Second Quarter Highlights:
- Net income of $9.45 million and Core income(1) of $8.45
million; diluted EPS of $0.28 and Core diluted EPS of $0.25
- Core diluted EPS(1) increased 24% sequentially to $0.25 per
share in 2Q21 from $0.20 in 1Q21
- Loan production volume increased 10.07% Q/Q and totaled $256.51
million in unpaid principal balance (UPB), driven by growth in
Traditional Commercial and Short-Term products and continued strong
demand for Investor 1-4 Rental loans
- Portfolio net interest margin of 4.83%
- Book value per common share of $11.62 as of June 30, 2021
- Loans held for investment (HFI) UPB of $2.07 billion as of June
30, 2021
- Nonaccrual loans as a percentage of HFI loans was 15.30% as of
June 30, 2021
- 2Q21 nonperforming loan (NPL) resolutions totaled $59.3 million
in UPB, realizing 103.9% of UPB resolved
- VEL added to the Russell 2000 and 3000 indices in June
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company)
reported net income of $9.45 million and core income of $8.45
million for 2Q21, compared to net income of $3.40 million and core
income of $6.72 million, respectively, in 1Q21. Earnings and core
earnings per diluted share were $0.28 and $0.25, respectively, in
2Q21, compared to earnings per diluted share of $0.10 and core
earnings per diluted share of $0.20, respectively, in 1Q21. Book
value per common share was $11.62 as of June 30, 2021, compared to
$11.12 as of March 31, 2021.
“Our results this quarter demonstrate the resilience of
Velocity’s business model and the ability of our platform to
deliver strong financial results,” said Chris Farrar, President and
CEO.
“The U.S. economy improved significantly during the quarter and
has driven renewed interest from investors looking to participate
in the strong real estate markets across the country. The changes
in housing demand that have occurred over the past 15 months have
heightened the importance of Velocity’s role in providing business
purposed financing to creditworthy borrowers who fall outside of
the credit guidelines of traditional banks, and we continue to
evolve our product offerings to meet the unique needs of our
clients. Our team of talented and highly skilled mortgage
professionals has done an exceptional job achieving this objective,
and I am very optimistic about the growth opportunities for
Velocity going forward.”
Second
Quarter Operating Results
KEY PERFORMANCE INDICATORS ($ in thousands)
2Q 2021
1Q 2021
$ Variance
% Variance
Pretax income
$
12,885
$
4,604
$
8,281
180%
Net income
$
9,453
$
3,396
$
6,057
178%
Diluted earnings per share
$
0.28
$
0.10
$
0.18
174%
Core income(1)
$
8,453
$
6,722
$
1,731
26%
Core diluted earnings per share(1)
$
0.25
$
0.20
$
0.05
24%
Pretax return on equity
22.57%
8.27%
n.a.
173%
Net interest margin - portfolio
4.83%
4.10%
n.a.
18%
Net interest margin - total company
3.98%
2.59%
n.a.
54%
Average common equity
$
228,314
$
222,810
$
5,504
2%
(1) Core income and Core diluted earnings per share are non-GAAP
measures. Please see the reconciliation to GAAP net income at the
end of this release.
Discussion of results:
- Net income for 2Q21 totaled $9.45 million, an increase from
$3.40 million in 1Q21, driven by higher interest income resulting
from strong resolutions of nonperforming loans and HFI portfolio
growth ‒ GAAP net income in 2Q21 included $6.98 million of interest
income from the realization of contractual interest, default
interest, and prepayment fees on nonperforming loans in 2Q21, a 59%
increase from 1Q21
- Core income for 2Q21 totaled $8.45 million, which reflects the
exclusion of $1.00 million from an improvement in the macroeconomic
loan loss forecast
- Portfolio NIM in 2Q21 was 4.83%, a 73 bps increase from 4.10%
in 1Q21, driven by an increase in interest income received from
nonperforming loans and 20 bps decrease in the weighted average
cost of funds
- The pretax return on equity was 22.57% in 2Q21, an increase
from 8.27% for 1Q21
TOTAL LOAN PORTFOLIO ($ of UPB in millions)
2Q 2021
1Q 2021
$ Variance
% Variance
Held for Investment Investor
1-4 Rental
$
1,019
$
985
$
26
3%
Mixed Use
293
275
16
6%
Multi-Family
184
183
1
0%
Retail
183
178
6
3%
All Other
384
370
10
4%
Total
$
2,062
$
1,991
$
59
4%
Held for Sale Investor 1-4
Rental
$
8
$
-
$
(13)
n.m.
