Second Quarter Highlights:
- Net income of $12.2 million and diluted earnings per share
(EPS) of $0.36, compared to $10.6 million and $0.31 per share,
respectively, for 2Q22
- Core net income(1) of $12.9 million and core diluted EPS(1) of
$0.38, compared to $10.6 million and $0.31 per share, respectively,
for 2Q22
- Loan production volume of $258.6 million in unpaid principal
balance (UPB), a decrease of 41.9% from 2Q22
- Total loan portfolio of $3.7 billion as of June 30, 2023, an
increase of 20.4% from June 30, 2022
- Nonperforming loans as a percentage of Held for Investment
(HFI) loans was 10.0% as of June 30, 2023, an increase from 8.2% as
of June 30, 2022
- Resolutions of nonperforming loans (NPL) and real estate owned
(REO) totaled $50.1 million in UPB, realizing gains of $1.5 million
or 103.0% of UPB resolved
- Portfolio net interest margin (NIM) of 3.24%, compared to 4.10%
for 2Q22
- Completed two securitizations in 2Q23. The VCC 2023-2
securitization totaling $202.2 million of securities issued, and
the VCC 2023-1R (Re-REMIC) totaling $64.8 million of securities
issued
- Liquidity(2) of $72.0 million as of June 30, 2023
- Book value per common share of $12.57 as of June 30, 2023, an
increase from $11.26 as of June 30, 2022
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company),
a leader in business purpose loans, reported net income of $12.2
million and core net income of $12.9 million for 2Q23, compared to
net income of $10.6 million and core net income of $10.6 million in
2Q22. Earnings and core earnings per diluted share were $0.36 and
$0.38, respectively, for 2Q23, compared to $0.31 and $0.31, for
2Q22.
“Velocity once again delivered strong quarterly earnings driven
by 20% year-over-year portfolio growth,” said Chris Farrar,
President and CEO. “Our second quarter results included solid
portfolio net interest income and strong growth in other operating
income driven by fair value gains and fees from loan production
activity. Production volumes rebounded in the second quarter as
forecast, increasing 19% quarter-over-quarter, with a weighted
average coupon of 11%. We have been successful in mitigating much
of the impact of higher rates by increasing loan coupons and volume
simultaneously this quarter, which is a testament to the strong
demand for investor properties and the skill of our loan
origination team.”
(1) Core income and Core EPS are a non-GAAP measures that
exclude nonrecurring and unusual activities from GAAP net income.
(2) Liquidity includes unrestricted cash reserves of $34.0 million
and available liquidity in unfinanced loans of $38.0 million.
Second
Quarter Operating Results
KEY PERFORMANCE INDICATORS ($ in thousands)
2Q 2023
2Q 2022
$ Variance
% Variance
Pretax income
$
16,824
$
14,790
$
2,034
14
%
Net income
$
12,183
$
10,645
$
1,538
14
%
Diluted earnings per share
$
0.36
$
0.31
$
0
14
%
Core net income(a)
$
12,928
$
10,645
$
2,283
21
%
Core diluted earnings per share(a)
$
0.38
$
0.31
$
0.07
21
%
Pretax return on equity
16.81
%
16.57
%
n.a.
1
%
Core pretax return on equity(a)
17.79
%
16.57
%
n.a.
7
%
Net interest margin - portfolio
3.24
%
4.10
%
n.a.
(21
)%
Net interest margin - total company
2.78
%
3.54
%
n.a.
