Third Quarter Highlights:
- Net income of $15.8 million, up 30.8% from $12.1 million for
3Q23. Diluted EPS of $0.44, up $0.09 from $0.35 per share for
3Q23
- Core net income(1) of $16.9 million, an increase of 31.2% from
$12.9 million for 3Q23. Core diluted EPS(1) of $0.47, up from $0.37
per share for 3Q23
- Loan production of $476.8 million in UPB, a 12.9% and 64.1%
increase from 2Q24 and 3Q23, respectively
- Nonperforming loans as a percentage of Held for Investment
(HFI)(2) loans was 10.6%, up slightly from 10.5% as of June 30,
2024, and 10.1% as of September 30, 2023, respectively
- Resolutions of nonperforming loans (NPL) and real estate owned
(REO) totaled $68.6 million in UPB
- Realized gains of $2.3 million or 103.4% of UPB resolved
- Portfolio net interest margin (NIM) of 3.60%, an increase of 6
bps Q/Q and 26 bps from 3.34% for 3Q23
- Completed the VCC 2024-4 securitization totaling $253.6 million
of securities issued
- Collapsed the 2020-2 securitization allowing us to redeploy
$25.1 million in retained equity more efficiently
- Liquidity(3) of $92.8 million and total available warehouse
line capacity of $349.3 million as of September 30, 2024
- Recourse debt to equity ratio of 1.5x due to aggregation of new
loans which were securitized after quarter end
- GAAP Book value per common share of $14.91 as of September 30,
2024, a 14.7% increase from $13.00 as of September 30, 2023
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company),
a leader in business purpose loans, reported net income of $15.8
million and core net income of $16.9 million for 3Q24, compared to
net income of $12.1 million and core net income of $12.9 million
for 3Q23. Earnings and core earnings per diluted share were $0.44
and $0.47, respectively, for 3Q24, compared to $0.35 and $0.37 for
3Q23.
“Velocity continued to expand on this year’s considerable
achievements by delivering another quarter of solid production
volume and portfolio growth,” said Chris Farrar, President and CEO.
“The third quarter of 2024 marked the sixth consecutive quarter of
profitable production volume growth in an environment where other
lenders have struggled. We have successfully leveraged investments
in our production platform and sales force to expand our reach into
the broker community and generate greater awareness among real
estate investors regarding Velocity’s financing solutions. These
successes have been supported by disciplined capital and asset
management. Resolution gains on nonperforming loans reached $2.3
million, or 3.4% of total unpaid principal resolved. During the
quarter, we successfully issued our fourth securitization of 2024,
which met with strong investor demand and improved pricing. We also
collapsed capital-inefficient securitized debt that was
successfully refinanced, unlocking capital to support future
growth. These strong results have us on track to achieve an
all-time full-year funding record for the Company in 2024 while
also realizing our goal of a $5 billion loan portfolio by
2025.”
Third Quarter
Operating Results
KEY PERFORMANCE INDICATORS ($ in thousands)
3Q 2024
3Q 2023
$ Variance
% Variance
Pretax income
$
21,244.2
$
17,238.5
$
4,005.7
23.2
%
Net income
$
15,803.2
$
12,085.9
$
3,717.2
30.8
%
Diluted earnings per share
$
0.44
$
0.35
$
0.09
26.5
%
Core pretax income
$
23,003.6
$
18,334.9
$
4,668.7
25.5
%
Core net income(a)
$
16,948.7
$
12,918.1
$
4,030.6
31.2
%
Core diluted earnings per share(a)
$
0.47
$
0.37
$
0.10
26.9
%
Pretax return on equity
17.55
%
16.82
%
n.a.
4.3
%
Core pretax return on equity(a)
19.00
%
17.89
%
n.a.
6.2
%
Net interest margin - portfolio
3.60
%
3.34
%
n.a.
7.8
%
Net interest margin - total company
3.06
%
2.90
%
n.a.
