First Quarter Highlights:
- Net income of $17.3 million, up 62.0% from $10.6 million for
1Q23. Diluted EPS of $0.49, up $0.18 from $0.31 per share for
1Q23
- Core net income(1) of $18.2 million, an increase of 60.4% from
$11.4 million for 1Q23. Core diluted EPS(1) of $0.51, up from $0.33
per share for 1Q23
- Loan production of $378.7 million in UPB, a 7.5% increase from
4Q23 and 74.5% from 1Q23
- Loan production in April 2024 totaled $129.0 million with an
11.0% weighted average coupon (WAC)
- Nonperforming loans as a percentage of Held for Investment
(HFI) loans was 10.1%, up slightly from the 9.7% as of December 31,
2023, and an increase from 8.7% as of March 31, 2023
- Resolutions of nonperforming loans (NPL) and real estate owned
(REO) totaled $54.5 million in UPB
- Realized gains of $1.3 million or 102.3% of UPB resolved
- Portfolio net interest margin (NIM) of 3.35%, a decrease of 17
bps Q/Q and an increase of 12 bps from 3.23% for 1Q23
- Completed the VCC 2024-1 securitization totaling $209.9 million
of securities issued
- Issued $75.0 million of senior secured notes to support ongoing
investment portfolio growth
- Liquidity(2) of $78.5 million as of March 31, 2024
- Recourse debt to equity ratio of 1.4x
- GAAP Book value per common share of $14.01 as of March 31,
2024, an increase from $13.49 as of December 31, 2023
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company),
a leader in business purpose loans, reported net income of $17.3
million and core net income of $18.2 million for 1Q24, compared to
net income of $10.6 million and core net income of $11.4 million
for 1Q23. Earnings and core earnings per diluted share were $0.49
and $0.51, respectively, for 1Q24, compared to $0.31 and $0.33 for
1Q23.
“Velocity began 2024 with another quarter of strong production
and loan portfolio growth, resulting in the second highest
quarterly net earnings in the Company’s history,” said Chris
Farrar, President and CEO. “We saw strong demand for financing to
purchase real estate assets, particularly in traditional commercial
properties, which equaled our 1-4 Investor loan volume this quarter
and drove our production volume growth. While base rates increased
during the first quarter, we continued to see an improvement of
spreads in the securitization markets and robust investor demand
for asset-backed securities. We remain on track to attain our
“5X25” goal of a $5 billion loan portfolio by 2025 and deliver
another year of solid financial performance.”
First Quarter
Operating Results
KEY PERFORMANCE INDICATORS ($ in thousands)
1Q 2024
1Q 2023
$ Variance
% Variance
Pretax income
$
23,236
$
14,757
$
8,479
57
%
Net income
$
17,251
$
10,649
$
6,602
62
%
Diluted earnings per share
$
0.49
$
0.31
$
0.18
56
%
Core Pretax income
$
24,525
$
15,681
$
8,844
56
%
Core net income(a)
$
18,249
$
11,376
$
6,873
60
%
Core diluted earnings per share(a)
$
0.51
$
0.33
$
0.18
54
%
Pretax return on equity
20.77
%
15.27
%
n.a.
36
%
Core pretax return on equity(a)
21.92
%
16.20
%
n.a.
35
%
Net interest margin - portfolio
3.35
%
3.23
%
n.a.
4
%
Net interest margin - total company
2.83
%
2.76
%
n.a.