(21
)%
Average common equity
$
400,441
$
357,218
$
43,223
12
%
(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 2Q23 was $12.2 million, compared to $10.6 million
for 2Q22
- Driven by continued strong portfolio growth, NPL resolution
activity and higher other operating income, partially offset by
securitization costs and higher operating expenses
- Core net income(1) was $12.9 million, compared to $10.6 million
for 2Q22
- Portfolio NIM in 2Q23 was 3.24%, compared to 4.10% for 2Q22,
resulting from increased funding costs, partially offset by rising
portfolio yields from higher loan coupons on recent loan
production
- The GAAP pretax return on equity was 16.8% for 2Q23, compared
to 16.6% for 2Q22
TOTAL LOAN PORTFOLIO ($ of UPB in millions)
2Q 2023
2Q 2022
$ Variance
% Variance
Held for Investment Investor
1-4 Rental
$
2,016
$
1,517
$
499
33
%
Mixed Use
452
410
43
10
%
Multi-Family
304
289
14
5
%
Retail
322
298
24
8
%
Warehouse
235
217
19
9
%
All Other
391
359
32
9
%
Total
$
3,720
$
3,090
630
20
%
Held for Sale Multi-Family
$
-
$
-
$
-
0
%
Total Managed Loan Portfolio UPB
$
3,720
$
3,090
$
630
20
%
Key loan portfolio metrics: Total loan count
9,541
7,779
Weighted average loan to value
68.2
%
68.2
%
Weighted average coupon
8.40
%
7.53
%
Weighted average total portfolio yield
8.24
%
7.97
%
Weighted average portfolio debt cost
5.58
%
4.34
%
Discussion of results:
- Velocity’s total loan portfolio was $3.7 billion in UPB as of
June 30, 2023, an increase of 20.4% from $3.1 billion in UPB as of
June 30, 2022
-
Primarily driven by 32.9% Y/Y growth in loans collateralized by
Investor 1-4 Rental properties and secondarily 10.4% Y/Y growth in
Mixed Use properties
-
Approximately 75% of the loans in Velocity’s HFI portfolio are
collateralized by properties that have a housing component
(Investor 1-4 Rental, Multifamily and Mixed Use)
-
Loan prepayments totaled $105.8 million, a 21.6% Q/Q increase,
and a 26.1% Y/Y decrease
-
The UPB of Fair Value (FVO) loans was $688.1 million in UPB, or
18.5% of total HFI loans, as of June 30, 2023, an increase from
$1.3 million in UPB, or 0.05% as of June 30, 2022
- The weighted average portfolio loan-to-value ratio was 68.2% as
of June 30, 2023, unchanged from 68.2% as of June 30, 2022, and
consistent with the five-quarter trailing average of 68.3%
- The weighted average total portfolio yield was 8.24% for 2Q23,
an increase of 27 bps from 2Q22, driven by higher loan coupons on
YTD 2023 loan production
- Portfolio-related debt cost for 2Q23 was 5.58%, an increase of
124 bps from 2Q22, driven by higher interest rates on
securitization and warehouse financing
LOAN PRODUCTION VOLUMES ($ in millions)
2Q 2023
2Q 2022
$ Variance
% Variance
Investor 1-4 Rental
$
163
$
254
$
(90
)
(36
)%
Traditional Commercial
73
164
(91
)
(55
)%
Short-term loans
22
28
(6
)
(21
)%
Total loan production
$
259
$
445
$
(187
)
(42
)%
Acquisitions
$
-
$
0.5
Discussion of results:
- Loan production in 2Q23 totaled $258.6 million in UPB, a 41.9%
decrease from $445.4 million in UPB in 2Q22
-
Management’s decision to reduce production, along with higher
interest rates, decreased volume from year-ago levels. On a Q/Q
basis, production volume rose 19.2% from 1Q23.
- The weighted average coupon (WAC) on 2Q23 HFI loan production
was 11.0%, an increase of 325 bps from 2Q22
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS ($ in thousands)
2Q 2023
2Q 2022
$ Variance
% Variance
Nonperforming loans(a)
$ 371,154
$ 252,253
$ 118,901
47%
Average Nonperforming Loans
$ 328,897
$ 257,646
$ 71,251
28%
Nonperforming loans % total HFI Loans
10.0%
8.2%
n.a.
22%
Total Charge Offs
$ 717
$ 38
$ 679
n.m. Charge-offs as a % of Avg. Nonperforming Loans(b)
0.87%
0.06%
n.a. n.m. Loan Loss Reserve
$ 4,626
$ 4,905
$ (279)
(6)%
(a) Nonperforming/Nonaccrual loans include loans 90+ days
past due, loans in foreclosure, bankruptcy and on nonaccrual. (b)
Reflects the annualized quarter-to-date charge-offs to average
nonperforming loans for the period. n.a.- not applicable, n.m. -
non meaningful
Discussion of results:
NET REVENUES ($ in thousands)
2Q 2023
2Q 2022
$ Variance
% Variance
Interest income
$
74,897
$
59,243
$
15,653
26
%
Interest expense - portfolio related
(45,451
)
(28,752
)
(16,699
)
58
%
Net Interest Income - portfolio related
29,446
30,491
(1,045
)
(3
)%
Interest expense - corporate debt
(4,139
)
(4,182
)
43
(1
)%
Net Interest Income
$
25,307
$
26,310
$
(1,003
)
(4
)%
Loan loss provision
(298
)
(279
)
(18
)
7
%
Gain on disposition of loans
1,237
1,777
(539
)
(30
)%
Unrealized gain on fair value loans
2,413
6
2,407
n.m.
