Velocity Financial, Inc. Reports Third Quarter 2021 Results

Rhea-AI Summary

Velocity Financial, Inc. (NYSE: VEL) reported Q3 2021 net income and core income of $8.02 million, a decrease from Q2 2021's $9.45 million. Diluted EPS was $0.23, down from $0.28 in Q2. Loan production surged by 32.81% to $340.66 million, primarily driven by Investor 1-4 Rental loans. Portfolio net interest income rose by 9% to $26.6 million, with a margin of 4.97%. The company issued a $205.18 million securitization and doubled its warehouse financing facility to $200 million. Despite improvements in credit performance, the nonperforming loans remained a concern at 12.7% of loans held for investment.

Positive

• Loan production increased by 32.81% quarter-over-quarter to $340.66 million.
• Portfolio net interest income rose 9% to $26.6 million.
• The company issued VCC 2021-2 securitization totaling $205.18 million.
• Successfully upsized warehouse financing to $200 million.

Negative

• Net income decreased to $8.02 million from $9.45 million in Q2 2021.
• Diluted earnings per share dropped from $0.28 to $0.23.
• Nonperforming loans at 12.7% of loans held for investment as of September 30, 2021.

Third Quarter Highlights:

• Net income and Core income⁽¹⁾ of $8.02 million; diluted EPS and Core diluted EPS⁽¹⁾ of $0.23
• Loan production volume increased 32.81% quarter-over-quarter and totaled $340.66 million in unpaid principal balance (UPB), driven mainly by growth in demand for Investor 1-4 Rental loans
• Portfolio net interest income of $26.6 million, an increase of 9.0% from 2Q21
• Portfolio net interest margin of 4.97%
• Book value per common share of $12.05 as of September 30, 2021, an increase from $11.62 per share as of June 30, 2021
• Loans held for investment (HFI) UPB of $2.27 billion as of September 30, 2021
• Nonaccrual loans as a percentage of HFI loans was 12.7% as of September 30, 2021
• 3Q21 nonperforming loan (NPL) resolutions totaled $59.96 million in UPB, realizing 103.5% of UPB resolved
• Issued our VCC 2021-2 securitization totaling $205.18 million in UPB
• Upsized and renewed a warehouse financing facility with a key liquidity provider, doubling the maximum capacity to $200 million and extending the renewal period from one year to two years
• Completed a registration statement with the capacity to issue up to $100 million of our common stock, $50 million of which, or up to a maximum of 4,000,000 shares, is authorized for issuance through a newly established “at the market” (ATM) program

WESTLAKE VILLAGE, Calif.--(BUSINESS WIRE)-- Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company) reported net income and core income of $8.02 million for 3Q21, compared to net income of $9.45 million and core income of $8.45 million in 2Q21. Earnings and core earnings per diluted share were $0.23 in 3Q21, compared to $0.28 and $0.25, respectively, in 2Q21. Book value per common share was $12.05 as of September 30, 2021, compared to $11.62 as of June 30, 2021.

“Third quarter results reflect outstanding execution by our loan origination team which delivered 33% quarter-over-quarter production growth, in addition to strong earnings and improved credit performance from our held for investment portfolio,” said Chris Farrar, President and CEO. “Demand for small balance business purposed loans accelerated in the third quarter with solid growth in rental demand driven by consumer preference for single family homes. Our strong originations trends continued in October as we originated $138.5 million of new loans, an all-time record for Velocity.”

“We are focused on driving continued organic growth in our core business, while at the same time seeking attractive opportunities that will allow us to reach new markets as we continue to execute on our vision of becoming the lender of choice in small-balance commercial lending.”

Third Quarter Operating Results
KEY PERFORMANCE INDICATORS
($ in thousands)		3Q 2021			2Q 2021			$ Variance				% Variance
Pretax income	$	10,927		$	12,885			$	(1,958	)		(15	)%
Net income	$	8,022		$	9,453			$	(1,431	)		(15	)%
Diluted earnings per share	$	0.23		$	0.28			$	(0	)		(16	)%
Core income(1)	$	8,022		$	8,453			$	(431	)		(5	)%
Core diluted earnings per share(1)	$	0.23		$	0.25			$	(0	)		(6	)%
Pretax return on equity		18.23	%		22.57	%			n.a.			(19	)%
Net interest margin - portfolio		4.97	%		4.83	%			n.a.			3	%
Net interest margin - total company		4.13	%		3.98	%			n.a.			4	%
Average common equity	$	239,790		$	228,314			$	11,476			5	%
(1) Core income is a non-GAAP measure. Please see the reconciliation to GAAP net income at the end of this release.

