WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Velocity Financial, Inc. (NYSE: VEL) ("Velocity†or the "Company†), a leader in investor real estate loans, today announced the closing of Velocity Commercial Capital, LLC's, a wholly-owned subsidiary of Velocity (the "Issuer†), previously announced offering of $500 million aggregate principal amount of 9.375% Senior Notes due 2031 (the "Notes†) which was sold at an offering price equal to 100% of the principal thereof in an offering exempt from regist. ...

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Velocity Financial, Inc. (NYSE:VEL) ("Velocity†or "Company†), a leader in investor real estate loans, will release its fourth quarter and full year 2025 results after the market close on Wednesday, March 11, 2026. 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. Webcast Information The conference call will be webcast live in listen-only ...

Financial Results - Velocity Financial, Inc. announced preliminary unaudited financial results for Q4 and the year ended December 31, 2025[6]. - Forward-looking statements indicate expectations regarding financial performance and operational information for the fiscal year ended December 31, 2025[10]. Senior Notes Offering - The company is offering up to $500 million aggregate principal amount of Senior Notes due 2031, subject to market conditions[8]. - The Notes will be fully guaranteed on a senior unsecured basis by Velocity Financial, Inc.[8]. - The offering is targeted at "qualified institutional buyers" and certain persons outside the U.S.[8]. - The company has not registered the Notes under the Securities Act and they may not be offered or sold in the U.S. without registration[8]. Compliance and Risks - The company faces risks including market fluctuations, economic instability, and potential disruptions in capital markets[10]. - Velocity Financial, Inc. emphasizes the importance of maintaining compliance with laws and regulations regarding customer information security[10]. - The company is not classified as an emerging growth company under the Securities Act[5]. Press Releases - The press releases related to these announcements are included as Exhibits 99.1 and 99.2[12].

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)--Velocity Financial, Inc. (NYSE: VEL), ("Velocity†or the "Company†), a leader in investor real estate loans, today announced that Velocity Commercial Capital, LLC, a wholly-owned subsidiary of Velocity (the "Issuer†), plans to offer up to $500 million aggregate principal amount of Senior Notes due 2031 (the "Notes†) to be sold in an offering exempt from registration under the Securities Act of 1933, as amended (the "Securities Act†) to individuals reas. ...

Core Insights - The company achieved a record loan production of $739 million in Q3, representing a 32% net increase year over year after accounting for prepayments [1][4][7] - Net income increased by 60% year over year, with core diluted EPS at $0.69 per share [2] - The nonperforming loan (NPL) rate decreased to 9.8%, down from 10.6% in the previous quarter, indicating stable asset quality [1][11] Production and Financial Performance - Loan production for Q3 was $739 million, surpassing the previous quarter's record of $725 million, with a total of 1,778 loans originated [7] - New applications exceeded $1.4 billion for the quarter, reflecting strong demand for the company's products [4] - The weighted average coupon on new held-for-investment originations was 10%, consistent with the last five-quarter average of 10.6% [7][8] Portfolio and Asset Management - The total loan portfolio reached just under $6.3 billion in unpaid principal balance (UPB), marking a 7.1% increase from Q2 and a 32% increase year over year [8] - The weighted average loan-to-value ratio remained low at 65.5%, indicating disciplined credit practices [4][10] - Nonperforming asset resolution gains totaled $2.8 million, averaging 3.8% quarterly over the last five quarters [11] Capital and Liquidity - The company maintained a strong portfolio net interest margin (NIM) at 3.65%, consistent with the last five-quarter average [10] - Total liquidity as of September 30 was just under $144 million, with over $600 million in available warehouse capacity [13][14] - The company is focused on compounding earnings by reinvesting profits back into the platform and portfolio [5][6] Strategic Initiatives - The company closed its first-ever single counterparty securitization with a top-tier money manager, which is expected to reduce transaction costs and diversify funding options [3] - The management expressed optimism about future earnings growth, citing healthy market conditions and robust capital markets, particularly in fixed income [15]

