8-K
Velocity Financial, Inc. (VEL)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2026
Velocity Financial, Inc.
(Exact name of Registrant as Specified in Its Charter)
| Delaware | 001-39183 | 46-0659719 |
|---|---|---|
| (State or Other Jurisdiction<br> <br>of Incorporation) | (Commission<br> <br>File Number) | (IRS Employer<br> <br>Identification No.) |
| 2945 Townsgate Road, Suite 110 | ||
| --- | --- | |
| Westlake Village, California | 91361 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s Telephone Number, Including Area Code: (818) 532-3700
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | 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)) |
| --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading<br> <br>Symbol(s) | Name of each exchange<br> <br>on which registered |
|---|---|---|
| Common stock, par value $0.01 per share | VEL | The New York Stock Exchange |
| Common stock, par value $0.01 per share | VEL | Indicate by check <br>NYSE Texas, Inc. |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
|---|
On May 6, 2026 we issued a press release announcing financial results for the quarter ended March 31, 2026. The press release is attached as Exhibit 99 and is incorporated herein by reference.
The information provided in Item 2.02, including Exhibit 99, is intended to be furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.
| Item 9.01 | Exhibits. |
|---|---|
| Exhibit<br> <br>Number | Description |
| --- | --- |
| 99 | Press Release dated May 6, 2026 |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Velocity Financial, Inc. | ||
|---|---|---|
| Date: May 6, 2026 | By: | /s/ Roland T. Kelly |
| Roland T. Kelly | ||
| Chief Legal Officer and General Counsel |
EX-99
Exhibit 99
Velocity Financial, Inc. Reports
First Quarter 2026 Results
FirstQuarter Highlights
Financial Results
| • | Net income of $22.4 million, an increase of 18.4% from $18.9 million for 1Q25. Diluted EPS of $0.57, an<br>increase of $0.06 from $0.51 per share for 1Q25 |
|---|---|
| • | Driven by loan portfolio growth and strong portfolio earnings |
| --- | --- |
| • | Core net income^^of $26.5 million, an increase of 30.8%<br>from $20.3 million for 1Q25. Core diluted EPS of $0.68, an increase from $0.55 per share for 1Q25^1^ |
| --- | --- |
| • | Diluted book value per common share of $17.75, an increase of 19.4% from $14.87 as of March 31, 2025<br> |
| --- | --- |
| • | Portfolio net interest margin (NIM) of 3.56%, an increase of 21 bps from 3.35% for 1Q25 |
| --- | --- |
| • | Consistently strong NIM levels have resulted from rate discipline on new loan production, with average loan<br>coupons of 10.28% on loans produced over the last five quarters |
| --- | --- |
Portfolio
| • | Loan production of $639.4 million, flat with $640.4 million in 1Q25 |
|---|---|
| • | Nonperforming loans (NPL) as a percentage of Held for Investment (HFI) loans was 10.1%, a decrease from 10.8% as<br>of March 31, 2025 |
| --- | --- |
| • | NPL resolutions totaled $70.1 million in UPB |
| --- | --- |
| • | Net gains of 102.3% or $1.6 million |
| --- | --- |
| • | Total NPL recoveries of 106.5% or $4.6 million of UPB resolved including accrued interest received<br> |
| --- | --- |
Liquidity and Capitalization
| • | Completed two securitizations totaling $513.8 million |
|---|---|
| • | Liquidity of $329.0 million, consisting of $87.1 million in unrestricted cash and $241.9 million<br>in available borrowings from unpledged loans |
| --- | --- |
| • | Total available warehouse line capacity of $835.6 million |
| --- | --- |
| ^1^ | Core net income and core diluted EPS are non-GAAP financial measures. Non-GAAP core adjustments include stock-based compensation expenses and costs related to the Company’s employee stock purchase plan. See “Non-GAAP Financial<br>Measures” and “Non-GAAP Financial Measure Reconciliations to GAAP Measures” at the end of this press release for more information regarding the use of<br>non-GAAP measures. |
| --- | --- |
1
Westlake Village, CA – May 6, 2026 – Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company), a leader in business purpose loans, reported net income of $22.4 million and core net income of $26.5 million for 1Q26, compared to $18.9 million and $20.3 million, respectively, for 1Q25. Earnings and core earnings per diluted share were $0.57 and $0.68 for 1Q26, compared to $0.51 and $0.55, respectively, for 1Q25.