Unrealized gain (loss) on fair value of securitized debt
5,560
-
5,560
n.m.
Origination income
2,735
553
2,182
395
%
Bank interest income
1,188
-
1,188
n.m.
Other operating income (expense)
903
1,257
(354
)
(28
)%
Total Other operating income (expense)
$
14,036
$
3,592
10,444
291
%
Net Revenue
$
39,046
$
29,622
$
9,423
32
%
n.m. - non meaningful
Discussion of results:
- Net Revenue in 2Q23 was $39.0 million, an increase of 31.8%
compared to $29.6 million for 2Q22
- Total net interest income, including corporate debt interest
expense, was $25.3 million for 2Q23, a 3.8% decrease from $26.3
million for 2Q22
- Portfolio net Interest income was $29.4 million for 2Q23, a
decrease of 3.4% from 2Q22 resulting from a $16.7 million increase
in interest expense, partially offset by $15.7 million of interest
income growth
-
Total other operating income includes gains on the disposition
of loans, unrealized gains/(losses) on fair value loans and
securitized debt, origination income, bank interest income on
deposits and other operating income, and totaled $14.0 million for
2Q23 compared to $3.6 million for 2Q22
-
Gain on disposition of loans totaled $1.2 million for 2Q23,
primarily resulting from gains on loans transferred to REO
-
Unrealized gains on the fair value of loans totaled $2.4 million
for 2Q23, primarily resulting from gains on 2Q23 new production,
partially offset by valuation decreases on the existing FVO
portfolio due to higher long-term interest rates
-
Unrealized gains on the fair value of securitized debt totaled
$5.6 million for 2Q23, primarily driven by an increase in long-term
rates as of June 30, 2023
-
Origination income totaled $2.7 million, driven by fee income
realized on loans originated in 2Q23
OPERATING EXPENSES ($ in thousands)
2Q 2023
2Q 2022
$ Variance
% Variance
Compensation and employee benefits
$
10,670
$
6,553
$
4,116
63
%
Origination (income)/expense
122.8
1,504
(1,381
)
(92
)%
Securitization expenses
2,699
-
2,699
n.m
.
Rent and occupancy
458
426
32
7
%
Loan servicing
4,267
3,290
977
30
%
Professional fees
1,056
1,062
(6
)
(1
)%
Real estate owned, net
1,018
(251
)
1,269
(505
)%
Other expenses
1,931
2,248
(318
)
(14
)%
Total operating expenses
$
22,222
$
14,832
$
7,390
50
%
n.m. - non meaningful
Discussion of results:
- Operating expenses totaled $22.2 million for 2Q23, an increase
of 49.8% from 2Q22. The variance to prior year results is primarily
attributable to our fair value accounting election in 4Q22.
-
Compensation expense totaled $10.7 million, compared to $6.6
million for 2Q22. In 2Q23, compensation expense related to loan
originations was expensed as incurred under fair value accounting
rather than deferred over the life of the loan under amortized cost
accounting for 2Q22.
-
Origination (income)/expenses totaled $0.1 million, a $1.4
million improvement from 2Q22, resulting from successful
initiatives to increase operational efficiencies
-
Securitization expenses totaled $2.7 million. Securitization
issuance costs are now expensed under fair value accounting and
were deferred in 2Q22.
