[Financial Highlights](index=1&type=section&id=Financial%20Highlights) [Fourth Quarter 2023 Highlights](index=1&type=section&id=Fourth%20Quarter%202023%20Highlights) Velocity Financial reported strong Q4 2023 profitability with net income more than doubling, diluted EPS doubling, and robust loan production growth. | Metric | 4Q 2023 | 4Q 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $17.4 million | $8.5 million | +105.1% | | Diluted EPS | $0.50 | $0.25 | +100.0% | | Core Net Income | $16.2 million | $9.1 million | +77.2% | | Core Diluted EPS | $0.46 | $0.27 | +70.4% | | Loan Production (UPB) | $352.1 million | $277.8 million (est.) | +26.8% | | Portfolio NIM | 3.52% | 2.84% | +68 bps | - Nonperforming loans (NPLs) as a percentage of Held for Investment (HFI) loans decreased to **9.7%** from 10.1% in Q3 2023, but increased from 8.3% in Q4 2022[4](index=4&type=chunk) - The company resolved **$70.9 million** in UPB of nonperforming loans and real estate owned (REO), realizing gains of **102.2%** of the UPB resolved[4](index=4&type=chunk) - Book value per common share increased to **$13.49** as of December 31, 2023, up from $13.00 at the end of the previous quarter[4](index=4&type=chunk) [Full-Year 2023 Highlights](index=1&type=section&id=Full-Year%202023%20Highlights) Velocity Financial achieved record full-year earnings in 2023 with net income rising to $52.3 million and total loan portfolio growth, despite a decrease in loan production volume. | Metric | FY 2023 | FY 2022 | % Change | | :--- | :--- | :--- | :--- | | Net Income | $52.3 million | $32.2 million | +62.4% | | Diluted EPS | $1.52 | $0.94 | +61.7% | | Core Net Income | $53.4 million | $42.2 million | +26.5% | | Core Diluted EPS | $1.54 | $1.24 | +24.2% | | Loan Production (UPB) | $1.1 billion | $1.8 billion | -38.9% | | Total Loan Portfolio (UPB) | $4.1 billion | $3.5 billion (est.) | +16.0% | [Management Commentary](index=2&type=section&id=Management%20Commentary) [CEO's Perspective](index=2&type=section&id=CEO%27s%20Perspective) CEO Chris Farrar highlighted record earnings driven by strategic portfolio growth and proactive asset management, with a focus on achieving a $5 billion loan portfolio by 2025. - Management credits record earnings to strategic portfolio growth and proactive asset management, turning market challenges into opportunities[6](index=6&type=chunk) - Loan production increased each quarter in 2023, with mortgage coupons rising **86 basis points** from the average rate in Q4 2022[6](index=6&type=chunk) - The company is focused on its "**5X25**" goal, aiming for a **$5 billion** loan portfolio by 2025, supported by a recent **$75 million** capital raise[6](index=6&type=chunk) [Fourth Quarter 2023 Financial Performance](index=2&type=section&id=Fourth%20Quarter%202023%20Financial%20Performance) [Overview of Q4 Operating Results](index=2&type=section&id=Overview%20of%20Q4%20Operating%20Results) Velocity Financial's Q4 2023 net income surged 105% year-over-year to $17.4 million, driven by fair value gains and expanded net interest margin. | Key Performance Indicators ($ in thousands) | 4Q 2023 | 4Q 2022 | % Variance | | :--- | :--- | :--- | :--- | | Pretax income | $22,307 | $11,692 | 91% | | Net income | $17,355 | $8,462 | 105% | | Diluted earnings per share | $0.50 | $0.25 | 100% | | Core net income | $16,161 | $9,118 | 77% | | Portfolio Net interest margin | 3.52% | 2.84% | 24% | - The strong performance was primarily driven by fair value gains on new loan production and a **48.9%** increase in net interest income[12](index=12&type=chunk) [Loan Portfolio Analysis (Q4)](index=3&type=section&id=Loan%20Portfolio%20Analysis%20%28Q4%29) As of December 31, 2023, the total loan portfolio grew 16.0% year-over-year to $4.1 billion, with stable credit quality and an increased weighted average coupon. | Total Loan Portfolio ($ of UPB in millions) | 4Q 2023 | 4Q 2022 | % Variance | | :--- | :--- | :--- | :--- | | Investor 1-4 Rental | $2,225 | $1,852 | 20% | | Traditional Commercial (Combined) | $1,395 | $1,271 | 10% | | Total Held for Investment | $4,056 | $3,512 | 15% | | Total Managed Loan Portfolio UPB | $4,073 | $3,512 | 16% | - The weighted average coupon on the total portfolio increased to **8.88%** from 7.95% in Q4 2022, driving the total portfolio yield up to **8.70%** from 7.51%[11](index=11&type=chunk)[16](index=16&type=chunk) - The weighted average portfolio loan-to-value ratio was **67.8%**, slightly down from 68.2% in the prior year, indicating consistent credit standards[16](index=16&type=chunk) [Loan Production and Credit Quality (Q4)](index=4&type=section&id=Loan%20Production%20and%20Credit%20Quality%20%28Q4%29) Q4 2023 loan production increased by 26.8% year-over-year to $352.1 million, with a strong weighted average coupon on new loans and a sequential decrease in nonperforming loans. | Loan Production Volumes ($ in millions) | 4Q 2023 | 4Q 2022 | % Variance | | :--- | :--- | :--- | :--- | | Investor 1-4 Rental | $183 | $169 | 9% | | Traditional Commercial | $130 | $83 | 57% | | Short-term loans | $39 | $26 | 49% | | Total loan production | $352 | $278 | 27% | - The weighted average coupon (WAC) on Q4 2023 HFI loan production was **11.2%**, an increase of **86 basis points** from Q4 2022[17](index=17&type=chunk) - Nonperforming loans (NPLs) were **9.7%** of total HFI loans, down from 10.1% in Q3 2023 but up from 8.3% in Q4 2022, with sequential improvement driven by portfolio growth and a slowdown in loans transitioning to foreclosure[15](index=15&type=chunk)[20](index=20&type=chunk) [Revenue and Expense Analysis (Q4)](index=5&type=section&id=Revenue%20and%20Expense%20Analysis%20%28Q4%29) Net revenue for Q4 2023 grew 59.6% year-over-year to $51.6 million, driven by increased net interest income and fair value gains, while operating expenses rose 40.7%. | Financial Item ($ in thousands) | 4Q 2023 | 4Q 2022 | % Variance | | :--- | :--- | :--- | :--- | | Net Interest Income - portfolio related | $34,864 | $24,777 | 41% | | Total Other operating income | $21,670 | $10,789 | 101% | | Net Revenue | $51,567 | $32,302 | 60% | | Total operating expenses | $29,260 | $20,804 | 41% | - The increase in other operating income was largely driven by net fair value marks on loans and securitized debt of **$15.3 million**, resulting from new production and a decrease in Treasury rates[24](index=24&type=chunk) - Operating expenses rose due