“Velocity continued to deliver impressive earnings in the first quarter of 2026” said Chris Farrar, President and CEO. “Velocity’s first quarter 2026 results were driven by higher portfolio net interest income and noninterest income from our growing portfolio and new production volume. Financing demand remained strong during the quarter, in both the traditional commercial and 1-4 family residential rental property markets, as investors continued to see considerable value in smaller commercial properties. We remain confident in Velocity’s long-term growth prospects and our ability to sustain profitable market share growth.”
Operating Results
Key Performance Indicators^2^
| Three Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | Variance | % Variance | ||||||||
| ( in thousands, except per share amounts) | |||||||||||
| Income before income tax | $ | 26,894 | $ | 3,983 | 14.8 | % | |||||
| Net income | $ | 18,887 | $ | 3,476 | 18.4 | % | |||||
| Diluted earnings per share | $ | 0.51 | $ | 0.06 | 11.8 | % | |||||
| Core income before income tax | $ | 29,103 | $ | 7,581 | 26.0 | % | |||||
| Core net income | $ | 20,253 | $ | 6,229 | 30.8 | % | |||||
| Core diluted earnings per share | $ | 0.55 | $ | 0.13 | 23.6 | % | |||||
| Net interest margin — portfolio related | %^(1)^ | 3.35 | %^(1)^ | 0.21 | % | 6.3 | % | ||||
| Net interest margin — total company | %^(1)^ | 2.88 | %^(1)^ | (0.23 | )% | (8.0 | )% | ||||
| Average common equity | $ | 534,940 | $ | 147,477 | 27.6 | % | |||||
| Pre-tax return on average equity | %^(1)^ | 20.1 | %^(1)^ | (2.0 | )% | (10.0 | )% | ||||
| Core pre-tax return on average equity | %^(1)^ | 21.8 | %^(1)^ | (0.3 | )% | (1.4 | )% |
All values are in US Dollars.
| ^(1)^ | Percentages are annualized |
|---|
Condensed Results of Operations
| Three Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | Variance | % Variance | ||||||||
| (In thousands) | |||||||||||
| Net interest income | $ | 43,920 | $ | 37,510 | 17.1 | % | |||||
| Provision for credit losses | 1,661 | 1,872 | ) | (11.3 | )% | ||||||
| Net interest income after provision | 42,259 | 35,638 | 18.6 | % | |||||||
| Other operating income | 42,957 | 33,446 | 28.4 | % | |||||||
| Net revenue | 85,216 | 69,084 | 23.4 | % | |||||||
| Operating expenses | 54,339 | 42,190 | 28.8 | % | |||||||
| Income before income taxes | 30,877 | 26,894 | 14.8 | % | |||||||
| Income tax expense | 8,578 | 8,246 | 4.0 | % | |||||||
| Net income | 22,299 | 18,648 | 19.6 | % | |||||||
| Net loss attributable to noncontrolling interest | (64 | ) | (239 | ) | 73.2 | % | |||||
| Net income attributable to Velocity Financial, Inc. | $ | 22,363 | $ | 18,887 | 18.4 | % |
All values are in US Dollars.