-
Loan servicing expense totaled $4.3 million, an increase of $1.0
million from 2Q22, driven primarily by the increase in
securitization debt outstanding to $3.1 billion as of June 30,
2023, from $2.5 billion as of June 30, 2022
SECURITIZATIONS ($ in thousands)
Securities
Balance at
Balance at
Trusts
Issued
6/30/2023
W.A. Rate
6/30/2022
W.A. Rate
2016-1 Trust
319,809
$
17,704
9.29
%
$
28,021
8.24
%
2017-2 Trust
245,601
51,930
3.95
%
68,749
3.59
%
2018-1 Trust
176,816
36,882
4.07
%
52,281
3.95
%
2018-2 Trust
307,988
87,984
4.51
%
108,845
4.36
%
2019-1 Trust
235,580
83,435
4.04
%
103,860
3.92
%
2019-2 Trust
207,020
76,284
3.45
%
98,792
3.37
%
2019-3 Trust
154,419
63,278
3.29
%
81,996
3.10
%
2020-1 Trust
248,700
121,074
2.86
%
149,646
2.84
%
2020-2 Trust
96,352
53,309
4.61
%
67,446
4.59
%
2021-1 Trust
251,301
183,089
1.76
%
214,835
1.74
%
2021-2 Trust
194,918
156,681
2.03
%
185,448
2.01
%
2021-3 Trust
204,205
167,652
2.46
%
195,308
2.46
%
2021-4 Trust
319,116
257,369
3.22
%
291,181
3.14
%
2022-1 Trust
273,594
246,883
3.93
%
264,936
3.91
%
2022-2 Trust
241,388
226,763
5.10
%
240,076
5.08
%
2022-MC1 Trust
84,967
39,862
6.90
%
80,931
6.94
%
2022-3 Trust
296,323
268,008
5.69
%
294,768
5.67
%
2022-4 Trust
308,357
289,929
6.25
%
2022-5 Trust
188,754
177,075
7.07
%
2023-1 Trust
198,715
189,763
7.02
%
2023-1R Trust
64,833
63,390
7.73
%
2023-2 Trust
202,210
199,864
7.17
%
$
4,820,966
$
3,058,208
4.72
%
$
2,527,119
3.77
%
Discussion of results
- Completed the VCC 2023-1R (Re-REMIC) totaling $64.8 million of
securities issued in April, collateralized by retained tranches
from previous VCC securitizations
- Completed the VCC 2023-2 securitization totaling $202.2 million
of securities issued in May, comprised of long-term
business-purpose loans
- The weighted average rate on Velocity’s outstanding
securitizations was 4.72% as of June 30, 2023, an increase of 95
bps from June 30, 2022
RESOLUTION ACTIVITIES LONG-TERM
LOANS RESOLUTION ACTIVITY
SECOND QUARTER 2023
SECOND QUARTER 2022
($ in thousands)
UPB $
Gain / (Loss) $
UPB $
Gain / (Loss) $
Paid in full
$
13,485
$
965
$
16,934
$
3,303
Paid current
19,771
280
17,407
129
REO sold (a)
4,836
(382
)
2,107
816
Total resolutions
$
38,092
$
863
$
36,448
$
4,248
Resolutions as a % of nonperforming UPB
102.3
%
111.7
%
SHORT-TERM AND FORBEARANCE
LOANS RESOLUTION ACTIVITY
SECOND QUARTER 2023
SECOND QUARTER 2022
($ in thousands)
UPB $
Gain / (Loss) $
UPB $
Gain / (Loss) $
Paid in full
$
7,004
$
318
$
9,913
$
976
Paid current
3,290
89
2,877
22
REO sold
1,672
222
1,262
500
Total resolutions
$
11,966
$
629
$
14,052
$
1,498
Resolutions as a % of nonperforming UPB
105.3
%
110.7
%
Grand total resolutions
$
50,058
$
1,492
$
50,500
$
5,746
Grand total resolutions as a % of nonperforming UPB
103.0
%
111.4
%
Discussion of results:
- 2Q23 NPL resolutions represented 13.5% of nonperforming loan
UPB as of March 31, 2023
- The UPB of loan resolutions in 2Q23 was in line with the recent
five-quarter resolution average of $42.0 million in UPB
Velocity’s executive management team will host a conference call
and webcast to review 2Q23 financial results on August 3rd, 2023,
at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.
Webcast Information
The conference call will be webcast live in listen-only mode and
can be accessed through the Events and Presentations section of the
Velocity Financial Investor Relations website
https://www.velfinance.com/events-and-presentations. To listen to
the webcast, please visit Velocity’s website at least 15 minutes
before the call to register, download, and install any needed
software. An audio replay of the call will also be available on
Velocity’s website following the completion of the conference
call.
Conference Call Information
To participate by phone, please dial-in 15 minutes before the
start time to allow for wait times to access the conference call.
The live conference call will be accessible by dialing
F1-833-316-0544 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
August 31, 2023, and can be accessed by dialing 1-877-344-7529 in
the U.S. and 855-669-9658 in Canada or 1-412-317-0088
internationally. The passcode for the replay is #7682506. The
replay will also be available on the Investor Relations section of
the Company's website under "Events and Presentations.”
