Loan Portfolio and Originations - The company originated 6,336 loans sourced by 1,777 different mortgage brokers during the year ended December 31, 2025, representing a small portion of the approximately 904,145 state-licensed mortgage originators in the U.S.[41] - As of December 31, 2025, the company's portfolio of loans held for investment totaled $6.5 billion in unpaid principal balance (UPB) across 48 states and the District of Columbia, with an average loan balance of approximately $390,000[45] - 91.4% of the loans held for investment, measured by UPB, were fully-amortizing over 30 years, which is believed to face a lower risk of default compared to balloon loans[46] - The weighted average loan-to-value (LTV) ratio at origination for loans held for investment was 65.2%, with 100% of the loans personally guaranteed by borrowers and a weighted average credit score of 700[47] - The primary product, a 30-year fixed-rate amortizing term loan, comprised 87.9% of loan originations during the year ended December 31, 2025, indicating strong market receptivity[42] Financial Performance - The company generated $210.4 million in portfolio-related net interest income for the year ended December 31, 2025, representing a net interest margin of 3.61%[34] - For the year ended December 31, 2025, the company generated pre-tax income of $146.2 million and net income of $105.0 million[217] - The yield on the total portfolio for the year ended December 31, 2025, was 9.45%[215] - The portfolio-related net interest margin for the year ended December 31, 2025, was 3.61%[217] Securitization Activities - The company executed 46 securitizations of investor real estate loans, issuing $10.6 billion in principal amount of securities between 2011 and December 31, 2025[31] - As of December 31, 2025, the company executed 46 securitizations of investor real estate loans, issuing $10.6 billion in principal amount of securities[51] - In August 2023, the company completed its first securitization collateralized by a short-term loan product, issuing $81.6 million in securities[52] - The company has executed 46 securitized debt offerings, issuing $10.6 billion in principal amount of securities from May 2011 through December 2025[216] - In January 2026, the company completed the issuance of $500.0 million aggregate principal amount of 9.375% Senior Notes maturing on February 15, 2031[218] - In February 2024, the company issued $75.0 million principal amount of five-year Senior Secured Notes bearing interest at 9.875%[219] Growth Strategies - The company aims to further penetrate its existing network of approximately 3,789 mortgage brokers, with 80% of loan originators having originated five or fewer loans during the year ended December 31, 2025[39] - The company continues to pursue inorganic growth strategies, including acquiring portfolios of loans and businesses that align with its strategic vision[38] Workforce and Operations - As of December 31, 2025, the company had a total of 371 employees, reflecting a 20% increase from the prior year, with 98% being full-time employees[60] - 29% of the company's workforce consists of Account Executives, who are crucial for generating business through relationships with third-party brokers[61] Market Conditions and Risks - The U.S. housing market is valued at a record $55.1 trillion, with the home rentership rate averaging approximately 34.3%, indicating a substantial market opportunity for investor real estate loans[24] - The company faces competition from various financial institutions, which may offer more favorable rates and terms, impacting its market position[56] - Economic conditions, including potential stagnation in real estate markets, may limit the company's ability to originate or acquire loans on attractive terms, potentially leading to losses[80] - The company faces risks from oversupply or reduced demand for residential rental and small commercial properties, as well as changes in zoning and rent control laws[81] - Adverse global market conditions, including government shutdowns and geopolitical conflicts, could materially affect the company's operations and financial condition[82] - A prolonged U.S. federal government shutdown could disrupt loan originations and reduce demand from borrowers reliant on federal income[83] Regulatory and Compliance Risks - The company is subject to various regulatory requirements and may need to obtain additional licenses to operate in new jurisdictions, which could be costly and time-consuming[59] - The company is subject to evolving regulations regarding data privacy and protection, which could elevate costs and require changes in business practices[169] - The company may incur penalties for potential violations of predatory lending laws, impacting its financial condition[170] - The regulatory environment may impose additional costs and risks related to compliance with federal, state, and local laws affecting mortgage-related assets[153] - The company may face significant compliance costs due to state licensing and operational requirements, which could adversely affect its business[158] Financial Risks - The company has substantial indebtedness, which could impair operational flexibility and increase vulnerability to adverse economic conditions[181] - The company's adjustable rate mortgages (ARMs) are subject to interest rate caps, which may reduce income during periods of rising interest rates[188] - Interest rate fluctuations could negatively impact the company's net interest income and cash flows, affecting profitability and borrower default rates[183] - A lower-than-expected credit rating from agencies could adversely impact the company's ability to complete new securitizations on favorable terms[173] Operational Risks - The quality of third-party loan servicers is critical; failures in servicing could lead to increased defaults and adversely impact financial results[89] - The company relies on key personnel for success, and their departure could have a material adverse effect on operations[93] - The company relies on third-party service providers for critical business functions, and any deterioration in their performance could impact operations[109] - Operational risks, including cyberattacks, could disrupt business operations and adversely affect financial results[104] Strategic Risks - The company may change its underwriting guidelines without notice, which could alter its risk profile and financial condition[100] - The inability to manage future growth effectively could adversely impact the company's financial condition[102] - Changes in market conditions and regulatory environments may necessitate adaptations in strategy, affecting overall business performance[103] - Acquisitions and strategic investments may divert management's attention and entail additional costs, potentially harming business operations[115] Asset and Liability Risks - The concentration of the loan portfolio in states like California, New York, Florida, New Jersey, and Texas increases exposure to economic downturns and natural disasters[129] - The company may incur substantial costs and delays in the foreclosure process, which could adversely affect cash flow and financial condition[133] - Environmental liabilities associated with properties could materially decrease the value of the underlying assets[134] - The company may be adversely affected by uninsured or underinsured losses related to properties, impacting cash flow and asset values[126] - The fair value of certain portfolio assets may not reflect realizable prices upon disposal, leading to potential discrepancies in reported values[138] Shareholder and Stock Risks - The company has not declared or paid cash dividends to date and does not intend to do so for the foreseeable future[197] - The market price of the company's common stock has been highly volatile, which could result in substantial losses for stockholders[191] - As of February 27, 2026, there were approximately 8,250 beneficial holders of the company's common stock[208] - The company is authorized to issue preferred stock without stockholder approval, which may affect the value of common stock[152]