3
%
Average common equity
$
447,613
$
386,935
$
60,678
16
%
(a) Core income, core diluted earnings per share and core pretax
return on equity are non-GAAP measures. Please see the
reconciliation to GAAP at the end of this release. n.a.- not
applicable
Discussion of results:
- Net income in 1Q24 was $17.3 million, compared to $10.6 million
for 1Q23
- Robust production volume with weighted average coupons of 11.1%
drove strong fair market value gains
- Core net income(1) was $18.2 million, compared to $11.4 million
for 1Q23
- 1Q24 core adjustments include incentive compensation expenses
and costs related to the Company’s employee stock purchase plan
(ESPP)
- Portfolio NIM for 1Q24 was 3.35%, compared to 3.23% for 1Q23, a
4.0% Y/Y increase driven by 11.1% average loan coupons on recent
loan production and continued NPL resolutions, partially offset by
higher funding costs
- The GAAP pretax return on equity was 20.77% for 1Q24, compared
to 15.27% for 1Q23
TOTAL LOAN PORTFOLIO ($ of UPB in millions)
1Q 2024
1Q 2023
$ Variance
% Variance Held for
Investment Investor 1-4 Rental
$
2,337
$
1,905
$
432
23
%
Mixed Use
492
450
43
9
%
Multi-Family
323
304
19
6
%
Retail
364
308
56
18
%
Warehouse
276
221
55
25
%
All Other
489
391
98
25
%
Total
$
4,282
$
3,579
$
703
20
%
Held for Sale Investor 1-4
Rental
$
-
$
-
$
-
n.m. Multi-Family
-
17
(17
)
n.m. Warehouse
-
-
-
n.m. All Other
-
-
-
n.m.
Total Managed Loan Portfolio UPB
$
4,282
$
3,596
$
685
19
%
Key loan portfolio metrics: Total loan count
11,013
9,147
Weighted average loan to value
67.6
%
68.1
%
Weighted average coupon
9.07
%
8.15
%
Weighted average total portfolio yield
8.71
%
8.00
%
Weighted average portfolio debt cost
5.93
%
5.33
%
n.m. - non meaningful
Discussion of results:
- Velocity’s total loan portfolio was $4.3 billion in UPB as of
March 31, 2024, an increase of 19.1% from $3.6 billion in UPB as of
March 31, 2023
- Primarily driven by 22.7% Y/Y growth in loans collateralized by
Investor 1-4 Rental properties and 25.1% Y/Y growth in loans
collateralized by “Other” commercial properties
- Loan prepayments totaled $142.0 million, an increase of 20.9%
Q/Q and 64.1% Y/Y
- The UPB of Fair Value (FVO) loans was $1.58 billion, or 36.9%
of total HFI loans, as of March 31, 2024, an increase from $454.0
million in UPB and 12.6%, as of March 31, 2023
- The weighted average portfolio loan-to-value ratio was 67.6% as
of March 31, 2024, down from 68.1% as of March 31, 2023, and
consistent with the five-quarter trailing average of 67.9%
- The weighted average total portfolio yield was 8.71% for 1Q24,
an increase of 71 bps from 1Q23, driven by a 93 bps increase in
average loan coupons from 1Q23
- Portfolio-related debt cost for 1Q24 was 5.93%, an increase of
60 bps from 1Q23, driven by higher interest rates on warehouse
financing and recent securitizations
LOAN PRODUCTION VOLUMES ($ in millions)
1Q 2024
1Q 2023
$ Variance % Variance Investor 1-4 Rental
$
167
$
116
$
51
44
%
Traditional Commercial
167
80
87
109
%
Short-term loans
45
21
24
115
%
Total loan production
$
379
$
217
$
162
75
%
Acquisitions
$
12
$
-
n.m. - non meaningful
Discussion of results:
- Loan production for 1Q24 totaled $378.7 million in UPB, a 74.5%
increase from $217.0 million in UPB for 1Q23
- Driven by growing demand for Traditional Commercial financing.
On a Q/Q basis, production volume rose 7.5%.
- The weighted average coupon (WAC) on 1Q24 HFI loan production
was 11.1%, essentially unchanged from 1Q23
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS ($ in thousands)
1Q 2024
1Q 2023
$ Variance % Variance Nonperforming loans(a)
$
432,560
$
309,937
$
122,623
40
%
Average Nonperforming Loans (b)
$
321,442
$
298,703
$
22,739
8
%
Average Loan HFI
$
4,149,750
$
3,512,133
$
637,617
18
%
Nonperforming loans % total HFI Loans
10.1
%
8.7
%
n.a.
17
%
Total Charge Offs
$
504
$
484
$
20
4
%
Charge-offs as a % of Avg. Nonperforming Loans(c)
0.63
%
0.65
%
n.a.
