Financial Data and Key Metrics Changes - Distributable earnings for Q3 2025 were $4.2 million or $0.29 per share, at the high end of guidance [4][12] - A regular quarterly dividend of $0.28 per share was declared, equating to an annualized yield of 11% [4] - The company ended the quarter with $77 million in cash and $310 million in capacity on secured financing facilities [14][15] Business Line Data and Key Metrics Changes - The portfolio consisted of $642 million in floating-rate first mortgage commitments across 22 loans, with a weighted average all-in yield of 8.2% and a weighted average loan-to-value of 67% [5] - The weighted average risk rating at quarter end was 2.9, with all loans current on debt service and no non-accrual balances [6][15] Market Data and Key Metrics Changes - Market sentiment improved following the Federal Reserve's rate cut in September, driving new financing activity [9] - Demand for floating-rate bridge financing remains strong, particularly due to 2021 and 2022 vintage floating-rate multifamily loan maturities [9][10] - The company is currently evaluating over $1 billion of loan opportunities, with a shift towards a higher proportion of acquisition financing [11] Company Strategy and Development Direction - The company aims to deploy capital into opportunities that offer the best relative value in the current environment, focusing on disciplined capital deployment [8] - The strategy includes maintaining strong sponsor relationships and leveraging underwriting and asset management expertise to generate attractive risk-adjusted returns [8] Management's Comments on Operating Environment and Future Outlook - Management noted that competition remains elevated, but they continue to find compelling opportunities that meet return thresholds [8] - Expectations of further rate cuts before year-end are anticipated to enhance borrower engagement and transaction volume [7][9] - The company expects fourth-quarter distributable earnings to be in the range of $0.29-$0.31 per share [13] Other Important Information - The company reported full repayment of two loans totaling $53.8 million during the quarter, with expectations for additional repayments in 2026 [7] - The CECL reserve remains modest at 150 basis points of total loan commitments, unchanged from the previous quarter [15] Q&A Session Summary Question: Expected repayments for the remainder of the year - Management confirmed that the only expected repayment before year-end is $15.3 million, with the majority of repayments scheduled for 2026 [17] Question: Sourcing of new loans and competition - Management indicated that most transactions come from traditional channels like mortgage banking, with a solid reputation helping to win loans [19] Question: Impact of lower SOFR on CECL reserve - Management explained that while lower SOFR could impact the CECL reserve, many factors influence it, and they maintain a conservative approach [23][24] Question: Demand for multifamily equity - Management noted that there is always demand for equity capital, especially with many loan maturities requiring additional equity [25][26] Question: Activity of banks in multifamily debt markets - Management observed that larger banks are active in the multifamily space, while smaller regional banks are more selective [28] Question: Cash balance increase - Management attributed the increase in cash balance to timing of repayments and the expectation of new loan originations [31] Question: NIM compression outlook - Management believes they are at the trough of NIM compression and expects to identify appropriate transactions for better returns [35]

Portfolio Overview - The loan investment portfolio totals $3.4 billion[6] - The weighted average all-in yield is 8.22%[6] - The weighted average credit spread is 3.66%[6] - 99.7% of the portfolio consists of floating rate loans[6] - The weighted average LTV (Loan-to-Value) is 66.1%[6] Liquidity and Capitalization - Available liquidity stands at $457.6 million[6] - 91.0% of financing is non-mark-to-market[6] - The debt-to-equity ratio is 2.2x[6] Dividend and Earnings - The common stock dividend declared for 1Q25 is $0.24 per share[6] - GAAP income per diluted share for 1Q25 is $0.12[6] - Distributable earnings per diluted share for 1Q25 is $0.24[6]

Financial Performance - GAAP net income was $53 million, or $004 per share[8] - Distributable earnings were $114 million, or $009 per share[8] - Adjusted distributable earnings reached $201 million, or $016 per share[8] - A dividend of $016 per share was declared and paid for Q1'25, representing a 134% yield on the current share price[8] Portfolio Overview - Total at-share assets amounted to $37 billion, predominantly in floating-rate senior loans[6,8] - The loan portfolio totaled $25 billion, comprising 74 loans with an average size of $33 million and a weighted average unlevered yield of 74%[6,8] - The company deployed $49 million of net capital year-to-date, committing $112 million across four new loans in Q1'25 and subsequently committing $70 million to one new loan[8] Liquidity and Capitalization - Available liquidity stood at $310 million, including $145 million in unrestricted cash and $165 million in corporate revolver capacity[6,8] - The company has $20 billion in total master repurchase facility capacity, with $12 billion available[8] - The debt-to-equity ratio was 20x, and the weighted average all-in cost of financing was 596%[6]

Financial Data and Key Metrics Changes - Velocity Financial, Inc. reported a 64% increase in originations for 2024, leading to a 37% increase in net revenue [8][9] - The Q4 pretax return on equity (ROE) was 26.8%, with core earnings of $0.60 per share for Q4 and $2.03 per share for the full year [13][14] - The total loan portfolio reached $5.1 billion, marking a 6.4% increase from Q3 and over 24% year-over-year growth [22][23] - The non-performing loan (NPL) rate was stable at 10.7%, consistent with the previous quarter [25] Business Line Data and Key Metrics Changes - Total loan production for Q4 was $563.5 million, an 18.2% increase from Q3 [19] - The weighted average coupon on the total portfolio was 9.53%, a 16 basis points increase from Q3 [23] - The net interest margin (NIM) for Q4 was 3.70%, reflecting a 10 basis points increase quarter-over-quarter [24] Market Data and Key Metrics Changes - The company experienced strong demand from borrowers, particularly in larger, more liquid metropolitan statistical areas (MSAs) [10] - The securitization market showed significant improvement post-presidential election, leading to tighter spreads and increased investor participation [11] Company Strategy and Development Direction - The company aims to continue capturing market share by lending to both residential and commercial real estate investors, addressing unmet needs in the market [7] - The strategy includes retaining earnings and building book value, with an adjusted book value estimated at $18.73 per share [17][18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued growth for 2025, citing strong borrower demand and a favorable capital market environment [34] - The company remains less sensitive to interest rate fluctuations compared to other mortgage segments, focusing on delivering capital to underserved borrowers [12] Other Important Information - The company reported $96 million in liquidity at the end of Q4, with a maximum line capacity of $785 million [31][32] - Non-performing loan resolution gains for Q4 were $5.6 million, with a total of $10.2 million for the year [27][28] Q&A Session Summary Question: Production expectations for 2025 - Management indicated that the current run rate is a good forecast for the year, with potential for upward growth due to increasing demand [39] Question: Average loan balance increase - The increase in average loan balance is attributed to a higher commercial component rather than entering new markets [41][43] Question: Capital needs for growth - Current retained earnings and ATM issuance are sufficient for growth, but additional capital may be needed if growth accelerates significantly [45] Question: Borrower mindset amidst rate volatility - Borrowers focus on property management and acquisition rather than interest rates, valuing certainty of execution [55] Question: NPL resolutions process - Most NPL resolutions involve borrowers paying current or refinancing, with only a small percentage leading to foreclosure [66] Question: CMBS market response to volatility - The company has not seen significant volatility in its securitizations, which are more comparable to non-QM RMBS executions [73] Question: Visibility into NPL resolution pipeline - NPL resolutions are unpredictable and can vary significantly, but historical trends suggest a durable source of returns [75] Question: Composition of the portfolio - The portfolio is nearly evenly split between one to four rental properties and small commercial assets, with a focus on liquid and easily sellable REO [80]