From a liquidity perspective, we have never been stronger, as we issued our first rated unsecured debt offering for $500,000,000 in January, which gives us greater flexibility and makes us less reliant on short-term warehouse lines. This new capital will help us execute our long-term plan of growing book value and maximizing shareholder returns. Looking forward, we have great momentum and are well positioned to continue our growth. That concludes my prepared remarks, and we will turn over to Page three in t ...

Financial Data and Key Metrics Changes - Core net income increased by 52% to $111 million, achieving a record pre-tax ROE of 26% [5][7] - Book value grew by 21% and net interest margin (NIM) remained stable at 3.6% [6][7] - Total loan production for 2025 reached $2.7 billion, a 47.5% year-over-year increase [11][12] Business Line Data and Key Metrics Changes - Originations volume increased by 49% to a record $2.7 billion, with 9 new securitizations totaling $2.6 billion [5][6] - The loan portfolio grew by 28% year-over-year, reaching $6.5 billion [11][12] - Non-performing loans (NPLs) decreased to 8.5% from 10.7% at the end of 2024 [14] Market Data and Key Metrics Changes - The fixed income markets showed healthy activity, with oversubscribed deals and tight spreads [4] - The securitization market was described as robust, with a deep bench of investors supporting the company [22] Company Strategy and Development Direction - The company aims to grow book value and maximize shareholder returns, supported by a strong liquidity position [6][19] - A transformative partnership was established by selling $129 million of NPLs while retaining servicing rights, which is expected to drive future earnings [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing healthy real estate markets and a growing pipeline [4][22] - The company remains disciplined in its lending practices and does not foresee significant impacts from potential changes in interest rates [27][46] Other Important Information - The company issued its first rated unsecured debt offering for $500 million, enhancing its liquidity and reducing reliance on short-term financing [6][19] - Total liquidity at year-end was just under $117 million, including $92 million in cash [11][19] Q&A Session Summary Question: Inquiry about the impact of potential rate cuts on loan demand - Management indicated that while a rate drop could lower costs and make offerings more attractive, it is not expected to be a significant growth driver [27][28] Question: Update on competitive dynamics in lending markets - Management noted no significant changes in competition and mentioned a slight positive impact from disruptions in private credit markets [38] Question: Deployment of proceeds from the recent debt raise - Management confirmed full deployment of the $500 million proceeds, with a minimum cash reserve of $30-$50 million maintained for safety [44] Question: Comparison of spreads and returns in single-family versus small balance commercial segments - Management stated that commercial assets yield wider spreads compared to single-family loans, with a difference of approximately 125 basis points [48]