(3
)%
Loan Loss Reserve
$
5,267
$
5,045
$
221
4
%
(a) Total 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 $432.6 million in UPB as of
March 31, 2024, or 10.1% of loans HFI, compared to $309.9 million
and 8.7% as of March 31, 2023
- Driven by growth in loans transitioning to foreclosure
- Charge-offs for 4Q23 totaled $504.0 thousand, compared to
$484.0 thousand for 1Q23
- The trailing five-quarter charge-off average was $508.8
thousand
- The loan loss reserve totaled $5.3 million as of March 31,
2024, a 4.4% increase from $5.0 million as of March 31, 2023
- Primarily resulting from an increase in the
individually-assessed reserve component
- Loans carried at fair value are not subject to a CECL
reserve
NET REVENUES ($ in thousands)
1Q 2024
1Q 2023
$ Variance % Variance Interest income
$
90,529
$
70,521
$
20,007
28
%
Interest expense - portfolio related
(55,675
)
(42,029
)
(13,645
)
32
%
Net Interest Income - portfolio related
34,854
28,492
6,362
22
%
Interest expense - corporate debt
(5,380
)
(4,139
)
(1,241
)
30
%
Loan loss provision
(1,002
)
(636
)
(366
)
58
%
Net interest income after provision for loan losses
$
28,472
$
23,717
$
4,755
20
%
Gain on disposition of loans
1,699
1,913
(214
)
(11
)%
Unrealized (loss) gain on fair value loans
18,925
7,354
11,571
157
%
Unrealized gain (loss) on fair value of securitized debt
(2,318
)
(170
)
(2,148
)
n.m. Unrealized gain/(loss) on mortgage servicing rights
444
(95
)
539
(567
)%
Origination income(a)
4,986
2,411
2,575
107
%
Bank interest income
1,631
948
683
n.m. Other operating income (expense)
408
481
(72
)
(15
)%
Total Other operating income (expense)
$
25,775
$
12,842
$
12,933
101
%
Net Revenue
$
54,247
$
36,560
$
17,687
48
%
(a) 1Q23 includes a reclass of production fees to expenses n.m. -
non meaningful
Discussion of results:
- Net Revenue for 1Q24 was $54.2 million, an increase of 48.4%
compared to $36.6 million for 1Q23
- Driven primarily by $12.9 million Y/Y growth in other operating
income and continued strong loan portfolio performance from
organically sourced production
- Total net interest income for 1Q24, including corporate debt
interest expense and loan loss provision, was $28.5 million, a
20.0% increase from $23.7 million for 1Q23
- Portfolio net Interest income was $34.9 million for 1Q24, an
increase of 22.3% from 1Q23 resulting from portfolio growth and a
12bps increase in NIM
- Total other operating income was $25.8 million for 1Q24, an
increase from $12.8 million for 1Q23, driven by net fair value
gains and origination fees on higher 1Q24 loan production
- Net FVO gains on loans and securitized debt were $16.6 million,
resulting primarily from fair value gains on new 1Q24 loan
production, partially offset by fair value losses on securitized
debt
- Origination income totaled $5.0 million, resulting from fee
income realized on loans 1Q24 loan production
- Gain on disposition of loans totaled $1.7 million for 1Q24,
primarily driven by loans transferred to Real Estate Owned
(REO)
OPERATING EXPENSES ($ in thousands)
1Q 2024
1Q 2023
$ Variance % Variance Compensation and employee
benefits
$
15,357
$
10,008
$
5,349
53
%
Origination (income)/expense(a)
646
(50
)
696
n.m.
Securitization expenses
2,874
2,584
290
n.m.
Rent and occupancy
498
446
51
12
%
Loan servicing
4,824
3,828
996
26
%
Professional fees
2,115
955
1,160
121
%
Real estate owned, net
2,455
1,829
626
34
%
Other expenses
2,242
2,202
39
2
%
Total operating expenses
$
31,011
$
21,802
$
9,208
42
%
(a) 1Q23 includes a reclass of production fees to expenses n.m. -
non meaningful
Discussion of results:
- Operating expenses totaled $31.0 million for 1Q24, an increase
of 42.2% from 1Q23, driven by our growth in originations and the
portfolio
- Compensation expense totaled $15.4 million, compared to $10.0
million for 1Q23
- Compensation growth was driven by growth of the production team
in addition to higher commissions expense from increased
origination volumes
- Securitization expenses totaled $2.9 million, resulting from
the issuance of the VCC 2024-1 securitization during the quarter,
in-line with securitization costs for 1Q23.
