Velocity Financial, Inc. Reports Second Quarter 2023 Results
Second Quarter Highlights:
-
Net income of
$12.2 million $0.36 $10.6 million $0.31 -
Core net income(1) of
$12.9 million $0.38 $10.6 million $0.31 -
Loan production volume of
$258.6 million 41.9% from 2Q22 -
Total loan portfolio of
$3.7 billion 20.4% from June 30, 2022 -
Nonperforming loans as a percentage of Held for Investment (HFI) loans was
10.0% as of June 30, 2023, an increase from8.2% as of June 30, 2022 -
Resolutions of nonperforming loans (NPL) and real estate owned (REO) totaled
$50.1 million $1.5 million 103.0% of UPB resolved -
Portfolio net interest margin (NIM) of
3.24% , compared to4.10% for 2Q22 -
Completed two securitizations in 2Q23. The VCC 2023-2 securitization totaling
$202.2 million $64.8 million -
Liquidity(2) of
$72.0 million -
Book value per common share of
$12.57 $11.26
“Velocity once again delivered strong quarterly earnings driven by
(1) Core income and Core EPS are a non-GAAP measures that exclude nonrecurring and unusual activities from GAAP net income.
(2) Liquidity includes unrestricted cash reserves of
Second Quarter Operating Results |
||||||||||||||
| KEY PERFORMANCE INDICATORS | ||||||||||||||
| ($ in thousands) | 2Q 2023 |
2Q 2022 |
$ Variance |
% Variance |
||||||||||
| Pretax income | $ |
16,824 |
|
$ |
14,790 |
|
$ |
2,034 |
14 |
% |
||||
| Net income | $ |
12,183 |
|
$ |
10,645 |
|
$ |
1,538 |
14 |
% |
||||
| Diluted earnings per share | $ |
0.36 |
|
$ |
0.31 |
|
$ |
0 |
14 |
% |
||||
| Core net income(a) | $ |
12,928 |
|
$ |
10,645 |
|
$ |
2,283 |
21 |
% |
||||
| Core diluted earnings per share(a) | $ |
0.38 |
|
$ |
0.31 |
|
$ |
0.07 |
21 |
% |
||||
| Pretax return on equity |
|
16.81 |
% |
|
16.57 |
% |
n.a. | 1 |
% |
|||||
| Core pretax return on equity(a) |
|
17.79 |
% |
|
16.57 |
% |
n.a. | 7 |
% |
|||||
| Net interest margin - portfolio |
|
3.24 |
% |
|
4.10 |
% |
n.a. | (21 |
)% |
|||||
| Net interest margin - total company |
|
2.78 |
% |
|
3.54 |
% |
n.a. | (21 |
)% |
|||||
| Average common equity | $ |
400,441 |
|
$ |
357,218 |
|
$ |
43,223 |
12 |
% |
||||
| (a) Core income, core diluted earnings per share and core pretax return on equity are non-GAAP measures. Please see the reconciliation to GAAP net income at the end of this release. | ||||||||||||||
| n.a.- not applicable | ||||||||||||||
Discussion of results:
-
Net income in 2Q23 was
$12.2 million $10.6 million - Driven by continued strong portfolio growth, NPL resolution activity and higher other operating income, partially offset by securitization costs and higher operating expenses
-
Core net income(1) was
$12.9 million $10.6 million -
Core adjustments included equity incentive compensation expenses and costs related to the Company’s employee stock purchase plan (ESPP)
-
-
Portfolio NIM in 2Q23 was
3.24% , compared to4.10% for 2Q22, resulting from increased funding costs, partially offset by rising portfolio yields from higher loan coupons on recent loan production -
The GAAP pretax return on equity was
16.8% for 2Q23, compared to16.6% for 2Q22
| TOTAL LOAN PORTFOLIO | ||||||||||||||
| ($ of UPB in millions) | 2Q 2023 |
2Q 2022 |
$ Variance |
% Variance |
||||||||||
| Held for Investment | ||||||||||||||
| Investor 1-4 Rental | $ |
2,016 |
|
$ |
1,517 |
|
$ |
499 |
33 |
% |
||||
| Mixed Use |
|
452 |
|
|
410 |
|
|
43 |
10 |
% |
||||
| Multi-Family |
|
304 |
|
|
289 |
|
|
14 |
5 |
% |
||||
| Retail |
|
322 |
|
|
298 |
|
|
24 |
8 |
% |
||||
| Warehouse |
|
235 |
|
|
217 |
|
|
19 |
9 |
% |
||||
| All Other |
|
391 |
|
|
359 |
|
|
32 |
9 |
% |
||||
| Total | $ |
3,720 |
|
$ |
3,090 |
|
|
630 |
20 |
% |
||||
| Held for Sale | ||||||||||||||
| Multi-Family | $ |
- |
|
$ |
- |
|
$ |
- |
0 |
% |
||||
| Total Managed Loan Portfolio UPB | $ |
3,720 |
|
$ |
3,090 |
|
$ |
630 |
20 |
% |
||||
| Key loan portfolio metrics: | ||||||||||||||
