Velocity Financial(US:VEL)2025-11-07 13:58Financial 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]