Discussion of results:

• Net income for 3Q21 totaled $8.02 million, a decrease from $9.45 million in 2Q21, mainly as a result of a $2.2MM gain from the sale of loans during 2Q21 and only a $0.3 million gain from loans sold in 3Q21, as we decided to retain all new production for securitization
• GAAP Net income and Core income were the same in 3Q21
• Portfolio NIM in 3Q21 was 4.97%, a 14 bps increase from 4.83% in 2Q21, driven by a quarter-over-quarter increase in portfolio-related interest income and a decrease in portfolio-related interest expense
• The pretax return on equity was 18.23% in 3Q21, a decrease from 22.57% for 2Q21, mainly as a result our decision to reduce whole loan sales in 3Q21.

TOTAL LOAN PORTFOLIO
($ of UPB in millions)		3Q 2021			2Q 2021			$ Variance				% Variance
Held for Investment
Investor 1-4 Rental	$	1,150		$	1,019			$	131			13	%
Mixed Use		302			293				10			3	%
Multi-Family		203			184				19			10	%
Retail		197			183				14			8	%
All Other		419			384				35			9	%
Total	$	2,271		$	2,062			$	209			10	%
Held for Sale
Investor 1-4 Rental	$	-		$	8			$	(8	)		n.m.
Total Managed Loan Portfolio UPB	$	2,271		$	2,070			$	201			10	%
Key loan portfolio metrics:
Total loan count		6,430			6,125
Weighted average loan to value		67.22	%		66.70	%
Weighted average total portfolio yield		8.77	%		8.90	%
Weighted average portfolio debt cost		4.48	%		4.81	%
n.m. - non meaningful

Discussion of results:

• Velocity’s total loan portfolio was $2.27 billion in UPB as of September 30, 2021, a 9.71% increase from $2.07 billion in UPB as of June 30, 2021
  ‒ HFI portfolio growth driven by record production activity, and also aided by a 5% quarter-over-quarter decrease in loan payoffs
• The weighted average loan-to-value of the HFI portfolio was 67.22% as of September 30, 2021, consistent with 66.70% as of June 30, 2021
• The weighted average total portfolio yield was 8.77% in 3Q21, a decrease of 13 bps from 2Q21, primarily driven by a reduction in delinquent contractual (NPL) interest received in 3Q21
• Portfolio related debt cost in 3Q21 was 4.48%, a decrease of 33 bps from 2Q21, primarily driven by the attractive issuance levels of Velocity’s securitization thus far in 2021

LOAN PRODUCTION VOLUMES
($ in millions)		3Q 2021		2Q 2021		$ Variance				% Variance
Investor 1-4 Rental	$	234	$	147		$	87			59	%
Traditional Commercial		81		95			(13	)		(14	)%
Short-term loans		25		15			11			72	%
Total loan production	$	341	$	257		$	84			33	%

Discussion of results:

• Loan production in 2Q21 totaled $340.66 million in UPB, a 32.81% increase from $256.51 million in UPB in 2Q21
  ‒ Driven by strong demand for 1-4 residential rental financing and the introduction of lending products tailored to meeting the evolving needs of our customers
• Loan origination volume in October 2021 totaled $138.5 million in UPB

CREDIT PERFORMANCE INDICATORS
($ in thousands)		3Q 2021			2Q 2021			$ Variance				% Variance
Nonperforming loans(1)	$	288,436		$	315,542			$	(27,106	)		(9	)%
Nonperforming loans % total HFI Loans		12.70	%		15.30	%		n.a.				(17	)%
Total Charge Offs(2)	$	162.08		$	917.61			$	(756	)		(82	)%
Charge-offs as a % of Avg. Loans HFI(3)		0.030	%		0.183	%		n.a.				(83	)%
Loan Loss Reserve	$	4,028		$	3,963			$	65			2	%
(1) Nonperforming/Nonaccrual loans include loans 90+ days past due, loans in foreclosure, bankruptcy and on nonaccrual.
(2) $420.47 thousand of the 2Q21 charge-off amount was related to one loan that transferred to REO.
(3) Annualized

