting from the election of fair
value accounting
- Securitization issuance costs in 1Q23 totaled $2.6 million.
Securitization issuance costs are now expensed under fair value
accounting and were previously deferred
- Loan servicing expense growth was driven by the increase in
securitizations outstanding to $2.9 billion as of March 31, 2023,
from $2.1 billion as of March 31, 2022
SECURITIZATIONS ($ in thousands)
Securities
Balance at Balance at Trusts Issued
3/31/2023 W.A. Rate 3/31/2022 W.A. Rate
2015-1 Trust
285,457
-
$
14,407
7.21
%
2016-1 Trust
319,809
19,896
8.85
%
32,518
8.10
%
2017-2 Trust
245,601
55,981
3.95
%
75,303
3.36
%
2018-1 Trust
176,816
41,239
4.01
%
57,284
4.04
%
2018-2 Trust
307,988
91,189
4.50
%
123,854
4.31
%
2019-1 Trust
235,580
87,832
4.08
%
115,299
3.95
%
2019-2 Trust
207,020
81,096
3.41
%
114,665
3.45
%
2019-3 Trust
154,419
65,757
3.28
%
90,919
3.27
%
2020-1 Trust
248,700
128,280
2.84
%
162,092
2.85
%
2020-2 Trust
96,352
57,239
4.60
%
73,750
4.36
%
2020-MC1 Trust
179,371
-
-
12,842
4.57
%
2021-1 Trust
251,301
186,986
1.75
%
228,015
1.74
%
2021-2 Trust
194,918
161,511
2.01
%
191,183
2.01
%
2021-3 Trust
204,205
172,915
2.45
%
199,381
2.46
%
2021-4 Trust
319,116
266,076
3.19
%
305,530
3.16
%
2022-1 Trust
273,594
250,986
3.93
%
270,642
3.94
%
2022-2 Trust
241,388
231,171
5.09
%
2022-MC1 Trust
84,967
48,298
6.88
%
2022-3 Trust
296,323
277,038
5.67
%
2022-4 Trust
308,357
297,702
6.24
%
2022-5 Trust
188,754
184,213
7.08
%
2023-1 Trust
198,715
195,999
7.01
%
$
5,018,751
$
2,901,403
4.29
%
$
2,067,684
3.12
%
Discussion of results
- Completed the VCC 2023-1 securitization totaling $198.7 million
of securities issued in January, comprised of long-term
business-purpose loans
- The weighted average rate on Velocity’s outstanding
securitizations was 4.29% as of March 31, 2023, an increase of 117
bps from March 31, 2022, driven by higher rates
- After quarter end, the Company completed the issuance of the
VCC 2023-1R totaling $64.8 million of securities issued,
collateralized by retained tranches from previous VCC
securitizations
RESOLUTION ACTIVITIES LONG-TERM
LOANS RESOLUTION ACTIVITY FIRST QUARTER
2023 FIRST QUARTER 2022 ($ in thousands)
UPB $
Gain / (Loss) $ UPB $ Gain / (Loss) $ Paid in
full
$
11,274
$
632
$
9,144
$
474
Paid current
18,477
233
7,597
117
REO sold (a)
570
137
2,522
469
Total resolutions
$
30,321
$
1,002
$
19,263
$
1,060
Resolutions as a % of nonperforming UPB
103.3
%
105.5
%
SHORT-TERM AND FORBEARANCE
LOANS RESOLUTION ACTIVITY FIRST QUARTER
2023 FIRST QUARTER 2022 ($ in thousands)
UPB $
Gain / (Loss) $ UPB $ Gain / (Loss) $ Paid in
full
$
5,560
$
348
$
13,820
$
646
Paid current
1,633
9
3,783
39
REO sold
1,209
(21
)
503
35
Total resolutions
$
8,402
$
336
$
18,106
$
720
Resolutions as a % of nonperforming UPB
104.0
%
104.0
%
Grand total resolutions
$
38,723
$
1,338
$
37,369
$
1,780
Grand total resolutions as a % of nonperforming UPB
103.5
%
104.8
%
Discussion of results:
- Total NPL and REO resolution activities in 1Q23 totaled $38.7
million in UPB and realized net gains of $1.3 million, or 103.5% of
UPB resolved, compared to $37.4 million in UPB and net gains of
$1.8 million, or 104.8% of UPB resolved in 1Q22
- Long-term loan and REO resolutions in 1Q23 totaled $30.3
million in UPB and realized gains of $1.0 million, compared to
$19.3 million in UPB and realized gains of $1.1 million in
1Q22
- Short-term loan and REO resolutions in 1Q23 totaled $8.4
million in UPB and realized gains of $0.3 million, compared to
$18.1 million in UPB and realized gains of $0.7 million in
1Q22
- The UPB of loan resolutions in 1Q23 were in line with the
recent five-quarter resolution average of $39.4 million in UPB
Velocity’s executive management team will host a conference call
and webcast to review 1Q23 financial results on May 4th, 2023, at
2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.
