Velocity Financial(US:VEL)2025-05-01 22:02Financial Data and Key Metrics Changes - The company originated $640 million in new loans, a 69% increase year-over-year, driving a 27% increase in net revenue and a 17% increase in core pretax earnings [5][8] - Core earnings per share increased to $0.55 from $0.51 a year ago, marking the second-best quarterly earnings in company history [8] - The total loan portfolio reached just under $5.5 billion, a 7.8% increase from year-end 2024 and a 27.3% increase year-over-year [13][14] Business Line Data and Key Metrics Changes - The weighted average coupon on new held-for-investment originations was strong at 10.5%, with a five-quarter average trend of 10.8% [12] - The weighted average loan-to-value ratio for the quarter was just under 63%, indicating tight credit levels [13] - Nonperforming loans remained stable at 10.8%, consistent with the previous quarter [16][17] Market Data and Key Metrics Changes - The company reported strong demand across all property types, with a recent shift towards commercial loans [5][22] - The real estate markets are functioning well, with healthy investor demand and participation in offerings despite market volatility [6][22] Company Strategy and Development Direction - The company aims to grow its portfolio to $10 billion over the next five years, requiring additional headcount and potential expansion into new geographic areas [49][50] - The focus remains on leveraging technology to scale the business while minimizing headcount increases [50][51] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the future, citing strong market demand and positive credit resolutions [22] - The company remains optimistic about earnings for the rest of the year, with expectations of stable origination yields [26][27] Other Important Information - The company completed four successful debt transactions and issued three new securitizations, indicating robust capital market activity [6][20] - Total liquidity as of March 31 was $75.6 million, with significant available warehouse line capacity [20] Q&A Session Summary Question: Will Q2 NIM be similar to Q1? - Management indicated that Q2 NIM is expected to be in the range of 3.35% to 3.5%, which is considered normal [24][25] Question: What is the outlook for new origination yields? - Management expects yields to remain stable, with potential for a decrease later in the year if the Federal Reserve continues to cut rates [26][27] Question: Is the increase in commercial demand due to borrowers being shut out of other channels? - Management clarified that the increase is primarily due to the establishment of a new commercial division rather than a shift in demand [31][32] Question: What will the raised capital be used for? - The raised capital will be used to continue making more loans, with a focus on growing the portfolio [36][37] Question: What is the current total headcount and office locations? - The company currently has 323 employees and operates from five office locations [46][47] Question: What is the long-term vision for the company? - The company aims to grow its portfolio to $10 billion in five years, with a focus on technology to enhance productivity [49][50]