| ^2^ | Core income before income tax, core net income, core diluted EPS and core<br>pre-tax return on average equity are non-GAAP measures. Please see “Non-GAAP Financial Measures” and “Non-GAAP Financial Measure Reconciliations to GAAP Measures” at the end of this press release. |
|---|
2
| • | Net interest income after provision for credit losses was $42.3 million, an increase of 18.6% from<br>$35.6 million for 1Q25 |
|---|---|
| • | Driven by strong portfolio growth and recoveries of interest income from NPLs by our asset management team<br> |
| --- | --- |
| • | Other operating income was $43.0 million, an increase from $33.4 million for 1Q25<br> |
| --- | --- |
| • | Driven primarily by net unrealized gain on fair value instruments |
| --- | --- |
| • | Net revenue was $85.2 million, an increase of 23.4% from $69.1 million for 1Q25 |
| --- | --- |
| • | Resulting from continued strong production-driven portfolio net interest income growth and fair value gains.<br> |
| --- | --- |
| • | Operating expenses totaled $54.3 million, an increase of 28.8% from 1Q25, primarily from higher professional<br>fees related to business development opportunities and the growth in our platform |
| --- | --- |
| • | Compensation expense totaled $23.5 million, compared to $21.7 million for 1Q25 |
| --- | --- |
| • | Driven by increases in headcount to support future planned growth |
| --- | --- |
| • | Professional fees totaled $5.8 million, compared to $1.8 million for 1Q25. |
| --- | --- |
| • | Driven by higher legal fees related to potential merger and acquisition due diligence. |
| --- | --- |
| • | Securitization expense totaled $5.3 million from the issuance of two securitizations during the quarter,<br>compared to costs of $4.0 million for one securitization during 1Q25 |
| --- | --- |
| • | Loan servicing expense totaled $8.6 million, from $8.0 million for 1Q25, driven by portfolio growth<br> |
| --- | --- |
Loan Portfolio
| March 31, | ||||||
| 2026 | 2025 | Variance | % Variance | |||
| ( in thousands) | ||||||
| Total Loans Outstanding: | ||||||
| Investor 1-4 | % | |||||
| Mixed use | % | |||||
| Retail | % | |||||
| Office | % | |||||
| Multifamily | % | |||||
| Government Insured Multifamily | ) | )% | ||||
| Warehouse | % | |||||
| Other^(1)^ | % | |||||
| Total loans | % |
All values are in US Dollars.
| ^(1)^ | All other properties individually comprised less than 5.0% of the total unpaid principal balance<br> | |||||||
|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Key Loan Portfolio Metrics^(1)^: | ||||||||
| Loan count | % | |||||||
| Loan-to-value | % | % | )% | )% | ||||
| Coupon | % | % | % | % | ||||
| Total portfolio yield | % | % | % | % | ||||
| Portfolio cost of debt | % | % | )% | )% |
All values are in US Dollars.
| ^(1)^ | Weighted averages, except for loan count |
|---|---|
| • | Total loan portfolio was $6.8 billion in UPB as of March 31, 2026, an increase of 25.4% from<br>$5.4 billion as of March 31, 2025 |
| --- | --- |
| • | Driven by healthy growth across all types of collateral securing our loans |
| --- | --- |
3
| • | Loan prepayments totaled $235.0 million in UPB, an increase of 3.2% from $227.6 million for 4Q25, and<br>19.9% from $196.0 million for 1Q25 |
|---|---|
| • | UPB of HFI FVO loans was $4.9 billion, or 71.7% of total HFI loans, as of March 31, 2026, an increase<br>from $3.1 billion, or 57.7% as of March 31, 2025 |
| --- | --- |
| • | Weighted average portfolio<br>loan-to-value ratio was 64.9% as of March 31, 2026, down from 66.1% as of March 31, 2025, and below the five-quarter trailing average of 65.0%<br> |
| --- | --- |
| • | Weighted average total portfolio yield was 9.23%, an increase of 12 bps from 1Q25, primarily driven by the<br>increase in weighted average loan coupons |
| --- | --- |
| • | Portfolio-related debt cost was 6.09%, a decrease of 14 bps from 1Q25, driven by lower warehouse financing<br>utilization and securitized debt interest expense |
| --- | --- |
Loan Production Volumes
| Three Months Ended March 31, | ||||||||
|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | Variance | % Variance | |||||
| ( in thousands) | ||||||||
| Originations Including Advances: | ||||||||
| Investor 1-4 rental | $ | 266,631 | ) | (12.8 | )% | |||
| Traditional commercial | 324,789 | 17.4 | % | |||||
| Short-term | 44,117 | ) | (47.2 | )% | ||||
| Government insured multifamily | 4,886 | ) | (54.4 | )% | ||||
| Total | $ | 640,423 | ) | (0.2 | )% |
All values are in US Dollars.
| • | Loan production totaled $639.4 million, including construction loan advances of $2.2 million,<br>consistent with $640.4 million for 1Q25 |
|---|---|
| • | 1Q26 production volume was driven by healthy demand for our traditional commercial product |
| --- | --- |
| • | Weighted average coupon on 1Q26 HFI loan production was 10.15%, a decrease of 36 bps from 10.51% for 1Q25<br>mirroring a similar reduction in shorter term interest rates |
| --- | --- |
| • | Government insured multifamily loans are originated by our capital light subsidiary Century Health &<br>Housing Capital and the related GNMA securities are sold to investors for cash gains shortly after closing |
| --- | --- |
Total HFI PortfolioCredit Performance
| Three Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | Variance | % Variance | ||||||||
| ( in thousands) | |||||||||||
| Key Nonperforming Loans Metrics: | |||||||||||
| Nonperforming loans UPB | $ | 587,811 | $ | 104,262 | 17.7 | % | |||||
| Total UPB | $ | 5,445,015 | $ | 1,391,529 | 25.6 | % | |||||
| Nonperforming loans UPB / Total UPB | % | 10.8 | % | (0.7 | )% | (6.2 | )% |
All values are in US Dollars.
