Fourth Quarter Highlights:
WESTLAKE VILLAGE, Calif., March 06, 2025--(BUSINESS WIRE)--Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company), a leader in business purpose loans, reported net income of $68.4 million and core net income of $72.9 million for the full year 2024, compared to net income of $52.3 million and core net income of $53.4 million for the full year 2023. Earnings and core earnings per diluted share were $1.91 and $2.03, respectively, for the full year 2024, compared to $1.52 and $1.54 for the full year 2023.
"Velocity delivered impressive earnings in the fourth quarter and full year 2024," said Chris Farrar, President and CEO. "The Company’s record full-year 2024 earnings were driven by continued strong production, which also reached record levels in 2024, on both a UPB and loans produced basis and by maintaining high underwriting standards. Our success resulted from ongoing initiatives to grow and streamline our loan production platform to capture a greater share of the large but fragmented business purpose loan market. I’m especially proud of our team’s ability to achieve outstanding production volume growth while remaining focused on maintaining strong returns with average loan coupons of 11 percent. This discipline is a key driver of our strong earnings and the reason we exceeded our 5x25 goal of $5 billion in UPB loan portfolio by 2025. Velocity is poised to build on our momentum to drive sustained earnings growth and enhanced long-term shareholder value."
(1) |
Core income and Core EPS are non-GAAP measures that exclude nonrecurring and unusual activities from GAAP net income. |
|
(2) |
Held for Investment (HFI) includes the unpaid principal balance of loans carried on an amortized cost basis and loans carried at fair value (FVO). |
|
(3) |
Liquidity includes unrestricted cash reserves of $49.9 million and available liquidity in unfinanced loans of $46.0 million. |
Fourth Quarter Operating Results
KEY PERFORMANCE INDICATORS | ||||||||||||
($ in thousands) | 4Q 2024 |
4Q 2023 |
$ Variance |
% Variance |
||||||||
Pretax income | $ |
32,038.2 |
$ |
22,307.3 |
$ |
9,730.8 |
43.6 |
% |
||||
Net income | $ |
20,587.1 |
$ |
17,354.6 |
$ |
3,232.5 |
18.6 |
% |
||||
Diluted earnings per share | $ |
0.57 |
$ |
0.50 |
$ |
0.07 |
15.0 |
% |
||||
Core pretax income | $ |
33,464.0 |
$ |
21,554.8 |
$ |
11,909.2 |
55.3 |
% |
||||
Core net income(a) | $ |
21,754.4 |
$ |
16,161.5 |
$ |
5,592.9 |
34.6 |
% |
||||
Core diluted earnings per share(a) | $ |
0.60 |
$ |
0.46 |
$ |
0.14 |
30.5 |
% |
||||
Pretax return on equity | 25.69 |
% |
20.66 |
% |
n.a. | 24.3 |
% |
|||||
Core pretax return on equity(a) | 26.83 |
% |
19.96 |
% |
n.a. | 34.4 |
% |
|||||
Net interest margin - portfolio | 3.70 |
% |
3.52 |
% |
n.a. | 5.3 |
% |
|||||
Net interest margin - total company | 3.20 |
% |
3.10 |
% |
n.a. | 3.2 |
% |
|||||
Average common equity | $ |
498,887.4 |
$ |
431,891.2 |
$ |
66,996.2 |
15.5 |
% |
(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:
TOTAL LOAN PORTFOLIO | |||||||||||||
($ of UPB in millions) | 4Q 2024 |
4Q 2023 |
$ Variance | % Variance | |||||||||
Held for Investment | |||||||||||||
Investor 1-4 Rental | $ |
2,653.3 |
$ |
2,224.8 |
$ |
428.5 |
19.3 |
% |
|||||
Mixed Use | 560.5 |
474.9 |
85.6 |
18.0 |
% |
||||||||
Multi-Family | 367.0 |
316.3 |
50.7 |
16.0 |
% |
||||||||
Retail | 446.6 |
344.0 |
102.6 |
29.8 |
% |
||||||||
Warehouse | 334.3 |
265.0 |
69.3 |
26.1 |
% |
||||||||
All Other | 694.2 |
430.9 |
263.4 |
61.1 |
% |
||||||||
Total | $ |
5,055.9 |
$ |
4,055.9 |
$ |
1,000.0 |
24.7 |
% |
|||||
Held for Sale | |||||||||||||