Total Managed Loan Portfolio UPB
$
2,070
$
1,991
$
80
4%
Key loan portfolio metrics: Total loan count
6,125
5,935
Weighted average loan to value
66.70%
66.28%
Weighted average total portfolio yield
8.90%
8.41%
Weighted average portfolio debt cost
4.81%
5.01%
n.m. - non meaningful
Discussion of results:
- Velocity’s total loan portfolio was $2.07 billion in UPB as of
June 30, 2021, a 3.99% increase from $1.99 billion in UPB as of
March 31, 2021 ‒ HFI portfolio growth driven by solid production
activity, partially offset by higher prepayment activity and loan
sales
- The weighted average total portfolio yield was 8.90% in 2Q21,
an increase of 49 bps from 1Q21, primarily driven by the increased
realization of delinquent and default interest from nonperforming
loan resolutions and improved portfolio performance
- Portfolio related debt cost in 2Q21 was 4.81%, a decrease of 20
bps from 1Q21, primarily driven by the issuance of Velocity’s VCC
2021-1 securitization in 2Q21, at a weighted average cost of
1.73%
LOAN PRODUCTION VOLUMES ($ in millions)
2Q 2021
1Q 2021
$ Variance
% Variance
Investor 1-4 Rental
$
147
$
149
$
(2)
(1)%
Traditional Commercial
95
84
11
12%
Short-term loans
15
-
15
n.m.
Total loan production
$
257
$
233
$
23
10%
n.m. - non meaningful
Discussion of results:
- Loan production in 2Q21 totaled $256.51 million in UPB, a
10.07% increase from $233.04 million in UPB in 1Q21 ‒ Driven by the
re-introduction of short-term loans to the production mix and
growth of long-term traditional commercial loan production
- Loan origination volume in July 2021 totaled $104.4 million in
UPB
CREDIT PERFORMANCE INDICATORS ($ in thousands)
2Q 2021
1Q 2021
$ Variance
% Variance
Nonperforming loans(1)
$
315,542
$
335,048
$
(19,506)
(6)%
Nonperforming loans % total HFI Loans
15.30%
16.83%
n.a.
(9)%
Total Charge Offs (trailing 6 months)(2)
$
986.40
$
377.14
$
609
162%
Charge-offs as a % of Avg. Nonperforming loans(3)
0.59%
0.23%
n.a.
157%
Loan Loss Reserve
$
3,963
$
5,881
$
(1,918)
(33)%
(1) Nonperforming/Nonaccrual loans include loans 90+ days past due,
loans in foreclosure, bankruptcy and on nonaccrual. (2) $420.47
thousand of the 2Q21 charge-off amount was related to one loan that
transferred to REO. (3) Annualized
Discussion of results:
- Nonperforming loans totaled $315.54 million as of June 30,
2021, or 15.30% of loans HFI, compared to $335.05 million as of
March 31, 2021, or 16.83% of loans HFI ‒ The quarter-over-quarter
improvement was driven by resolution of 17.37% of nonperforming
loan UPB as of March 31, 2021, 10.58% through payoff and 6.79% were
brought back to performing (accrual) status. These resolutions in
2Q21 realized all delinquent contractual interest in addition to
default interest and prepayment fees.