Financial Data and Key Metrics Changes - Core net income increased by 52% to $111 million, achieving a record pre-tax ROE of 26% [5][7] - Book value grew by 21% and net interest margin (NIM) remained stable at 3.6% [6][7] - Total loan production for 2025 reached $2.7 billion, a 47.5% year-over-year increase [11][12] Business Line Data and Key Metrics Changes - Originations volume increased by 49% to a record $2.7 billion, with productivity from account executives driving this growth [5][11] - The portfolio grew by 28% year-over-year, reaching $6.5 billion [11][12] - Non-performing loans (NPLs) decreased to 8.5% from 10.7% at the end of 2024, aided by the sale of $129 million in NPLs [14][15] Market Data and Key Metrics Changes - The fixed income markets are healthy, with oversubscribed deals and tight spreads [4] - The securitization market remains robust, contributing to the company's strong capital raising efforts [22][19] Company Strategy and Development Direction - The company aims to grow book value and maximize shareholder returns, supported by a strong liquidity position [6][19] - A transformative partnership was established by selling NPLs while retaining servicing rights, which is expected to drive future earnings [6][8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing healthy real estate markets and a growing pipeline [4][22] - The company remains disciplined in its lending practices and does not foresee significant impacts from potential changes in interest rates [27][46] Other Important Information - The company issued its first rated unsecured debt offering for $500 million, enhancing its liquidity and reducing reliance on short-term financing [6][19] - Total liquidity at year-end was just under $117 million, with $92 million in cash and cash equivalents [18] Q&A Session Summary Question: Update on the competitive dynamic of lending markets - Management noted no significant changes in competition and indicated a slight positive impact from disruptions in private credit markets [37][38] Question: Impact of potential interest rate cuts on loan demand - Management stated that a rate drop would be marginally helpful, lowering costs but not significantly driving growth as clients are more transaction-sensitive [27][28] Question: Deployment of proceeds from the debt raise - Management confirmed full deployment of the $500 million proceeds, paying down warehouse balances and maintaining a minimum cash reserve of $30 million to $50 million [44][45] Question: Comparison of spreads and returns in single-family versus commercial segments - Management indicated wider spreads on commercial assets, approximately 125 basis points wider than single-family loans, reflecting appropriate risk adjustments [48]

Financial Data and Key Metrics Changes - Core net income increased by 52% to $111 million, achieving a record pre-tax ROE of 26% [5] - Book value grew by 21% and net interest margin (NIM) remained stable at 3.6% [7] - Total loan production for 2025 reached $2.7 billion, a 47.5% year-over-year increase [11] Business Line Data and Key Metrics Changes - Originations volume increased by 49% to a record $2.7 billion, with 9 new securitizations totaling $2.6 billion [5] - The loan portfolio grew by 28% year-over-year, reaching $6.5 billion [11] - Non-performing loans (NPLs) decreased to 8.5% from 10.7% at the end of 2024 [13] Market Data and Key Metrics Changes - The securitization market is described as robust, with a deep bench of investors supporting the company [21] - The weighted average coupon on new Q4 held for investment originations was just over 10% [10] Company Strategy and Development Direction - The company aims to grow book value and maximize shareholder returns, supported by a strong liquidity position [6] - A transformative partnership was established by selling $129 million of NPLs while retaining servicing rights, which is expected to drive future earnings [6] Management's Comments on Operating Environment and Future Outlook - The management expressed optimism about the healthy real estate markets and stable credit conditions, indicating a positive outlook for 2026 [21] - The company does not foresee significant impacts from potential changes in the broader financial markets, as their clients are less rate-sensitive [27] Other Important Information - The company issued its first rated unsecured debt offering for $500 million, enhancing liquidity and reducing reliance on short-term warehouse lines [6] - Total liquidity at year-end was just under $117 million, with $92 million in cash and cash equivalents [11] Q&A Session Questions and Answers Question: Impact of potential rate cuts on loan demand - Management indicated that while a rate drop could lower costs and make offerings more attractive, it is not expected to be a significant driver of growth as clients are more transaction-sensitive [27][29] Question: Update on competitive dynamics in lending markets - Management noted that competition remains stable with no significant changes, and the disruption in private credit markets may create opportunities for the company [40][41] Question: Deployment of proceeds from the debt raise and liquidity management - The company has fully deployed the $500 million proceeds, paying down warehouse balances and maintaining a minimum cash reserve of $30-$50 million for safety [46] Question: Comparison of spreads and returns in single-family versus small balance commercial segments - Management stated that commercial assets yield wider spreads compared to single-family loans, with a difference of approximately 125 basis points [50]

Core Insights - The company is focused on the development of transcript-related projects, indicating a commitment to enhancing their offerings in this area [1] Group 1 - The company publishes thousands of quarterly earnings calls each quarter, showcasing significant growth and expansion in their coverage [1]

4Q25 Results Presentation March 11, 2026 Forward-looking statements Some of the statements contained in this presentation may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, projections, plans and strategies, positioning, 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 termi ...