Investor 1-4 Rental | $ |
- |
$ |
17.0 |
$ |
(17 |
) |
(100.0 |
)% |
||||
Government Insured Multifamily (CHHC) | - |
- |
- |
n.m. | |||||||||
Multi-Family | - |
- |
- |
n.m. | |||||||||
Warehouse | - |
- |
- |
n.m. | |||||||||
All Other | - |
- |
- |
n.m. | |||||||||
Total Managed Loan Portfolio UPB | $ |
5,055.9 |
$ |
4,072.9 |
$ |
983.0 |
24.1 |
% |
|||||
Key loan portfolio metrics: | |||||||||||||
Total loan count | 12,932 |
10,477 |
|||||||||||
Weighted average loan to value | 66.6 |
% |
67.8 |
% |
|||||||||
Weighted average coupon | 9.53 |
% |
8.88 |
% |
|||||||||
Weighted average total portfolio yield | 9.34 |
% |
8.70 |
% |
|||||||||
Weighted average portfolio debt cost | 6.14 |
% |
5.75 |
% |
|||||||||
n.m. - non meaningful |
Discussion of results:
LOAN PRODUCTION VOLUMES | ||||||||
($ in millions) | 4Q 2024 |
4Q 2023 |
$ Variance | % Variance | ||||
Investor 1-4 Rental | $ |
199.9 |
$ |
183.2 |
$ |
16.7 |
9.1% |
|
Traditional Commercial | 320.3 |
130.3 |
190.0 |
145.9% |
||||
Short-term | 38.7 |
38.6 |
0.0 |
0.1% |
||||
Government Insured Multifamily (CHHC) | 4.6 |
- |
4.6 |
n.m. | ||||
Total loan production | $ |
563.5 |
$ |
352.1 |
$ |
211.3 |
60.0% |
|
Acquisitions | $ |
- |
$ |
- |
Discussion of results:
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS | |||||||||||||
($ in thousands) | 4Q 2024 |
4Q 2023 |
$ Variance | % Variance | |||||||||
Nonperforming loans(a) | $ |
539,438.0 |
$ |
394,562.0 |
$ |
144,876.0 |
36.7 |
% |
|||||
Total HFI loans | $ |
5,055,937.0 |
$ |
4,055,936.0 |
$ |
1,000,001.0 |
24.7 |
% |
|||||
Nonperforming loans % total HFI loans | 10.7 |
% |
9.7 |
% |
n.a. | 9.7 |
% |
||||||
Average nonperforming loans subject to CECL reserve (b) | $ |
314,510.7 |
$ |
332,971.1 |
$ |
(18,460.4 |
) |
(5.5 |
)% |
||||
Loan loss reserve | $ |
4,174.0 |
$ |
4,768.9 |
$ |
(594.9 |
) |
(12.5 |
)% |
||||
Total charge offs | $ |
698.8 |
$ |
743.5 |
$ |
(44.7 |
) |
(6.0 |
)% |
||||
Charge-offs as a % of avg. nonperforming CECL loans(c) | 0.9 |
% |
0.9 |
% |
n.a. | (0.5 |
)% |
||||||
Gain on transfer to REO | $ |
2,381.7 |
$ |
1,403.0 |
$ |
978.7 |
69.8 |
% |
|||||
REO valuations, net | $ |
(2,217.3 |
) |
$ |
(1,417.0 |
) |
$ |
(800.3 |
) |
56.5 |
% |
||
Gain (loss) on sale of REO | $ |
3,411.2 |
$ |
456.0 |
$ |
2,955.2 |
648.1 |
% |
|||||
Total gain on REO | $ |
3,575.5 |
$ |
442.0 |
$ |
3,133.5 |
708.9 |
% |
(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:
NET REVENUES | |||||||||||||
($ in thousands) | 4Q 2024 |
4Q 2023 |
$ Variance |
% Variance |
|||||||||
Interest income | $ |
113,484.1 |
$ |
86,269.5 |
$ |
27,214.6 |
31.5 |
% |
|||||
Interest expense - portfolio related | (68,484.4 |
) |
(51,405.0 |
) |
(17,079.4 |
) |
33.2 |
% |
|||||
Net Interest Income - portfolio related | 44,999.7 |
34,864.5 |
10,135.2 |
29.1 |
% |
||||||||
Interest expense - corporate debt | (6,142.8 |
) |
(4,139.9 |
) |
(2,002.8 |
) |
48.4 |
% |
|||||
Loan loss provision | (22.0 |
) |
(826.7 |
) |
804.7 |
(97.3 |
)% |
||||||
Net interest income after provision for loan losses | $ |
38,834.9 |
$ |
29,896.8 |
$ |
8,938.0 |
29.9 |
% |
|||||
Gain on disposition of loans | 2,784.0 |
1,482.0 |
1,302.0 |
87.9 |
% |
||||||||
Unrealized (loss) gain on fair value loans | (15,722.6 |
) |
39,367.4 |
(55,090.0 |
) |
(139.9 |
)% |
||||||
Unrealized gain (loss) on fair value of securitized debt | 34,538.5 |
(24,085.1 |
) |
58,623.6 |
(243.4 |
)% |
|||||||
Unrealized gain/(loss) on mortgage servicing rights | 1,297.0 |
(1,208.2 |
) |
2,505.2 |
(207.4 |
)% |
|||||||
Origination fee income | 7,245.1 |
3,981.4 |
3,263.7 |
82.0 |
% |
||||||||
Interest income on cash balance | 1,451.3 |