to higher compensation from sales and operational hires, increased loan servicing costs from portfolio growth, and **$2.7 million** in securitization expenses that are now expensed as incurred[25](index=25&type=chunk) [Securitization and Resolution Activities (Q4)](index=7&type=section&id=Securitization%20and%20Resolution%20Activities%20%28Q4%29) Velocity completed one securitization of $202.9 million in Q4 2023, while demonstrating strong asset management by resolving $70.9 million in nonperforming loans and REO with significant gains. - The company completed one securitization in Q4 2023, issuing **$202.9 million** of securities[27](index=27&type=chunk) - The weighted average rate on outstanding securitizations increased by **94 basis points** year-over-year to **5.22%** as of December 31, 2023[27](index=27&type=chunk) Resolution Activity | Resolution Activity | 4Q 2023 | 4Q 2022 | | :--- | :--- | :--- | | Total Resolutions (UPB) | $70.9 million | $25.3 million | | Realization (% of UPB) | 102.2% | 102.3% | [Full-Year 2023 Financial Performance](index=9&type=section&id=Full-Year%202023%20Financial%20Performance) [Overview of FY 2023 Operating Results](index=9&type=section&id=Overview%20of%20FY%202023%20Operating%20Results) For FY 2023, Velocity Financial's net income increased 62% to $52.3 million, driven by higher net interest and other income, despite a decrease in loan production and a contracted net interest margin. | Full-Year Operating Results ($ in thousands) | FY 2023 | FY 2022 | % Variance | | :--- | :--- | :--- | :--- | | Total Loan production | $1,118,000 | $1,762,000 | (37)% | | Net Interest Margin - Portfolio | 3.34% | 3.64% | (8)% | | Net Income | $52,273 | $32,211 | 62% | | Diluted EPS | $1.52 | $0.94 | 61% | | Core Income | $53,384 | $42,153 | 26.6% | | Core Diluted EPS | $1.54 | $1.24 | 24.5% | - The decrease in loan production was attributed to the higher interest rate environment prevalent throughout most of FY 2023[34](index=34&type=chunk) - The decline in Net Interest Margin (NIM) was driven by higher securitization and warehouse financing costs, partially offset by a higher WAC on new loans (**11.1%** in 2023 vs **8.0%** in 2022)[34](index=34&type=chunk)[36](index=36&type=chunk) [Credit Performance and REO (FY 2023)](index=9&type=section&id=Credit%20Performance%20and%20REO%20%28FY%202023%29) In FY 2023, average nonperforming loans increased to $328.1 million, maintaining stability as a percentage of the HFI portfolio, while net gains from charge-off and REO activity decreased. Charge-Offs, Gain/(Loss) on REO ($ in thousands) | Charge-Offs, Gain/(Loss) on REO ($ in thousands) | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Average nonperforming loans | $328,105 | $266,129 | | Charge-offs | $(2,039) | $(521) | | Total gain/(loss) on REO | $2,038 | $5,462 | - Average NPLs as a percentage of average loans HFI were **8.7%** for FY 2023, consistent with 8.6% for FY 2022[36](index=36&type=chunk) [Financial Statements and Reconciliations](index=14&type=section&id=Financial%20Statements%20and%20Reconciliations) [Consolidated Statements of Financial Condition](index=14&type=section&id=Consolidated%20Statements%20of%20Financial%20Condition) As of December 31, 2023, Velocity's total assets grew to $4.40 billion, driven by a 17% increase in the net loan portfolio, with total equity rising to $436.9 million. Balance Sheet ($ in thousands) | Balance Sheet ($ in thousands) | 12/31/2023 | 12/31/2022 | | :--- | :--- | :--- | | Total loans, net | $4,151,785 | $3,548,485 | | Total Assets | $4,404,573 | $3,748,975 | | Total Liabilities | $3,967,700 | $3,368,475 | | Total equity | $436,873 | $380,500 | | Book value per share | $13.49 | $11.89 | [Consolidated Statements of Income](index=15&type=section&id=Consolidated%20Statements%20of%20Income) For FY 2023, total interest income increased to $310.8 million, driving net revenue to $171.7 million and net income to $52.3 million, despite higher operating expenses. Income Statement (Years, $ in thousands) | Income Statement (Years, $ in thousands) | 12/31/2023 | 12/31/2022 | | :--- | :--- | :--- | | Net interest income after provision | $105,836 | $81,996 | | Total other operating income | $65,910 | $24,320 | | Net revenue | $171,745 | $106,316 | | Total operating expenses | $100,618 | $61,764 | | Net income attributable to Velocity | $52,273 | $32,211 | Income Statement (Quarters, $ in thousands) | Income Statement (Quarters, $ in thousands) | 4Q 2023 | 4Q 2022 | | :--- | :--- | :--- | | Net revenue | $51,567 | $32,495 | | Total operating expenses | $29,260 | $20,804 | | Net income attributable to Velocity | $17,355 | $8,462 | [Net Interest Margin Analysis](index=17&type=section&id=Net%20Interest%20Margin%20Analysis) Q4 2023 saw a significant improvement in portfolio-related net interest margin to 3.52%, driven by higher loan yields, while the full-year NIM contracted slightly to 3.34%. Quarterly NIM Analysis | Quarterly NIM Analysis | 4Q 2023 | 4Q 2022 | | :--- | :--- | :--- | | Avg. Loan Portfolio Yield | 8.70% | 7.51% | | Avg. Portfolio Debt Cost | 5.75% | 5.23% | | Net Interest Spread - Portfolio | 2.95% | 2.28% | | Net Interest Margin - Portfolio | 3.52% | 2.84% | Annual NIM Analysis | Annual NIM Analysis | FY 2023 | FY 2022 | | :--- | :--- | :--- | | Avg. Loan Portfolio Yield | 8.34% | 7.77% | | Avg. Portfolio Debt Cost | 5.58% | 4.64% | | Net Interest Spread - Portfolio | 2.76% | 3.13% | | Net Interest Margin - Portfolio | 3.34% | 3.64% | [Reconciliation of GAAP to Non-GAAP Measures](index=18&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) The company provides a reconciliation from GAAP Net Income to non-GAAP Core Net Income, adjusting for specific items to present a clearer view of operating performance. Core Net Income Reconciliation ($ in thousands) | Core Net Income Reconciliation ($ in thousands) | 4Q 2023 | FY 2023 | FY 2022 | | :--- | :--- | :--- | :--- | | Net Income (GAAP) | $17,355 | $52,273 | $32,211 | | Tax liability reduction | $(1,866) | $(1,866) | — | | Equity award & ESPP costs | $673 | $2,977 | $656 | | Corporate debt refinancing costs | — | — | $9,286 | | Core Net Income (Non-GAAP) | $16,161 | $53,384 | $42,153 | [Supplementary Information](index=11&type=section&id=Supplementary%20Information) [Conference Call and Company Information](index=11&type=section&id=Conference%20Call%20and%20Company%20Information) Velocity Financial