| • | NPLs totaled $692.1 million in UPB as of March 31, 2026, or 10.1% of total HFI loans, compared to<br>$587.8 million and 10.8% as of March 31, 2025 |
|---|
4
CECL Portfolio Credit Performance
| Three Months Ended March 31, | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | Variance | % Variance | ||||||||
| ( in thousands) | |||||||||||
| Allowance for Credit Losses: | |||||||||||
| Beginning balance | $ | 4,174 | $ | 347 | 8.3 | % | |||||
| Provision for credit losses | 1,872 | (211 | ) | (11.3 | )% | ||||||
| Charge-offs | ) | (1,029 | ) | (293 | ) | 28.5 | % | ||||
| Ending balance | $ | 5,017 | $ | (157 | ) | (3.1 | )% | ||||
| Total UPB subject to CECL | $ | 2,304,587 | $ | (367,113 | ) | (15.9 | )% | ||||
| Nonperforming loans UPB subject to CECL | $ | 292,811 | $ | (54,404 | ) | (18.6 | )% | ||||
| Nonperforming loans UPB subject to CECL / Total UPB subject to CECL | % | 12.7 | % | (0.4 | )% | (3.2 | )% | ||||
| Allowance for credit losses / Total UPB subject to CECL | % | 0.22 | % | 0.03 | % | 15.2 | % | ||||
| Charge-offs / Total UPB subject to CECL | %^(1)^ | 0.18 | %^(1)^ | 0.09 | % | 52.8 | % |
All values are in US Dollars.
| ^(1)^ | Annualized |
|---|---|
| • | Charge-offs for 1Q26 totaled $1.3 million, compared to $1.0 million for 1Q25 |
| --- | --- |
| • | The trailing five-quarter charge-offs average was $1.4 million |
| --- | --- |
| • | Credit loss reserve totaled $4.9 million as of March 31, 2026, a decrease of 3.1% from<br>$5.0 million as of March 31, 2025 |
| --- | --- |
| • | Driven by our decreasing loan portfolio subject to credit loss reserve |
| --- | --- |
| • | CECL reserve rate of 0.25% (CECL reserve as % of HFI loans at amortized cost) was relatively consistent with the<br>recent five-quarter average rate of 0.23% |
| --- | --- |
Real Estate Owned
| Three Months Ended March 31, | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| 2026 | 2025 | Variance | % Variance | |||||||
| ( in thousands) | ||||||||||
| Gain (loss) on new REO: | ||||||||||
| Gain on transfer to REO - amortized cost loans | $ | 2,834 | ) | (0.1 | )% | |||||
| Valuation gain on transfer to REO - fair value loans | 1,589 | 149.9 | % | |||||||
| Total gain on new REO | $ | 4,423 | 53.8 | % | ||||||
| Three Months Ended March 31, | ||||||||||
| 2026 | 2025 | Variance | % Variance | |||||||
| ( in thousands) | ||||||||||
| Gain (loss) on existing REO: | ||||||||||
| REO valuation loss, net | ) | $ | (2,073 | ) | ) | 55.2 | % | |||
| (Loss) gain on sale of REO | ) | 300 | ) | (143.0 | )% | |||||
| Total (loss) on existing REO | ) | $ | (1,773 | ) | ) | 88.7 | % |
All values are in US Dollars.