- Charge-offs in 2Q21 totaled $917.6 thousand compared to $68.78
thousand in 1Q21 ‒ Nearly half, or $420.47 thousand of the 2Q21
charge-off amount was related to one loan that transferred to REO,
all or part of which could be recovered upon sale of the REO
- The reserve for loan losses was $3.96 million as of June 30,
2021, compared to $5.88 million as of March 31, 2021 ‒ The recovery
of loan loss provision in 2Q21 reflects an improvement in the
macroeconomic component of the loan loss reserve resulting from a
more optimistic outlook for the U.S. economy
- Capitalized interest recovered on COVID forbearance loans
granted a deferral through the end of 2Q21 totaled $1.27 million,
with a remaining balance of $7.37 million as of June 30, 2021. None
of the capitalized interest has been forgiven.
NET REVENUES ($ in thousands)
2Q 2021
1Q 2021
$ Variance
% Variance
Interest income
$
44,978
$
40,707
$
4,271
10.49%
Interest expense - portfolio related
(20,566)
(20,832)
266
(1)%
Interest expense - corporate debt
(4,309)
(7,350)
3,041
(41)%
Net Interest Income
$
20,103
$
12,525
$
7,578
61%
Loan loss provision
1,000
(105)
1,105
n.m. Gain on loan sales
2,391
2,839
(448)
(16)%
Other Operating (loss) income
41
(38)
79
n.m.
Total Net Revenues
$
23,535
$
15,221
$
8,314
55%
n.m. - non meaningful
Discussion of results:
- Net revenue was $23.53 in 2Q21, a 54.62% increase from the
prior quarter driven by the increased realization of delinquent and
default interest from strong nonperforming loan resolution activity
‒ Net interest income in 1Q21 included $3.33 million of
nonrecurring interest expense from the refinancing of our corporate
debt
OPERATING EXPENSES ($ in thousands)
2Q 2021
1Q 2021
$ Variance
% Variance
Compensation and employee benefits
$
4,546
$
5,186
$
(640)
(12)%
Rent and occupancy
430
463
(33)
(7)%
Loan servicing
1,922
1,867
55
3%
Professional fees
795
533
262
49%
Real estate owned, net
1,039
509
530
104%
Other expenses
1,918
2,059
(141)
(7)%
Total expenses
$
10,650
$
10,617
$
33
0%
Discussion of results:
- Operating expenses in 2Q21 were essentially unchanged from the
prior quarter, with a 12% quarter-over-quarter decrease in
compensation and employee benefits, offset by higher costs to
maintain the real estate owned (REO) portfolio and professional
fees for public company reporting requirements
SECURITIZATIONS Securities Balance at
Balance at Trusts Issued 6/30/2021
W.A. Rate 3/31/2021 W.A. Rate 2014-1 Trust
$
161,076
$
19,973
7.86%
$
21,690
7.92%
2015-1 Trust
285,457
24,852
7.63%
26,762
6.88%
2016-1 Trust
319,809
43,925
8.12%
50,940
8.06%
2016-2 Trust
166,853
34,440
7.08%
38,953
7.07%
2017-1 Trust
211,910
55,648
6.02%
65,728
5.69%
2017-2 Trust
245,601
101,179
3.33%
114,517
3.40%
2018-1 Trust
176,816
79,377
4.02%
88,754
4.12%
2018-2 Trust
307,988
175,943
4.48%
192,240
4.53%
2019-1 Trust
235,580
159,345
4.06%
173,216
4.11%
2019-2 Trust
207,020
141,446
3.51%
148,834
3.50%
2019-3 Trust
154,419
112,848
3.28%
122,072
3.29%
2020-1 Trust
248,700
199,267
2.86%
208,269
2.84%
2020-2 Trust
96,352
97,601
4.44%
106,343
4.54%
2020-MC1 Trust
179,371
84,454
4.43%
116,241
4.50%
2021-1 Trust
251,301
250,109
1.73%
$
3,057,994
$
1,580,408
$
1,474,560
Discussion of results:
- Securitization balances as of June 30, 2021, totaled $1.58
billion, an increase from $1.47 billion as of March 31, 2021,
driven by the issuance of Velocity’s VCC 2021-1 securitization in
May
- The VCC 2021-1 transaction totaled $264.52 million in UPB and
priced at a weighted average fixed rate of 1.73% ‒ Broad investor
demand tightened spreads for the entire capital stack and lowered
our weighted average coupon by over one percent as compared to our
pre-COVID VCC 2020-1 transaction
RESOLUTION ACTIVITIES LONG-TERM
LOANS RESOLUTION ACTIVITY SECOND
QUARTER 2021 FIRST QUARTER 2021 ($ in thousands)
UPB
$ Gain /(Loss) $ UPB $ Gain /(Loss) $ Paid
in full
$
21,925
$
1,446
$
15,961
$
795
Paid current
14,949
219
10,774
62
REO sold
947
(2
)
2,754