held a conference call on March 7, 2024, to discuss financial results, highlighting its business model as a vertically integrated real estate finance firm. - A conference call and webcast were held on March 7, 2024, to review financial results[37](index=37&type=chunk) - Velocity Financial is a vertically integrated real estate finance company that originates and manages business purpose loans secured by 1-4 unit residential rental and small commercial properties[40](index=40&type=chunk) [Non-GAAP Measures and Forward-Looking Statements](index=11&type=section&id=Non-GAAP%20Measures%20and%20Forward-Looking%20Statements) The report utilizes non-GAAP financial measures for performance evaluation and includes forward-looking statements subject to various risks and uncertainties. - The company uses non-GAAP measures like core net income and core diluted EPS to exclude non-recurring expenses and better evaluate operating performance[41](index=41&type=chunk)[42](index=42&type=chunk)[45](index=45&type=chunk) - The report contains forward-looking statements that are not guarantees of future results and are subject to risks and uncertainties, including economic conditions, regulatory changes, and market conditions[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk)

Velocity Financial, Inc. (NYSE:VEL) Q3 2023 Earnings Conference Call November 2, 2023 5:00 PM ET Company Participants Chris Oltmann - Treasurer Chris Farrar - President and CEO Mark Szczepaniak - Chief Financial Officer Conference Call Participants Stephen Laws - Raymond James Sarah Barcomb - BTIG Steve Delaney - JMP Securities Operator Good day and welcome to the Velocity Financial Q3 2023 Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is be ...

Investor 1-4 Mixed-Use Multi-Family Commercial > 3Q23 Results Presentation November 2, 2023 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-loo ...

[Part I. Financial Information](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) The company's total assets increased to $4.12 billion as of September 30, 2023, from $3.75 billion at year-end 2022, driven by growth in the loan portfolio. Net income for the nine months ended September 30, 2023, was $35.1 million, a significant increase from $24.3 million in the prior-year period, primarily due to higher net interest income and unrealized gains on fair value instruments. The company adopted fair value option accounting for new loans and certain debt, and began using derivative instruments for cash flow hedging [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) Consolidated Balance Sheet Highlights ($ in thousands) | Account | Sep 30, 2023 (Unaudited) | Dec 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $29,393 | $45,248 | | Total loans, net | $3,917,366 | $3,548,485 | | Real estate owned, net | $29,299 | $13,325 | | **Total Assets** | **$4,117,308** | **$3,748,975** | | **Liabilities** | | | | Securitized debt, net | $2,504,334 | $2,736,290 | | Securitized debt, at fair value | $669,139 | $— | | Warehouse and repurchase facilities, net | $215,176 | $330,814 | | **Total Liabilities** | **$3,697,292** | **$3,368,475** | | **Total Equity** | **$420,016** | **$380,500** | - Total loans, net, increased by approximately **10.4%** to **$3.92 billion** as of September 30, 2023, from **$3.55 billion** at the end of 2022[10](index=10&type=chunk) [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) Statement of Income Summary ($ in thousands, except per share data) | Metric | Q3 2023 | Q3 2022 | 9 Months 2023 | 9 Months 2022 | | :--- | :--- | :--- | :--- | :--- | | Net Interest Income | $27,367 | $24,847 | $77,027 | $62,509 | | Total Other Operating Income | $17,360 | $3,027 | $44,239 | $12,900 | | Total Operating Expenses | $27,334 | $13,245 | $71,359 | $40,960 | | Net Income | $12,169 | $10,290 | $35,126 | $24,292 | | Diluted EPS | $0.35 | $0.29 | $1.02 | $0.70 | - Net income for Q3 2023 was **$12.2 million**, an **18.3%** increase from **$10.3 million** in Q3 2022. For the nine months ended September 30, 2023, net income rose **44.6%** to **$35.1 million** from **$24.3 million** in the prior-year period[17](index=17&type=chunk) - The significant increase in other operating income is primarily due to a **$9.7 million** unrealized gain on fair value securitized debt in Q3 2023, which was not present in 2022[17](index=17&type=chunk) [Consolidated Statements of Cash Flows](index=8&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) - For the nine months ended September 30, 2023, the company experienced a net decrease in cash, cash equivalents, and restricted cash of **$15.0 million**[23](index=23&type=chunk) - Key cash flow activities for the first nine months of 2023 include: - **Operating:** Net cash provided was **$22.7 million** - **Investing:** Net cash used was **$360.8 million**, primarily for the origination of loans held for investment (**$728.2 million**), partially offset by payoffs (**$334.2 million**) - **Financing:** Net cash provided was **$323.2 million**, driven by proceeds from securitized debt (**$774.3 million**) and warehouse advances (**$753.3 million**), offset by repayments[23](index=23&type=chunk) [Notes to Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - Significant accounting policy changes include the election of the fair value option (FVO) for securitized debt issued after January 1, 2023, and the adoption of hedge accounting for derivative instruments starting in Q3 2023[35](index=35&type=chunk)[39](index=39&type=chunk)[40](index=40&type=chunk) - As of September 30, 2023, the company's COVID-19 forbearance program had an ending unpaid principal balance (UPB) of **$177.0 million**, of which **76.7%** were performing/accruing[49](index=49&type=chunk)[51](index=51&type=chunk) - The company began using forward starting interest rate swaps as cash flow hedges in Q3 2023 to manage interest rate risk on future debt issuances. As of September 30, 2023, derivative assets were valued at **$1.26 million**[106](index=106&type=chunk)[107](index=107&type=chunk) - The company is the sole beneficial interest holder of twenty-three securitization trusts, which are consolidated as variable interest entities (VIEs). These transactions are accounted for as secured borrowings[73](index=73&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) The company's loan portfolio grew to $3.9 billion in UPB as of Q3 2023. Loan originations