5.6
%
Average common equity
$
484,197.4
$
409,954.3
$
74,243.1
18.1
%
(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 3Q24 was $15.8 million, compared to $12.1 million
for 3Q23
- Strong portfolio earnings driven by production volume growth
and continued focus on optimizing loan resolution gains
- Core net income(1) was $16.9 million, compared to $12.9 million
for 3Q23
- 3Q24 core adjustments included incentive compensation expenses
and costs related to the Company’s employee stock purchase plan
(ESPP)
- Portfolio NIM for 3Q24 was 3.60%, compared to 3.34% for 3Q23, a
7.8% Y/Y increase driven by consistent HFI portfolio growth and
average loan coupons of approximately 11.0% on recent loan
production
TOTAL LOAN PORTFOLIO ($ of UPB in millions)
3Q 2024
3Q 2023
$ Variance % Variance Held
for Investment Investor 1-4 Rental
$
2,565.8
$
2,120.2
$
445.6
21.0
%
Mixed Use
535.8
457.1
78.7
17.2
%
Multi-Family
344.3
305.0
39.3
12.9
%
Retail
405.9
327.8
78.1
23.8
%
Warehouse
300.4
246.6
53.8
21.8
%
All Other
582.1
401.1
181.0
45.1
%
Total
$
4,734.3
$
3,857.8
$
876.5
22.7
%
Held for Sale Investor 1-4
Rental
$
-
$
-
$
-
0.0
%
Government Insured Multifamily (CHHC)
18.9
-
-
n.m. Multi-Family
-
6.6
(6.6
)
n.m. Warehouse
-
11.2
(11.2
)
n.m. All Other
-
1.2
(1.2
)
n.m.
Total Managed Loan Portfolio UPB
$
4,753.3
$
3,876.7
$
876.5
22.6
%
Key loan portfolio metrics: Total loan count
12,235
9,953
Weighted average loan to value
67.0
%
68.0
%
Weighted average coupon
9.37
%
8.63
%
Weighted average total portfolio yield
9.18
%
8.38
%
Weighted average portfolio debt cost
6.15
%
5.63
%
n.m. - non meaningful
Discussion of results:
- Velocity’s total loan portfolio was $4.8 billion in UPB as of
September 30, 2024, an increase of 22.6% from $3.9 billion in UPB
as of September 30, 2023
- Primarily driven by 21.0% Y/Y growth in loans collateralized by
Investor 1-4 Rental properties and 45.1% Y/Y growth in loans
collateralized by “Other” commercial properties
- Government Insured Multifamily loans are originated by our
subsidiary CHHC and sold to investors for cash gains shortly after
closing
- Loan prepayments totaled $173.9 million in UPB, an increase
from $165.8 million for 2Q24, and $104.6 million for 3Q23
- The UPB of fair value option (FVO) loans was $2.2 billion, or
47.3% of total loans, as of September 30, 2024, an increase from
$955.6 million in UPB, or 24.7% as of September 30, 2023
- The weighted average portfolio loan-to-value ratio was 67.0% as
of September 30, 2024, down from 68.0% as of September 30, 2023,
and consistent with the five-quarter trailing average of 67.5%
- The weighted average total portfolio yield was 9.18% as of
September 30, 2024, an increase of 80 bps from September 30, 2023,
driven by a 74 bps increase in the weighted average loan coupons
over the same period
- Portfolio-related debt cost as of September 30, 2024, was
6.15%, an increase of 52 bps from September 30, 2023, driven by the
higher warehouse utilization and rates on recent
securitizations
LOAN PRODUCTION VOLUMES ($ in millions)
3Q 2024
3Q 2023
$ Variance % Variance Investor 1-4 Rental
$
219.9
$
154.3
$
65.7
42.6
%
Traditional Commercial
175.2
97.5
77.7
79.6
%
Government Insured Multifamily (CHHC)
18.9
-
18.9
n.m. Short-term
62.7
38.8
23.9
61.7
%
Total loan production
$
476.8
$
290.6
$
186.2
64.1
%
Acquisitions
$
-
$
-
n.m. - non meaningful
Discussion of results:
- Loan production for 3Q24 totaled $476.8 million in UPB, a 64.1%
increase from $290.6 million for 3Q23
- Traditional Commercial financing demand led the Y/Y growth;
however, Investor 1-4 rental and Short-term financing also
experienced strong demand. The weighted average coupon (WAC) on
3Q24 HFI loan production was 10.8%, a modest decrease from 11.0%
for 3Q23
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS ($ in thousands)
3Q 2024
3Q 2023
$ Variance % Variance Nonperforming loans(a)
$
503,939.0
$
387,725.0
$
116,214.0
30.0
%
Total HFI loans
$
4,734,319.0
$
3,857,778.7
$
876,540.3
22.7
%
Nonperforming loans % total HFI loans
10.6
%
10.1
%
n.a.