| • | Total gain on new REO was $6.8 million, compared to a gain of $4.4 million for 1Q25, driven by higher<br>valuation gain |
|---|---|
| • | Total loss on existing REO was $3.3 million, compared to a loss of $1.8 million for 1Q25, driven by<br>valuation loss |
| --- | --- |
5
Nonperforming loans (NPLs) Resolution
| Three Months Ended March 31, 2026 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Total Nonperforming Loans | UPB | DefaultInterest | PrepaymentPenalty | Net Gain | RegularAccruedInterest | ServicingAdvancesWrite-Offs | TotalRecovered | |||||||||
| ( in thousands) | ||||||||||||||||
| Resolved — loans paid off | $ | 710 | $ | 434 | $ | 1,144 | $ | 1,873 | $ | (677 | ) | $ | 2,340 | |||
| Resolved — loans paid current | 437 | — | 437 | 1,824 | (31 | ) | 2,230 | |||||||||
| Total resolutions | $ | 1,147 | $ | 434 | $ | 1,581 | $ | 3,697 | $ | (708 | ) | $ | 4,570 | |||
| Recovery rate | 102.3 | % | 106.5 | % | ||||||||||||
| Three Months Ended March 31, 2025 | ||||||||||||||||
| Total Nonperforming Loans | UPB | DefaultInterest | PrepaymentPenalty | Net Gain | RegularAccruedInterest | ServicingAdvancesWrite-Offs | TotalRecovered | |||||||||
| ( in thousands) | ||||||||||||||||
| Resolved — loans paid off | $ | 753 | $ | 418 | $ | 1,171 | $ | 2,152 | $ | (425 | ) | $ | 2,898 | |||
| Resolved — loans paid current | 389 | — | 389 | 1,936 | (10 | ) | 2,315 | |||||||||
| Total resolutions | $ | 1,142 | $ | 418 | $ | 1,560 | $ | 4,088 | $ | (435 | ) | $ | 5,213 | |||
| Recovery rate | 102.3 | % | 107.6 | % |
All values are in US Dollars.
| • | NPLs resolution totaled $70.1 million in UPB, realizing gains of 102.3% of UPB resolved compared to<br>$68.3 million in UPB and similar gains of 102.3% of UPB resolved for 1Q25 |
|---|---|
| • | UPB of NPLs resolution for 1Q26 was below the recent five-quarter average of $80.3 million in UPB resolved<br>and below the average gains of 108.5% of UPB resolved |
| --- | --- |
6
Velocity’s executive management team will host a conference call and webcast on May 6, 2026, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to review Velocity’s 1Q26 financial results.
Investors and Media:
Chris Oltmann
(818) 532-3708
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 prior to the start time to allow for wait time 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 join the Velocity Financial, Inc. earnings call.
A replay of the call will be available through midnight on May 29, 2026, and can be accessed by dialing 1-855-669-9658 in the U.S and Canada or 1-412-317-0088 internationally. The passcode for the replay is 6829289. 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 business purpose 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 22 years.
Non-GAAP Financial Measures
To supplement our financial statements presented in accordance with United States generally accepted accounting principles (GAAP), the Company uses non-GAAP core net income, core income before income tax, core pre-tax return on average equity and core diluted EPS, which are non-GAAP financial measures.
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, costs incurred from activities that are not normal recurring operating expenses, 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. Non-GAAP core income before income tax is core net income before deducting income taxes. Non-GAAP core pre-tax return on average equity is core income before income tax divided by our average shareholders’ equity.
7
We have included non-GAAP core net income, non-GAAP core income before income tax, non-GAAP core pre-tax return on average equity 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, non-GAAP core income before income tax, non-GAAP core pre-tax return on average equity 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 Net Income, please refer to the section of this press release below titled “Non-GAAP Financial Measure Reconciliations to GAAP Measures” 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) changes in federal government fiscal and monetary policies, (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) geopolitical conflicts.
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 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.