were $290.6 million in Q3 2023, a decrease from the prior year due to rising interest rates and strategic caution. Net interest margin remained relatively stable QoQ but decreased YoY due to higher funding costs. The adoption of fair value option (FVO) accounting for new loans and certain debt significantly impacted reported income, increasing both other operating income and operating expenses. Nonperforming loans increased to 10.1% of the portfolio, but the company continues to resolve these assets with net gains [Business Overview and Recent Developments](index=36&type=section&id=Business%20Overview%20and%20Recent%20Developments) - Velocity Financial is a vertically integrated real estate finance company that originates and manages investor loans secured by 1-4 unit residential rental and commercial properties. As of September 30, 2023, its loan portfolio totaled **$3.9 billion** in unpaid principal balance (UPB)[134](index=134&type=chunk)[136](index=136&type=chunk) - In Q3 2023, the company completed two securitizations totaling **$316.3 million**, including its first securitization of short-term mortgage loans (VCC 2023-RTL1)[143](index=143&type=chunk) - The company began applying fair value option (FVO) accounting to all originated mortgage loans starting October 1, 2022, and to securitized debt on a case-by-case basis from January 1, 2023. This change means a CECL loan loss reserve is not recorded on these FVO loans[141](index=141&type=chunk)[142](index=142&type=chunk) [Portfolio and Asset Quality](index=39&type=section&id=Portfolio%20and%20Asset%20Quality) Key Portfolio Statistics | Metric | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | Total loans (UPB, $ in thousands) | $3,876,726 | $3,432,540 | | Loan count | 9,953 | 8,476 | | Weighted average LTV | 68.0% | 68.7% | | Weighted average coupon | 8.6% | 7.7% | | Nonperforming loans (% of total) | 10.0% | 7.4% | Loan Originations (Q3 2023 vs Q3 2022) | Period | Loan Balance ($ in thousands) | Weighted Average Coupon | Weighted Average LTV | | :--- | :--- | :--- | :--- | | Q3 2023 | $290,581 | 11.04% | 65.3% | | Q3 2022 | $457,272 | 8.58% | 66.8% | - Nonperforming loans increased to **10.1%** (**$387.7 million**) of the portfolio as of September 30, 2023, up from **7.4%** (**$253.3 million**) a year prior[176](index=176&type=chunk) - The allowance for loan losses decreased to **$4.7 million** as of September 30, 2023, from **$5.3 million** a year earlier, primarily due to loan payoffs and the shift to FVO accounting for new originations, which do not require a CECL reserve[172](index=172&type=chunk)[174](index=174&type=chunk) [Results of Operations](index=44&type=section&id=Results%20of%20Operations) Key Performance Metrics (Annualized) | Metric | Q3 2023 | Q3 2022 | | :--- | :--- | :--- | | Portfolio yield | 8.38% | 7.88% | | Cost of funds — portfolio related | 5.63% | 4.81% | | Net interest margin — portfolio related | 3.34% | 3.59% | | Pre-tax return on equity | 16.82% | 15.26% | | Return on equity | 11.87% | 11.18% | - Net interest income for Q3 2023 increased to **$27.4 million** from **$24.8 million** in Q3 2022. The growth was driven by a larger average loan balance, which offset the negative impact of a higher cost of funds[221](index=221&type=chunk)[222](index=222&type=chunk)[226](index=226&type=chunk) - Operating expenses rose to **$27.3 million** in Q3 2023 from **$13.2 million** in Q3 2022. The increase was mainly due to higher compensation and securitization costs, as expenses for FVO loans and FVO debt are recognized immediately rather than being deferred[237](index=237&type=chunk)[239](index=239&type=chunk) - Other operating income surged to **$17.4 million** in Q3 2023 from **$3.0 million** in Q3 2022, primarily due to unrealized gains on fair value securitized debt (**$9.7 million**) and higher origination income, both resulting from the adoption of FVO accounting[234](index=234&type=chunk)[235](index=235&type=chunk) [Liquidity and Capital Resources](index=54&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2023, total liquidity plus available warehouse capacity was **$654.0 million**, consisting of **$29.4 million** in cash, **$30.9 million** in available borrowings for unencumbered loans, and **$593.6 million** in available warehouse capacity[252](index=252&type=chunk) - The company's primary funding sources are warehouse repurchase facilities, securitized debt, corporate debt, and equity. From May 2011 through September 2023, the company has completed thirty securitizations, issuing **$6.2 billion** in securities[251](index=251&type=chunk)[262](index=262&type=chunk) - The company has a five-year **$215.0 million** syndicated corporate term loan with a fixed rate of **7.125%**, maturing in March 2027[266](index=266&type=chunk)[269](index=269&type=chunk) - The company maintains an at-the-market (ATM) equity offering program. During Q3 2023, **27,529** shares were sold for net proceeds of **$327.2 thousand**[267](index=267&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk is interest rate volatility, which affects both income from assets and expenses on liabilities. To manage this risk, the company utilizes financial instruments, specifically forward starting payer interest rate swaps. As of September 30, 2023, it had swaps with a notional amount of $155.0 million to hedge against changes in the SOFR benchmark for a forecasted debt issuance - The company's main market risk is interest rate volatility, which impacts net interest income and the fair value of its assets and liabilities[275](index=275&type=chunk) - To mitigate interest rate risk, the company uses derivative instruments. As of September 30, 2023, it held forward starting payer interest rate swaps with a total notional value of **$155.0 million** to hedge cash flows on a forecasted debt issuance[275](index=275&type=chunk) [Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures as of September 30, 2023. They concluded that these controls were effective at a reasonable assurance level. There were no material changes to the company's internal control over financial reporting during the quarter - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of September 30, 2023[277](index=277&type=chunk) - No material changes were made to the company's internal control over financial reporting during the third quarter of 2023[278](index=278&type=chunk) [Part II. Other Information](index=62&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Legal Proceedings](index=62&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business. Management does not believe that the final outcome of any currently pending matters will have a material adverse effect on the company's financial condition or results of operations - The company is party to various legal proceedings in the normal course of business but does not expect them to have a material adverse effect on its financial condition or operations[280](index=280&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=62&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During the three months ended September 30, 2023, Velocity Financial, Inc. did not make any purchases of its own common stock - The company made no purchases of its common stock during the three months ended September 30, 2023[282](index=282&type=chunk)