1,715.6 |
(264.3 |
) |
(15.4 |
)% |
|||||||
Other operating income (expense) | 736.4 |
418.1 |
318.3 |
76.1 |
% |
||||||||
Total other operating income (expense) | $ |
32,329.7 |
$ |
21,670.2 |
$ |
10,659.5 |
49.2 |
% |
|||||
Net revenue | $ |
71,164.6 |
$ |
51,567.1 |
$ |
19,597.5 |
38.0 |
% |
Discussion of results:
OPERATING EXPENSES | |||||||||||
($ in thousands) | 4Q 2024 |
4Q 2023 |
$ Variance |
% Variance |
|||||||
Compensation and employee benefits | $ |
20,083.5 |
$ |
15,143.37 |
$ |
4,940.2 |
32.6 |
% |
|||
Origination expense | 815.6 |
172.5 |
643.1 |
372.8 |
% |
||||||
Securitization expenses | 7,103.1 |
2,709.2 |
4,394.0 |
162.2 |
% |
||||||
Rent and occupancy | 295.8 |
550.6 |
(254.8 |
) |
(46.3 |
)% |
|||||
Loan servicing | 6,749.1 |
4,635.8 |
2,113.3 |
45.6 |
% |
||||||
Professional fees | 1,476.9 |
1,732.8 |
(256.0 |
) |
(14.8 |
)% |
|||||
Real estate owned, net | 268.4 |
2,068.2 |
(1,799.8 |
) |
(87.0 |
)% |
|||||
Other expenses | 2,335.3 |
2,248.3 |
87.0 |
3.9 |
% |
||||||
Total operating expenses | $ |
39,126.8 |
$ |
29,259.7 |
$ |
9,867.0 |
33.7 |
% |
Discussion of results:
SECURITIZATIONS | ||||||||||||
($ in thousands) | Securities | Balance at | Balance at | |||||||||
Trusts | Issued | 12/31/2024 | W.A. Rate | 12/31/2023 | W.A. Rate | |||||||
2017-2 Trust | 245,601 |
33,012 |
4.09 |
% |
45,869 |
3.97 |
% |
|||||
2018-1 Trust | 176,816 |
24,482 |
4.13 |
% |
33,505 |
4.03 |
% |
|||||
2018-2 Trust | 307,988 |
59,091 |
4.47 |
% |
76,871 |
4.48 |
% |
|||||
2019-1 Trust | 235,580 |
60,459 |
4.07 |
% |
76,391 |
4.07 |
% |
|||||
2019-2 Trust | 207,020 |
... | 46,872 |
3.41 |
% |
66,340 |
3.42 |
% |
||||
2019-3 Trust | 154,419 |
46,827 |
3.30 |
% |
58,089 |
3.29 |
% |
|||||
2020-1 Trust | 248,700 |
91,135 |
2.88 |
% |
106,976 |
2.85 |
% |
|||||
2020-2 Trust | 96,352 |
- |
- |
45,180 |
4.61 |
% |
||||||
2021-1 Trust | 251,301 |
152,995 |
1.76 |
% |
171,748 |
1.76 |
% |
|||||
2021-2 Trust | 194,918 |
125,391 |
2.04 |
% |
143,797 |
2.02 |
% |
|||||
2021-3 Trust | 204,205 |
136,510 |
2.47 |
% |
158,043 |
2.46 |
% |
|||||
2021-4 Trust | 319,116 |
214,284 |
3.25 |
% |
244,919 |
3.22 |
% |
|||||
2022-1 Trust | 273,594 |
217,190 |
3.94 |
% |
236,358 |
3.93 |
% |
|||||
2022-2 Trust | 241,388 |
191,764 |
5.06 |
% |
210,217 |
5.07 |
% |
|||||
2022-MC1 Trust | 84,967 |
12,041 |
6.90 |
% |
31,508 |
6.90 |
% |
|||||
2022-3 Trust | 296,323 |
234,647 |
5.72 |
% |
257,047 |
5.70 |
% |
|||||
2022-4 Trust | 308,357 |
232,064 |
6.21 |
% |
274,419 |
6.24 |
% |
|||||
2022-5 Trust | 188,754 |
132,519 |
7.04 |
% |
162,925 |
7.06 |
% |
|||||
2023-1 Trust | 198,715 |
144,724 |
7.02 |
% |
177,250 |
7.02 |
% |
|||||
2023-1R Trust | 64,833 |
38,508 |
7.57 |
% |
58,237 |
7.68 |
% |
|||||
2023-2 Trust | 202,210 |
157,198 |
7.33 |
% |
188,805 |
7.19 |
% |
|||||
2023-RTL1 Trust | 81,608 |
81,608 |
8.24 |
% |
81,608 |
8.24 |
% |
|||||
2023-3 Trust | 234,741 |
195,799 |
7.94 |
% |
227,228 |
7.82 |
% |
|||||
2023-4 Trust | 202,890 |
181,307 |
8.33 |
% |
201,813 |
8.38 |
% |
|||||
2024-1 Trust | 209,862 |
178,234 |
7.75 |
% |
||||||||
2024-2 Trust | 286,235 |
260,500 |
7.11 |
% |
||||||||
2024-3 Trust | 204,599 |
191,583 |
7.20 |
% |
||||||||
2024-4 Trust | 253,612 |
243,945 |
7.08 |
% |
||||||||
2024-5 Trust | 292,880 |
290,552 |
6.14 |
% |
||||||||
2024-6 Trust | 293,895 |
293,767 |
5.92 |
% |
||||||||
$ |
6,561,479 |
$ |
4,269,008 |
5.75 |
% |
$ |
3,335,143 |
5.22 |
% |
|||
Discussion of results
RESOLUTION ACTIVITIES | ||||||||||||
LONG-TERM LOANS | ||||||||||||
RESOLUTION ACTIVITY | FOURTH QUARTER 2024 | FOURTH QUARTER 2023 | ||||||||||
($ in thousands) | UPB $ | Gain / (Loss) $ | UPB $ | Gain / (Loss) $ | ||||||||