About Velocity Financial, Inc.
Based in Westlake Village, California, Velocity is a vertically
integrated real estate finance company that primarily originates
and manages business purpose loans secured by 1-4-unit residential
rental and small commercial properties. Velocity originates loans
nationwide across an extensive network of independent mortgage
brokers built and refined over 19 years.
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance
with United States generally accepted accounting principles (GAAP),
the Company uses non-GAAP core net income and core diluted EPS,
which are non-GAAP financial measures.
Non-GAAP core net income and non-GAAP core diluted EPS are
non-GAAP financial measures that represent our net income (loss)
and net income (loss) per diluted share, adjusted to eliminate the
effect of certain costs incurred from activities that are not
normal recurring operating expenses, such as COVID-stressed charges
and recoveries of loan loss provision, nonrecurring debt
amortization, the impact of operational measures taken to address
the COVID-19 pandemic and workforce reduction costs, and costs
associated with acquisitions. To calculate non-GAAP core diluted
EPS, we use the weighted-average number of shares of common stock
outstanding that is used to calculate net income per diluted share
under GAAP.
We have included non-GAAP core net income and non-GAAP core
diluted EPS because they are key measures used by our management to
evaluate our operating performance, generate future operating
plans, and make strategic decisions, including those relating to
operating expenses and the allocation of internal resources.
Accordingly, we believe that non-GAAP core net income and non-GAAP
core diluted EPS provide useful information to investors and others
in understanding and evaluating our operating results in the same
manner as our management and board of directors. In addition, they
provide useful measures for period-to-period comparisons of our
business, as they remove the effect of certain items that we expect
to be nonrecurring.
These non-GAAP financial measures should not be considered in
isolation from, or as a substitute for, financial information
prepared in accordance with GAAP. These non-GAAP financial measures
are not based on any standardized methodology prescribed by GAAP
and are not necessarily comparable to similarly titled measures
presented by other companies.
For more information on Core Income, please refer to the section
of this press release below titled “Adjusted Financial Metric
Reconciliation to GAAP Net Income” at the end of this press
release.
Forward-Looking Statements
Some of the statements contained in this press release may
constitute forward-looking statements within the meaning of the
federal securities laws. Forward-looking statements relate to
anticipated results, expectations, projections, plans and
strategies, anticipated events or trends, and similar expressions
concerning matters that are not historical facts. In some cases,
you can identify forward-looking statements by the use of
forward-looking terminology such as “may,” “will,” “expects,”
“intends,” “plans,” “anticipates,” “believes,” “estimates,”
“predicts,” “goal,” ”position,” or “potential” or the negative of
these words and phrases or similar words or phrases that are
predictions of or indicate future events or trends and which do not
relate solely to historical matters. You can also identify
forward-looking statements by discussions of strategy, plans, or
intentions.
The forward-looking statements contained in this press release
reflect our current views about future events and are subject to
numerous known and unknown risks, uncertainties, assumptions, and
changes in circumstances that may cause actual results to differ
significantly from those expressed or contemplated in any
forward-looking statement. While forward-looking statements reflect
our good faith projections, assumptions, and expectations, they are
not guarantees of future results. Furthermore, we disclaim any
obligation to publicly update or revise any forward-looking
statement to reflect changes in underlying assumptions or factors,
new information, data or methods, future events, or other changes,
except as required by applicable law. Factors that could cause our
results to differ materially include, but are not limited to, (1)
the continued course and severity of the COVID-19 pandemic and its
direct and indirect impacts, (2) general economic and real estate
market conditions, including the risk of recession (3) regulatory
and/or legislative changes, (4) our customers' continued interest
in loans and doing business with us, (5) market conditions and
investor interest in our future securitizations, and (6) the
continued conflict in Ukraine and (7) changes in federal government
fiscal and monetary policies.
Additional information relating to these and other factors that
could cause future results to differ materially from those
expressed or contemplated in any forward-looking statements can be
found in the section titled ‘‘Risk Factors” in our Form 10-Q filed
with the SEC on May 14, 2020, as well as other cautionary
statements we make in our current and periodic filings with the
SEC. Such filings are available publicly on our Investor Relations
web page at www.velfinance.com.