| Total loan count |
|
9,541 |
|
|
7,779 |
|
||||||||
| Weighted average loan to value |
|
68.2 |
% |
|
68.2 |
% |
||||||||
| Weighted average coupon |
|
8.40 |
% |
|
7.53 |
% |
||||||||
| Weighted average total portfolio yield |
|
8.24 |
% |
|
7.97 |
% |
||||||||
| Weighted average portfolio debt cost |
|
5.58 |
% |
|
4.34 |
% |
||||||||
Discussion of results:
-
Velocity’s total loan portfolio was
$3.7 billion 20.4% from$3.1 billion -
Primarily driven by
32.9% Y/Y growth in loans collateralized by Investor 1-4 Rental properties and secondarily10.4% Y/Y growth in Mixed Use properties -
Approximately
75% of the loans in Velocity’s HFI portfolio are collateralized by properties that have a housing component (Investor 1-4 Rental, Multifamily and Mixed Use) -
Loan prepayments totaled
$105.8 million 21.6% Q/Q increase, and a26.1% Y/Y decrease
-
-
The UPB of Fair Value (FVO) loans was
$688.1 million 18.5% of total HFI loans, as of June 30, 2023, an increase from$1.3 million 0.05% as of June 30, 2022-
The company elected fair value accounting treatment for new HFI loan originations effective October 1, 2022
-
-
The weighted average portfolio loan-to-value ratio was
68.2% as of June 30, 2023, unchanged from68.2% as of June 30, 2022, and consistent with the five-quarter trailing average of68.3% -
The weighted average total portfolio yield was
8.24% for 2Q23, an increase of 27 bps from 2Q22, driven by higher loan coupons on YTD 2023 loan production -
Portfolio-related debt cost for 2Q23 was
5.58% , an increase of 124 bps from 2Q22, driven by higher interest rates on securitization and warehouse financing
| LOAN PRODUCTION VOLUMES | |||||||||||||
| ($ in millions) | 2Q 2023 |
2Q 2022 |
$ Variance |
% Variance |
|||||||||
| Investor 1-4 Rental | $ |
163 |
$ |
254 |
$ |
(90 |
) |
(36 |
)% |
||||
| Traditional Commercial |
|
73 |
|
164 |
|
(91 |
) |
(55 |
)% |
||||
| Short-term loans |
|
22 |
|
28 |
|
(6 |
) |
(21 |
)% |
||||
| Total loan production | $ |
259 |
$ |
445 |
$ |
(187 |
) |
(42 |
)% |
||||
| Acquisitions | $ |
- |
$ |
0.5 |
|||||||||
Discussion of results:
-
Loan production in 2Q23 totaled
$258.6 million 41.9% decrease from$445.4 million -
Management’s decision to reduce production, along with higher interest rates, decreased volume from year-ago levels. On a Q/Q basis, production volume rose
19.2% from 1Q23.
-
-
The weighted average coupon (WAC) on 2Q23 HFI loan production was
11.0% , an increase of 325 bps from 2Q22
| HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS | ||||||||
| ($ in thousands) | 2Q 2023 |
2Q 2022 |
$ Variance |
% Variance |
||||
| Nonperforming loans(a) |
|
|
|
|
||||
| Average Nonperforming Loans |
|
|
|
|
||||
| Nonperforming loans % total HFI Loans |
|
|
n.a. |
|
||||
| Total Charge Offs |
|
|
|
n.m. | ||||
| Charge-offs as a % of Avg. Nonperforming Loans(b) |
|
|
n.a. | n.m. | ||||
| Loan Loss Reserve |
|
|
|
(6)% |
||||
| (a) Nonperforming/Nonaccrual loans include loans 90+ days past due, loans in foreclosure, bankruptcy and on nonaccrual. | ||||||||
| (b) Reflects the annualized quarter-to-date charge-offs to average nonperforming loans for the period. | ||||||||
| n.a.- not applicable, n.m. - non meaningful | ||||||||
Discussion of results:
-
Nonperforming loans (NPL) totaled
$371.2 million 10.0% of loans HFI, compared to$252.3 million 8.2% , respectively, as of June 30, 2022-
NPL growth is driven by portfolio seasoning of prior year’s originations and an aggressive collection philosophy that places loans in foreclosure quickly for early delinquencies
-
-
Charge-offs in 2Q23 totaled
$716.6 thousand $37.8 thousand -
The trailing five-quarter charge-off average was
$279.6 thousand
-
-
The loan loss reserve totaled
$4.6 million 5.7% decrease from$4.9 million -
Resulting from the run-off of the amortized cost HFI loan portfolio and a modestly improved macroeconomic outlook.