Paid in full | $ |
32,078.3 |
$ |
1,810.0 |
$ |
22,341.8 |
$ |
826.2 |
||||
Paid current | 19,830.3 |
182.4 |
36,025.9 |
206.0 |
||||||||
REO sold (a) | 4,821.4 |
3,243.0 |
1,588.1 |
140.4 |
||||||||
Total resolutions | $ |
56,730 |
$ |
5,235 |
$ |
59,955.8 |
$ |
1,172.5 |
||||
Resolutions as a % of nonperforming UPB | 109.2 |
% |
102.0 |
% |
||||||||
SHORT-TERM AND FORBEARANCE LOANS | ||||||||||||
RESOLUTION ACTIVITY | FOURTH QUARTER 2024 | FOURTH QUARTER 2023 | ||||||||||
($ in thousands) | UPB $ | Gain / (Loss) $ | UPB $ | Gain / (Loss) $ | ||||||||
Paid in full | $ |
9,858.1 |
$ |
170.9 |
$ |
2,770.0 |
$ |
37.0 |
||||
Paid current | 7,536.0 |
1.2 |
7,560.3 |
12.9 |
||||||||
REO sold | 5,233.2 |
168.1 |
603.8 |
315.9 |
||||||||
Total resolutions | $ |
22,627 |
$ |
340.2 |
$ |
10,934.1 |
$ |
365.8 |
||||
Resolutions as a % of nonperforming UPB | 101.5 |
% |
103.3 |
% |
||||||||
Grand total resolutions | $ |
79,357.3 |
$ |
5,575.6 |
$ |
70,889.8 |
$ |
1,538.3 |
||||
Grand total resolutions as a % of nonperforming UPB | 107.0 |
% |
102.2 |
% |
Discussion of results:
Full Year 2024 Operating Results
FULL-YEAR OPERATING RESULTS | ||||||||||||
($ in thousands) | FY 2024 | FY 2023 | $ Variance | % Variance | ||||||||
Investor 1-4 Rental | $ |
771,129.8 |
$ |
616,837.0 |
$ |
154,292.8 |
25.0 |
% |
||||
Traditional Commercial | 836,763.0 |
361,958.5 |
474,804.5 |
131.2 |
% |
|||||||
Short-term | 209,707.4 |
120,456.7 |
89,250.7 |
74.1 |
% |
|||||||
Government Insured Multifamily (CHHC) | 23,553.8 |
19,088.2 |
4,465.6 |
23.4 |
% |
|||||||
Total loan production | $ |
1,841,154.0 |
$ |
1,118,340.4 |
$ |
722,813.6 |
64.6 |
% |
||||
Average loans | $ |
4,488,300.8 |
$ |
3,725,197.0 |
$ |
763,103.8 |
20.5 |
% |
||||
Portfolio yield | 9.06 |
% |
8.34 |
% |
n.a. | 8.7 |
% |
|||||
Average debt - portfolio related | $ |
4,076,596.4 |
$ |
3,341,411.0 |
$ |
735,185.4 |
22.0 |
% |
||||
Cost of funds - portfolio related | 6.06 |
% |
5.58 |
% |
n.a. | 8.7 |
% |
|||||
Net Interest Margin - Portfolio | 3.56 |
% |
3.34 |
% |
n.a. | 6.5 |
% |
|||||
Total gains on NPL resolutions | $ |
10,190.9 |
$ |
5,521.0 |
$ |
4,670 |
84.6 |
% |
||||
Nonperforming loans % total HFI loans | 10.7 |
% |
9.7 |
% |
n.a. | 9.7 |
% |
|||||
Total Net interest income(a) | $ |
134,631.1 |
$ |
105,836.3 |
$ |
28,794.9 |
27.2 |
% |
||||
Total other income | $ |
101,397.66 |
$ |
65,909.84 |
$ |
35,487.82 |
53.8 |
% |
||||
Total expenses(b) | $ |
167,610.82 |
$ |
119,473.20 |
$ |
48,137.62 |
40.3 |
% |
||||
Net income | $ |
68,419.0 |
$ |
52,272.6 |
$ |
16,146.4 |
30.9 |
% |
||||
Diluted EPS | $ |
1.91 |
$ |
1.52 |
$ |
0.40 |
26.2 |
% |
||||
Core net income(c) | $ |
72,870.5 |
$ |
53,384.3 |
$ |
19,486.3 |
36.5 |
% |
||||
Core diluted EPS(c) | $ |
2.03 |
$ |
1.54 |
$ |
0.49 |
31.8 |
% |
||||
Pretax return on equity | 20.3 |
% |
17.5 |
% |
n.a. | 16.2 |
% |
(a) | After provision for loan losses. | |
(b) | Total expenses includes total operating expenses, income taxes and income attributable to minority interest. | |
(c) | 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 | |
n.a.- not applicable |
Year Ended | ||||||||||||
($ in thousands) | 12/31/2024 | 12/31/2023 | $ Variance | % Variance | ||||||||
Average nonperforming loans for the period (1) | $ |
318,858 |
$ |
328,105.0 |
$ |
(9,247.0 |
) |
(2.8 |
)% |
|||
Charge-offs | 1,768.1 |
2,039.6 |
(271.5 |
) |
(13.3 |
)% |
||||||
Charge-offs / Average nonperforming loans for the period (1) | 0.55 |
% |
0.62 |
% |
- |
(10.8 |
)% |
|||||
Gain on REO: | ||||||||||||
Gain on transfer of REO | 8,703.9 |
7,411.9 |
1,292.0 |