76
Total resolutions
$
37,821
$
1,663
$
29,489
$
933
Resolutions as a % of nonperforming UPB
104.4
%
103.2
%
SHORT-TERM AND FORBEARANCE
LOANS RESOLUTION ACTIVITY SECOND
QUARTER 2021 FIRST QUARTER 2021 ($ in thousands)
UPB
$ Gain /(Loss) $ UPB $ Gain /(Loss) $ Paid
in full
$
13,517
$
682
$
8,569
$
343
Paid current
7,794
59
11,170
40
REO sold
164
(73
)
-
-
Total resolutions
$
21,475
$
668
$
19,739
$
383
Resolutions as a % of nonperforming UPB
103.1
%
101.9
%
Grand total resolutions
$
59,296
$
2,331
$
49,228
$
1,316
Grand total resolutions as a % of nonperforming UPB
103.9
%
102.7
%
Discussion of results:
- Resolution of nonperforming loans and REO in the HFI portfolio
totaled $59.30 million in UPB during 2Q21 and realized $2.33
million of gains, compared to $49.23 million in UPB and $1.32
million of gains, respectively, in 1Q21 ‒ Total resolution gains as
a % of UPB resolved were 103.93% in 2Q21, compared to 102.67% in
1Q21, driven by a 94% quarter-over-quarter increase in the
collection of default interest and prepayment penalties collected
on NPL resolutions
- Resolutions of long-term HFI loans in 2Q21 totaled $37.82 and
realized $1.66 million of gains, compared to $29.49 million and
$0.93 million, respectively, in 1Q21
- Resolutions of short-term HFI loans totaled $21.48 in 2Q21 and
realized $0.67 million of gains, compared to $19.74 million and
$0.38 million, respectively, in 1Q21
Webcast Information
Velocity’s executive management team will host a conference call
and webcast to review its financial results at 2:00 p.m. Pacific
Time / 5:00 p.m. Eastern Time on the same day.
The conference call will be webcast live in listen-only mode and
can be accessed through the Events and Presentations section of
Velocity Financials’ Investor Relations website at
https://www.velfinance.com/events-and-presentations. To listen to
the webcast, please go to Velocity’s website at least 15 minutes
before the call to register and to download and install any needed
software.
Management’s slide presentation will be available through the
Events and Presentations section of the Company’s Investor
Relations website after the market close on Thursday, August 5,
2021.
Conference Call Information
To participate by phone, please dial in 15 minutes prior to 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 be joined into the
Velocity Financial, Inc. earnings call.
A replay of the call will be available through midnight on
August 30, 2021, 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 #10157578. 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 investor 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 16 years.
(1) Core Income and Core EPS are non-GAAP
financial measures the Company presents to help investors better
understand unique items that impact earnings. For a reconciliation
of GAAP Net Income to Core Income, please refer to the sections of
this press release titled “Non-GAAP Financial Measures” and
“Adjusted Financial Metric Reconciliation to GAAP Net Income.”
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance
with United States generally accepted accounting principles
(“GAAP”), the Company uses Core Income, which is a non-GAAP
financial measure. 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,” 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, (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 contemplated
securitization and (6) changes in federal government fiscal and
monetary policies.
Additional information relating to these and other factors that
could cause future results to differ materially from those
expressed or contemplated in any forward-looking statements can be
found in the section titled ‘‘Risk Factors” in our Form 10-Q filed
with the SEC on May 14, 2020, as well as other cautionary
statements we make in our current and periodic filings with the
SEC. Such filings are available publicly on our Investor Relations
web page at www.velfinance.com.