Financial Performance - Net income for Q3 2025 was $25.4 million, a 60.6% increase from $15.8 million in Q3 2024, with diluted EPS rising to $0.65 from $0.44[5] - Core net income reached $26.9 million, up 58.9% from $16.9 million in Q3 2024, with core diluted EPS increasing to $0.69 from $0.47[6] - Net income attributable to Velocity Financial, Inc. for Q3 2025 was $25,373,000, a 60.9% increase from $15,803,000 in Q3 2024[43] - Core diluted earnings per share for Q3 2025 were $0.69, compared to $0.47 for Q3 2024, indicating a growth of 46.8%[43] Loan Production and Growth - Record loan production totaled $739.0 million, a 55.0% increase from $476.8 million in Q3 2024, driven by strong demand for traditional commercial and investor 1-4 rental loans[18] - Total loans outstanding increased to $6.3 billion, a 32.0% rise from $4.8 billion in Q3 2024, with significant growth across all collateral types[14] - Total loans, net rose to $6.5 billion as of September 30, 2025, up from $5.2 billion at the end of 2024, indicating a growth of 25.4%[37] Interest Income and Margin - Net interest income after provision for credit losses was $48.7 million, a 38.6% increase from $35.1 million in Q3 2024, supported by strong portfolio growth[13] - Interest income for the three months ended September 30, 2025, was $144,119,000, an increase of 37.1% compared to $105,070,000 for the same period in 2024[39] - The net interest margin for the total company improved to 3.25% in Q3 2025 from 3.06% in Q3 2024[41] - The company reported a net interest spread of 3.16% for the total company in Q3 2025, compared to 2.87% in Q3 2024[41] Operating Expenses - Operating expenses rose to $50.4 million, a 45.6% increase from Q3 2024, primarily due to higher production-driven compensation expenses[13] - Total operating expenses for the three months ended September 30, 2025, were $50,397,000, compared to $34,613,000 in the same period of 2024, representing an increase of 45.6%[39] Credit Quality and Losses - Nonperforming loans (NPL) as a percentage of Held for Investment (HFI) loans decreased to 9.8% from 10.6% in Q3 2024, with NPLs totaling $614.2 million[16] - The allowance for credit losses decreased to $4.6 million as of September 30, 2025, a 5.5% decline from $4.9 million in the same period of 2024[23] - The provision for credit losses increased significantly to $381,000 in Q3 2025, compared to a reversal of $69,000 in Q3 2024, representing a variance of 652.2%[23] - Charge-offs for Q3 2025 amounted to $677,000, an increase of 111.6% from $320,000 in Q3 2024[23] - Provision for credit losses was $381,000 in Q3 2025, a significant decrease from a provision of $(69,000) in Q3 2024, indicating improved credit quality[39] Asset Growth - The total assets increased to $6.96 billion as of September 30, 2025, compared to $5.53 billion at the end of 2024, reflecting a growth of 25.9%[37] - The total equity rose to $637.5 million as of September 30, 2025, compared to $520.2 million at the end of 2024, indicating a growth of 22.5%[37] - The diluted book value per share increased to $16.31 as of September 30, 2025, up from $14.26 at the end of 2024, representing a growth of 14.4%[37] Other Income and Liquidity - Other operating income was $37.1 million, an increase of 78.8% from $20.7 million in Q3 2024, driven by record origination volumes[13] - Liquidity stood at $143.5 million, comprising $99.0 million in unrestricted cash and $44.5 million in available borrowings from unpledged loans[5] - Nonperforming assets (NPA) resolution totaled $108.0 million in UPB for Q3 2025, achieving a recovery rate of 102.6% compared to $68.6 million in UPB with a recovery rate of 103.4% in Q3 2024[22] - The total loss on real estate owned (REO) was $1.6 million in Q3 2025, a significant decline from a gain of $1.2 million in Q3 2024, driven by higher valuation losses[21]