5.5
%
Average nonperforming loans subject to CECL reserve (b)
$
320,135.3
$
351,848.0
$
(31,712.7
)
(9.0
)%
Total charge offs
$
319.6
$
95.2
$
224.4
235.7
%
Charge-offs as a % of avg. nonperforming CECL loans(c)
0.40
%
0.11
%
n.a.
269.0
%
Loan loss reserve
$
4,851.2
$
4,684.8
$
166.4
3.6
%
Gain on transfer to REO
$
2,248.6
$
1,935.4
$
312.9
16.2
%
REO valuations, net
$
(1,642.0
)
$
(224.5
)
$
(1,417.9
)
(631.5
)%
Gain (loss) on sale of REO
$
615.1
$
(137.0
)
$
752.2
548.9
%
(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 $503.9 million in UPB as of
September 30, 2024, or 10.6% of loans HFI, compared to $387.7
million and 10.1% as of September 30, 2023
- NPLs in foreclosure status comprised 8.1% of loans HFI as of
September 30, 2024, down slightly from 8.2% as of September 30,
2023
- Charge-offs for 3Q24 totaled $319.6 thousand, compared to $95.2
thousand for 3Q23
- The trailing five-quarter charge-off average was $381.5
thousand
- Net charge-off and REO activity comprises charge-offs, gain on
transfer of REO, gain (loss) on sale of REO, and REO valuations.
For 3Q24, net charge-off and REO activity resulted in a net gain of
$0.9 million, compared to a net gain of $1.5 million for 3Q23,
primarily driven by gains on loans transferred to REO
- The loan loss reserve totaled $4.9 million as of September 30,
2024, a 3.6% increase from $4.7 million as of September 30, 2023
- Mainly driven by updated valuation of the individually assessed
NPL portfolio
- The CECL reserve rate was 0.19% (CECL Reserve as % of Amortized
Cost HFI loans), which was in line with the recent five-quarter
average rate of 0.18% and within management’s expected range of
0.15% to 0.20%
NET REVENUES ($ in thousands)
3Q 2024
3Q 2023
$ Variance % Variance Interest income
$
105,069.6
$
79,088.4
$
25,981.2
32.9
%
Interest expense - portfolio related
(63,870.5
)
(47,583.0
)
(16,287.6
)
34.2
%
Net Interest Income - portfolio related
41,199.0
31,505.5
9,693.6
30.8
%
Interest expense - corporate debt
(6,142.8
)
(4,137.9
)
(2,004.8
)
48.4
%
Loan loss provision
68.9
(153.8
)
222.7
(144.8
)%
Net interest income after provision for loan losses
$
35,125.2
$
27,212.7
$
7,912.4
29.1
%
Gain on disposition of loans
2,291.0
3,606.3
(1,315.3
)
(36.5
)%
Unrealized (loss) gain on fair value loans
35,529.7
(1,283.5
)
36,813.2
2868.1
%
Unrealized gain (loss) on fair value of securitized debt
(24,995.4
)
9,692.3
(34,687.7
)
(357.9
)%
Unrealized gain/(loss) on mortgage servicing rights
(993.4
)
341.1
(1,334.5
)
(391.3
)%
Origination fee income(a)
6,703.8
3,323.5
3,380.3
101.7
%
Interest income on cash balance
1,676.2
1,341.9
334.3
24.9
%
Other operating income (expense)
518.8
339.7
179.1
52.7
%
Total other operating income (expense)
$
20,731.7
$
17,360.2
$
3,371.4
19.4
%
Net revenue
$
55,856.8
$
44,573.0
$
11,283.8
25.3
%
(a) 3Q23 includes a reclass of production fees to expenses
Discussion of results:
- Net Revenue for 3Q24 was $55.9 million, an increase of 25.3%
from $44.6 million for 3Q23