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 go to 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 following the completion of the conference
call.
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 May
31, 2023, 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 #4004772. 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 19 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 (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 Statements of
Financial Condition
Quarter Ended 3/31/2023 12/31/2022
9/30/2022 6/30/2022 3/31/2022 Unaudited
Audited Unaudited Unaudited Unaudited
(In thousands)
Assets Cash and cash equivalents
$
39,397
$
45,248
$
26,372
$
46,250
$
36,629
Restricted cash
16,636
16,808
14,533
9,217
10,837
Loans held for sale, net
-
-
-
-
77,503
Loans held for sale, at fair value
18,081
-
16,569
-
-
Loans held for investment, at fair value
450,732
276,095
926
1,351
1,352
Loans held for investment
3,169,280
3,272,390
3,445,563
3,118,799
2,828,302
Total loans, net
3,638,093
3,548,485
3,463,058
3,120,150
2,907,157
Accrued interest receivables
20,931
20,463
18,333
15,820
14,169
Receivables due from servicers
64,133
65,644
66,992
75,688
78,278
Other receivables
2,188
1,075
1,962
1,320
4,527
Real estate owned, net
21,778
13,325
13,188
19,218
16,177
Property and equipment, net
3,209
3,356
3,495
3,632
3,690
Deferred tax asset
2,543
5,033
4,337
15,195
16,477
Mortgage Servicing Rights, at fair value
9,143
9,238
9,868
8,438
7,661
Goodwill
6,775
6,775
6,775
6,775
6,775
Other assets
12,268
13,525
18,453
11,036
7,345
Total Assets
$
3,837,094
$
3,748,975
$
3,647,366
$
3,332,739
$
3,109,722
Liabilities and members' equity Accounts payable and
accrued expenses
$
84,976
$
91,525
$
75,150
$
78,384
$
92,768
Secured financing, net
210,155
209,846
209,537
209,227
208,956
Securitizations, net
2,657,469
2,736,290
2,651,895
2,477,226
2,035,374
Securitizations at Fair Value
194,941
-
-
-
-
Warehouse & repurchase facilities
298,313
330,814
340,050
208,390
424,692
Total Liabilities
3,445,854
3,368,475
3,276,632
2,973,227
2,761,790
Stockholders' Equity Stockholders' equity
387,624
376,811
366,810
355,895
344,441
Noncontrolling interest in subsidiary
3,616
3,689
3,924
3,617
3,491
Total equity
391,240
380,500
370,734
359,512
347,932
Total Liabilities and members' equity
$
3,837,094
$
3,748,975
$
3,647,366
$
3,332,739
$
3,109,722
Book value per share
$
12.18
$
11.89
$
11.61
$
11.26
$
10.90
Shares outstanding
32,112(1)
31,996(2)
31,922(3)
$
31,922(4)
$
31,913(5)
(1)
Based on 32,111,906 common shares
outstanding as of March 31, 2023, and excludes unvested shares of
common stock authorized for incentive compensation totaling
490,526.
(2)
Based on 31,955,730 common shares
outstanding as of December 31, 2022, and excludes unvested shares
of common stock authorized for incentive compensation totaling
494,139.
(3)
Based on 31,921,721 common shares
outstanding as of September 30, 2022, and excludes unvested shares
of common stock authorized for incentive compensation totaling
494,139.
(4)
Based on 31,921,721 common shares
outstanding as of June 30, 2022, and excludes unvested shares of
common stock authorized for incentive compensation totaling
494,139.
(5)
Based on 31,912,884 common shares
outstanding as of March 31, 2022, and excludes unvested shares of
common stock authorized for incentive compensation totaling
505,408.
Velocity Financial,
Inc.