Financial Data and Key Metrics Changes - The company achieved a record quarter with pre-tax earnings up 66.5% and net income up 60% year over year [4][6] - Production volumes reached $739 million, a 32% net increase in the portfolio year over year after netting out prepayments [4][10] - Core diluted EPS was reported at 69 cents per share, with a portfolio NIM stable at 360 basis points above the target of 3.5% [6][11] Business Line Data and Key Metrics Changes - Loan production for Q3 was $739 million, breaking the previous quarter's record of $725 million, with a total of 1,778 loans originated [9][10] - The weighted average coupon on new held-for-investment originations was strong at 10.5%, consistent with the last five quarters' average of 10.6% [9][10] - The total loan portfolio as of September 30 was just under $6.3 billion, reflecting a 7.1% increase from Q2 and a 32% increase year over year [10][11] Market Data and Key Metrics Changes - The weighted average loan-to-value for the quarter was at 62.8%, consistent with the last five quarters' average [10] - Non-performing loan rate at the end of Q3 was 9.8%, down from 10.6% in Q2 and 80 basis points year over year [11][12] - Total liquidity as of September 30 was just under $144 million, with over $600 million of warehouse capacity available [14] Company Strategy and Development Direction - The company emphasizes compounding earnings by reinvesting all earnings back into the platform and portfolio [7] - A strategic partnership was formed for the first-ever single counterparty securitization, aimed at reducing transaction costs and diversifying funding options [5][6] - The company plans to maximize opportunities in the supportive fixed income markets [5][16] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the future, citing healthy markets and strong credit performance [16] - The capital markets, especially in fixed income, are described as extremely robust, with expectations for continued earnings growth [16] Other Important Information - The company reported a net loss of $1.6 million in REO activities, primarily due to REO valuations [13] - The CECL loan loss reserve was $4.6 million, or 22 basis points, consistent over the last five quarters [13][14] Q&A Session Summary Question: Concerns about REO valuations and charge-offs - Management explained that the negative $6.3 million in REO valuations is primarily a timing issue, reflecting adjustments to market realities [20][22] - The REO is initially booked at fair value, and subsequent adjustments may reflect market conditions at the time of sale [22][24] Question: Current headcount and changes over the last year - The company reported a headcount of 347 as of September 30, an increase of about 82 employees year over year [30]

Loan Portfolio and Performance - As of September 30, 2025, the company's loan portfolio totaled $6.3 billion with an average loan balance of approximately $393 thousand[155]. - The annualized yield on the total portfolio for the three months ended September 30, 2025, was 9.54%, while for the nine months it was 9.44%[155]. - The portfolio-related net interest margin for the three months ended September 30, 2025, was 3.65%, an increase from 3.60% in the same period of 2024[157]. - For the three months ended September 30, 2025, the company generated pre-tax income of $35.4 million, compared to $21.2 million for the same period in 2024, representing a 67% increase[157]. - The total loans (UPB) increased from $4.75 billion as of September 30, 2024, to $6.28 billion as of September 30, 2025, reflecting a growth of approximately 32%[175]. - Nonperforming loans as a percentage of total loans decreased from 10.6% as of September 30, 2024, to 9.8% as of September 30, 2025[175]. - The weighted average loan-to-value ratio at origination for the portfolio was 65.5% as of September 30, 2025[175]. - Total loan originations including unfunded commitments increased to $738.96 million for the three months ended September 30, 2025, up $13.6 million from the previous quarter and $262.2 million from the same quarter last year[179]. - The unpaid principal balance of loans held for investment as of September 30, 2025, was $6.27 billion, an increase from $5.06 billion as of December 31, 2024[181]. - Nonperforming loans represented 12.3% of the total unpaid principal balance of loans held for investment as of September 30, 2025[190]. - Total loans held for investment amounted to $6.27 billion as of September 30, 2025, with 90.2% classified as performing loans[191]. - Loans due in more than five years accounted for 95.9% of the total loans held for investment as of September 30, 2025[181]. Financial Results and Income - The company reported a total gain on real estate owned (REO) of $3.26 million for the nine months ended September 30, 2025[183]. - The company resolved $108.0 million of nonperforming assets in Q3 2025, up from $104.0 million in Q2 2025 and $68.6 million in Q3 2024, with net gains of $2.8 million, $3.6 million, and $2.3 million for the respective quarters[193]. - The recovery rate on resolved nonperforming assets was 102.7% for Q3 2025, compared to 103.4% for Q2 2025 and 103.0% for Q3 2024[194]. - The company generated approximately $47.0 million in net cash and cash equivalents from operating, investing, and financing activities during the nine months ended September 30, 2025, compared to $5.3 million in 2024[275]. - Net income attributable to Velocity Financial, Inc. was $25.4 million for the three months ended September 30, 2025, compared to $15.8 million in 2024, and $70.3 million for the nine months ended September 30, 2025, compared to $47.8 million in 2024[233]. - Interest income increased by $39.0 million to $144.1 million for the three months ended September 30, 2025, compared to $105.1 million for the same period in 2024, driven by higher average loan portfolio balances and yield[235]. - Net interest income - portfolio related rose 34.0% to $55.2 million for the three months ended September 30, 2025, up from $41.2 million in 2024, and increased 33.1% to $152.6 million for the nine months ended September 30, 2025, compared to $114.6 million in 2024[234]. Operating Expenses - Total operating expenses increased to $50.4 million for the three months ended September 30, 2025, from $34.6 million in 2024, and to $144.5 million for the nine months ended September 30, 2025, from $100.5 million in 2024[233]. - Provision for credit losses increased to $0.4 million for the three months ended September 30, 2025, from a reversal of $0.1 million in 2024, and to $3.9 million for the nine months ended September 30, 2025, from $1.2 million in 2024[245]. - Compensation and employee benefits increased by $5.7 million to $23.3 million for the three months ended September 30, 2025, compared to $17.6 million for the same period in 2024, mainly due to higher headcount and commissions[255]. - Securitization expenses increased to $6.4 million for the three months ended September 30, 2025, from $3.2 million for the same period in 2024, resulting from more securitization transactions[257]. - Loan servicing expenses increased to $7.7 million for the three months ended September 30, 2025, from $5.7 million for the same period in 2024, primarily due to the growth of the loan portfolio[258]. Debt and Liquidity - The company completed 44 securitization transactions from May 2011 through September 2025, issuing $9.9 billion in principal amount of securities[281]. - Outstanding bond balances for securitized debt as of September 30, 2025, totaled $5.55 billion, an increase from $4.27 billion as of December 31, 2024[284]. - The company had five non-mark-to-market warehouse facilities and one mark-to-market facility as of September 30, 2025, with borrowings of $334.7 million and $600.3 million of available capacity[276]. - Total liquidity as of September 30, 2025, was $143.5 million, consisting of $99.0 million in cash and $44.5 million in borrowings from available warehouse capacity[269]. - As of September 30, 2025, the company had $555.8 million in additional available warehouse capacity, bringing total liquidity plus available warehouse capacity to $699.3 million[269]. - The company entered into a five-year $215.0 million syndicated corporate debt agreement on March 15, 2022, with a fixed interest rate of 7.125% maturing on March 15, 2027[288]. - A second five-year $75.0 million syndicated corporate debt agreement was established on February 5, 2024, with an interest rate of 9.875% maturing on February 15, 2029[289]. Market Conditions and Future Outlook - Market uncertainties, including geopolitical conflicts and macroeconomic conditions, may impact the company's operational and financial performance[160]. - The company is applying a severe stress scenario for its current expected credit loss (CECL) estimate, reflecting economic uncertainties[185]. - Forward-looking statements indicate expectations regarding loan originations and strategies for future funding and development of business and products[301]. - The company does not plan to structure any securitized debt as sales or utilize off-balance-sheet vehicles, ensuring sufficient funding for working capital requirements[287]. - The company has never maintained relationships with unconsolidated entities for off-balance-sheet arrangements, ensuring transparency in financial commitments[299].