17.4 |
% |
|||||||
Gain on sale of REO | 4,275.3 |
568.0 |
3,707.4 |
652.7 |
% |
|||||||
REO valuations, net | (6,120.8 |
) |
(3,903.4 |
) |
(2,217.4 |
) |
56.8 |
% |
||||
Total gain on REO (2) | $ |
6,858.5 |
$ |
4,076.5 |
$ |
2,781.9 |
68.2 |
% |
(1) |
Reflects the monthly average of nonperforming loans held for investment, excluding FVO loans, during the period | |||
(2) |
Total gain on REO excludes charge-offs. |
Discussion of full-year 2024 results:
(1) | Core income and Core EPS are non-GAAP measures that exclude nonrecurring and unusual activities from GAAP net income. |
Velocity’s executive management team will host a conference call and webcast on March 6th, 2025, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to review 4Q24 and the full-year 2024 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 March 28, 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 2785466. 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 | |||||||||||||||
12/31/2024 | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 | |||||||||||
Unaudited | Unaudited | Unaudited | Unaudited | Audited | |||||||||||
(In thousands) | |||||||||||||||
Assets | |||||||||||||||
Cash and cash equivalents | $ |
49,901 |
$ |
44,094 |
$ |
47,366 |
$ |
34,829 |
$ |
40,566 |
|||||
Restricted cash | 20,929 |
23,167 |
32,293 |
24,216 |
21,361 |
||||||||||
Loans held for sale, at fair value | - |
19,231 |
- |
- |
17,590 |
||||||||||
Loans held for investment, at fair value | 2,766,951 |
2,354,718 |
1,971,683 |
1,649,540 |
1,306,072 |
||||||||||
Loans held for investment, at amortized cost | 2,420,116 |
2,526,320 |
2,619,619 |
2,727,518 |
2,828,123 |
||||||||||
Total loans, net | 5,187,067 |
4,900,269 |
4,591,302 |
4,377,058 |
4,151,785 |
||||||||||
Accrued interest receivables | 35,235 |
32,944 |
31,124 |
29,374 |
27,028 |
||||||||||
Receivables due from servicers | 123,494 |
93,681 |
82,359 |
87,523 |
85,077 |
||||||||||
Other receivables | 1,359 |
4,265 |
6,566 |
2,113 |
8,763 |
||||||||||
Real estate owned, net | 68,000 |
62,361 |
50,757 |
46,280 |
44,268 |
||||||||||
Property and equipment, net | 1,650 |
1,693 |
1,912 |
2,013 |
2,785 |
||||||||||
Deferred tax asset | 13,612 |
14,501 |
1,144 |
1,580 |
2,339 |
||||||||||
Mortgage Servicing Rights, at fair value | 13,712 |
12,416 |
12,229 |
9,022 |
8,578 |
||||||||||
Derivative assets | - |
- |
- |
1,967 |
- |
||||||||||
Goodwill | 6,775 |
6,775 |
6,775 |
6,775 |
6,775 |
||||||||||
Other assets | 5,674 |
6,308 |
9,566 |
5,468 |
5,248 |
||||||||||
Total Assets | $ |
5,527,408 |
$ |
5,202,474 |
$ |
4,873,393 |
$ |
4,628,218 |
$ |
4,404,573 |
|||||
Liabilities and members' equity | |||||||||||||||
Accounts payable and accrued expenses | $ |
147,814 |
$ |
140,534 |
$ |
138,033 |
$ |
123,988 |
$ |
121,969 |
|||||
Secured financing, net | 284,833 |
284,371 |
283,909 |
283,813 |
211,083 |
||||||||||
Securitized debt, at amortized cost | 2,019,056 |
2,105,099 |
2,228,941 |
2,329,906 |
2,418,811 |
||||||||||
Securitized debt, at fair value | 2,207,408 |
1,749,268 |
1,509,952 |
1,073,843 |
877,417 |
||||||||||
Warehouse & repurchase facilities | 348,082 |
434,027 |
237,437 |
360,216 |
334,755 |
||||||||||
Derivative liability | - |
1,486 |
374 |
- |
3,665 |
||||||||||
Total Liabilities | 5,007,193 |
4,714,785 |
4,398,646 |
4,171,766 |
3,967,700 |
||||||||||
Stockholders' Equity | |||||||||||||||
Stockholders' equity | 516,944 |
484,636 |
471,323 |
452,941 |
433,444 |
||||||||||
Noncontrolling interest in subsidiary | 3,271 |
3,053 |
3,424 |
3,511 |
3,429 |
||||||||||
Total equity | 520,215 |
487,689 |
474,747 |
456,452 |
436,873 |
||||||||||