- Loan servicing expense totaled $4.8 million, a 26.0% increase
from $3.8 million for 1Q23, driven by portfolio growth and
nonperforming loan resolution costs
- REO expense increased totaled $2.5 million, an increase from
$1.8 million for 1Q23, driven by increased valuation-related
expenses
SECURITIZATIONS ($ in thousands)
Securities
Balance at Balance at Trusts Issued
3/31/2024 W.A. Rate 3/31/2023 W.A. Rate
2016-1 Trust
319,809
$
-
0.00%
$
19,896
8.85%
2017-2 Trust
245,601
41,610
4.06%
55,981
3.95%
2018-1 Trust
176,816
31,981
4.09%
41,239
4.01%
2018-2 Trust
307,988
74,490
4.51%
91,189
4.50%
2019-1 Trust
235,580
70,253
4.06%
87,832
4.08%
2019-2 Trust
207,020
62,467
3.44%
81,096
3.41%
2019-3 Trust
154,419
54,912
3.30%
65,757
3.28%
2020-1 Trust
248,700
101,991
2.89%
128,280
2.84%
2020-2 Trust
96,352
42,088
4.57%
57,239
4.60%
2021-1 Trust
251,301
165,657
1.77%
186,986
1.75%
2021-2 Trust
194,918
141,057
2.03%
161,511
2.01%
2021-3 Trust
204,205
153,438
2.46%
172,915
2.45%
2021-4 Trust
319,116
237,277
3.25%
266,076
3.19%
2022-1 Trust
273,594
233,429
3.94%
250,986
3.93%
2022-2 Trust
241,388
205,358
5.07%
231,171
5.09%
2022-MC1 Trust
84,967
27,519
6.92%
48,298
6.88%
2022-3 Trust
296,323
251,143
5.71%
277,038
5.67%
2022-4 Trust
308,357
263,336
6.22%
297,702
6.24%
2022-5 Trust
188,754
154,783
7.01%
184,213
7.08%
2023-1 Trust
198,715
169,107
7.04%
195,999
7.01%
2023-1R Trust
64,833
54,342
7.63%
2023-2 Trust
202,210
178,713
8.24%
2023-RTL1 Trust
81,608
81,608
7.22%
2023-3 Trust
234,741
220,689
7.87%
2023-4 Trust
202,890
215,821
8.32%
2024-1 Trust
209,862
207,855
7.91%
$
5,550,067
$
3,440,924
5.43%
$
2,901,403
4.47%
Discussion of results
- The company completed one securitization during 1Q24 totaling
$209.9 million of securities issued
- The transaction execution improved significantly from the prior
quarter
- The weighted average rate on Velocity’s outstanding
securitizations was 5.43% as of March 31, 2024, an increase of 96
bps from March 31, 2023
RESOLUTION ACTIVITIES LONG-TERM
LOANS RESOLUTION ACTIVITY FIRST QUARTER
2024 FIRST QUARTER 2023 ($ in thousands)
UPB $
Gain / (Loss) $ UPB $ Gain / (Loss) $ Paid in
full
$
16,563
$
798
$
11,274
$
632
Paid current
27,494
164
18,477
233
REO sold (a)
3,888
224
570
137
Total resolutions
$
47,945
$
1,186
$
30,321
$
1,002
Resolutions as a % of nonperforming UPB
102.5
%
103.3
%
SHORT-TERM AND FORBEARANCE
LOANS RESOLUTION ACTIVITY FIRST QUARTER
2024 FIRST QUARTER 2023 ($ in thousands)
UPB $
Gain / (Loss) $ UPB $ Gain / (Loss) $ Paid in
full
$
2,496
$
-
$
5,560
$
348
Paid current
2,927
25
1,633
9
REO sold
1,161
62
1,209
(21
)
Total resolutions
$
6,584
$
87
$
8,402
$
336
Resolutions as a % of nonperforming UPB
101.3
%
104.0
%
Grand total resolutions
$
54,529
$
1,274
$
38,723
$
1,338
Grand total resolutions as a % of nonperforming UPB
102.3
%
103.5
%
Discussion of results:
- NPL resolution totaled $54.5 million in UPB, realizing 102.3%
of UPB resolved compared to $38.7 million in UPB and realization of
103.5% of UPB resolved for 1Q23