-
Loans carried at fair value are not subject to a CECL reserve
-
| NET REVENUES | |||||||||||||||
| ($ in thousands) | 2Q 2023 |
2Q 2022 |
$ Variance |
% Variance |
|||||||||||
| Interest income | $ |
74,897 |
|
$ |
59,243 |
|
$ |
15,653 |
|
26 |
% |
||||
| Interest expense - portfolio related |
|
(45,451 |
) |
|
(28,752 |
) |
|
(16,699 |
) |
58 |
% |
||||
| Net Interest Income - portfolio related |
|
29,446 |
|
|
30,491 |
|
|
(1,045 |
) |
(3 |
)% |
||||
| Interest expense - corporate debt |
|
(4,139 |
) |
|
(4,182 |
) |
|
43 |
|
(1 |
)% |
||||
| Net Interest Income | $ |
25,307 |
|
$ |
26,310 |
|
$ |
(1,003 |
) |
(4 |
)% |
||||
| Loan loss provision |
|
(298 |
) |
|
(279 |
) |
|
(18 |
) |
7 |
% |
||||
| Gain on disposition of loans |
|
1,237 |
|
|
1,777 |
|
|
(539 |
) |
(30 |
)% |
||||
| Unrealized gain on fair value loans |
|
2,413 |
|
|
6 |
|
|
2,407 |
|
n.m. |
|||||
| Unrealized gain (loss) on fair value of securitized debt |
|
5,560 |
|
|
- |
|
|
5,560 |
|
n.m. |
|||||
| Origination income |
|
2,735 |
|
|
553 |
|
|
2,182 |
|
395 |
% |
||||
| Bank interest income |
|
1,188 |
|
|
- |
|
|
1,188 |
|
n.m. |
|||||
| Other operating income (expense) |
|
903 |
|
|
1,257 |
|
|
(354 |
) |
(28 |
)% |
||||
| Total Other operating income (expense) | $ |
14,036 |
|
$ |
3,592 |
|
|
10,444 |
|
291 |
% |
||||
| Net Revenue | $ |
39,046 |
|
$ |
29,622 |
|
$ |
9,423 |
|
32 |
% |
||||
| n.m. - non meaningful | |||||||||||||||
Discussion of results:
-
Net Revenue in 2Q23 was
$39.0 million 31.8% compared to$29.6 million -
Total net interest income, including corporate debt interest expense, was
$25.3 million 3.8% decrease from$26.3 million -
Portfolio net Interest income was
$29.4 million 3.4% from 2Q22 resulting from a$16.7 million $15.7 million
-
Portfolio net Interest income was
-
Total other operating income includes gains on the disposition of loans, unrealized gains/(losses) on fair value loans and securitized debt, origination income, bank interest income on deposits and other operating income, and totaled
$14.0 million $3.6 million -
Gain on disposition of loans totaled
$1.2 million -
Unrealized gains on the fair value of loans totaled
$2.4 million -
Unrealized gains on the fair value of securitized debt totaled
$5.6 million -
Origination income totaled
$2.7 million
-
| OPERATING EXPENSES | ||||||||||||||
| ($ in thousands) | 2Q 2023 |
2Q 2022 |
$ Variance |
% Variance |
||||||||||
| Compensation and employee benefits | $ |
10,670 |
$ |
6,553 |
|
$ |
4,116 |
|
63 |
% |
||||
| Origination (income)/expense |
|
122.8 |
|
1,504 |
|
|
(1,381 |
) |
(92 |
)% |
||||
| Securitization expenses |
|
2,699 |
|
- |
|
|
2,699 |
|
n.m | . |
||||
| Rent and occupancy |
|
458 |
|
426 |
|
|
32 |
|
7 |
% |
||||
| Loan servicing |
|
4,267 |
|
3,290 |
|
|
977 |
|
30 |
% |
||||
| Professional fees |
|
1,056 |
|
1,062 |
|
|
(6 |
) |
(1 |
)% |
||||
| Real estate owned, net |
|
1,018 |
|
(251 |
) |
|
1,269 |
|
(505 |
)% |
||||
| Other expenses |
|
1,931 |
|
2,248 |
|
|
(318 |
) |
(14 |
)% |
||||
| Total operating expenses | $ |
22,222 |
$ |
14,832 |
|
$ |
7,390 |
|
50 |
% |
||||
| n.m. - non meaningful | ||||||||||||||
Discussion of results:
-
Operating expenses totaled
$22.2 million 49.8% from 2Q22. The variance to prior year results is primarily attributable to our fair value accounting election in 4Q22.-
Compensation expense totaled
$10.7 million $6.6 million -
Origination (income)/expenses totaled
$0.1 million $1.4 million -
Securitization expenses totaled
$2.7 million -
Loan servicing expense totaled
$4.3 million $1.0 million $3.1 billion $2.5 billion
-
| SECURITIZATIONS | ||||||||||
| ($ in thousands) | Securities |
Balance at |
Balance at |
|||||||
| Trusts | Issued |
6/30/2023 |