- Driven by strong production-driven portfolio growth and
disciplined focus on maintaining a net interest margin above
3.0%
- Total net interest income for 3Q24, including corporate debt
interest expense and loan loss provision, was $35.1 million, a
29.1% increase from $27.2 million for 3Q23
- Portfolio net Interest income was $41.2 million for 3Q24, an
increase of 30.8% from 3Q23 resulting from portfolio growth and a
26bps increase in NIM
- Total other operating income was $20.7 million for 3Q24, an
increase from $17.4 million for 3Q23
- Net unrealized FVO gains on loans and securitized debt were
$10.5 million, compared to a net gain of $8.4 million for 3Q23
- Origination income totaled $6.7 million, resulting from
improved origination fees of 1.4% charged on 3Q24 new loan
production
- Gain on disposition of loans totaled $2.3 million for 3Q24,
driven by loans transferred to Real Estate Owned (REO)
OPERATING EXPENSES ($ in thousands)
3Q 2024
3Q 2023
$ Variance % Variance Compensation and employee
benefits
$
17,585.9
$
12,522.8
$
5,063.1
40.4
%
Origination (income)/expense(a)
866.6
273.2
593.4
217.2
%
Securitization expenses
3,186.1
4,930.5
(1,744.3
)
(35.4
)%
Rent and occupancy
518.8
472.4
46.4
9.8
%
Loan servicing
5,656.1
4,901.4
754.6
15.4
%
Professional fees
2,304.5
853.8
1,450.7
169.9
%
Real estate owned, net
1,951.0
1,238.7
712.3
57.5
%
Other expenses
2,542.6
2,141.6
401.0
18.7
%
Total operating expenses
$
34,612.6
$
27,334.5
$
7,278.1
26.6
%
(a) 3Q23 includes a reclass of production fees to expenses
Discussion of results:
- Operating expenses totaled $34.6 million for 3Q24, an increase
of 26.6% from 3Q23, primarily driven by the continued growth of our
origination platform and higher production volume
- Compensation expense totaled $17.6 million, compared to $12.5
million for 3Q23
- Driven by higher commissions on increased production volume and
growth of the production team
- Securitization expenses totaled $3.2 million from issuing one
securitization during the quarter, compared to costs of $4.9
million for two securitizations during 3Q23
- Loan servicing expense totaled $5.7 million, a 15.4% increase
from $4.9 million for 3Q23, driven by portfolio growth
- Professional fees totaled $2.3 million, a 169.9% increase from
$0.9 million for 3Q23, driven by increased legal expenses
- REO expenses totaled $2.0 million, a 57.5% increase from $1.2
million for 3Q23, driven by higher valuation adjustment and
property preservation expenses
SECURITIZATIONS ($ in thousands)
Securities
Balance at Balance at Trusts Issued
9/30/2024 W.A. Rate 9/30/2023 W.A. Rate
2017-2 Trust
245,601
36,321
4.14
%
48,206
3.95
%
2018-1 Trust
176,816
26,820
4.14
%
35,010
3.99
%
2018-2 Trust
307,988
63,005
4.49
%
80,409
4.43
%
2019-1 Trust
235,580
64,004
4.12
%
79,215
4.06
%
2019-2 Trust
207,020
50,835
3.42
%
69,216
3.40
%
2019-3 Trust
154,419
50,268
3.28
%
60,482
3.29
%
2020-1 Trust
248,700
96,201
2.89
%
110,958
2.89
%
2020-2 Trust
96,352
-
-
49,528
4.59
%
2021-1 Trust
251,301
157,675
1.77
%
176,529
1.76
%
2021-2 Trust