Velocity Financial,
Inc.
Consolidated Statements of
Financial Condition
Quarter Ended 6/30/2021 3/31/2021
12/31/2020 9/30/2020 6/30/2020
Unaudited Unaudited Audited Unaudited
Unaudited (In thousands)
Assets Cash and cash
equivalents
$
27,741
$
20,434
$
13,273
$
19,210
$
9,803
Restricted cash
7,921
6,808
7,020
7,821
6,735
Loans held for sale, net
7,916
0
13,106
0
212,344
Loans held for investment, at fair value
1,370
1,364
1,539
3,327
2,956
Loans held for investment
2,057,046
1,983,435
1,924,489
1,977,236
1,836,065
Net deferred loan costs
26,707
25,070
23,600
23,850
25,754
Total loans, net
2,093,039
2,009,869
1,962,734
2,004,413
2,077,119
Accrued interest receivables
11,094
11,169
11,373
13,134
17,793
Receivables due from servicers
73,517
77,731
71,044
44,466
36,028
Other receivables
10,169
3,879
4,085
402
4,609
Real estate owned, net
20,046
14,487
15,767
14,653
15,648
Property and equipment, net
3,625
3,891
4,145
4,446
4,718
Deferred tax asset
13,196
9,246
6,654
1,832
5,556
Other assets
7,257
7,325
6,779
16,489
9,042
Total Assets
$
2,267,605
$
2,164,839
$
2,102,874
$
2,126,866
$
2,187,051
Liabilities and members' equity Accounts payable and
accrued expenses
$
70,049
$
65,003
$
63,361
$
61,859
$
55,938
Secured financing, net
164,053
129,666
74,982
74,776
74,571
Securitizations, net
1,558,163
1,453,386
1,579,019
1,670,930
1,599,719
Warehouse & repurchase facilities
151,872
203,314
75,923
19,541
160,796
Total Liabilities
1,944,137
1,851,369
1,793,285
1,827,106
1,891,024
Mezzanine Equity Series A Convertible preferred stock
90,000
90,000
90,000
90,000
90,000
Stockholders' Equity Stockholders' equity
233,468
223,470
219,589
209,760
206,027
Total Liabilities and members' equity
$
2,267,605
$
2,164,839
$
2,102,874
$
2,126,866
$
2,187,051
Book value per share
$
11.62
$
11.12
$
10.93
$
10.44
$
10.26
Shares outstanding
20,087
20,087
20,087
20,087
20,087
Velocity Financial, Inc.
Consolidated Statements of
Income (Quarterly)
Quarter Ended ($ in thousands)
6/30/2021
3/31/2021 12/31/2020 9/30/2020
6/30/2020 Unaudited Unaudited Audited
Unaudited Unaudited Revenues Interest income
$
44,978
$
40,707
$
41,556
$
41,374
$
39,755
Interest expense - portfolio related
20,566
20,832
21,442
22,347
21,189
Net interest income - portfolio related
24,412
19,875
20,114
19,027
18,566
Interest expense - corporate debt
4,309
7,350
1,900
1,913
1,894
Net interest income
20,103
12,525
18,214
17,114
16,672
Provision for loan losses
(1,000
)
105
406
1,573
1,800
Net interest income after provision for loan losses
21,103
12,420
17,808
15,541
14,872
Other operating income (expense)
2,432
2,801
4,691
1,349
(1,339
)
Total net revenues
23,535
15,221
22,499
16,890
13,533
Operating expenses Compensation and employee benefits
4,546
5,186
4,135
5,692
5,863
Rent and occupancy
430
463
424
415
448
Loan servicing
1,922
1,867
1,977
2,168
1,754
Professional fees
795
533
1,415
1,051
588
Real estate owned, net
1,039
509
217
898
408
Other operating expenses
1,918
2,059
2,578
1,641
1,847
Total operating expenses
10,650
10,617
10,746
11,865
10,908
Income before income taxes
12,885
4,604
11,753
5,025
2,625
Income tax expense
3,432
1,208
2,177
1,544
484
Net income
$
9,453
$
3,396
$
9,576
$
3,481
$
2,141
Less: Deemed dividends on preferred stock
-
-
-
-
$
48,955
Less: Undistributed earnings allocated to participating securities
3,571
$
1,281
n.a. n.a. n.a.