W.A. Rate |
6/30/2022 |
W.A. Rate |
|||||
| 2016-1 Trust |
|
319,809 |
$ |
17,704 |
9.29 |
% |
$ |
28,021 |
8.24 |
% |
| 2017-2 Trust |
|
245,601 |
|
51,930 |
3.95 |
% |
|
68,749 |
3.59 |
% |
| 2018-1 Trust |
|
176,816 |
|
36,882 |
4.07 |
% |
|
52,281 |
3.95 |
% |
| 2018-2 Trust |
|
307,988 |
|
87,984 |
4.51 |
% |
|
108,845 |
4.36 |
% |
| 2019-1 Trust |
|
235,580 |
|
83,435 |
4.04 |
% |
|
103,860 |
3.92 |
% |
| 2019-2 Trust |
|
207,020 |
|
76,284 |
3.45 |
% |
|
98,792 |
3.37 |
% |
| 2019-3 Trust |
|
154,419 |
|
63,278 |
3.29 |
% |
|
81,996 |
3.10 |
% |
| 2020-1 Trust |
|
248,700 |
|
121,074 |
2.86 |
% |
|
149,646 |
2.84 |
% |
| 2020-2 Trust |
|
96,352 |
|
53,309 |
4.61 |
% |
|
67,446 |
4.59 |
% |
| 2021-1 Trust |
|
251,301 |
|
183,089 |
1.76 |
% |
|
214,835 |
1.74 |
% |
| 2021-2 Trust |
|
194,918 |
|
156,681 |
2.03 |
% |
|
185,448 |
2.01 |
% |
| 2021-3 Trust |
|
204,205 |
|
167,652 |
2.46 |
% |
|
195,308 |
2.46 |
% |
| 2021-4 Trust |
|
319,116 |
|
257,369 |
3.22 |
% |
|
291,181 |
3.14 |
% |
| 2022-1 Trust |
|
273,594 |
|
246,883 |
3.93 |
% |
|
264,936 |
3.91 |
% |
| 2022-2 Trust |
|
241,388 |
|
226,763 |
5.10 |
% |
|
240,076 |
5.08 |
% |
| 2022-MC1 Trust |
|
84,967 |
|
39,862 |
6.90 |
% |
|
80,931 |
6.94 |
% |
| 2022-3 Trust |
|
296,323 |
|
268,008 |
5.69 |
% |
|
294,768 |
5.67 |
% |
| 2022-4 Trust |
|
308,357 |
|
289,929 |
6.25 |
% |
||||
| 2022-5 Trust |
|
188,754 |
|
177,075 |
7.07 |
% |
||||
| 2023-1 Trust |
|
198,715 |
|
189,763 |
7.02 |
% |
||||
| 2023-1R Trust |
|
64,833 |
|
63,390 |
7.73 |
% |
||||
| 2023-2 Trust |
|
202,210 |
|
199,864 |
7.17 |
% |
||||
$ |
4,820,966 |
$ |
3,058,208 |
4.72 |
% |
$ |
2,527,119 |
3.77 |
% |
|
Discussion of results
-
Completed the VCC 2023-1R (Re-REMIC) totaling
$64.8 million -
Completed the VCC 2023-2 securitization totaling
$202.2 million -
The weighted average rate on Velocity’s outstanding securitizations was
4.72% as of June 30, 2023, an increase of 95 bps from June 30, 2022
| RESOLUTION ACTIVITIES | ||||||||||||||
| LONG-TERM LOANS | ||||||||||||||
| RESOLUTION ACTIVITY | SECOND QUARTER 2023 |
SECOND QUARTER 2022 |
||||||||||||
| ($ in thousands) | UPB $ |
Gain / (Loss) $ |
UPB $ |
Gain / (Loss) $ |
||||||||||
| Paid in full | $ |
13,485 |
$ |
965 |
|
$ |
16,934 |
$ |
3,303 |
|
||||
| Paid current |
|
19,771 |
|
280 |
|
|
17,407 |
|
129 |
|
||||
| REO sold (a) |
|
4,836 |
|
(382 |
) |
|
2,107 |
|
816 |
|
||||
| Total resolutions | $ |
38,092 |
$ |
863 |
|
$ |
36,448 |
$ |
4,248 |
|
||||
| Resolutions as a % of nonperforming UPB |
|
102.3 |
% |
|
111.7 |
% |
||||||||
| SHORT-TERM AND FORBEARANCE LOANS | ||||||||||||||
| RESOLUTION ACTIVITY | SECOND QUARTER 2023 |
SECOND QUARTER 2022 |
||||||||||||
| ($ in thousands) | UPB $ |
Gain / (Loss) $ |
UPB $ |
Gain / (Loss) $ |
||||||||||
| Paid in full | $ |
7,004 |
$ |
318 |
|
$ |
9,913 |
$ |
976 |
|
||||
| Paid current |
|
3,290 |
|
89 |
|
|
2,877 |
|
22 |
|
||||
| REO sold |
|
1,672 |
|
222 |
|
|
1,262 |
|
500 |
|
||||
| Total resolutions | $ |
11,966 |
$ |
629 |
|
$ |
14,052 |
$ |
1,498 |
|
||||
| Resolutions as a % of nonperforming UPB |
|
105.3 |
% |
|
110.7 |
% |
||||||||
| Grand total resolutions | $ |
50,058 |
$ |
1,492 |
|
$ |
50,500 |
$ |
5,746 |
|
||||
| Grand total resolutions as a % of nonperforming UPB |
|
103.0 |
% |
|
111.4 |
% |
||||||||
Discussion of results:
-
2Q23 NPL resolutions represented
13.5% of nonperforming loan UPB as of March 31, 2023 -
The UPB of loan resolutions in 2Q23 was in line with the recent five-quarter resolution average of
$42.0 million
Velocity’s executive management team will host a conference call and webcast to review 2Q23 financial results on August 3rd, 2023, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.
