VEL 8-K

Velocity Financial, Inc. (VEL)

8-K 2023-05-05 For: 2023-05-04

View Original

Added on July 04, 2026

Search and read filings like this one from Claude or ChatGPT with the SEC filings MCP server →

Delaware	001-39183	46-0659719
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

30699 Russell Ranch Road, Suite 295 Westlake Village, California		91362
(Address of Principal Executive Offices)		(Zip Code)

☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.01 per share		VEL		The New York Stock Exchange

Exhibit Number		Description

99		Press Release dated May 4, 2023

	Velocity Financial, Inc.

Date: May 4, 2023	By:	/s/ Roland T. Kelly
		Roland T. Kelly
		Chief Legal Officer and General Counsel

VEL 8-K

Velocity Financial, Inc. Reports First Quarter 2023 Results

Contacts

KEY PERFORMANCE INDICATORS
($ in thousands)	1Q 2023			1Q 2022			$ Variance			% Variance
Pretax income	$	14,757		$	4,021		$	10,736		267.0	%
Net income	$	10,649		$	3,121		$	7,528		241.2	%
Diluted earnings per share	$	0.31		$	0.09		$	0.22		242.7	%
Core net income^(a)	$	11,376		$	12,407		$	(1,031	)	(8.3	)%
Core diluted earnings per share^(a)	$	0.33		$	0.36		$	(0.03	)	(7.9	)%
Pretax return on equity		15.27	%		4.55	%	n.a.			235.6	%
Core pretax return on equity^(a)		16.20	%		19.02	%	n.a.			(14.8	)%
Net interest margin - portfolio		3.23	%		4.25	%	n.a.			(23.9	)%
Net interest margin - total company		2.76	%		1.69	%	n.a.			63.3	%
Average common equity	$	386,935		$	353,635		$	33,300		9.4	%

^(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.

TOTAL LOAN PORTFOLIO
($ of UPB in millions)	1Q 2023			1Q 2022			$ Variance			% Variance
*Held for Investment*
Investor 1-4 Rental	$	1,905		$	1,319		$	586		44.4	%
Mixed Use		450			380			70		18.4	%
Multi-Family		304			279			25		9.0	%
Retail		308			278			30		10.8	%
Warehouse		221			201			20		10.1	%
All Other		391			343			48		13.9	%
Total	$	3,579		$	2,800			779		27.8	%
*Held for Sale*
Multi-Family	$	17		$	77		$	(59	)	(77.4	)%
Total Managed Loan Portfolio UPB	$	3,596		$	2,877		$	719		25.0	%
*Key loan portfolio metrics:*
Total loan count		9,147			7,365
Weighted average loan to value		68.1	%		67.9	%
Weighted average coupon		8.15	%		7.50	%
Weighted average total portfolio yield		8.00	%		7.76	%
Weighted average portfolio debt cost		5.33	%		4.00	%

LOAN PRODUCTION VOLUMES
($ in millions)	1Q 2023		1Q 2022		$ Variance			% Variance
Investor 1-4 Rental	$	116	$	293	$	(177	)	(60.4	)%
Traditional Commercial		80		272		(192	)	(70.6	)%
Short-term loans		21		16		5		28.1	%
Total loan production	$	217	$	581	$	(364	)	(62.7	)%

Acquisitions	$	-	$	4

HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS
($ in thousands)	1Q 2023			1Q 2022			$ Varience		$ Varience
Nonperforming loans^(a)	$	309,937		$	275,487		$	34,450	12.5	%
Average Nonperforming Loans	$	298,703		$	278,349		$	20,354	7.3	%
Nonperforming loans % total HFI Loans		8.7	%		9.8	%	n.a.		(12.0	)%
Total Charge Offs	$	484		$	328		$	156	47.5	%
Charge-offs as a % of Avg. Nonperforming Loans^(b)		0.65	%		0.47	%	n.a.		n.m
Loan Loss Reserve	$	5,045		$	4,664		$	381	8.2	%

^(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.m. - non meaningful

NET REVENUES
($ in thousands)	1Q 2023			1Q 2022			$ Variance			% Variance
Interest income	$	70,521		$	52,049		$	18,472		35.5	%
Interest expense - portfolio related		(42,029	)		(23,556	)		(18,473	)	78.4	%
Net Interest Income - portfolio related		28,492			28,493			(1	)	(0.0	)%
Interest expense - corporate debt		(4,139	)		(17,140	)		13,001		(75.9	)%
Net Interest Income	$	24,353		$	11,353		$	13,000		114.5	%
Loan loss provision		(636	)		(730	)		94		(12.9	)%
Gain on disposition of loans		1,913			4,540			(2,627	)	(57.9	)%
Unrealized gain on fair value loans		7,354			11			7,343		n.m
Unrealized loss on fair securitizations		(170	)		-			(170	)	n.m
Other operating income (expense)		3,460			1,097			2,363		215.4	%
Net Revenue	$	36,275		$	16,271		$	20,004		122.9	%
n.m. - non meaningful