194,918
129,046
2.06
%
149,431
2.02
%
2021-3 Trust
204,205
142,029
2.47
%
161,467
2.47
%
2021-4 Trust
319,116
219,627
3.23
%
250,941
3.24
%
2022-1 Trust
273,594
221,565
3.94
%
240,733
3.94
%
2022-2 Trust
241,388
198,288
5.07
%
221,631
5.08
%
2022-MC1 Trust
84,967
18,401
6.88
%
35,677
6.90
%
2022-3 Trust
296,323
239,881
5.71
%
262,308
5.71
%
2022-4 Trust
308,357
239,871
6.21
%
283,270
6.23
%
2022-5 Trust
188,754
138,941
7.08
%
171,183
7.05
%
2023-1 Trust
198,715
156,125
7.03
%
181,006
7.01
%
2023-1R Trust
64,833
44,985
7.61
%
60,515
7.69
%
2023-2 Trust
202,210
168,556
7.33
%
194,955
7.19
%
2023-RTL1 Trust
81,608
81,608
8.24
%
81,608
8.23
%
2023-3 Trust
234,741
217,620
7.94
%
232,802
7.80
%
2023-4 Trust
202,890
196,999
8.40
%
2024-1 Trust
209,862
187,751
7.64
%
2024-2 Trust
286,235
267,393
7.06
%
2024-3 Trust
204,599
196,559
7.20
%
2024-4 Trust
253,612
252,307
6.90
%
$
5,974,704
$
3,862,681
5.72
%
$
3,237,080
5.01
%
Discussion of results
- The weighted average rate on Velocity’s outstanding
securitizations was 5.72% as of September 30, 2024, an increase of
71 bps from September 30, 2023
- The company completed one securitization during 3Q24, totaling
$253.6 million of securities issued with a weighted average rate of
6.9%
- Down from a weighted average rate of 7.6% for securitizations
issued during 3Q23
- Sold two retained tranches from 2023 securitizations during
3Q24, totaling $36.6 million of securities issued
- Subsequent to quarter end, the company completed the VCC 2024-5
securitization totaling $300.4 million of securities issued with a
weighted average rate of 6.0%
- Collapsed the VCC 2020-2 securitization totaling $39.4 million
in outstanding bonds in 3Q24, which unlocked $25.1 million of
retained equity
- The collateral from the collapsed securitization was refinanced
on warehouse lines and will be securitized in future periods
RESOLUTION ACTIVITIES LONG-TERM
LOANS RESOLUTION ACTIVITY THIRD QUARTER
2024 THIRD QUARTER 2023 ($ in thousands)
UPB $
Gain / (Loss)$ UPB $ Gain / (Loss)$ Paid in
full
$
23,874.5
$
965.2
$
20,668.0
$
758.0
Paid current
34,956.6
567.0
26,950.0
206.0
REO sold (a)
1,431.4
290.0
6,341.0
162.0
Total resolutions
$
60,262.6
$
1,822.2
$
53,959.0
$
1,126.0
Resolutions as a % of nonperforming UPB
103.0
%
102.1
%
SHORT-TERM AND FORBEARANCE
LOANS RESOLUTION ACTIVITY THIRD QUARTER
2024 THIRD QUARTER 2023 ($ in thousands)
UPB $
Gain / (Loss)$ UPB $ Gain / (Loss)$ Paid in
full
$
4,974.1
$
151.0
$
2,967.0
$
38.0
Paid current
2,122.0
7.3
6,292.0
-
REO sold
1,260.3
325.1
2,434.0
(11.0
)
Total resolutions
$
8,356.3
$
483.5
$
11,693.0
$
27.0
Resolutions as a % of nonperforming UPB
105.8
%
100.2
%
Grand total resolutions
$
68,618.9
$
2,305.6
$
65,652.0
$
1,153.0
Grand total resolutions as a % of nonperforming UPB
103.4
%
101.8
%
Discussion of results:
- NPL resolution totaled $68.6 million in UPB, realizing 103.4%
of UPB resolved compared to $65.7 million in UPB and realization of
101.8% of UPB resolved for 3Q23
- The UPB of loan resolutions in 3Q24 was in line with the recent