Webcast Information
The conference call will be webcast live in listen-only mode and can be accessed through the Events and Presentations section of the Velocity Financial Investor Relations website https://www.velfinance.com/events-and-presentations. To listen to the webcast, please visit Velocity’s website at least 15 minutes before the call to register, download, and install any needed software. An audio replay of the call will also be available on Velocity’s website following the completion of the conference call.
Conference Call Information
To participate by phone, please dial-in 15 minutes before the start time to allow for wait times to access the conference call. The live conference call will be accessible by dialing F1-833-316-0544 in the
A replay of the call will be available through midnight on August 31, 2023, and can be accessed by dialing 1-877-344-7529 in the
About Velocity Financial, Inc.
Based in
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance with
Non-GAAP core net income and non-GAAP core diluted EPS are non-GAAP financial measures that represent our net income (loss) and net income (loss) per diluted share, adjusted to eliminate the effect of certain costs incurred from activities that are not normal recurring operating expenses, such as COVID-stressed charges and recoveries of loan loss provision, nonrecurring debt amortization, the impact of operational measures taken to address the COVID-19 pandemic and workforce reduction costs, and costs associated with acquisitions. To calculate non-GAAP core diluted EPS, we use the weighted-average number of shares of common stock outstanding that is used to calculate net income per diluted share under GAAP.
We have included non-GAAP core net income and non-GAAP core diluted EPS because they are key measures used by our management to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that non-GAAP core net income and non-GAAP core diluted EPS provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. In addition, they provide useful measures for period-to-period comparisons of our business, as they remove the effect of certain items that we expect to be nonrecurring.
These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies.
For more information on Core Income, please refer to the section of this press release below titled “Adjusted Financial Metric Reconciliation to GAAP Net Income” at the end of this press release.
Forward-Looking Statements
Some of the statements contained in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to anticipated results, expectations, projections, plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “goal,” ”position,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.
The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions, and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement. While forward-looking statements reflect our good faith projections, assumptions, and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to, (1) the continued course and severity of the COVID-19 pandemic and its direct and indirect impacts, (2) general economic and real estate market conditions, including the risk of recession (3) regulatory and/or legislative changes, (4) our customers' continued interest in loans and doing business with us, (5) market conditions and investor interest in our future securitizations, and (6) the continued conflict in
Additional information relating to these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements can be found in the section titled ‘‘Risk Factors” in our Form 10-Q filed with the SEC on May 14, 2020, as well as other cautionary statements we make in our current and periodic filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.velfinance.com.
Velocity Financial, LLC |
||||||||||||||||||||
Consolidated Statements of Financial Condition |
||||||||||||||||||||
