Velocity Financial(VEL) - 2025 Q1 - Quarterly Results

Financial Performance - Net income for Q1 2025 was $18.9 million, a 9.5% increase from $17.3 million in Q1 2024, with diluted EPS rising to $0.51 from $0.49[4] - Core net income reached $20.3 million, up 11.0% from $18.2 million in Q1 2024, with core diluted EPS increasing to $0.55 from $0.51[4] - Net revenue for 1Q25 was $69.1 million, a 27.4% increase from $54.2 million in 1Q24, driven by strong portfolio net interest income growth and unrealized fair value gains[18] - Total net interest income was $35.6 million for 1Q25, up 25.2% from $28.5 million in 1Q24, with portfolio net interest income at $43.7 million, also a 25.2% increase[18] - Net income attributable to Velocity Financial, Inc. for the quarter was $18,887,000, compared to $17,251,000 in the same quarter last year, showing an increase of 9.5%[46] - Core net income for the quarter was $20,253,000, up from $18,249,000 in the same quarter last year, which is a growth of 11.0%[52] - Basic earnings per share for the quarter was $0.55, compared to $0.52 in the same quarter last year, reflecting an increase of 5.8%[46] Loan Production and Portfolio - Record loan production of $640.4 million in UPB, representing a 69.1% increase from $378.7 million in Q1 2024[4] - Total loan portfolio was $5.4 billion in UPB, a 27.3% increase from $4.3 billion in Q1 2024, driven by a 19.8% growth in Investor 1-4 Rental loans[12] - The average loan portfolio balance increased to $5,214,186,000 from $4,159,412,000 in the same quarter last year, representing a growth of 25.4%[48] Nonperforming Loans and Credit Quality - Nonperforming loans (NPL) as a percentage of Held for Investment (HFI) loans were 10.8%, slightly up from 10.1% in Q1 2024[4] - Nonperforming loans (NPL) reached $587.8 million as of March 31, 2025, representing 10.8% of loans held for investment (HFI), an increase from $432.6 million and 10.1% a year earlier[15] - The provision for credit losses was $1,872,000, compared to a reversal of $1,002,000 in the same quarter last year, indicating a shift in credit quality assessment[46] Operating Expenses - Operating expenses totaled $42.2 million for 1Q25, a 36.0% increase from $31.0 million in 1Q24, primarily due to higher production-driven compensation expenses[20] - Compensation expenses rose to $21.7 million in 1Q25, compared to $15.4 million in 1Q24, reflecting increased commission compensation on higher production volume[20] - Total operating expenses for the quarter were $42,190,000, up from $31,011,000 in the same quarter last year, indicating a rise of 36.0%[46] Liquidity and Capital - Liquidity as of March 31, 2025, was $75.6 million, with total available warehouse line capacity of $238.2 million[4] - Total assets as of March 31, 2025, were $5,971.53 million, an increase from $5,527.41 million as of December 31, 2024[42] - Total loans, net, increased to $5,614.21 million as of March 31, 2025, compared to $5,187.07 million as of December 31, 2024[42] - Cash and cash equivalents rose to $51.68 million as of March 31, 2025, up from $49.90 million as of December 31, 2024[42] - Book value per share increased to $16.19 as of March 31, 2025, compared to $15.70 as of December 31, 2024[42] - Stockholders' equity grew to $566.22 million as of March 31, 2025, from $520.22 million as of December 31, 2024[42] Securitization and Interest Rates - The weighted average loan-to-value ratio was 66.1% as of March 31, 2025, down from 67.6% in Q1 2024[12] - The weighted average rate on outstanding securitizations was 5.87% as of March 31, 2025, an increase of 44 basis points from the previous year[22] - The company completed one securitization in 1Q25 totaling $342.8 million with a weighted average rate of 6.7%, down from 7.9% in 1Q24[22] - The net interest margin - portfolio related for the quarter was 3.35%, consistent with the previous quarter, indicating stable performance[48] - The company reported a net interest spread - total company of 2.75%, an increase from 2.62% in the same quarter last year, showing improved efficiency[48] Future Outlook and Risks - The company expects solid investor loan demand to continue, driven by strong financing demand in both traditional commercial and residential rental property markets[6] - Forward-looking statements indicate potential risks including general economic conditions and regulatory changes that may impact future results[38]