Velocity Financial(US:VEL)2024-11-08 00:29Loan Portfolio and Performance - As of September 30, 2024, the company's loan portfolio totaled $4.8 billion, with an average loan balance of approximately $388.5 thousand[109]. - The annualized yield on the total portfolio for the three months ended September 30, 2024, was 9.18%[109]. - The portfolio-related net interest margin increased to 3.60% for the three months ended September 30, 2024, compared to 3.34% for the same period in 2023[109]. - Total loans originated in Q3 2024 reached $476.775 million, an increase from $422.226 million in Q2 2024 and $290.581 million in Q3 2023[122]. - The net loans held for investment as of September 30, 2024, amounted to $4.881 billion, up from $4.134 billion as of September 30, 2023[123]. - The weighted average loan-to-value ratio at origination was 67.0% as of September 30, 2024[121]. - The weighted average coupon for loans held for investment was 10.85% in Q3 2024, compared to 11.03% in Q2 2024[122]. - The average loan size for loans held for investment in Q3 2024 was $388,000, compared to $381,000 in Q2 2024[122]. Income and Expenses - For the three months ended September 30, 2024, the company generated pre-tax income of $21.2 million and net income of $15.8 million[109]. - Net income for the three months ended September 30, 2024, was $15,617 thousand, up from $12,169 thousand in the same period last year, representing a growth of 28.5%[150]. - Total operating expenses were $34.61 million for the three months ended September 30, 2024, compared to $27.33 million for the same period in 2023[160]. - Interest income increased by $25.98 million to $105.07 million for the three months ended September 30, 2024, compared to $79.09 million for the same period in 2023, primarily due to higher portfolio balances and average loan yield[161]. - Other operating income increased to $20.73 million for the three months ended September 30, 2024, from $17.36 million for the same period in 2023[160]. Nonperforming Loans and Credit Losses - Nonperforming loans as of September 30, 2024, amounted to $503.9 million, representing 10.6% of total loans[121]. - Nonperforming loans represented 12.5% of total UPB as of September 30, 2024, compared to 11.8% as of September 30, 2023[129]. - The allowance for credit losses as of September 30, 2024, was $4.9 million, compared to $4.7 million as of September 30, 2023, reflecting an increase in the individually-assessed component of the reserve[128]. - The charge-offs for Q3 2024 were $1.069 million, with a charge-off rate of 0.06% of total UPB for the nine months ended September 30, 2024[126]. - The recovery rate on resolved nonperforming loans was 103.0% for Q3 2024, compared to 101.1% for Q2 2024 and 102.1% for Q3 2023[132]. Debt and Financing - The company executed thirty-five securitized debt transactions, resulting in over $7.4 billion in gross debt proceeds from May 2011 through September 30, 2024[109]. - In February 2024, the company issued $75.0 million principal amount of five-year Senior Secured Notes bearing interest at 9.875%[110]. - Total debt for the company reached $4,442,040 thousand, an increase from $3,594,611 thousand year-over-year, indicating a growth of 23.6%[143]. - The total outstanding borrowings as of September 30, 2024, amounted to $3.86 billion, an increase from $3.34 billion as of December 31, 2023[180]. - The company entered into a five-year $215.0 million syndicated corporate debt agreement in March 2022, bearing interest at a fixed rate of 7.125%[182]. Market Conditions and Risks - The company operates in a highly fragmented market with substantial demand for financing and limited supply of institutional financing alternatives[109]. - The company anticipates continued economic challenges, including rising unemployment and geopolitical tensions, impacting future credit loss estimates[127]. - The primary market risk for the company is interest rate volatility, which impacts income and expenses recorded on assets and liabilities[187]. - Forward-looking statements regarding the company's future performance and strategies are subject to risks and uncertainties[186]. Cash and Liquidity - Cash and cash equivalents totaled $44.1 million as of September 30, 2024, up from $29.4 million in the same period last year[174]. - The total liquidity, including available warehouse capacity, was $442.1 million as of September 30, 2024[174]. - The company reported a net cash provided by operating activities of $4.5 million for the nine months ended September 30, 2024, down from $22.7 million for the same period in 2023[175].