Quarter Ended |
||||||||||||||||||||
6/30/2023 |
3/31/2023 |
12/31/2022 |
9/30/2022 |
6/30/2022 |
||||||||||||||||
Unaudited |
Unaudited |
Audited |
Unaudited |
Unaudited |
||||||||||||||||
| (In thousands) | ||||||||||||||||||||
| Assets | ||||||||||||||||||||
| Cash and cash equivalents | $ |
33,987 |
|
$ |
39,397 |
|
$ |
45,248 |
|
$ |
26,372 |
|
$ |
46,250 |
|
|||||
| Restricted cash |
|
16,786 |
|
|
16,636 |
|
|
16,808 |
|
|
14,533 |
|
|
9,217 |
|
|||||
| Loans held for sale, at fair value |
|
- |
|
|
18,081 |
|
|
- |
|
|
16,569 |
|
|
- |
|
|||||
| Loans held for investment, at fair value |
|
705,330 |
|
|
450,732 |
|
|
276,095 |
|
|
926 |
|
|
1,351 |
|
|||||
| Loans held for investment |
|
3,057,940 |
|
|
3,169,280 |
|
|
3,272,390 |
|
|
3,445,563 |
|
|
3,118,799 |
|
|||||
| Total loans, net |
|
3,763,270 |
|
|
3,638,093 |
|
|
3,548,485 |
|
|
3,463,058 |
|
|
3,120,150 |
|
|||||
| Accrued interest receivables |
|
22,602 |
|
|
20,931 |
|
|
20,463 |
|
|
18,333 |
|
|
15,820 |
|
|||||
| Receivables due from servicers |
|
63,896 |
|
|
64,133 |
|
|
65,644 |
|
|
66,992 |
|
|
75,688 |
|
|||||
| Other receivables |
|
1,306 |
|
|
2,188 |
|
|
1,075 |
|
|
1,962 |
|
|
1,320 |
|
|||||
| Real estate owned, net |
|
20,388 |
|
|
21,778 |
|
|
13,325 |
|
|
13,188 |
|
|
19,218 |
|
|||||
| Property and equipment, net |
|
3,023 |
|
|
3,209 |
|
|
3,356 |
|
|
3,495 |
|
|
3,632 |
|
|||||
| Deferred tax asset |
|
1,878 |
|
|
2,543 |
|
|
5,033 |
|
|
4,337 |
|
|
15,195 |
|
|||||
| Mortgage Servicing Rights, at fair value |
|
9,445 |
|
|
9,143 |
|
|
9,238 |
|
|
9,868 |
|
|
8,438 |
|
|||||
| Goodwill |
|
6,775 |
|
|
6,775 |
|
|
6,775 |
|
|
6,775 |
|
|
6,775 |
|
|||||
| Other assets |
|
7,789 |
|
|
12,268 |
|
|
13,525 |
|
|
18,453 |
|
|
11,036 |
|
|||||
| Total Assets | $ |
3,951,145 |
|
$ |
3,837,094 |
|
$ |
3,748,975 |
|
$ |
3,647,366 |
|
$ |
3,332,739 |
|
|||||
| Liabilities and members' equity | ||||||||||||||||||||
| Accounts payable and accrued expenses | $ |
95,344 |
|
$ |
84,976 |
|
$ |
91,525 |
|
$ |
75,150 |
|
$ |
78,384 |
|
|||||
| Secured financing, net |
|
210,464 |
|
|
210,155 |
|
|
209,846 |
|
|
209,537 |
|
|
209,227 |
|
|||||
| Securitized debt, net |
|
2,622,547 |
|
|
2,657,469 |
|
|
2,736,290 |
|
|
2,651,895 |
|
|
2,477,226 |
|
|||||
| Securitized debt, at fair value |
|
381,799 |
|
|
194,941 |
|
|
- |
|
|
- |
|
|
- |
|
|||||
| Warehouse & repurchase facilities |
|
235,749 |
|
|
298,313 |
|
|
330,814 |
|
|
340,050 |
|
|
208,390 |
|
|||||
| Total Liabilities |
|
3,545,903 |
|
|
3,445,854 |
|
|
3,368,475 |
|
|
3,276,632 |
|
|
2,973,227 |
|
|||||
| Stockholders' Equity | ||||||||||||||||||||
| Stockholders' equity |
|
401,707 |
|
|
387,624 |
|
|
376,811 |
|
|
366,810 |
|
|
355,895 |
|
|||||
| Noncontrolling interest in subsidiary |
|
3,535 |
|
|
3,616 |
|
|
3,689 |
|
|
3,924 |
|
|
3,617 |
|
|||||
| Total equity |
|
405,242 |
|
|
391,240 |
|
|
380,500 |
|
|
370,734 |
|
|
359,512 |
|
|||||
| Total Liabilities and members' equity | $ |
3,951,145 |
|
$ |
3,837,094 |
|
$ |
3,748,975 |
|
$ |
3,647,366 |
|
$ |
3,332,739 |
|
|||||
| Book value per share | $ |
12.57 |
|
$ |
12.18 |
|
$ |
11.89 |
|
$ |
11.61 |
|
$ |
11.26 |
|
|||||
| Shares outstanding |
|
32,239(1 |
) |
|
32,112(2 |
) |
|
31,996(3 |
) |
|
31,922(4 |
) |
|
31,922(5 |
) |
|||||
(1) |
Based on 32,238,715 common shares outstanding as of June 30, 2023, and excludes unvested shares of common stock authorized for incentive compensation totaling 502,913. |
|
(2) |
Based on 32,111,906 common shares outstanding as of March 31, 2023, and excludes unvested shares of common stock authorized for incentive compensation totaling 490,526. |
|
(3) |
Based on 31,955,730 common shares outstanding as of December 31, 2022, and excludes unvested shares of common stock authorized for incentive compensation totaling 494,139. |
|
(4) |