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Financial Performance - Net income reached $25.4 million, a 60.6% increase from $15.8 million in 3Q24[8] - Core net income increased by 58.9% to $26.9 million, compared to $16.9 million in 3Q24[8] - Diluted EPS rose to $0.65, up from $0.44 per share in 3Q24[8] - Core diluted EPS increased to $0.69, up from $0.47 per share in 3Q24[8] Loan Production and Portfolio - Loan production hit a new record of $739.0 million, a 55.0% increase from 3Q24[6] - The total loan portfolio reached $6.3 billion in UPB as of September 30, 2025, a 32.0% increase from $4.8 billion in UPB as of September 30, 2024[6] - Portfolio net interest margin (NIM) for 3Q25 was 3.65%, an increase of 5 bps from 3.60% for 3Q24[8] - The UPB of fair value option (FVO) loans was $4.2 billion, or 66.3% of total loans, as of September 30, 2025, an increase from $2.2 billion in UPB, or 47.1% as of September 30, 2024[19] Asset Quality and Resolution - Nonperforming loans (NPL) as a % of HFI loans decreased to 9.8%, down from 10.6% as of September 30, 2024[6] - 3Q25 NPA resolutions realized gains of $2.8 million, or 102.6%, of UPB resolved[6] - NPA resolutions totaled $108.0 million in UPB, realizing 102.6% of UPB resolved, compared to $68.6 million in UPB and realization of 103.4% of UPB resolved for 3Q24[33] Financing and Capital - Completed the 1st single counterparty securitization totaling $190.9 million of securities issued with a large money manager in July, in addition to the VCC 2025-4 securitization totaling $457.5 million of securities issued[6,9] - Liquidity of $143.5 million, consisting of $99.0 million in unrestricted cash and $44.5 million in available borrowings from unpledged loans[9] - Total available warehouse line capacity of $600.3 million[9]