Velocity Financial,
LLC
Consolidated Statements of
Financial Condition
Quarter Ended
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
Unaudited
Unaudited
Audited
Unaudited
Unaudited
(In thousands)
Assets Cash and cash equivalents
$
33,987
$
39,397
$
45,248
$
26,372
$
46,250
Restricted cash
16,786
16,636
16,808
14,533
9,217
Loans held for sale, at fair value
-
18,081
-
16,569
-
Loans held for investment, at fair value
705,330
450,732
276,095
926
1,351
Loans held for investment
3,057,940
3,169,280
3,272,390
3,445,563
3,118,799
Total loans, net
3,763,270
3,638,093
3,548,485
3,463,058
3,120,150
Accrued interest receivables
22,602
20,931
20,463
18,333
15,820
Receivables due from servicers
63,896
64,133
65,644
66,992
75,688
Other receivables
1,306
2,188
1,075
1,962
1,320
Real estate owned, net
20,388
21,778
13,325
13,188
19,218
Property and equipment, net
3,023
3,209
3,356
3,495
3,632
Deferred tax asset
1,878
2,543
5,033
4,337
15,195
Mortgage Servicing Rights, at fair value
9,445
9,143
9,238
9,868
8,438
Goodwill
6,775
6,775
6,775
6,775
6,775
Other assets
7,789
12,268
13,525
18,453
11,036
Total Assets
$
3,951,145
$
3,837,094
$
3,748,975
$
3,647,366
$
3,332,739
Liabilities and members' equity Accounts payable and
accrued expenses
$
95,344
$
84,976
$
91,525
$
75,150
$
78,384
Secured financing, net
210,464
210,155
209,846
209,537
209,227
Securitized debt, net
2,622,547
2,657,469
2,736,290
2,651,895
2,477,226
Securitized debt, at fair value
381,799
194,941
-
-
-
Warehouse & repurchase facilities
235,749
298,313
330,814
340,050
208,390
Total Liabilities
3,545,903
3,445,854
3,368,475
3,276,632
2,973,227
Stockholders' Equity Stockholders' equity
401,707
387,624
376,811
366,810
355,895
Noncontrolling interest in subsidiary
3,535
3,616
3,689
3,924
3,617
Total equity
405,242
391,240
380,500
370,734
359,512
Total Liabilities and members' equity
$
3,951,145
$
3,837,094
$
3,748,975
$
3,647,366
$
3,332,739
Book value per share
$
12.57
$
12.18
$
11.89
$
11.61
$
11.26
Shares outstanding
32,239(1
)
32,112(2
)
31,996(3
)
31,922(4
)
31,922(5
)
(1)
Based on 32,238,715 common shares
outstanding as of June 30, 2023, and excludes unvested shares of
common stock authorized for incentive compensation totaling
502,913.
(2)
Based on 32,111,906 common shares
outstanding as of March 31, 2023, and excludes unvested shares of
common stock authorized for incentive compensation totaling
490,526.
(3)
Based on 31,955,730 common shares
outstanding as of December 31, 2022, and excludes unvested shares
of common stock authorized for incentive compensation totaling
494,139.
(4)
Based on 31,921,721 common shares
outstanding as of September 30, 2022, and excludes unvested shares
of common stock authorized for incentive compensation totaling
494,139.
(5)
Based on 31,921,721 common shares
outstanding as of June 30, 2022, and excludes unvested shares of
common stock authorized for incentive compensation totaling
494,139.