Based on 31,921,721 common shares outstanding as of September 30, 2022, and excludes unvested shares of common stock authorized for incentive compensation totaling 494,139. |
|
(5) |
Based on 31,921,721 common shares outstanding as of June 30, 2022, and excludes unvested shares of common stock authorized for incentive compensation totaling 494,139. |
|
Velocity Financial, LLC |
|||||||||||||||||||
Consolidated Statements of Income (Quarters) |
|||||||||||||||||||
Quarter Ended |
|||||||||||||||||||
| ($ in thousands) | 6/30/2023 |
3/31/2023 |
12/31/2022 |
9/30/2022 |
6/30/2022 |
||||||||||||||
Unaudited |
Unaudited |
Audited |
Unaudited |
Unaudited |
|||||||||||||||
| Revenues | |||||||||||||||||||
| Interest income | $ |
74,897 |
$ |
70,521 |
|
$ |
65,632 |
|
$ |
63,419 |
|
$ |
59,243 |
|
|||||
| Interest expense - portfolio related |
|
45,451 |
|
42,029 |
|
|
40,854 |
|
|
34,561 |
|
|
28,752 |
|
|||||
| Net interest income - portfolio related |
|
29,446 |
|
28,492 |
|
|
24,778 |
|
|
28,858 |
|
|
30,491 |
|
|||||
| Interest expense - corporate debt |
|
4,139 |
|
4,139 |
|
|
4,139 |
|
|
4,011 |
|
|
4,182 |
|
|||||
| Net interest income |
|
25,307 |
|
24,353 |
|
|
20,639 |
|
|
24,847 |
|
|
26,309 |
|
|||||
| Provision for loan losses |
|
298 |
|
636 |
|
|
(437 |
) |
|
580 |
|
|
279 |
|
|||||
| Net interest income after provision for loan losses |
|
25,009 |
|
23,717 |
|
|
21,076 |
|
|
24,267 |
|
|
26,030 |
|
|||||
| Other operating income | |||||||||||||||||||
| Gain on disposition of loans |
|
1,237 |
|
1,913 |
|
|
391 |
|
|
399 |
|
|
1,777 |
|
|||||
| Unrealized gain on fair value loans |
|
2,413 |
|
7,354 |
|
|
7,795 |
|
|
453 |
|
|
6 |
|
|||||
| Unrealized gain (loss) on fair value securitizations |
|
5,560 |
|
(170 |
) |
|
- |
|
|
- |
|
|
- |
|
|||||
| Origination income |
|
2,735 |
|
2,411 |
|
|
3,521 |
|
|
518 |
|
|
553 |
|
|||||
| Bank interest income |
|
1,188 |
|
948 |
|
|
- |
|
|
0 |
|
|
0 |
|
|||||
| Other income (expense) |
|
903 |
|
386 |
|
|
(288 |
) |
|
1,656 |
|
|
1,257 |
|
|||||
| Total other operating income |
|
14,036 |
|
12,842 |
|
|
11,419 |
|
|
3,027 |
|
|
3,592 |
|
|||||
| Net revenue |
|
39,046 |
|
36,560 |
|
|
32,495 |
|
|
27,294 |
|
|
29,622 |
|
|||||
| Operating expenses | |||||||||||||||||||
| Compensation and employee benefits |
|
10,670 |
|
10,008 |
|
|
11,793 |
|
|
6,788 |
|
|
6,553 |
|
|||||
| Origination expenses |
|
123 |
|
(50 |
) |
|
1,328 |
|
|
209 |
|
|
1,504 |
|
|||||
| Securitizations expenses |
|
2,699 |
|
2,584 |
|
|
- |
|
|
- |
|
|
- |
|
|||||
| Rent and occupancy |
|
458 |
|
446 |
|
|
435 |
|
|
445 |
|
|
426 |
|
|||||
| Loan servicing |
|
4,267 |
|
3,828 |
|
|
3,244 |
|
|
3,314 |
|
|
3,290 |
|
|||||
| Professional fees |
|
1,056 |
|
955 |
|
|
1,091 |
|
|
664 |
|
|
1,062 |
|
|||||
| Real estate owned, net |
|
1,018 |
|
1,829 |
|
|
552 |
|
|
(195 |
) |
|
(251 |
) |
|||||
| Other operating expenses |
|
1,931 |
|
2,202 |
|
|
2,360 |
|
|
2,020 |
|
|
2,248 |
|
|||||
| Total operating expenses |
|
22,222 |
|
21,802 |
|
|
20,804 |
|
|
13,245 |
|
|
14,832 |
|
|||||
| Income before income taxes |
|
16,824 |
|
14,757 |
|
|
11,692 |
|
|
14,049 |
|
|
14,790 |
|
|||||
| Income tax expense |
|
4,602 |
|
4,021 |
|
|
3,465 |
|
|
3,759 |
|
|
4,019 |
|
|||||
| Net income |
|
12,222 |
|
10,736 |
|
|
8,227 |
|
|
10,290 |
|
|
10,771 |
|
|||||
| Net income attributable to noncontrolling interest |
|
39 |
|
87 |
|
|
(235 |
) |
|
307 |
|
|
126 |
|
|||||
| Net income attributable to Velocity Financial, Inc. |
|
12,183 |
|
10,649 |
|
|
8,462 |
|
|
9,983 |
|
|
10,645 |
|
|||||
| Less undistributed earnings attributable to participating securities |
|
185 |
|
160 |
|
|
127 |
|
|
152 |
|
|
164 |
|
|||||
| Net earnings attributable to common shareholders | $ |
11,998 |
$ |
10,489 |
|
$ |
8,335 |
|
$ |
9,831 |
|
$ |
10,481 |
|
|||||
| Basic earnings (loss) per share | $ |
0.37 |
$ |
0.33 |
|
$ |
0.26 |
|
$ |
0.31 |
|
$ |
0.33 |
|
|||||