Total Liabilities and members' equity | $ |
5,527,408 |
$ |
5,202,474 |
$ |
4,873,393 |
$ |
4,628,218 |
$ |
4,404,573 |
|||||
Book value per share | $ |
15.70 |
$ |
14.91 |
$ |
14.52 |
$ |
14.01 |
$ |
13.49 |
|||||
Shares outstanding | 33,143(1) |
32,712(2) |
32,701(3) |
32,574(4) |
32,395(5) |
(1) |
Based on 33,142,650 common shares outstanding as of December 31, 2024, and excludes unvested shares of common stock authorized for incentive compensation totaling 402,935. |
|
(2) |
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. |
|
(3) |
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. |
|
(4) |
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. |
|
(5) |
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. |
Velocity Financial, Inc. Consolidated Statements of Income (Quarters) |
|||||||||||||||||||
Quarter Ended | |||||||||||||||||||
($ in thousands) | 12/31/2024 | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 | ||||||||||||||
Unaudited | Unaudited | Unaudited | Unaudited | Unaudited | |||||||||||||||
Revenues | |||||||||||||||||||
Interest income | $ |
113,484 |
$ |
105,070 |
$ |
97,760 |
$ |
90,529 |
$ |
86,269 |
|||||||||
Interest expense - portfolio related | 68,484 |
63,871 |
59,188 |
55,675 |
51,405 |
||||||||||||||
Net interest income - portfolio related | 45,000 |
41,199 |
38,572 |
34,854 |
34,864 |
||||||||||||||
Interest expense - corporate debt | 6,143 |
6,143 |
6,155 |
5,380 |
4,140 |
||||||||||||||
Net interest income | 38,857 |
35,056 |
32,417 |
29,474 |
30,724 |
||||||||||||||
Provision for loan losses | 22 |
(69 |
) |
218 |
1,002 |
827 |
|||||||||||||
Net interest income after provision for loan losses | 38,835 |
35,125 |
32,199 |
28,472 |
29,897 |
||||||||||||||
Other operating income | |||||||||||||||||||
Gain on disposition of loans | 2,784 |
2,291 |
3,168 |
1,699 |
1,482 |
||||||||||||||
Unrealized gain (loss) on fair value loans | (15,723 |
) |
35,530 |
17,123 |
18,925 |
39,367 |
|||||||||||||
Unrealized gain (loss) on fair value securitized debt | 34,539 |
(24,995 |
) |
(4,643 |
) |
(2,318 |
) |
(24,085 |
) |
||||||||||
Unrealized gain/(loss) on mortgage servicing rights | 1,297 |
(993 |
) |
(373 |
) |
444 |
(1,208 |
) |
|||||||||||
Origination fee income | 7,245 |
6,704 |
5,072 |
4,986 |
3,981 |
||||||||||||||
Interest income on cash balance | 1,451 |
1,676 |
1,731 |
1,631 |
1,716 |
||||||||||||||
Other income (expense) | 736 |
519 |
483 |
408 |
418 |
||||||||||||||
Total other operating income | 32,330 |
20,732 |
22,561 |
25,775 |
21,670 |
||||||||||||||
Net revenue | 71,165 |
55,857 |
54,760 |
54,247 |
51,567 |
||||||||||||||
Operating expenses | |||||||||||||||||||
Compensation and employee benefits | 20,084 |
17,586 |
16,562 |
15,357 |
15,143 |
||||||||||||||
Origination expenses | 816 |
867 |
749 |
646 |
173 |
||||||||||||||
Securitizations expenses | 7,103 |
3,186 |
6,232 |
2,874 |
2,709 |
||||||||||||||
Rent and occupancy | 296 |
519 |
617 |
498 |
551 |
||||||||||||||
Loan servicing | 6,749 |
5,656 |
5,160 |
4,824 |
4,636 |
||||||||||||||
Professional fees | 1,477 |
2,305 |
1,718 |
2,115 |
1,733 |
||||||||||||||
Real estate owned, net | 268 |
1,951 |
1,355 |
2,455 |
2,068 |
||||||||||||||
Other operating expenses | 2,335 |
2,543 |
2,494 |
2,242 |
2,248 |
||||||||||||||
Total operating expenses | 39,127 |
34,613 |
34,887 |
31,011 |
29,260 |
||||||||||||||
Income before income taxes | 32,038 |
21,244 |
19,873 |
23,236 |
22,307 |
||||||||||||||
Income tax expense | 11,233 |
5,627 |
5,162 |
5,903 |
5,141 |
||||||||||||||
Net income | 20,805 |
15,617 |
14,711 |
17,333 |
17,166 |
||||||||||||||