Discussion of results:

• Nonperforming loans totaled $288.44 million as of September 30, 2021, or 12.70% of loans HFI, compared to $315.54 million as of June 30, 2021, or 15.30% of loans HFI
  ‒ The quarter-over-quarter improvement was driven by resolution of 19.00% of nonperforming loan UPB as of June 30, 2021, 10.41% through payoff and 7.07% were brought back to performing (accrual) status, 1.52% from sales of REO properties. Loan resolutions in 3Q21 realized all delinquent contractual interest in addition to default interest and prepayment fees.
• Charge-offs in 3Q21 totaled $162.08 thousand compared to $917.6 thousand in 2Q21
  ‒ Charge-offs in 3Q21 reflect a reversion to more normalized levels, which have averaged $358 thousand per quarter over the past eight quarters
• The reserve for loan losses was $4.03 million as of September 30, 2021, compared to $3.96 million as of June 30, 2021
  ‒ The reserve remained consistent. An increase in reserve attributable to portfolio growth was mainly offset by a reduction in reserve driven by strong resolutions on nonperforming loans.
• Capitalized interest recovered on COVID forbearance loans granted a deferral through the end of 3Q21 totaled $1.77 million, with a remaining balance of $8.03 million as of September 30, 2021. None of the capitalized interest has been forgiven.

NET REVENUES
($ in thousands)		3Q 2021			2Q 2021			$ Variance				% Variance
Interest income	$	46,923		$	44,978			$	1,945			4	%
Interest expense - portfolio related	$	(20,321	)		(20,566	)			245			(1	)%
Interest expense - corporate debt		(4,488	)		(4,309	)			(179	)		4	%
Net Interest Income	$	22,114		$	20,103			$	2,011			10	%
Loan loss provision		(228	)		1,000				(1,228	)		n.m.
Gain on loan sales		306			2,391				(2,085	)		(87	)%
Other operating income (expense)		33			41				(8	)		(20	)%
Total Net Revenues	$	22,225		$	23,535			$	(1,310	)		(6	)%
n.m. - non meaningful

Discussion of results:

• Total net interest income, including corporate interest expense, increased by $2.01 million, or 10.0% sequentially, primarily resulting from growth in our HFI portfolio.
• Net Revenues decreased quarter-over-quarter by $1.31 million, mainly due to our decision to retain loans for securitization and a more normalized loan loss provision

OPERATING EXPENSES
($ in thousands)		3Q 2021		2Q 2021		$ Variance				% Variance
Compensation and employee benefits	$	4,738	$	4,546		$	192			4	%
Rent and occupancy		447		430			17			4	%
Loan servicing		2,014		1,922			92			5	%
Professional fees		736		795			(59	)		(7	)%
Real estate owned, net		1,186		1,039			147			14	%
Other expenses		2,177		1,918			259			14	%
Total expenses	$	11,298	$	10,650		$	648			6	%

Discussion of results:

• Operating expenses in 3Q21 of $11.3 million were generally consistent with the $10.7 million in 2Q21

SECURITIZATIONS
	Securities			Balance at					Balance at
Trusts	Issued			9/30/2021		W.A. Rate			6/30/2021		W.A. Rate
2014-1 Trust	$	161,076		$	18,910	8.12	%		$	19,973	7.86	%
2015-1 Trust		285,457			21,161	7.57	%			24,852	7.63	%
2016-1 Trust		319,809			40,354	8.25	%			43,925	8.12	%
2016-2 Trust		166,853			29,207	7.54	%			34,440	7.08	%
2017-1 Trust		211,910			50,258	6.34	%			55,648	6.02	%
2017-2 Trust		245,601			94,486	3.45	%			101,179	3.33	%
2018-1 Trust		176,816			72,219	4.02	%			79,377	4.02	%
2018-2 Trust		307,988			156,587	4.34	%			175,943	4.48	%
2019-1 Trust		235,580			146,086	4.08	%			159,345	4.06	%
2019-2 Trust		207,020			130,198	3.44	%			141,446	3.51	%
2019-3 Trust		154,419			105,570	3.26	%			112,848	3.28	%
2020-1 Trust		248,700			186,400	2.86	%			199,267	2.86	%
2020-2 Trust		96,352			88,695	4.51	%			97,601	4.44	%
2020-MC1 Trust		179,371			57,111	4.51	%			84,454	4.43	%
2021-1 Trust		251,301			245,423	1.72	%			250,109	1.73	%
2021-2 Trust		194,918			203,743	1.77	%
	$	3,504,213		$	1,646,408	3.55	%		$	1,580,407	3.83	%