Financial Data and Key Metrics Changes - The company reported a 19% increase in originations compared to the previous quarter, with net revenue growth of 6.8% quarter-over-quarter while holding operating expenses flat [7][12] - Earnings per share showed significant growth, with book value increasing to $12.57 on a GAAP basis [19] - The overall portfolio yield increased by 24 basis points year-over-year, reflecting higher coupon rates on new loans [13] Business Line Data and Key Metrics Changes - Total loan production for Q2 was approximately $258 million, a 19.2% increase from $217 million in Q1 [21] - The weighted average coupon for Q2 production was 11%, marking a 3.25% year-over-year increase [21] - The total loan portfolio as of June 30 was $3.7 billion, a 3.4% increase from Q1 and a 20% increase from Q4 of the previous year [22] Market Data and Key Metrics Changes - The non-performing loan (NPL) rate increased to 10% from 8.2% in the previous quarter, attributed to portfolio seasoning [15][24] - The company resolved over $50 million in non-performing UPB for a net gain of $1.5 million, maintaining a three-point gain on NPL resolutions [26] Company Strategy and Development Direction - The company is focused on growing assets and improving return on equity while maintaining a healthy origination pipeline [10][11] - Management emphasized the importance of creating attractive risk-adjusted deals as banks tighten lending activities, allowing the company to capture more opportunities [7][10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the stability of the real estate market and anticipated continued positive resolutions in credit performance [33] - The company expects to grow earnings and maintain strong demand for its products, projecting an end-of-year origination volume around $1 billion [45] Other Important Information - The company has a total liquidity of $72 million, with $34 million in cash and cash equivalents, and $38 million in available liquidity on unfinanced finance loan collateral [30] - The CECL loan loss reserve stood at $4.6 million, consistent with previous quarters [27] Q&A Session Summary Question: Can you speak about the execution of securitization 2023-2 compared to 2023-1? - Management noted that while demand was not as strong as in 2023-1 due to tightening conditions, the execution was still oversubscribed and successful [35] Question: How is the competitive landscape from banks affecting your underwriting standards? - Management indicated that banks remain cautious, providing opportunities for the company to improve underwriting standards and capture business that may have previously gone to banks [42][43] Question: What is the outlook for origination volumes in the second half of the year? - Management projected that the current run rate is sustainable, expecting to end the year around $1 billion in origination volume [45]

Earnings - Net income was $122 million, with diluted earnings per share (EPS) of $036, compared to $106 million and $031 per share for 2Q22[6] - Core net income reached $129 million, with core diluted EPS of $038, compared to $106 million and $031 per share for 2Q22[7] - Net revenue grew by 68% Q/Q, while operating expense growth was essentially flat Q/Q[9] - The W A portfolio yield reached 824% for 2Q23, a 24 bps increase from 797% for 2Q22[10] Production & Loan Portfolio - Loan production in 2Q23 totaled $2586 million in UPB, a decrease of 419% from $4454 million in UPB for 2Q22[11] - The total loan portfolio was $37 billion in UPB as of June 30, 2023, an increase of 204% from June 30, 2022[13] - NPLs were 100% of Held for Investment (HFI) as of June 30, 2023, up from 82% as of June 30, 2022 Realized 30% gains on NPL UPB resolved in 2Q23[14] Financing & Capital - The company completed the VCC 2023-1R (Re-REMIC) securitization totaling $648 million of non –mark to market securities issued, resulting in $480 million in additional liquidity[15] - The company completed the VCC 2023-2 securitization totaling $2022 million of securities issued, comprised of long-term business-purpose loans[17] - Liquidity was $720 million as of June 30, 2023[18] - Total available warehouse line capacity was $5730 million as of June 30, 2023[19]

PART I. FINANCIAL INFORMATION [Item 1. Consolidated Financial Statements (Unaudited)](index=3&type=section&id=Item%201.%20Consolidated%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements for Velocity Financial, Inc. as of June 30, 2023, and for the three and six-month periods then ended [Consolidated Balance Sheets](index=3&type=section&id=Consolidated%20Balance%20Sheets) The Consolidated Balance Sheets show an increase in total assets to $3.95 billion as of June 30, 2023, from $3.75 billion at December 31, 2022, driven by a rise in total loans, net, to $3.76 billion, with total liabilities increasing to $3.55 billion and total equity growing to $405.2 million from $380.5 million Consolidated Balance Sheet Highlights ($ in thousands) | Account | June 30, 2023 (Unaudited) | December 31, 2022 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $33,987 | $45,248 | | Total loans, net | $3,763,270 | $3,548,485 | | Total assets | $3,951,145 | $3,748,975 | | **Liabilities** | | | | Securitized debt, net | $2,622,547 | $2,736,290 | | Securitized debt, at fair value | $381,799 | $— | | Warehouse and repurchase facilities, net | $235,749 | $330,814 | | Total liabilities | $3,545,903 | $3,368,475 | | **Equity** | | | | Total equity | $405,242 | $380,500 | [Consolidated Statements of Income](index=5&type=section&id=Consolidated%20Statements%20of%20Income) For the three months ended June 30, 2023, net income attributable to Velocity Financial, Inc. was $12.2 million, or $0.36 per diluted share, compared to $10.6 million, or $0.31 per diluted share, for the same period in 2022, with net income rising to $22.8 million from $13.8 million year-over-year for the six-month period Consolidated Statements of Income Highlights ($ in thousands, except per share data) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | Net interest income | $25,307 | $26,309 | $49,660 | $37,662 | | Total other operating income | $14,037 | $3,592 | $26,878 | $9,873 | | Total operating expenses | $22,222 | $14,832 | $44,024 | $27,715 | | Net income attributable to Velocity Financial, Inc. | $12,183 | $10,645 | $22,832 | $13,766 | | Diluted EPS | $0.36 | $0.31 | $0.67 | $0.40 | [Consolidated Statements of Changes in Stockholders' Equity](index=6&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Total stockholders' equity increased from $380.5 million at December 31, 2022, to $405.2 million at June 30, 2023, primarily driven by net income of $22.8 million for the six-month period, along with stock-based compensation and common stock issuances, partially offset by treasury stock purchases and distributions to non-controlling interests Changes in Stockholders' Equity (Six Months Ended June 30, 2023, $ in thousands) | Description | Amount | | :--- | :--- | | Balance – December 31, 2022 | $380,500 | | Net income | $10,736 (Q1) + $12,222 (Q2) | | Purchase of treasury stock, at cost | ($836) | | Stock-based compensation & issuances | $1,000 + $875 + $1,025 | | Distributions to non-controlling interest | ($160) + ($120) | | **Balance – June 30, 2023** | **$405,242** | [Consolidated Statements of Cash Flows](index=7&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, the company experienced a net decrease in cash, cash equivalents, and restricted cash of $11.3 million, with net cash provided by operating activities at $32.4 million, net cash used in investing activities at $212.6 million, and net cash provided by financing activities at $168.9 million Consolidated Cash Flow Summary (Six Months Ended, $ in thousands) | Activity | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | Net cash provided by operating activities | $32,429 | $13,100 | | Net cash used in investing activities | ($212,609) | ($507,879) | | Net cash provided by financing activities | $168,897 | $502,642 | | **Net (decrease) increase in cash** | **($11,283)** | **$7,863** | [Notes to Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements%20(Unaudited)) The notes detail the company's organization, accounting policies, and financial instrument specifics, including the adoption of fair value option (FVO) accounting for securitized debt issued after January 1, 2023, and for all originated mortgage loans since October 1, 2022, with a subsequent event noting a securitization of $85.9 million in August 2023 - The company originates and acquires residential and commercial investor real estate loans and primarily finances them through securitizations, having acquired an **80% interest** in Century Health & Housing Capital in December 2021[24](index=24&type=chunk)[26](index=26&type=chunk) - Effective January 1, 2023, the company elected to apply the fair value option (FVO) to securitized debt issued when the underlying collateral is also carried at fair value[31](index=31&type=chunk)[35](index=35&type=chunk) Loan Portfolio Summary (UPB, $ in thousands) | Status | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Total Loans Held for Investment, Net | $3,057,940 | $3,272,390 | | Total Loans Held for Investment, at Fair Value | $705,330 | $276,095 | | **Total Loans, Net** | **$3,763,270** | **$3,548,485** | - As of June 30, 2023, total nonaccrual loans (amortized cost basis) were **$354.8 million**, an increase from **$295.3 million** at year-end 2022[43](index=43&type=chunk)[44](index=44&type=chunk) Securitized Debt Summary ($ in thousands) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Securitized debt, net | $2,622,547 | $2,736,290 | | Securitized debt, at fair value | $381,799 | $— | | **Total Securitized Debt** | **$3,004,346** | **$2,736,290** | - In August 2023, the company completed a securitization of **$85.9 million** of investor real estate loans, which will be accounted for as a secured borrowing[116](index=116&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=34&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's performance, highlighting a total loan portfolio of $3.7 billion UPB as of June 30, 2023, with key factors including the election of Fair Value Option (FVO) accounting, Q2 2023 loan originations of $258.6 million, and an increase in nonperforming loans to 10.0% of the portfolio - The company is a vertically integrated real estate finance company that originates and manages investor loans secured by 1-4 unit residential rental and commercial properties, with a total portfolio of **$3.7 billion UPB** as of June 30, 2023[120](index=120&type=chunk)[122](index=122&type=chunk) - The election to apply Fair Value Option (FVO) accounting to new loans (since Oct 2022) and certain securitized debt (since Jan 2023) significantly affects the comparability of financial results, as it changes how income and expenses are recognized[127](index=127&type=chunk)[128](index=128&type=chunk) Key Portfolio Statistics (UPB) | Metric | June 30, 2023 | June 30, 2022 | | :--- | :--- | :--- | | Total loans | $3,719,825 thousand | $3,090,258 thousand | | Weighted average coupon | 8.4% | 7.5% | | Nonperforming loans (% of total) | 10.0% | 8.2% | - Loan originations for Q2 2023 were **$258.6 million**, a decrease from **$445.4 million** in Q2 2022, which management attributes to increased interest rates and a strategic reduction in originations[149](index=149&type=chunk) - Total liquidity plus available warehouse capacity was **$648.0 million** as of June 30, 2023, consisting of cash, available borrowings, and warehouse/revolving credit line capacity[236](index=236&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section is not applicable for the current reporting period - This section was intentionally omitted as it is not applicable[258](index=258&type=chunk) [Controls and Procedures](index=59&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[260](index=260&type=chunk) - No material changes were made to the company's internal control over financial reporting during the quarter[261](index=261&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=60&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal proceedings in the ordinary course of business, but management does not believe that the final disposition of any currently pending matters will have a material adverse effect on the company's financial condition or results of operations - The company states that it does not expect any pending legal proceedings to have a material adverse effect on its business or financial results[263](index=263&type=chunk) [Risk Factors](index=60&type=section&id=Item%201A.