Velocity Financial,
LLC
Consolidated Statements of
Income (Quarters)
Quarter Ended
($ in thousands)
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
Unaudited
Unaudited
Audited
Unaudited
Unaudited
Revenues Interest income
$
74,897
$
70,521
$
65,632
$
63,419
$
59,243
Interest expense - portfolio related
45,451
42,029
40,854
34,561
28,752
Net interest income - portfolio related
29,446
28,492
24,778
28,858
30,491
Interest expense - corporate debt
4,139
4,139
4,139
4,011
4,182
Net interest income
25,307
24,353
20,639
24,847
26,309
Provision for loan losses
298
636
(437
)
580
279
Net interest income after provision for loan losses
25,009
23,717
21,076
24,267
26,030
Other operating income Gain on disposition of loans
1,237
1,913
391
399
1,777
Unrealized gain on fair value loans
2,413
7,354
7,795
453
6
Unrealized gain (loss) on fair value securitizations
5,560
(170
)
-
-
-
Origination income
2,735
2,411
3,521
518
553
Bank interest income
1,188
948
-
0
0
Other income (expense)
903
386
(288
)
1,656
1,257
Total other operating income
14,036
12,842
11,419
3,027
3,592
Net revenue
39,046
36,560
32,495
27,294
29,622
Operating expenses Compensation and employee benefits
10,670
10,008
11,793
6,788
6,553
Origination expenses
123
(50
)
1,328
209
1,504
Securitizations expenses
2,699
2,584
-
-
-
Rent and occupancy
458
446
435
445
426
Loan servicing
4,267
3,828
3,244
3,314
3,290
Professional fees
1,056
955
1,091
664
1,062
Real estate owned, net
1,018
1,829
552
(195
)
(251
)
Other operating expenses
1,931
2,202
2,360
2,020
2,248
Total operating expenses
22,222
21,802
20,804
13,245
14,832
Income before income taxes
16,824
14,757
11,692
14,049
14,790
Income tax expense
4,602
4,021
3,465
3,759
4,019
Net income
12,222
10,736
8,227
10,290
10,771
Net income attributable to noncontrolling interest
39
87
(235
)
307
126
Net income attributable to Velocity Financial, Inc.
12,183
10,649
8,462
9,983
10,645
Less undistributed earnings attributable to participating
securities
185
160
127
152
164
Net earnings attributable to common shareholders
$
11,998
$
10,489
$
8,335
$
9,831
$
10,481
Basic earnings (loss) per share
$
0.37
$
0.33
$
0.26
$
0.31
$
0.33
Diluted earnings (loss) per common share
$
0.36
$
0.31
$
0.25
$
0.29
$
0.31
Basic weighted average common shares outstanding
32,122
32,098
31,923
31,922
31,917
Diluted weighted average common shares outstanding
34,140
34,052
34,063
34,199
34,057
Velocity Financial,
Inc.
Net Interest Margin —
Portfolio Related and Total Company
(Unaudited)
Quarter Ended June 30,
2023
Quarter Ended March 31,
2023
Quarter Ended June 30,
2022
Interest
Average
Interest
Average
Interest
Average
Average
Income /
Yield /
Average
Income /
Yield /
Average
Income /
Yield /
($ in thousands)
Balance
Expense
Rate(1)
Balance
Expense
Rate(1)
Balance
Expense
Rate(1)
Loan portfolio: Loans held for sale
$
3,477
$
12,896
$
62,987
Loans held for investment
3,634,093
3,512,133
2,910,693
Total loans
$
3,637,570
$
74,897
8.24
%
$
3,525,029
$
70,521
8.00
%
$
2,973,680
$
59,243
7.97
%
Debt: Warehouse and repurchase facilities
$
238,027
5,910
9.93
%
$
225,497
4,833
8.57
%
$
318,960
4,115
5.16
%
Securitizations
3,020,624
39,541
5.24
%
2,926,153
37,196
5.08
%
2,332,340
24,637
4.23
%
Total debt - portfolio related
3,258,651
45,451
5.58
%
3,151,650
42,029
5.33
%
2,651,300
28,752
4.34
%
Corporate debt
215,000
4,139
7.70
%
215,000
4,139
7.70
%
215,000
4,182
7.78
%
Total debt
$
3,473,651
$
49,590
5.71
%
$
3,366,650
$
46,168
5.49
%
$
2,866,300
$
32,934
4.60
%
Net interest spread - portfolio related (2)
2.66
%
2.67
%
3.63
%
Net interest margin - portfolio related
3.24
%
3.23
%
4.10
%
Net interest spread - total company (3)
2.53
%
2.52
%
3.37
%
Net interest margin - total company
2.78
%
2.76
%
3.54
%
(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)
6/30/2023
3/31/2023
12/31/2022
9/30/2022
6/30/2022
Net Income
$
12,183
$
10,649
$
8,462
$
9,983
$
10,645
Equity award & ESPP costs
745
728
656
-
-
Core Net Income
$
12,928
$
11,376
$
9,118
$
9,983
$
10,645
Diluted weighted average common shares outstanding
34,140
34,052
34,063
34,199
34,057
Core diluted earnings per share
$
0.38
$
0.33
$
0.27
$
0.29
$
0.31
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230803769766/en/
Investors and Media: Chris Oltmann (818) 532-3708
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