OPERATING EXPENSES
($ in thousands)	1Q 2023			1Q 2022			$ Variance			% Variance
Compensation and employee benefits	$	10,008		$	5,323		$	4,685		88.0	%
Origination (income)/expense		(334	)		310			(644	)	n.m
Securitization issuance expense		2,584			-			2,584		n.m
Rent and occupancy		446			442			4		1.0	%
Loan servicing		3,828			2,450			1,378		56.2	%
Professional fees		955			1,362			(407	)	(29.8	)%
Real estate owned, net		1,829			(175	)		2,004		n.m
Other expenses		2,202			2,227			(25	)	(1.1	)%
Total operating expenses	$	21,518		$	12,250		$	9,268		75.7	%
n.m. - non meaningful

SECURITIZATIONS
($ in thousands)	Securities		Balance at				Balance at
Trusts	Issued		3/31/2023		W.A. Rate		3/31/2022		W.A. Rate
2015-1 Trust		285,457		-			$	14,407	7.21	%
2016-1 Trust		319,809		19,896	8.85	%		32,518	8.10	%
2017-2 Trust		245,601		55,981	3.95	%		75,303	3.36	%
2018-1 Trust		176,816		41,239	4.01	%		57,284	4.04	%
2018-2 Trust		307,988		91,189	4.50	%		123,854	4.31	%
2019-1 Trust		235,580		87,832	4.08	%		115,299	3.95	%
2019-2 Trust		207,020		81,096	3.41	%		114,665	3.45	%
2019-3 Trust		154,419		65,757	3.28	%		90,919	3.27	%
2020-1 Trust		248,700		128,280	2.84	%		162,092	2.85	%
2020-2 Trust		96,352		57,239	4.60	%		73,750	4.36	%
2020-MC1 Trust		179,371		-	-			12,842	4.57	%
2021-1 Trust		251,301		186,986	1.75	%		228,015	1.74	%
2021-2 Trust		194,918		161,511	2.01	%		191,183	2.01	%
2021-3 Trust		204,205		172,915	2.45	%		199,381	2.46	%
2021-4 Trust		319,116		266,076	3.19	%		305,530	3.16	%
2022-1 Trust		273,594		250,986	3.93	%		270,642	3.94	%
2022-2 Trust		241,388		231,171	5.09	%
2022-MC1 Trust		84,967		48,298	6.88	%
2022-3 Trust		296,323		277,038	5.67	%
2022-4 Trust		308,357		297,702	6.24	%
2022-5 Trust		188,754		184,213	7.08	%
2023-1 Trust		198,715		195,999	7.01	%
	$	5,018,751	$	2,901,403	4.29	%	$	2,067,684	3.12	%

RESOLUTION ACTIVITIES
LONG-TERM LOANS

RESOLUTION ACTIVITY	FIRST QUARTER 2023					FIRST QUARTER 2022
($ in thousands)	UPB $		Gain / (Loss) $			UPB $		Gain / (Loss) $
Paid in full	$	11,274	$	632		$	9,144	$	474
Paid current		18,477		233			7,597		117
REO sold (a)		570		137			2,522		469
Total resolutions	$	30,321	$	1,002		$	19,263	$	1,060

Resolutions as a % of nonperforming UPB				103.3	%				105.5	%

SHORT-TERM AND FORBEARANCE LOANS

RESOLUTION ACTIVITY	FIRST QUARTER 2023					FIRST QUARTER 2022
($ in thousands)	UPB $		Gain / (Loss) $			UPB $		Gain / (Loss) $
Paid in full	$	5,560	$	348		$	13,820	$	646
Paid current		1,633		9			3,783		39
REO sold		1,209		(21	)		503		35
Total resolutions	$	8,402	$	336		$	18,106	$	720