Discussion of results:

• Weighted Average Rate decreased 28bps as a result of our continued lower cost issuances
• Securitization balances as of September 30, 2021, totaled $1.65 billion, an increase from $1.58 billion as of June 30, 2021, driven by the issuance of Velocity’s VCC 2021-2 securitization in August, partially offset by prepayment activity and contractual principal amortization
• Exploring strategies to opportunistically refinance certain of our existing securitizations with exercisable call rights to further reduce financing costs

RESOLUTION ACTIVITIES
LONG-TERM LOANS
RESOLUTION ACTIVITY		THIRD QUARTER 2021						SECOND QUARTER 2021
($ in thousands)		UPB $		Gain / (Loss) $				UPB $		Gain / (Loss) $
Paid in full		$	13,353	$	1,251			$	21,925	$	1,446
Paid current			7,722		79				14,949		219
REO sold(1)			4,680		31				947		(2	)
Total resolutions		$	25,755	$	1,361			$	37,821	$	1,663
Resolutions as a % of nonperforming UPB					105.3	%					104.4	%
Note (1) There was an REO property held since January 2019 that was sold during the quarter ended September 30, 2021, with a total lifetime loss of $1.7 million, all of which was recognized in prior periods.
SHORT-TERM AND FORBEARANCE LOANS
RESOLUTION ACTIVITY		THIRD QUARTER 2021						SECOND QUARTER 2021
($ in thousands)		UPB $		Gain / (Loss) $				UPB $		Gain / (Loss) $
Paid in full		$	8,960	$	664			$	13,517	$	682
Paid current			25,141		29				7,794		59
REO sold			104		47				164		(73	)
Total resolutions		$	34,205	$	740			$	21,475	$	668
Resolutions as a % of nonperforming UPB					102.2	%					103.1	%
Grand total resolutions		$	59,960	$	2,101			$	59,296	$	2,331
Grand total resolutions as a % of nonperforming UPB					103.5	%					103.9	%

Discussion of results:

• Resolution activities on $60.0 million of UPB in 3Q21 resulted in net gains of $2.1 million or 103.5% of UPB resolved
• Long-term loan resolutions totaled $25.76 million in UPB and realized $1.4 million of gains
  ‒ Gains in 3Q21 were primarily comprised of default interest realized when the loans payoff or cure, and prepayment penalties on payoff if the loan is still within the prepayment window
• Short-term loan resolutions totaled $34.2 million in UPB and realized $0.74 million of gains
  ‒ Gains in 3Q21 were primarily comprised of default interest realized when the loans payoff
  ‒ The UPB of short-term loans that paid current was $25.1 million in 3Q21, and increase from $7.8 million in 2Q21

Conference Call and Webcast

Velocity’s executive management team will host a conference call and webcast to review its financial results on Wednesday, November 3, 2021, 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 Velocity Financial’s Investor Relations website at https://www.velfinance.com/events-and-presentations. To listen to the webcast, please go to Velocity’s website at least 15 minutes before the call to register and to download and install any needed software.

Management’s slide presentation will be available through the Events and Presentations section of the Company’s Investor Relations website after the market close on Wednesday, November 3, 2021.

Conference Call Information

To participate by phone, please dial-in 15 minutes prior to the start time to allow for wait times to access the conference call. The live conference call will be accessible by dialing 1-833-316-0544 in the U.S. and Canada and 1-412-317-5725 for international callers. Callers should ask to be joined into the Velocity Financial, Inc. earnings call.

A replay of the call will be available through midnight on November 30, 2021 and can be accessed by dialing 1-877-344-7529 in the U.S. and 855-669-9658 in Canada or 1-412-317-0088 internationally. The passcode for the replay is #10160806. The replay will also be available on the Investor Relations section of the Company's website under "Events and Presentations.”

About Velocity Financial, Inc.

Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that primarily originates and manages investor loans secured by 1-4-unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers built and refined over 16 years.