| Diluted earnings (loss) per common share | $ |
0.36 |
$ |
0.31 |
|
$ |
0.25 |
|
$ |
0.29 |
|
$ |
0.31 |
|
|||||
| Basic weighted average common shares outstanding |
|
32,122 |
|
32,098 |
|
|
31,923 |
|
|
31,922 |
|
|
31,917 |
|
|||||
| Diluted weighted average common shares outstanding |
|
34,140 |
|
34,052 |
|
|
34,063 |
|
|
34,199 |
|
|
34,057 |
|
|||||
Velocity Financial, Inc. |
|||||||||||||||||||||||||||
Net Interest Margin — Portfolio Related and Total Company |
|||||||||||||||||||||||||||
(Unaudited) |
|||||||||||||||||||||||||||
Quarter Ended June 30, 2023 |
Quarter Ended March 31, 2023 |
Quarter Ended June 30, 2022 |
|||||||||||||||||||||||||
Interest |
Average |
Interest |
Average |
Interest |
Average |
||||||||||||||||||||||
Average |
Income / |
Yield / |
Average |
Income / |
Yield / |
Average |
Income / |
Yield / |
|||||||||||||||||||
| ($ in thousands) | Balance |
Expense |
Rate(1) |
Balance |
Expense |
Rate(1) |
Balance |
Expense |
Rate(1) |
||||||||||||||||||
| Loan portfolio: | |||||||||||||||||||||||||||
| Loans held for sale | $ |
3,477 |
$ |
12,896 |
$ |
62,987 |
|||||||||||||||||||||
| Loans held for investment |
|
3,634,093 |
|
3,512,133 |
|
2,910,693 |
|||||||||||||||||||||
| Total loans | $ |
3,637,570 |
$ |
74,897 |
8.24 |
% |
$ |
3,525,029 |
$ |
70,521 |
8.00 |
% |
$ |
2,973,680 |
$ |
59,243 |
7.97 |
% |
|||||||||
| Debt: | |||||||||||||||||||||||||||
| Warehouse and repurchase facilities | $ |
238,027 |
|
5,910 |
9.93 |
% |
$ |
225,497 |
|
4,833 |
8.57 |
% |
$ |
318,960 |
|
4,115 |
5.16 |
% |
|||||||||
| Securitizations |
|
3,020,624 |
|
39,541 |
5.24 |
% |
|
2,926,153 |
|
37,196 |
5.08 |
% |
|
2,332,340 |
|
24,637 |
4.23 |
% |
|||||||||
| Total debt - portfolio related |
|
3,258,651 |
|
45,451 |
5.58 |
% |
|
3,151,650 |
|
42,029 |
5.33 |
% |
|
2,651,300 |
|
28,752 |
4.34 |
% |
|||||||||
| Corporate debt |
|
215,000 |
|
4,139 |
7.70 |
% |
|
215,000 |
|
4,139 |
7.70 |
% |
|
215,000 |
|
4,182 |
7.78 |
% |
|||||||||
| Total debt | $ |
3,473,651 |
$ |
49,590 |
5.71 |
% |
$ |
3,366,650 |
$ |
46,168 |
5.49 |
% |
$ |
2,866,300 |
$ |
32,934 |
4.60 |
% |
|||||||||
| Net interest spread - portfolio related (2) | 2.66 |
% |
2.67 |
% |
3.63 |
% |
|||||||||||||||||||||
| Net interest margin - portfolio related | 3.24 |
% |
3.23 |
% |
4.10 |
% |
|||||||||||||||||||||
| Net interest spread - total company (3) | 2.53 |
% |
2.52 |
% |
3.37 |
% |
|||||||||||||||||||||
| Net interest margin - total company | 2.78 |
% |
2.76 |
% |
3.54 |
% |
|||||||||||||||||||||
| (1) Annualized. | |||||||||||||||||||||||||||
| (2) Net interest spread — portfolio related is the difference between the rate earned on our loan portfolio and the interest rates paid on our portfolio-related debt. | |||||||||||||||||||||||||||
| (3) Net interest spread — total company is the difference between the rate earned on our loan portfolio and the interest rates paid on our total debt. | |||||||||||||||||||||||||||
Velocity Financial, Inc. |
|||||||||||||||
Adjusted Financial Metric Reconciliation to GAAP Net Income |
|||||||||||||||
(Unaudited) |
|||||||||||||||
Quarters: |
|||||||||||||||
| Core Net Income | |||||||||||||||
Quarter Ended |
|||||||||||||||
| ($ in thousands) | 6/30/2023 |
3/31/2023 |
12/31/2022 |
9/30/2022 |
6/30/2022 |
||||||||||
| Net Income | $ |
12,183 |
$ |
10,649 |
$ |
8,462 |
$ |
9,983 |
$ |
10,645 |
|||||
| Equity award & ESPP costs |
|
745 |
|
728 |
|
656 |
|
- |
|
- |
|||||
| Core Net Income | $ |
12,928 |
$ |
11,376 |
$ |
9,118 |
$ |
9,983 |
$ |
10,645 |
|||||
| Diluted weighted average common shares outstanding |
|
34,140 |
|
34,052 |
|
34,063 |
|
34,199 |
|
34,057 |
|||||
| Core diluted earnings per share | $ |
0.38 |
$ |
0.33 |
$ |
0.27 |
$ |
0.29 |
$ |
0.31 |
|||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20230803769766/en/
Investors and Media:
Chris Oltmann
(818) 532-3708
Source: Velocity Financial, Inc.