8
Velocity Financial, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
| March 31, 2026 | December 31, 2025 | |||
|---|---|---|---|---|
| (Unaudited) | (Audited) | |||
| ASSETS | ||||
| Cash, cash equivalents, and restricted cash | $ | 112,050 | $ | 249,237 |
| Total loans, net | 7,105,538 | 6,758,131 | ||
| Accrued interest and receivables | 196,303 | 202,477 | ||
| Real estate owned, net | 131,849 | 118,289 | ||
| Other assets | 45,703 | 53,379 | ||
| Total assets | $ | 7,591,443 | $ | 7,381,513 |
| LIABILITIES | ||||
| Accounts payable and accrued expenses | $ | 173,076 | $ | 168,314 |
| Secured financing, net | 73,274 | 286,679 | ||
| Unsecured senior notes, net | 485,445 | — | ||
| Securitized debt, at amortized cost | 1,638,995 | 1,705,589 | ||
| Securitized debt, at fair value | 4,426,240 | 4,236,737 | ||
| Warehouse and repurchase facilities, net | 98,009 | 308,506 | ||
| Total liabilities | 6,895,039 | 6,705,825 | ||
| Commitments and contingencies | ||||
| EQUITY | ||||
| Stockholders’ equity | 693,348 | 672,535 | ||
| Noncontrolling interest in subsidiary | 3,056 | 3,153 | ||
| Total equity | 696,404 | 675,688 | ||
| Total liabilities and equity | $ | 7,591,443 | $ | 7,381,513 |
| Diluted book value per share | $ | 17.75 | $ | 17.19 |
| Diluted shares at period end | 39,245 | 39,297 |
9
Velocity Financial, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2026 | December 31,<br>2025 | March 31,<br>2025 | |||||||
| (Unaudited) | (Unaudited) | (Unaudited) | |||||||
| Interest income | $ | 153,080 | $ | 152,403 | $ | 118,740 | |||
| Interest expense - portfolio related | 94,027 | 94,652 | 75,088 | ||||||
| Net interest income - portfolio related | 59,053 | 57,751 | 43,652 | ||||||
| Interest expense - corporate debt | 15,133 | 6,142 | 6,142 | ||||||
| Net interest income | 43,920 | 51,609 | 37,510 | ||||||
| Provision for credit losses | 1,661 | 1,954 | 1,872 | ||||||
| Net interest income after provision for credit losses | 42,259 | 49,655 | 35,638 | ||||||
| Other operating income | |||||||||
| Gain on disposition of loans | |||||||||
| Unrealized gain on fair value loans | 1,039 | 21,129 | 34,836 | ||||||
| Unrealized gain (loss) on fair value securitized debt | 26,254 | 800 | (13,682 | ) | |||||
| Origination fee income | 7,970 | 6,644 | 8,679 | ||||||
| Other income | 7,694 | 24,676 | 3,613 | ||||||
| Total other operating income | 42,957 | 53,249 | 33,446 | ||||||
| Operating expenses | |||||||||
| Compensation and employee benefits | 23,520 | 22,628 | 21,684 | ||||||
| Loan servicing | 8,563 | 9,448 | 8,008 | ||||||
| Real estate owned, net | 6,862 | 8,651 | 3,029 | ||||||
| Other operating expenses | 15,394 | 12,128 | 9,469 | ||||||
| Total operating expenses | 54,339 | 52,855 | 42,190 | ||||||
| Income before income taxes | 30,877 | 50,049 | 26,894 | ||||||
| Income tax expense | 8,578 | 15,296 | 8,246 | ||||||
| Net income | 22,299 | 34,753 | 18,648 | ||||||
| Net loss attributable to noncontrolling interest | (64 | ) | (44 | ) | (239 | ) | |||
| Net income attributable to Velocity Financial, Inc. | 22,363 | 34,797 | 18,887 | ||||||
| Less undistributed earnings attributable to unvested restricted stock awards | 312 | 477 | 233 | ||||||
| Net earnings attributable to common stockholders | $ | 22,051 | $ | 34,320 | $ | 18,654 | |||
| Earnings per common share: | |||||||||
| Basic | $ | 0.57 | $ | 0.89 | $ | 0.55 | |||
| Diluted | $ | 0.57 | $ | 0.89 | $ | 0.51 | |||
| Weighted average common shares outstanding: | |||||||||
| Basic | 38,626 | 38,378 | 33,687 | ||||||
| Diluted | 39,174 | 39,243 | 36,811 |
10
Velocity Financial, Inc.