- 1Q24 NPL resolutions represented 13.8% of nonperforming loan
UPB as of December 31, 2023
- The UPB of loan resolutions in 1Q24 were in-line with the
recent five-quarter resolution average of $55.9 million in UPB
Velocity’s executive management team will host a conference call
and webcast to review 1Q24 financial results on May 2nd, 2024, 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 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 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
24, 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 #3912582. 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 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 3/31/2024 12/31/2023
9/30/2023 6/30/2023 3/31/2023 Unaudited
Audited Unaudited Unaudited Unaudited
(In thousands)
Assets Cash and cash equivalents
$
34,829
$
40,566
$
29,393
$
33,987
$
39,397
Restricted cash
24,216
21,361
17,703
16,786
16,636
Loans held for sale, at fair value
-
17,590
19,536
-
18,081
Loans held for investment, at fair value
1,649,540
1,306,072
951,990
705,330
450,732
Loans held for investment
2,727,518
2,828,123
2,945,840
3,057,940
3,169,280
Total loans, net
4,377,058
4,151,785
3,917,366
3,763,270
3,638,093
Accrued interest receivables
29,374
27,028
24,756
22,602
20,931
Receivables due from servicers
87,523
85,077
70,139
63,896
64,133
Other receivables
2,113
8,763
236
1,306
2,188
Real estate owned, net
46,280
44,268
29,299
20,388
21,778
Property and equipment, net
2,013
2,785
2,861
3,023
3,209
Deferred tax asset
1,580
2,339
705
1,878
2,543
Mortgage Servicing Rights, at fair value
9,022
8,578
9,786
9,445
9,143
Derivative assets
1,967
-
1,261
-
-
Goodwill
6,775
6,775
6,775
6,775
6,775
Other assets
5,468
5,248
7,028
7,789
12,268
Total Assets
$
4,628,218
$
4,404,573
$
4,117,308
$
3,951,145
$
3,837,094
Liabilities and members' equity Accounts payable and
accrued expenses
$
123,988
$
121,969
$
97,869
$
95,344
$
84,976
Secured financing, net
283,813
211,083
210,774
210,464
210,155
Securitized debt, net
2,329,906
2,418,811
2,504,334
2,622,547
2,657,469
Securitized debt, at fair value
1,073,843
877,417
669,139
381,799
194,941
Warehouse & repurchase facilities
360,216
334,755
215,176
235,749
298,313
Derivative liability
-
3,665
-
-
-
Total Liabilities
4,171,766
3,967,700
3,697,292
3,545,903
3,445,854
Stockholders' Equity Stockholders' equity
452,941
433,444
416,398
401,707
387,624
Noncontrolling interest in subsidiary
3,511
3,429
3,618
3,535
3,616
Total equity
456,452
436,873
420,016
405,242
391,240
Total Liabilities and members' equity
$
4,628,218
$
4,404,573
$
4,117,308
$
3,951,145
$
3,837,094
Book value per share
$
14.01
$
13.49
$
13.00
$
12.57
$
12.18
Shares outstanding
32,574(1)
32,395(2)
32,314(3)
32,239(4)
32,112(5)
(1)
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.
(2)
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.
(3)
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.
(4)
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.
(5)
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.
Velocity Financial,
Inc.