Resolutions as a % of nonperforming UPB				104.0	%				104.0	%

Grand total resolutions	$	38,723	$	1,338		$	37,369	$	1,780

Grand total resolutions as a % of nonperforming UPB				103.5	%				104.8	%

Velocity Financial, Inc. Consolidated Statements of Financial Condition

	Quarter Ended
	3/31/2023		12/31/2022		9/30/2022		6/30/2022		3/31/2022
	Unaudited		Audited		Unaudited		Unaudited		Unaudited
(In thousands)
Assets
Cash and cash equivalents	$	39,397	$	45,248	$	26,372	$	46,250	$	36,629
Restricted cash		16,636		16,808		14,533		9,217		10,837
Loans held for sale, net		-		-		-		-		77,503
Loans held for sale, at fair value		18,081		-		16,569		-		-
Loans held for investment, at fair value		450,732		276,095		926		1,351		1,352
Loans held for investment		3,169,280		3,272,390		3,445,563		3,118,799		2,828,302
Total loans, net		3,638,093		3,548,485		3,463,058		3,120,150		2,907,157
Accrued interest receivables		20,931		20,463		18,333		15,820		14,169
Receivables due from servicers		64,133		65,644		66,992		75,688		78,278
Other receivables		2,188		1,075		1,962		1,320		4,527
Real estate owned, net		21,778		13,325		13,188		19,218		16,177
Property and equipment, net		3,209		3,356		3,495		3,632		3,690
Deferred tax asset		2,543		5,033		4,337		15,195		16,477
Mortgage Servicing Rights, at fair value		9,143		9,238		9,868		8,438		7,661
Goodwill		6,775		6,775		6,775		6,775		6,775
Other assets		12,268		13,525		18,453		11,036		7,345
Total Assets	$	3,837,094	$	3,748,975	$	3,647,366	$	3,332,739	$	3,109,722

Liabilities and members' equity
Accounts payable and accrued expenses	$	84,976	$	91,525	$	75,150	$	78,384	$	92,768
Secured financing, net		210,155		209,846		209,537		209,227		208,956
Securitizations, net		2,657,469		2,736,290		2,651,895		2,477,226		2,035,374
Securitizations at Fair Value		194,941		-		-		-		-
Warehouse & repurchase facilities		298,313		330,814		340,050		208,390		424,692
Total Liabilities		3,445,854		3,368,475		3,276,632		2,973,227		2,761,790

Stockholders' Equity
Stockholders' equity		387,624		376,811		366,810		355,895		344,441
Noncontrolling interest in subsidiary		3,616		3,689		3,924		3,617		3,491
Total equity		391,240		380,500		370,734		359,512		347,932
Total Liabilities and members' equity	$	3,837,094	$	3,748,975	$	3,647,366	$	3,332,739	$	3,109,722

Book value per share	$	12.18	$	11.89	$	11.61	$	11.26	$	10.90

Shares outstanding		32,112⁽¹⁾		31,996⁽²⁾		31,922⁽³⁾	$	31,922⁽⁴⁾	$	31,913⁽⁵⁾

⁽¹⁾		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.
⁽²⁾		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.
⁽³⁾		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.
⁽⁴⁾		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.
⁽⁵⁾		Based on 31,912,884 common shares outstanding as of March 31, 2022, and excludes unvested shares of common stock authorized for incentive compensation totaling 505,408.

Velocity Financial, Inc. Net Interest Margin ‒ Portfolio Related and Total Company (Unaudited)

Quarters:

	Quarter Ended March 31, 2023						Quarter Ended December 31, 2022						Quarter Ended March 31, 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	$	12,896					$	64,699					$	69,092
Loans held for investment		3,512,133						3,430,296						2,613,759
Total loans	$	3,525,029	$	70,521	8.00	%	$	3,494,995	$	65,632	7.51	%	$	2,682,851	$	52,049	7.76	%

Debt:
Warehouse and repurchase facilities	$	225,497		4,833	8.57	%	$	286,094		5,776	8.08	%	$	338,247		3,764	4.45	%
Securitizations		2,926,153		37,196	5.08	%		2,838,315		35,078	4.94	%		2,018,186		19,791	3.92	%
Total debt - portfolio related		3,151,650		42,029	5.33	%		3,124,409		40,854	5.23	%		2,356,433		23,555	4.00	%
Corporate debt		215,000		4,139	7.70	%		215,000		4,139	7.70	%		178,915		17,141	38.32	%
Total debt	$	3,366,650	$	46,168	5.49	%	$	3,339,409	$	44,993	5.39	%	$	2,535,348	$	40,696	6.42	%

Net interest spread - portfolio related⁽²⁾					2.67	%					2.28	%					3.76	%
Net interest margin - portfolio related					3.23	%					2.84	%					4.25	%

Net interest spread - total company⁽³⁾					2.52	%					2.11	%					1.34	%
Net interest margin - total company					2.76	%					2.36	%					1.69	%

Velocity Financial, Inc. Adjusted Financial Metric Reconciliation to GAAP Net Income (Unaudited)

Quarters:

Core Net Income
	Quarter Ended
	3/31/2023		12/31/2022		9/30/2022		6/30/2022		3/31/2022

Net Income	$	10,649	$	8,462	$	9,983	$	10,645	$	3,121
Corporate debt refinancing costs		-		-		-		-	$	9,286
Equity award & ESPP costs	$	728	$	656		-		-	$	-
Core Net Income	$	11,376	$	9,118	$	9,983	$	10,645	$	12,407

Diluted weighted average common shares outstanding		34,052		34,063		34,199		34,057		34,204
Core diluted earnings per share	$	0.33	$	0.27	$	0.29	$	0.31	$	0.36