five-quarter resolution average of $68.1 million in UPB and 102.1%
of UPB resolved
Velocity’s executive management team will host a conference call
and webcast on November 7th, 2024, at 2:00 p.m. Pacific Time / 5:00
p.m. Eastern Time to review 3Q24 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
November 29, 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 #8544057. 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 9/30/2024 6/30/2024
3/31/2024 12/31/2023 9/30/2023
Unaudited Unaudited Unaudited Audited
Unaudited (In thousands)
Assets Cash and cash
equivalents
$
44,094
$
47,366
$
34,829
$
40,566
$
29,393
Restricted cash
23,167
32,293
24,216
21,361
17,703
Loans held for sale, at fair value
19,231
-
-
17,590
19,536
Loans held for investment, at fair value
2,354,718
1,971,683
1,649,540
1,306,072
951,990
Loans held for investment, at amortized cost
2,526,320
2,619,619
2,727,518
2,828,123
2,945,840
Total loans, net
4,900,269
4,591,302
4,377,058
4,151,785
3,917,366
Accrued interest receivables
32,944
31,124
29,374
27,028
24,756
Receivables due from servicers
93,681
82,359
87,523
85,077
70,139
Other receivables
4,265
6,566
2,113
8,763
236
Real estate owned, net
62,361
50,757
46,280
44,268
29,299
Property and equipment, net
1,693
1,912
2,013
2,785
2,861
Deferred tax asset
14,501
1,144
1,580
2,339
705
Mortgage Servicing Rights, at fair value
12,416
12,229
9,022
8,578
9,786
Derivative assets
-
-
1,967
-
1,261
Goodwill
6,775
6,775
6,775
6,775
6,775
Other assets
6,308
9,566
5,468
5,248
7,028
Total Assets
$
5,202,474
$
4,873,393
$
4,628,218
$
4,404,573
$
4,117,308
Liabilities and members' equity Accounts payable and
accrued expenses
$
140,534
$
138,033
$
123,988
$
121,969
$
97,869
Secured financing, net
284,371
283,909
283,813
211,083
210,774
Securitized debt, at amortized cost
2,105,099
2,228,941
2,329,906
2,418,811
2,504,334
Securitized debt, at fair value
1,749,268
1,509,952
1,073,843
877,417
669,139
Warehouse & repurchase facilities
434,027
237,437
360,216
334,755
215,176
Derivative liability
1,486
374
-
3,665
-
Total Liabilities
4,714,785
4,398,646
4,171,766
3,967,700
3,697,292
Stockholders' Equity Stockholders' equity
484,636
471,323
452,941
433,444
416,398
Noncontrolling interest in subsidiary
3,053
3,424
3,511
3,429
3,618
Total equity
487,689
474,747
456,452
436,873
420,016
Total Liabilities and members' equity
$
5,202,474
$
4,873,393
$
4,628,218
$
4,404,573
$
4,117,308
Book value per share
$
14.91
$
14.52
$
14.01
$
13.49
$
13.00
Shares outstanding
32,712
(1)
32,701
(2)
32,574
(3)
32,395
(4)
32,314
(5)
(1)
Based on 32,711,910 common shares outstanding as of September 30,
2024, and excludes unvested shares of common stock authorized for
incentive compensation totaling 402,935.
(2)
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.
(3)
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.
(4)
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.
(5)
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.
Velocity Financial,
Inc.