%20Risk%20Factors) This section was intentionally omitted pursuant to the reduced disclosure requirements for a smaller reporting company - Risk factors are intentionally omitted due to the company's status as a smaller reporting company[264](index=264&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=60&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company made no purchases of its common stock during the three months ended June 30, 2023 - No common stock purchases were made by the company during the three months ended June 30, 2023[265](index=265&type=chunk) [Defaults Upon Senior Securities](index=60&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section is not applicable - This section is not applicable[266](index=266&type=chunk) [Mine Safety Disclosures](index=60&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable - This section is not applicable[267](index=267&type=chunk) [Other Information](index=60&type=section&id=Item%205.%20Other%20Information) During the three months ended June 30, 2023, none of the company's officers or directors had any Rule 10b5-1 trading plans or other non-Rule 10b5-1 trading arrangements in effect - No officers or directors had any Rule 10b5-1 trading arrangements in effect during the second quarter of 2023[268](index=268&type=chunk) [Exhibits](index=61&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of or incorporated by reference into the Quarterly Report on Form 10-Q, including certificates of incorporation, bylaws, various agreements, and officer certifications - A list of exhibits filed with the report is provided, including corporate governance documents, agreements, and required certifications under the Sarbanes-Oxley Act[270](index=270&type=chunk)[271](index=271&type=chunk)[273](index=273&type=chunk)

Financial Data and Key Metrics Changes - The company reported a portfolio yield increase of 49 basis points from Q4 2022, reflecting strong performance in the first quarter [9][25] - The weighted average coupon for new originations was 11.1%, significantly up from 6.3% in Q1 2022, indicating a strong increase in interest rates on loans [21] - The overall portfolio reached approximately $3.6 billion in UPV, representing a 25% year-over-year growth from Q1 2022 [22] Business Line Data and Key Metrics Changes - The company has strategically reduced loan production in early 2023, with Q1 originations at $217 million, but plans to increase volumes moving forward [20][11] - Non-performing loan (NPL) resolutions in Q1 amounted to nearly $39 million, with a 3.5% gain, indicating a return to historical resolution trends [24] Market Data and Key Metrics Changes - The company is experiencing increased lending opportunities due to competitors tightening credit, leading to better borrower quality [8] - The non-performing loan rate was reported at 8.7%, consistent with the previous quarter and down from 9.8% in Q1 2022 [26] Company Strategy and Development Direction - The company is focused on a disciplined growth strategy, capitalizing on the current market conditions to selectively increase loan originations [11][36] - A successful securitization transaction in April 2023 generated approximately $65 million in financing, enhancing the company's capital position [33][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating the current economic environment, highlighting a healthy demand for loans despite a slowing real estate market [11][36] - The company anticipates continued earnings and portfolio growth, supported by a disciplined credit process and strong asset resolutions [13][37] Other Important Information - The company has maintained a strong cash reserve of $45 million, with $39 million in cash and cash equivalents, ensuring ample liquidity for future operations [32] - The CECL loan loss reserve remained flat at $5 million, indicating stability in the company's risk management practices [27] Q&A Session Summary Question: Opportunities in the current environment and potential for increasing rates - Management indicated that while spreads could potentially increase, they are currently at a healthy level with ROEs well above 25% [40] Question: Future origination run rate expectations - Management suggested a target of approximately $250 million in monthly originations moving forward [41] Question: Legacy transactions and potential for securitization - Management confirmed that they are transitioning most deals to a sequential pay structure, with some legacy deals still in place that will free up capital in the future [42] Question: Impact of recent banking issues on borrower quality - Management noted an increase in the quality of borrowers as banks have become more cautious in their lending practices [45] Question: Growth opportunities in the next two years - Management expressed optimism about growth opportunities, citing strong demand for financing and a favorable market position [48]

Financial Performance - Net income was $106 million, with diluted earnings per share (EPS) at $031, compared to $31 million and $009 per share in 1Q22[6] - Core net income reached $114 million, and core diluted EPS was $033, a decrease from $124 million and $036 per share in 1Q22[6] - The weighted average portfolio yield increased by 24 bps to 800% in 1Q23, from 776% in 1Q22[6] - Book value per share as of March 31, 2023, was $1218, compared to $1189 as of December 31, 2022[9] Loan Portfolio and Production - Loan production in 1Q23 totaled $2170 million in UPB, a decrease of 627% from $5814 million in UPB for 1Q22[7, 14] - The total loan portfolio was $36 billion in UPB as of March 31, 2023, an increase of 250% from March 31, 2022[7, 17] - Nonperforming loans as a percentage of total HFI loans was 87% as of March 31, 2023, a decrease from 98% as of March 31, 2022[7, 59] Capital and Liquidity - VCC 2023-1 securitization in January totaled $1987 million of securities issued[8] - Liquidity was $453 million as of March 31, 2023, including $394 million in unrestricted cash and cash equivalents and $59 million in available liquidity in unfinanced loans[8] - Total warehouse line capacity was $8318 million as of March 31, 2023[8] Asset Resolution - Total NPL and REO resolution activities in 1Q23 totaled $387 million in UPB and realized net gains of $13 million, or 1035% of UPB resolved[54]