(1)

Core Income and Core EPS are non-GAAP financial measures the Company presents to help investors better understand unique items that impact earnings. For a reconciliation of GAAP Net Income to Core Income, please refer to the sections of this press release titled “Non-GAAP Financial Measures” and “Adjusted Financial Metric Reconciliation to GAAP Net Income.”

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), the Company uses Core Income, which is a non-GAAP financial measure. 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,” 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, (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 contemplated securitization and (6) changes in federal government fiscal and monetary policies.

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, Inc. Consolidated Statements of Financial Condition
	Quarter Ended
	9/30/2021			6/30/2021			3/31/2021			12/31/2020			9/30/2020
	Unaudited			Unaudited			Unaudited			Audited			Unaudited
(In thousands)
Assets
Cash and cash equivalents	$	35,497		$	27,741		$	20,434		$	13,273		$	19,210
Restricted cash		9,586			7,921			6,808			7,020			7,821
Loans held for sale, net		0			7,916			0			13,106			0
Loans held for investment, at fair value		1,360			1,370			1,364			1,539			3,327
Loans held for investment		2,265,922			2,057,046			1,983,435			1,924,489			1,977,236
Net deferred loan costs		29,775			26,707			25,070			23,600			23,850
Total loans, net		2,297,057			2,093,039			2,009,869			1,962,734			2,004,413
Accrued interest receivables		11,974			11,094			11,169			11,373			13,134
Receivables due from servicers		57,058			73,517			77,731			71,044			44,466
Other receivables		870			10,169			3,879			4,085			402
Real estate owned, net		17,905			20,046			14,487			15,767			14,653
Property and equipment, net		3,348			3,625			3,891			4,145			4,446
Deferred tax asset		17,026			13,196			9,246			6,654			1,832
Other assets		6,843			7,257			7,325			6,779			16,489
Total Assets	$	2,457,164		$	2,267,605		$	2,164,839		$	2,102,874		$	2,126,866
Liabilities and members' equity
Accounts payable and accrued expenses	$	79,360		$	70,049		$	65,003		$	63,361		$	61,859
Secured financing, net		163,449			164,053			129,666			74,982			74,776
Securitizations, net		1,623,674			1,558,163			1,453,386			1,579,019			1,670,930
Warehouse & repurchase facilities		258,491			151,872			203,314			75,923			19,541
Total Liabilities		2,124,974			1,944,137			1,851,369			1,793,285			1,827,106
Mezzanine Equity
Series A Convertible preferred stock		90,000			90,000			90,000			90,000			90,000
Stockholders' Equity
Stockholders' equity		242,190			233,468			223,470			219,589			209,760
Total Liabilities and members' equity	$	2,457,164		$	2,267,605		$	2,164,839		$	2,102,874		$	2,126,866
Book value per share	$	12.05		$	11.62		$	11.12		$	10.93		$	10.44
Shares outstanding		20,098			20,087			20,087			20,087			20,087

Velocity Financial, Inc. Consolidated Statements of Income (Quarterly)
	Quarter Ended
($ in thousands)	9/30/2021			6/30/2021				3/31/2021				12/31/2020				9/30/2020
	Unaudited			Unaudited				Unaudited				Audited				Unaudited
Revenues
Interest income	$	46,923		$	44,978			$	40,707			$	41,556			$	41,374
Interest expense - portfolio related		20,321			20,566				20,832				21,442				22,347
Net interest income - portfolio related		26,602			24,412				19,875				20,114				19,027
Interest expense - corporate debt		4,488			4,309				7,350				1,900				1,913
Net interest income		22,114			20,103				12,525				18,214				17,114
Provision for loan losses		228			(1,000	)			105				406				1,573
Net interest income after provision for loan losses		21,886			21,103				12,420				17,808				15,541
Other operating income
Gain on disposition of loans		306			2,391				2,839				4,855				(51	)
Unrealized gain/(loss) on fair value loans		0			20				(2	)			32				379
Other income (expense)		33			21				(36	)			(196	)			1,021
Other operating income (expense)		339			2,432				2,801				4,691				1,349
Total net revenues		22,225			23,535				15,221				22,499				16,890
Operating expenses
Compensation and employee benefits		4,738			4,546				5,186				4,135				5,692
Rent and occupancy		447			430				463				424				415
Loan servicing		2,014			1,922				1,867				1,977				2,168
Professional fees		736			795				533				1,415				1,051
Real estate owned, net		1,186			1,039				509				217				898
Other operating expenses		2,177			1,918				2,059				2,578				1,641
Total operating expenses		11,298			10,650				10,617				10,746				11,865
Income before income taxes		10,927			12,885				4,604				11,753				5,025
Income tax expense		2,905			3,432				1,208				2,177				1,544
Net income	$	8,022		$	9,453			$	3,396			$	9,576			$	3,481
Less: Deemed dividends on preferred stock					-				-				-				-
Less: Undistributed earnings allocated to participating securities		3,030		$	3,571			$	1,281				n.a.				n.a.
Net income (loss) allocated to common shareholders	$	4,992		$	5,882			$	2,115			$	9,576			$	3,481
Basic earnings (loss) per share	$	0.25		$	0.29			$	0.11			$	0.48			$	0.17
Diluted earnings (loss) per common share	$	0.23		$	0.28			$	0.10			$	0.29			$	0.11
Basic weighted average common shares outstanding		20,090			20,087				20,087				20,087				20,087
Diluted weighted average common shares outstanding		34,212			33,960				33,407				32,793				32,435