Net income (loss) allocated to common
shareholders
$
5,882
$
2,115
$
9,576
$
3,481
$
(46,814
)
Basic earnings (loss) per share
$
0.29
$
0.11
$
0.48
$
0.17
$
(2.33
)
Diluted earnings (loss) per common share
$
0.28
$
0.10
$
0.29
$
0.11
$
(2.33
)
Basic weighted average common shares outstanding
20,087
20,087
20,087
20,087
20,087
Diluted weighted average common shares outstanding
33,960
33,407
32,793
32,435
20,087
Velocity Financial, Inc.
Net Interest Margin ‒
Portfolio Related and Total Company
(Unaudited)
Quarter Ended June 30,
2021
Quarter Ended March 31,
2021
Quarter Ended June 30,
2020
Interest
Average
Interest
Average
Interest
Average
Average
Income /
Yield /
Average
Income /
Yield /
Average
Income /
Yield /
($ in thousands)
Balance
Expense
Rate(1)
Balance
Expense
Rate(1)
Balance
Expense
Rate(1)
Loan portfolio: Loans held for sale
$
11,524
$
8,904
$
220,047
Loans held for investment
2,010,962
1,927,760
1,875,260
Total loans
$
2,022,486
$
44,978
8.90
%
$
1,936,664
$
40,707
8.41
%
(4
)
$
2,095,307
$
39,755
7.59
%
Debt: Warehouse and repurchase facilities
$
166,981
2,361
5.66
%
$
113,528
1,705
6.01
%
$
242,676
2,632
4.34
%
Securitizations
1,543,295
18,205
4.72
%
1,548,642
19,127
4.94
%
1,589,191
18,557
4.67
%
Total debt - portfolio related
1,710,276
20,566
4.81
%
1,662,170
20,832
5.01
%
1,831,867
21,189
4.63
%
Corporate debt
166,335
4,309
10.36
%
108,365
7,350
27.13
%
(5
)
78,000
1,894
9.71
%
Total debt
$
1,876,611
$
24,875
5.30
%
$
1,770,535
$
28,182
6.37
%
$
1,909,867
$
23,083
4.83
%
Net interest spread - portfolio related (2)
4.08
%
3.39
%
2.96
%
Net interest margin - portfolio related
4.83
%
4.10
%
3.54
%
Net interest spread - total company (3)
3.59
%
2.04
%
(5
)
2.75
%
Net interest margin - total company
3.98
%
2.59
%
(5
)
3.18
%
(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.
(4)
The debt issuance cost amortization was
higher for the three months ended March 31, 2021, as a result of a
lower average outstanding borrowing balance from a new financing
facility.
(5)
Excluding the one-time debt issuance cost
write-off of $2.9 million and prepayment penalties of $1.6 million
associated with the $78.0 million payoff of our corporate debt in
February 2021, the corporate debt average rate would have been
10.49%; net interest spread — total company would have been 3.06%;
and net interest margin — total company would have been 3.52% for
the three months ended March 31, 2021.
Velocity Financial, Inc.
Adjusted Financial Metric
Reconciliation to GAAP Net Income
(Unaudited)
Core Income Quarter Ended ($ in thousands)
6/30/2021 3/31/2021 12/31/2020
9/30/2020 6/30/2020 Net Income
$
9,453
$
3,396
$
9,576
$
3,481
$
2,141
Recovery of Loan Loss Provision
$
(1,000
)
Nonrecurring debt amortization
3,326
-
-
-
COVID-19 Impact
-
-
-
1,267
Workforce reduction costs
-
-
432
-
Core Income
$
8,453
$
6,722
$
9,576
$
3,913
$
3,408
Core diluted earnings per share
$
0.25
$
0.20
$
0.29
$
0.12
$
0.17
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210805006097/en/
Investors and Media: Chris Oltmann (818) 532-3708
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