Consolidated Statements of
Income (Quarters)
Quarter Ended ($ in thousands)
3/31/2024
12/31/2023 9/30/2023 6/30/2023
3/31/2023 Unaudited Unaudited Unaudited
Unaudited Unaudited Revenues Interest income
$
90,529
$
86,269
$
79,088
$
74,897
$
70,521
Interest expense - portfolio related
55,675
51,405
47,583
45,451
42,029
Net interest income - portfolio related
34,854
34,864
31,505
29,446
28,492
Interest expense - corporate debt
5,380
4,140
4,138
4,139
4,139
Net interest income
29,473
30,724
27,367
25,307
24,353
Provision for loan losses
1,002
828
154
298
636
Net interest income after provision for loan losses
28,472
29,897
27,213
25,009
23,717
Other operating income Gain on disposition of loans
1,699
1,482
3,606
1,237
1,913
Unrealized gain (loss) on fair value loans
18,925
39,367
(1,284
)
2,413
7,354
Unrealized gain (loss) on fair value securitized debt
(2,318
)
(24,085
)
9,692
5,560
(170
)
Unrealized gain/(loss) on mortgage servicing rights
444
(1,208
)
341
302
(95
)
Origination income
4,986
3,981
3,323
2,735
2,411
Bank interest income
1,631
1,716
1,342
1,188
948
Other income (expense)
408
418
340
601
481
Total other operating income
25,775
21,670
17,360
14,036
12,842
Net revenue
54,247
51,567
44,573
39,046
36,560
Operating expenses Compensation and employee benefits
15,357
15,143
12,523
10,670
10,008
Origination expenses
646
173
273
123
(50
)
Securitizations expenses
2,874
2,709
4,930
2,699
2,584
Rent and occupancy
498
551
472
458
446
Loan servicing
4,824
4,636
4,901
4,267
3,828
Professional fees
2,115
1,733
854
1,056
955
Real estate owned, net
2,455
2,068
1,239
1,018
1,829
Other operating expenses
2,242
2,248
2,142
1,931
2,202
Total operating expenses
31,011
29,260
27,334
22,222
21,802
Income before income taxes
23,236
22,307
17,239
16,824
14,757
Income tax expense
5,903
5,141
5,070
4,602
4,021
Net income
17,333
17,166
12,169
12,222
10,736
Net income attributable to noncontrolling interest
82
(189
)
83
39
87
Net income attributable to Velocity Financial, Inc.
17,251
17,355
12,086
12,183
10,649
Less undistributed earnings attributable to participating
securities
217
225
183
185
160
Net earnings attributable to common shareholders
$
17,034
$
17,130
$
11,903
$
11,998
$
10,489
Basic earnings (loss) per share
$
0.52
$
0.53
$
0.37
$
0.37
$
0.33
Diluted earnings (loss) per common share
$
0.49
$
0.50
$
0.35
$
0.36
$
0.31
Basic weighted average common shares outstanding
32,541
32,326
32,275
32,122
32,098
Diluted weighted average common shares outstanding
35,439
34,991
34,731
34,140
34,052
Velocity Financial,
Inc.
Net Interest Margin ‒
Portfolio Related and Total Company
(Unaudited)
Quarters:
Quarter Ended March 31, 2024 Quarter Ended March 31,
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
$
9,661
$
12,896
Loans held for investment
4,149,750
3,512,133
Total loans
$
4,159,412
$
90,529
8.71
%
$
3,525,029
$
70,521
8.00
%
Debt: Warehouse and repurchase facilities
$
267,559
6,392
9.56
%
$
225,497
4,833
8.57
%
Securitizations
3,486,173
49,283
5.65
%
2,926,153
37,196
5.08
%
Total debt - portfolio related
3,753,732
55,675
5.93
%
3,151,650
42,029
5.33
%
Corporate debt
261,552
5,380
8.23
%
215,000
4,139
7.70
%
Total debt
$
4,015,284
$
61,055
6.08
%
$
3,366,650
$
46,168
5.49
%
Net interest spread - portfolio related (2)
2.77
%
2.67
%
Net interest margin - portfolio related
3.35
%
3.23
%
Net interest spread - total company (3)
2.62
%
2.52
%
Net interest margin - total company
2.83
%
2.76
%
(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 3/31/2024
12/31/2023 9/30/2023 6/30/2023
3/31/2023 Net Income
$
17,251
$
17,355
$
12,086
$
12,183
$
10,649
Corporate debt refinancing costs
-
-
-
-
-
Tax liability reduction
-
(1,866
)
-
-
-
Equity award & ESPP costs
998
673
832
745
728
Core Net Income
$
18,249
$
16,161
$
12,918
$
12,928
$
11,376
Core diluted earnings per share
$
0.51
$
0.46
$
0.37
$
0.38
$
0.33
$
0.51
$
0.46
$
0.37
$
0.38
$
0.33
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240502443752/en/
Investors and Media: Chris Oltmann (818) 532-3708
Velocity Financial (NYSE:VEL)
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