Consolidated Statements of
Income (Quarters)
Quarter Ended ($ in thousands)
9/30/2024
6/30/2024 3/31/2024 12/31/2023
9/30/2023 Unaudited Unaudited Unaudited
Unaudited Unaudited Revenues Interest income
$
105,070
$
97,760
$
90,529
$
86,269
$
79,088
Interest expense - portfolio related
63,871
59,188
55,675
51,405
47,583
Net interest income - portfolio related
41,199
38,572
34,854
34,864
31,505
Interest expense - corporate debt
6,143
6,155
5,380
4,140
4,138
Net interest income
35,056
32,417
29,474
30,724
27,367
Provision for loan losses
(69
)
218
1,002
827
154
Net interest income after provision for loan losses
35,125
32,199
28,472
29,897
27,213
Other operating income Gain on disposition of loans
2,291
3,168
1,699
1,482
3,606
Unrealized gain (loss) on fair value loans
35,530
17,123
18,925
39,367
(1,284
)
Unrealized gain (loss) on fair value securitized debt
(24,995
)
(4,643
)
(2,318
)
(24,085
)
9,692
Unrealized gain/(loss) on mortgage servicing rights
(993
)
(373
)
444
(1,208
)
341
Origination fee income
6,704
5,072
4,986
3,981
3,323
Interest income on cash balance
1,676
1,731
1,631
1,716
1,342
Other income (expense)
519
483
408
418
340
Total other operating income
20,732
22,561
25,775
21,670
17,360
Net revenue
55,857
54,760
54,247
51,567
44,573
Operating expenses Compensation and employee benefits
17,586
16,562
15,357
15,143
12,523
Origination expenses
867
749
646
173
273
Securitizations expenses
3,186
6,232
2,874
2,709
4,930
Rent and occupancy
519
617
498
551
472
Loan servicing
5,656
5,160
4,824
4,636
4,901
Professional fees
2,305
1,718
2,115
1,733
854
Real estate owned, net
1,951
1,355
2,455
2,068
1,239
Other operating expenses
2,543
2,494
2,242
2,248
2,142
Total operating expenses
34,613
34,887
31,011
29,260
27,334
Income before income taxes
21,244
19,873
23,236
22,307
17,239
Income tax expense
5,627
5,162
5,903
5,141
5,070
Net income
15,617
14,711
17,333
17,166
12,169
Net income attributable to noncontrolling interest
(186
)
(67
)
82
(189
)
83
Net income attributable to Velocity Financial, Inc.
15,803
14,778
17,251
17,355
12,086
Less undistributed earnings attributable to participating
securities
191
182
217
225
183
Net earnings attributable to common shareholders
$
15,612
$
14,596
$
17,034
$
17,130
$
11,903
Basic earnings (loss) per share
$
0.48
$
0.45
$
0.52
$
0.53
$
0.37
Diluted earnings (loss) per common share
$
0.44
$
0.42
$
0.49
$
0.50
$
0.35
Basic weighted average common shares outstanding
32,711
32,585
32,541
32,326
32,275
Diluted weighted average common shares outstanding
35,895
35,600
35,439
34,991
34,731
Velocity Financial,
Inc.
Net Interest Margin ‒
Portfolio Related and Total Company
(Unaudited)
Quarters:
Quarter Ended September 30, 2024 Quarter Ended
September 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
$
3,166
$
3,170
Loans held for investment
4,575,745
3,770,460
Total loans
$
4,578,911
$
105,070
9.18
%
$
3,773,630
$
79,088
8.38
%
Debt: Warehouse and repurchase facilities
$
311,560
7,105
9.12
%
$
192,855
4,943
10.25
%
Securitizations
3,840,480
56,766
5.91
%
3,186,756
42,640
5.35
%
Total debt - portfolio related
4,152,040
63,871
6.15
%
3,379,611
47,583
5.63
%
Corporate debt
290,000
6,143
8.47
%
215,000
4,138
7.70
%
Total debt
$
4,442,040
$
70,014
6.30
%
$
3,594,611
$
51,721
5.76
%
Net interest spread - portfolio related (2)
3.03
%
2.75
%
Net interest margin - portfolio related
3.60
%
3.34
%
Net interest spread - total company (3)
2.87
%
2.63
%
Net interest margin - total company
3.06
%
2.90
%
(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) 9/30/2024 6/30/2024 3/31/2024
12/31/2023 9/30/2023 Net Income
$
15,803
$
14,778
$
17,251
$
17,355
$
12,086
Tax liability reduction
-
-
(1,866
)
-
Equity award & ESPP costs
1,146
1,140
998
673
832
Core Net Income
$
16,949
$
15,918
$
18,249
$
16,161
$
12,918
Diluted weighted average common shares outstanding
35,895
35,600
35,439
34,991
34,731
Core diluted earnings per share
$
0.47
$
0.45
$
0.51
$
0.46
$
0.37
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241107057086/en/
Investors and Media: Chris Oltmann (818) 532-3708
Grafico Azioni Velocity Financial (NYSE:VEL)
Storico
Da Ott 2024 a Nov 2024
Grafico Azioni Velocity Financial (NYSE:VEL)
Storico
Da Nov 2023 a Nov 2024