Loan Portfolio and Performance - As of March 31, 2023, the company's loan portfolio totaled $3.6 billion, with an average loan balance of approximately $393,000[126] - The annualized yield on the total portfolio for the three months ended March 31, 2023, was 8.00%[126] - The portfolio-related net interest margin for the same period was 3.23%, an increase from 2.84% in the previous quarter[128] - The total loans increased from $3.51 billion as of December 31, 2022, to $3.60 billion as of March 31, 2023[149] - The weighted average loan-to-value ratio at origination was 68.1% as of March 31, 2023[126] - The weighted average coupon for the loan portfolio increased to 8.15% as of March 31, 2023, from 7.95% at the end of December 2022[149] - Total loan originations for Q1 2023 were $217.0 million, a decrease of $364.4 million from $581.4 million in Q1 2022, primarily due to a strategic reduction in originations[154] - The average loan size for total loan originations in Q1 2023 was $368, with a weighted average coupon of 10.58% and a weighted average loan-to-value (LTV) of 65.0%[154] - The total loans held for investment, net, as of March 31, 2023, was $3,620.0 million, compared to $3,548.5 million as of December 31, 2022[155] - The percentage of current performing loans was 85.2% as of March 31, 2023, compared to 84.6% as of December 31, 2022[162] Nonperforming Loans and Allowance for Loan Losses - Nonperforming loans as a percentage of total loans increased to 8.62% as of March 31, 2023, compared to 8.34% at the end of December 2022[149] - Nonperforming loans amounted to $309.9 million, or 8.7% of the held for investment loan portfolio as of March 31, 2023, up from $292.8 million, or 8.3% as of December 31, 2022[163] - The allowance for loan losses as of March 31, 2023, was $5.0 million, compared to $4.9 million as of December 31, 2022, reflecting a less optimistic macroeconomic outlook[159] - The company considers various factors, including economic conditions and borrower equity, in estimating the allowance for loan losses, which is subject to change based on market conditions[160] - The average nonperforming loans held for investment were $298,703,000, with charge-offs of $484,000, resulting in a charge-off rate of 0.65%[168] - The company resolved $36.9 million of nonperforming loans during Q1 2023, compared to $34.3 million in Q1 2022, realizing net gains of $1.3 million in Q1 2023[164] Financial Performance and Income - Net income for the three months ended March 31, 2023, was $10.736 million, up from $3.231 million for the same period in 2022, reflecting a significant increase in profitability[207] - Interest income increased by $18.5 million to $70.5 million for the three months ended March 31, 2023, compared to $52.0 million for the same period in 2022, primarily due to higher portfolio balances and an increase in average loan yield from 7.76% to 8.00%[209] - The total company net interest margin increased to 2.76% for the three months ended March 31, 2023, from 1.69% for the same period in 2022[183] - Net interest income after provision for loan losses was $23.717 million for the three months ended March 31, 2023, compared to $10.623 million for the same period in 2022[207] - Total operating expenses for the three months ended March 31, 2023, were $21.518 million, compared to $12.250 million for the same period in 2022, indicating increased operational costs[207] - The annualized charge-off rate over the average loans held for investment remained low at 0.06% for the three months ended March 31, 2023, compared to 0.00% for the previous quarter and 0.05% for the same quarter in 2022[187] Securitization and Debt - The company completed one securitization totaling $198.7 million in UPB of investor real estate loans during the quarter ended March 31, 2023[133] - The company has executed a total of twenty-six securitizations, resulting in over $5.6 billion in gross debt proceeds since May 2011[127] - The company completed twenty-six securitizations from May 2011 through March 2023, issuing $5.6 billion in principal amount of securities to third parties[245] - The total debt related to the portfolio was $3.366 billion as of March 31, 2023, compared to $2.535 billion for the same period in 2022[207] - A five-year $215,000,000 syndicated corporate debt agreement was established on March 15, 2022, with a fixed interest rate of 7.125%[249] Cash Flow and Liquidity - Total liquidity plus available warehouse capacity was $578.2 million as of March 31, 2023, consisting of $39.4 million in cash and $532.9 million in available warehouse capacity[236] - Cash used in operating activities for the three months ended March 31, 2023, was $(11,928) thousand, compared to $11,836 thousand provided in the same period of 2022[237] - The company had $299.0 million in borrowings under warehouse facilities as of March 31, 2023, with $532.9 million of available capacity[242] - The net cash provided by financing activities for the three months ended March 31, 2023, was $77,483 thousand, compared to $281,684 thousand in the same period of 2022[237] - The net change in cash, cash equivalents, and restricted cash for the three months ended March 31, 2023, was $(6,023) thousand, compared to $(138) thousand in the same period of 2022[237] Future Outlook and Strategic Plans - Forward-looking statements indicate expectations regarding loan originations and strategies for future funding and business development[256] - The company plans to use proceeds from new securities issuance primarily for repaying warehouse borrowings and originating new investor real estate loans[248] - The company does not plan to structure any securitizations as sales or utilize off-balance-sheet vehicles[248]