Net income attributable to noncontrolling interest | 218 |
(186 |
) |
(67 |
) |
82 |
(189 |
) |
|||||||||||
Net income attributable to Velocity Financial, Inc. | 20,587 |
15,803 |
14,778 |
17,251 |
17,355 |
||||||||||||||
Less undistributed earnings attributable to participating securities | 253 |
191 |
182 |
217 |
225 |
||||||||||||||
Net earnings attributable to common shareholders | $ |
20,334 |
$ |
15,612 |
$ |
14,596 |
$ |
17,034 |
$ |
17,130 |
|||||||||
Basic earnings (loss) per share | $ |
0.62 |
$ |
0.48 |
$ |
0.45 |
$ |
0.52 |
$ |
0.53 |
|||||||||
Diluted earnings (loss) per common share | $ |
0.57 |
$ |
0.44 |
$ |
0.42 |
$ |
0.49 |
$ |
0.50 |
|||||||||
Basic weighted average common shares outstanding | 32,771 |
32,711 |
32,585 |
32,541 |
32,326 |
||||||||||||||
Diluted weighted average common shares outstanding | 36,097 |
35,895 |
35,600 |
35,439 |
34,991 |
Velocity Financial, Inc. Consolidated Statements of Income (Quarters) |
||||||
Year Ended | ||||||
($ in thousands) | 12/31/2024 | 12/31/2023 | ||||
Audited | Audited | |||||
Revenues | ||||||
Interest income | $ |
406,843 |
$ |
310,776 |
||
Interest expense - portfolio related | 247,218 |
186,468 |
||||
Net interest income - portfolio related | 159,625 |
124,307 |
||||
Interest expense - corporate debt | 23,821 |
16,556 |
||||
Net interest income | 135,804 |
107,751 |
||||
Provision for loan losses | 1,173 |
1,914 |
||||
Net interest income after provision for loan losses | 134,631 |
105,836 |
||||
Other operating income | ||||||
Gain on disposition of loans | 9,940 |
8,238 |
||||
Unrealized gain (loss) on fair value loans | 55,857 |
47,850 |
||||
Unrealized gain (loss) on fair value securitized debt | 2,581 |
(9,002 |
) |
|||
Unrealized gain/(loss) on mortgage servicing rights | 375 |
(660 |
) |
|||
Origination fee income | 24,007 |
12,450 |
||||
Interest income on cash balance | 6,490 |
5,194 |
||||
Other income (expense) | 2,148 |
1,840 |
||||
Total other operating income | 101,398 |
65,910 |
||||
Net revenue | 236,029 |
171,746 |
||||
Operating expenses | ||||||
Compensation and employee benefits | 69,589 |
48,344 |
||||
Origination expenses | 3,077 |
518 |
||||
Securitizations expenses | 19,396 |
12,923 |
||||
Rent and occupancy | 1,929 |
1,927 |
||||
Loan servicing | 22,388 |
17,631 |
||||
Professional fees | 7,616 |
4,599 |
||||
Real estate owned, net | 6,030 |
6,153 |
||||
Other operating expenses | 9,613 |
8,524 |
||||
Total operating expenses | 139,638 |
100,619 |
||||
Income before income taxes | 96,391 |
71,127 |
||||
Income tax expense | 27,925 |
18,834 |
||||
Net income | 68,466 |
52,293 |
||||
Net income attributable to noncontrolling interest | 47 |
20 |
||||
Net income attributable to Velocity Financial, Inc. | 68,419 |
52,273 |
||||
Less undistributed earnings attributable to participating securities | 834 |
753 |
||||
Net earnings attributable to common shareholders | $ |
67,585 |
$ |
51,520 |
||
Basic earnings (loss) per share | $ |
2.07 |
$ |
1.60 |
||
Diluted earnings (loss) per common share | $ |
1.91 |
$ |
1.52 |
||
Basic weighted average common shares outstanding | 32,653 |
32,206 |
||||
Diluted weighted average common shares outstanding | 35,760 |
34,484 |
Velocity Financial, Inc. Net Interest Margin ‒ Portfolio Related and Total Company (Unaudited) |
|||||||||||||||||
Quarters: |
|||||||||||||||||
Quarter Ended December 31, 2024 | Quarter Ended December 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 | $ |
3,145 |
$ |
14,918 |
|||||||||||||
Loans held for investment | 4,855,794 |
3,949,642 |
|||||||||||||||
Total loans | $ |
4,858,939 |
9.34 |
% |
$ |
3,964,560 |
$ |
86,268 |
8.70 |
% |