Net Interest Margin - Portfolio Related and Total Company
($ in thousands)
| Three Months Ended | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31, 2026 | March 31, 2025 | |||||||||||||
| AverageBalance | InterestIncome /Expense | AverageYield /Rate ^(1)^ | AverageBalance | InterestIncome /Expense | AverageYield /Rate ^(1)^ | |||||||||
| Loan Portfolio: | ||||||||||||||
| Loans held for sale | $ | 189 | $ | 998 | ||||||||||
| Loans held for investment | 6,632,799 | 5,213,188 | ||||||||||||
| Total loans | $ | 6,632,988 | $ | 153,080 | 9.23 | % | $ | 5,214,186 | $ | 118,740 | 9.11 | % | ||
| Debt: | ||||||||||||||
| Warehouse facilities | $ | 176,760 | $ | 3,723 | 8.42 | % | $ | 433,790 | $ | 8,505 | 7.84 | % | ||
| Securitized debt | 6,003,318 | 90,304 | 6.02 | % | 4,387,277 | 66,583 | 6.07 | % | ||||||
| Total debt - portfolio related | 6,180,078 | 94,027 | 6.09 | % | 4,821,067 | 75,088 | 6.23 | % | ||||||
| Corporate - Secured debt | 142,043 | 6,681 | 18.81 | %^(4)^ | 290,000 | 6,142 | 8.47 | % | ||||||
| Corporate - Unsecured debt | 333,333 | 8,452 | 10.14 | %^(5)^ | — | — | — | |||||||
| Total debt | $ | 6,655,454 | $ | 109,160 | 6.56 | % | $ | 5,111,067 | $ | 81,230 | 6.36 | % | ||
| Net interest spread -<br>portfolio related^(2)^ | 3.15 | % | 2.88 | % | ||||||||||
| Net interest margin - portfolio related | 3.56 | % | 3.35 | % | ||||||||||
| Net interest spread - total company^(3)^ | 2.67 | % | 2.75 | % | ||||||||||
| Net interest margin - total company | 2.65 | % | 2.88 | % | ||||||||||
| ^(1)^ | Annualized | |||||||||||||
| --- | --- | |||||||||||||
| ^(2)^ | Net interest spread — portfolio related is the difference between the rate earned on our loan portfolio<br>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<br>the interest rates paid on our total debt | |||||||||||||
| --- | --- | |||||||||||||
| ^(4)^ | The average yield of 18.81% for corporate secured debt reflects a lower average balance given that the<br>$215.0 million secured debt was paid off at the end of January 2026, and interest expense also included $1.3 million write-off of debt issuance costs and $3.2 million interest expense for the<br>quarter. Excluding these non-recurring costs, the adjusted average yield on the remaining secured debt would be 10.50% going forward. | |||||||||||||
| --- | --- | |||||||||||||
| ^(5)^ | The average yield of 10.14% for corporate unsecured debt reflects a lower average balance given that the<br>$500.0 million unsecured debt was not issued until the end of January 2026; on a full-quarter basis, the average yield would be 9.98%. | |||||||||||||
| --- | --- |
11
Velocity Financial, Inc.
Non-GAAP Financial Measure Reconciliations to GAAP Measures
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended March 31, | ||||||
|---|---|---|---|---|---|---|
| 2026 | 2025 | |||||
| Income before income tax | $ | 30,877 | $ | 26,894 | ||
| Equity award & ESPP expenses | 2,695 | 1,970 | ||||
| Debt issuance costs write-off | 1,340 | — | ||||
| Potential M&A due diligence | 4,100 | — | ||||
| IRS Employee Retention Credit | (2,392 | ) | — | |||
| Net income (loss) attributable to noncontrolling interest | (64 | ) | (239 | ) | ||
| Core income before income tax | $ | 36,684 | $ | 29,103 | ||
| Average common equity | 682,417 | 534,940 | ||||
| Pre-tax return on average equity | 18.1 | % | 20.1 | % | ||
| Tax effect of equity award & ESPP expenses | 1.6 | % | 1.5 | % | ||
| Tax effect of debt issuance costs write-off | 0.8 | % | 0.0 | % | ||
| Tax effect of potential M&A due diligence | 2.4 | % | 0.0 | % | ||
| Tax effect of IRS Employee Retention Credit | (1.4 | )% | 0.0 | % | ||
| Tax effect of net income (loss) attributable to noncontrolling interest | (0.0 | )% | (0.2 | )% | ||
| Core pre-tax return on average equity | 21.5 | % | 21.8 | % | ||
| Three Months Ended March 31, | ||||||
| 2026 | 2025 | |||||
| Net income | 22,363 | $ | 18,887 | |||
| Equity award & ESPP expenses | 1,933 | 1,366 | ||||
| Debt issuance costs write-off | 961 | — | ||||
| Due diligence and advisory fees | 2,941 | — | ||||
| IRS Employee Retention Credit | (1,716 | ) | — | |||
| Core net income | $ | 26,482 | $ | 20,253 | ||
| Diluted weighted average common shares outstanding | 39,174 | 36,811 | ||||
| Core diluted earnings per share | $ | 0.68 | $ | 0.55 |
12