Velocity Financial, Inc. Net Interest Margin ‒ Portfolio Related and Total Company (Unaudited)
	Quarter Ended September 30, 2021									Quarter Ended June 30, 2021									Quarter Ended September 30, 2020
				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	$	2,284								$	11,524								$	-
Loans held for investment		2,137,505									2,010,962									2,016,414
Total loans	$	2,139,789		$	46,923		8.77	%		$	2,022,486		$	44,978		8.90	%		$	2,016,414		$	41,374		8.21	%
Debt:
Warehouse and repurchase facilities	$	182,383			2,365		5.19	%		$	166,981			2,361		5.66	%		$	22,306			703		12.61	%
Securitizations		1,633,059			17,956		4.40	%			1,543,295			18,205		4.72	%			1,742,669			21,644		4.97	%
Total debt - portfolio related		1,815,442			20,321		4.48	%			1,710,276			20,566		4.81	%			1,764,975			22,347		5.07	%
Corporate debt		172,934			4,488		10.38	%			166,335			4,309		10.36	%			78,000			1,913		9.81	%
Total debt	$	1,988,376		$	24,809		4.99	%		$	1,876,611		$	24,875		5.30	%		$	1,842,975		$	24,260		5.27	%
Net interest spread - portfolio related (2)							4.29	%								4.08	%								3.14	%
Net interest margin - portfolio related							4.97	%								4.83	%								3.77	%
Net interest spread - total company (3)							3.78	%								3.59	%								2.94	%
Net interest margin - total company							4.13	%								3.98	%								3.39	%
(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)
Core Income
	Quarter Ended
($ in thousands)	9/30/2021			6/30/2021				3/31/2021			12/31/2020			9/30/2020
Net Income	$	8,022		$	9,453			$	3,396		$	9,576		$	3,481
Recovery of Loan Loss Provision		-		$	(1,000	)			-			-			-
Nonrecurring debt amortization		-			-				3,326			-			-
COVID-19 Impact		-			-				-			-			-
Workforce reduction costs		-			-				-			-			432
Core Income	$	8,022		$	8,453			$	6,722		$	9,576		$	3,913
Core diluted earnings per share	$	0.23		$	0.25			$	0.20		$	0.29		$	0.12

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20211103006149/en/

Investors and Media:

Chris Oltmann

(818) 532-3708

Source: Velocity Financial, Inc.

FAQ

What were Velocity Financial's Q3 2021 earnings?

Velocity Financial reported Q3 2021 net income of $8.02 million, a decrease from $9.45 million in Q2.

What is the loan production volume for VEL in Q3 2021?

Loan production in Q3 2021 totaled $340.66 million, a 32.81% increase from Q2.

What is the diluted EPS for VEL in Q3 2021?

The diluted earnings per share for Q3 2021 was $0.23, down from $0.28 in Q2.

What is the nonperforming loans percentage for Velocity Financial?

As of September 30, 2021, nonperforming loans accounted for 12.7% of loans held for investment.

What key financial events occurred for VEL in Q3 2021?

Velocity issued a $205.18 million securitization and secured warehouse financing of $200 million.