Core Insights - Velocity Financial, Inc. reported a significant increase in net income for the fourth quarter and full year 2025, with net income reaching $34.8 million for 4Q25, a 69.0% increase from $20.6 million in 4Q24, and full-year net income of $105.1 million, up 53.5% from $68.4 million in 2024 [1][2][3] - The company's core net income for 2025 was $111.0 million, compared to $72.9 million in 2024, reflecting strong production and effective credit discipline [1][2] - The total loan portfolio increased to $6.5 billion as of December 31, 2025, a 28.4% rise from $5.1 billion in 2024, driven by record production volumes [1][2] Financial Performance - For 4Q25, diluted earnings per share (EPS) were $0.89, an increase of $0.32 from $0.57 in 4Q24, while core diluted EPS rose to $0.93 from $0.60 [1][2] - The net interest margin (NIM) for the portfolio was 3.59%, down 11 basis points from 3.70% in 4Q24, but still reflecting strong levels due to disciplined rate management [1][2] - Total net revenue for 4Q25 was $102.9 million, a 44.6% increase from $71.2 million in 4Q24, attributed to strong loan production and fair value gains [1][2] Loan Portfolio and Production - Loan production for 2025 totaled $2.7 billion, a 48.7% increase from $1.8 billion in 2024, marking the highest annual volume in the company's history [2] - The total loans outstanding as of December 31, 2025, included $3.1 billion in Investor 1-4 loans, $691.7 million in retail loans, and $542.6 million in office loans, among others [1][2] - Nonperforming loans (NPLs) as of December 31, 2025, totaled $554.5 million, representing 8.5% of total loans, down from 10.7% in 2024 [1][2] Credit Performance - The allowance for credit losses increased to $4.5 million as of December 31, 2025, reflecting a provision for credit losses of $5.8 million, significantly higher than $1.2 million in 2024 [2] - Charge-offs for 2025 totaled $5.5 million, compared to $1.8 million in 2024, primarily due to two large charge-offs [2] - The recovery rate for resolved NPLs was 109.0% for 2025, slightly up from 108.8% in 2024, with total resolutions amounting to $331.5 million [2] Operating Expenses - Total operating expenses for 2025 were $197.4 million, a 41.3% increase from $139.6 million in 2024, driven by higher headcount and production-related costs [1][2] - Compensation and employee benefits accounted for $90.2 million of the operating expenses, reflecting the company's growth strategy [3] Securitization and Capitalization - Velocity completed nine securitizations totaling $2.6 billion in 2025, enhancing its capital structure [2] - The company reported total available warehouse line capacity of $599.9 million and liquidity of $116.8 million as of December 31, 2025 [1][2]

Core Viewpoint - Velocity Financial, Inc. has successfully closed an offering of $500 million in Senior Notes with a 9.375% interest rate, maturing in 2031, indicating strong investor interest in real estate loans [1] Group 1: Company Overview - Velocity Financial, Inc. is a leader in investor real estate loans, highlighting its significant role in the market [1] - The offering was conducted by Velocity Commercial Capital, LLC, a wholly-owned subsidiary of Velocity, showcasing the company's structured approach to capital raising [1] Group 2: Financial Details - The Senior Notes were sold at an offering price equal to 100% of the principal amount, reflecting a stable demand for the company's debt instruments [1] - The notes carry a fixed interest rate of 9.375%, which is competitive in the current market environment [1]

Company Overview - Velocity Financial, Inc. is a leader in investor real estate loans, based in Westlake Village, California [4] - The company primarily originates and manages business-purpose loans secured by 1-4 unit residential rental and small commercial properties [4] - Velocity has built an extensive network of independent mortgage brokers over 21 years, allowing it to originate loans nationwide [4] Upcoming Financial Results - Velocity will release its fourth quarter and full year 2025 results after the market close on March 11, 2026 [1] - An executive management team will host a conference call and webcast to review the financial results at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time on the same day [1] Webcast and Conference Call Details - The conference call will be available in listen-only mode via the company's Investor Relations website [2] - Participants can join the call by dialing 1-833-316-0544 in the U.S. and Canada or 1-412-317-5725 for international callers [3] - A replay of the call will be available until midnight on March 27, 2026, with specific access numbers provided for U.S. and international callers [4]