Consolidated Statements of
Income (Quarters)
Quarter Ended ($ in thousands)
3/31/2023
12/31/2022 9/30/2022 6/30/2022
3/31/2022 Revenues Interest income
$
70,521
$
65,632
$
63,419
$
59,243
$
52,049
Interest expense - portfolio related
42,029
40,854
34,561
28,752
23,556
Net interest income - portfolio related
28,492
24,778
28,858
30,491
28,493
Interest expense - corporate debt
4,139
4,139
4,011
4,182
17,140
Net interest income
24,353
20,639
24,847
26,309
11,353
Provision for loan losses
636
(437
)
580
279
730
Net interest income after provision for loan losses
23,717
21,076
24,267
26,030
10,623
Other operating income Gain on disposition of loans
1,913
391
399
1,776
4,540
Unrealized gain on fair value loans
7,354
7,795
453
6
11
Unrealized loss on fair securitizations
(170
)
-
-
-
-
Other income (expense)
3,461
2,842
1,657
1,257
1,097
Total other operating income
12,558
11,029
2,509
3,039
5,648
Net revenue
36,275
32,105
26,776
29,070
16,271
Operating expenses Compensation and employee benefits
10,008
11,793
6,788
6,553
5,323
Origination (income)/expense
(334
)
937
(309
)
951
310
Securitization issuance expense
2,584
-
-
-
-
Rent and occupancy
446
435
445
426
442
Loan servicing
3,828
3,244
3,314
3,290
2,450
Professional fees
955
1,091
664
1,062
1,362
Real estate owned, net
1,829
552
(195
)
(251
)
(175
)
Other operating expenses
2,202
2,360
2,020
2,248
2,538
Total operating expenses
21,518
20,413
12,727
14,279
12,250
Income before income taxes
14,757
11,692
14,049
14,790
4,021
Income tax expense
4,021
3,465
3,759
4,019
790
Net income
10,736
8,227
10,290
10,771
3,231
Net income attributable to noncontrolling interest
87
(235
)
307
126
110
Net income attributable to Velocity Financial, Inc.
10,649
8,462
9,983
10,645
3,121
Less undistributed earnings attributable to participating
securities
160
127
152
164
48
Net earnings attributable to common shareholders
$
10,489
$
8,335
$
9,831
$
10,481
$
3,073
Basic earnings (loss) per share
$
0.33
$
0.26
$
0.31
$
0.33
$
0.10
Diluted earnings (loss) per common share
$
0.31
$
0.25
$
0.29
$
0.31
$
0.09
Basic weighted average common shares outstanding
32,098
31,923
31,922
31,917
31,892
Diluted weighted average common shares outstanding
34,052
34,063
34,199
34,057
34,204
Velocity Financial,
Inc.
Net Interest Margin ‒
Portfolio Related and Total Company
(Unaudited)
Quarters:
Quarter Ended March 31, 2023 Quarter Ended
December 31, 2022 Quarter Ended March 31, 2022
Interest Average Interest Average
Interest Average Average Income /
Yield / Average Income / Yield /
Average Income / Yield / ($ in
thousands) Balance Expense Rate(1)
Balance Expense Rate(1) Balance
Expense Rate(1) Loan portfolio: Loans held for
sale
$
12,896
$
64,699
$
69,092
Loans held for investment
3,512,133
3,430,296
2,613,759
Total loans
$
3,525,029
$
70,521
8.00
%
$
3,494,995
$
65,632
7.51
%
$
2,682,851
$
52,049
7.76
%
Debt: Warehouse and repurchase facilities
$
225,497
4,833
8.57
%
$
286,094
5,776
8.08
%
$
338,247
3,764
4.45
%
Securitizations
2,926,153
37,196
5.08
%
2,838,315
35,078
4.94
%
2,018,186
19,791
3.92
%
Total debt - portfolio related
3,151,650
42,029
5.33
%
3,124,409
40,854
5.23
%
2,356,433
23,555
4.00
%
Corporate debt
215,000
4,139
7.70
%
215,000
4,139
7.70
%
178,915
17,141
38.32
%
Total debt
$
3,366,650
$
46,168
5.49
%
$
3,339,409
$
44,993
5.39
%
$
2,535,348
$
40,696
6.42
%
Net interest spread - portfolio related (2)
2.67
%
2.28
%
3.76
%
Net interest margin - portfolio related
3.23
%
2.84
%
4.25
%
Net interest spread - total company (3)
2.52
%
2.11
%
1.34
%
Net interest margin - total company
2.76
%
2.36
%
1.69
%
(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 3/31/2023
12/31/2022 9/30/2022 6/30/2022
3/31/2022 Net Income
$
10,649
$
8,462
$
9,983
$
10,645
$
3,121
Corporate debt refinancing costs
-
-
-
-
$
9,286
Equity award & ESPP costs
$
728
$
656
-
-
$
-
Core Net Income
$
11,376
$
9,118
$
9,983
$
10,645
$
12,407
Diluted weighted average common shares outstanding
34,052
34,063
34,199
34,057
34,204
Core diluted earnings per share
$
0.33
$
0.27
$
0.29
$
0.31
$
0.36
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230504005760/en/
Investors and Media: Chris Oltmann (818) 532-3708
Velocity Financial (NYSE:VEL)
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