|||||||
Debt: | |||||||||||||||||
Warehouse and repurchase facilities | $ |
341,596 |
7,179 |
8.41 |
% |
$ |
255,266 |
6,040 |
9.46 |
% |
|||||||
Securitizations | 4,117,512 |
61,306 |
5.96 |
% |
3,320,467 |
45,365 |
5.46 |
% |
|||||||||
Total debt - portfolio related | 4,459,108 |
68,484 |
6.14 |
% |
3,575,733 |
51,405 |
5.75 |
% |
|||||||||
Corporate debt | 290,000 |
6,143 |
8.47 |
% |
215,000 |
4,138 |
7.70 |
% |
|||||||||
Total debt | $ |
4,749,108 |
$ |
74,627 |
6.29 |
% |
$ |
3,790,733 |
$ |
55,543 |
5.86 |
% |
|||||
Net interest spread - portfolio related (2) | 3.20 |
% |
2.95 |
% |
|||||||||||||
Net interest margin - portfolio related | 3.70 |
% |
3.52 |
% |
|||||||||||||
Net interest spread - total company (3) | 3.06 |
% |
2.84 |
% |
|||||||||||||
Net interest margin - total company | 3.20 |
% |
3.10 |
% |
(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. |
Years: | |||||||||||||||||
Year Ended December 31, 2024 | Year Ended December 31, 2023 | ||||||||||||||||
Interest | Average | Interest | Average | ||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | ||||||||||||
($ in thousands) | Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||
Loan portfolio: | |||||||||||||||||
Loans held for sale | $ |
6,488 |
$ |
8,615 |
|||||||||||||
Loans held for investment | 4,481,813 |
3,716,582 |
|||||||||||||||
Total loans | $ |
4,488,301 |
$ |
406,843 |
9.06 |
% |
$ |
3,725,197 |
$ |
310,775 |
8.34 |
% |
|||||
Debt: | |||||||||||||||||
Warehouse and repurchase facilities | $ |
295,936 |
26,790 |
9.05 |
% |
$ |
227,911 |
21,726 |
9.53 |
% |
|||||||
Securitizations | 3,780,660 |
220,428 |
5.83 |
% |
3,113,500 |
164,742 |
5.29 |
% |
|||||||||
Total debt - portfolio related | 4,076,596 |
247,219 |
6.06 |
% |
3,341,411 |
186,468 |
5.58 |
% |
|||||||||
Corporate debt | 282,888 |
23,821 |
8.42 |
% |
215,000 |
16,556 |
7.70 |
% |
|||||||||
Total debt | $ |
4,359,484 |
$ |
271,039 |
6.22 |
% |
$ |
3,556,411 |
$ |
203,024 |
5.71 |
% |
|||||
Net interest spread - portfolio related (1) | 3.00 |
% |
2.76 |
% |
|||||||||||||
Net interest margin - portfolio related | 3.56 |
% |
3.34 |
% |
|||||||||||||
Net interest spread - total company (2) | 2.85 |
% |
2.63 |
% |
|||||||||||||
Net interest margin - total company | 3.03 |
% |
2.89 |
% |
(1) |
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. | |
(2) |
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) | 12/31/20234 | 9/30/2024 | 6/30/2024 | 3/31/2024 | 12/31/2023 | ||||||||||
Net Income | $ |
20,587 |
$ |
15,803 |
$ |
14,778 |
$ |
17,251 |
$ |
17,355 |
|||||
Tax liability reduction | - |
- |
- |
- |
(1,866 |
) |
|||||||||
Equity award & ESPP costs | 1,167 |
1,146 |
1,140 |
998 |
673 |
||||||||||
Core Net Income | $ |
21,754 |
$ |
16,949 |
$ |
15,918 |
$ |
18,249 |
$ |
16,161 |
|||||
Diluted weighted average common shares outstanding | 36,097 |
35,895 |
35,600 |
35,439 |
34,991 |
||||||||||
Core diluted earnings per share | $ |
0.60 |
$ |
0.47 |
$ |
0.45 |
$ |
0.51 |
$ |
0.46 |
Years: |
||||||
Core Net Income | ||||||
Year Ended | ||||||
($ in thousands) | 12/31/2024 | 12/31/2023 | ||||
Net Income | $ |
68,419 |
$ |
52,273 |
||
Tax liability reduction | - |
(1,866 |
) |
|||
Equity award & ESPP costs | 4,452 |
2,977 |
||||
Core Net Income | $ |
72,871 |
$ |
53,384 |
||
Diluted weighted average common shares outstanding | $ |
35,760 |
$ |
34,484 |
||
Core diluted earnings per share | $ |
2.03 |
$ |
1.54 |
View source version on businesswire.com: https://www.businesswire.com/news/home/20250306265526/en/
Contacts
Investors and Media:
Chris Oltmann
(818) 532-3708
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