Velocity Financial, Inc. Reports Second Quarter 2022 Results
08/04/2022 - 04:15 PM
Second Quarter Highlights:
Net income of $10.6 million and diluted earnings per share (EPS) of $0.31 , compared to $9.5 million and $0.28 per share, respectively, for 2Q21
Core net income(1) of $10.6 million and core diluted EPS(1) of $0.31 , compared to $8.5 million and $0.25 per share, respectively, for 2Q21
Loan production volume of $445.4 million in unpaid principal balance (UPB), an increase of 73.6% from 2Q21
Loan production volume for the first half of 2022 was over $1.0 billion in UPB, more than twice the amount originated over the same period in 2021
Total loan portfolio UPB of $3.1 billion as of June 30, 2022 , an increase of 49.3% from June 30, 2021
Nonaccrual loans as a percentage of Held for Investment (HFI) loans was 8.2% as of June 30, 2022 , down from 15.3% as of June 30, 2021
Resolutions of nonperforming loans (NPL) totaled $50.5 million in UPB, realizing gains of $5.7 million or 111.4% of UPB resolved
Portfolio net interest margin (NIM) of 4.10% , compared to 4.83% in 2Q21
Completed three VCC securitizations in 2Q22 totaling $622.7 million
Total liquidity(2) of $134.0 million as of June 30, 2022
Book value per common share of $11.26 as of June 30, 2022
WESTLAKE VILLAGE, Calif. --(BUSINESS WIRE)--
Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company) reported net income and core net income of $10.6 million for 2Q22, compared to net income of $9.5 million and core net income of $8.5 million for 2Q21. Earnings and core earnings per diluted share were $0.31 for 2Q22, compared to $0.28 and $0.25 per share, respectively, for 2Q21.
“Velocity’s second quarter results reflect our unique portfolio model, solid market position and operational expertise,” said Chris Farrar , President and CEO. “Our investment loan portfolio has grown more than 49% over the past twelve months, driven by robust origination volumes that contributed to solid earnings growth.”
Mr. Farrar continued, “During the second quarter we issued three new securitizations totaling $622.7 million , demonstrating Velocity’s differentiation in today’s market resulting from our extensive securitization track record and reputation for high-quality loan collateral. These securitizations allowed us to further optimize non-recourse leverage and enhance our liquidity position. While financing costs have increased along with market volatility, we have been able to successfully increase rates on new production while maintaining solid volume levels.”
Second Quarter Operating Results
KEY PERFORMANCE INDICATORS
($ in thousands)
2Q 2022
2Q 2021
$ Variance
% Variance
Pretax income(a)
$
14,664
$
12,885
$
1,779
14
%
Net income
$
10,645
$
9,453
$
1,192
13
%
Diluted earnings per share
$
0.31
$
0.28
$
0.0
11
%
Core net income(b)
$
10,645
$
8,453
$
2,192
25.9
%
Core diluted earnings per share(b)
$
0.31
$
0.25
$
0.1
26
%
Pretax return on equity
16.42
%
22.57
%
n.a.
(27
)%
Core pretax return on equity(b)
16.42
%
20.19
%
n.a.
(19
)%
Net interest margin - portfolio
4.10
%
4.83
%
n.a.
3
%
Net interest margin - total company
3.54
%
3.98
%
n.a.
(35
)%
Average common equity
$
357,218
$
228,314
$
128,903
59
%
(a) Prextax income less net income attributable to noncontrolling interests
(b) 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.
Discussion of results:
Net income in 2Q22 was $10.6 million , compared to $9.5 million in 2Q21.
‒ 2Q22 net income was driven by an increase in interest income from our loan portfolio, in addition to default interest and fees realized from the resolution of nonperforming loans
Core net income(1) was $10.6 million , an increase of 25.9% from $8.5 million in 2Q21
Portfolio NIM in 2Q22 was 4.10% , compared to 4.83% from 2Q21, resulting from a decrease in the weighted average portfolio yield from lower interest rates on loan production in recent prior quarters, partially offset by a decrease in the weighted average cost of funds from lower securitization and warehouse financing rates
The GAAP pretax return on equity was 16.42% in 2Q22, compared to 22.57% in 2Q21
‒ Driven by higher equity balance in 2Q22
TOTAL LOAN PORTFOLIO
($ of UPB in millions)
2Q 2022
2Q 2021
$ Variance
% Variance
Held for Investment
Investor 1-4 Rental
$
1,517
$
1,019
$
499
49
%
Mixed Use
410
293
117
40
%
Multi-Family
289
184
105
57
%
Retail
298
183
115
63
%
Warehouse
217
131
86
65
%
All Other
359
253
106
42
%
Total
$
3,090
$
2,062
$
1,028
50
%
Held for Sale
Investor 1-4 Rental
$
-
$
8
$
(8
)
n.m.
Total Managed Loan Portfolio UPB
$
3,090
$
2,070
$
1,020
49
%
Key loan portfolio metrics:
Total loan count
7,779
6,125
Weighted average loan to value
68.16
%
66.70
%
Weighted average total portfolio yield
7.97
%
8.90
%
Weighted average portfolio debt cost
4.34
%
4.81
%
Discussion of results:
Velocity’s total loan portfolio was $3.1 billion in UPB as of June 30, 2022 , an increase of 49.3% from $2.1 billion in UPB as of June 30, 2021
‒ Portfolio growth was driven by record loan production volume over the prior twelve months
‒ Payoff activity totaled $142.8 million in UPB in 2Q22, compared to $131.8 million in 2Q21
The weighted average loan-to-value of the portfolio was 68.2% as of June 30, 2022 , largely consistent with the 66.7% as of June 30, 2021 , and the five-quarter trailing average of 67.5%
The weighted average total portfolio yield was 7.97% in 2Q22, a 93 bps year-over-year decrease driven by lower interest rates on new loan production over the period and payoff of older, higher-rate loans
Portfolio-related debt cost in 2Q22 was 4.34% , a decrease of 47 bps from 2Q21, driven by the collapse of older, higher-cost securitizations and lower rates on the securitizations issued in the second half of 2021
LOAN PRODUCTION VOLUMES
($ in millions)
2Q 2022
2Q 2021
$ Variance
% Variance
Investor 1-4 Rental
$
254
$
147
$
106
72
%
Traditional Commercial
164
95
69
73
%
Short-term loans
28
15
13
90
%
Total loan production
$
445
$
257
$
189
74
%
Discussion of results:
Loan production in 2Q22 totaled $445.4 million in UPB, compared to $256.5 million in UPB in 2Q21
‒ The year-over-year increase of 73.6% resulted from balanced growth of Investor 1-4 and Traditional Commercial long-term loan production
Loan production volume for the first half of 2022 was over $1.0 billion in UPB, more than twice the amount originated over the same period in 2021
The weighted average note rate on 2Q22 loan production was 7.75% , an increase of 43 bps from 2Q21
HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS
($ in thousands)
2Q 2022
2Q 2021
$ Variance
% Variance
Nonperforming loans(a)
$
252,253
$
315,542
$
(63,290
)
(20
)%
Average Nonperforming Loans
$
257,646
$
274,112
$
(16,466
)
(6
)%
Nonperforming loans % total HFI Loans
8.2
%
15.3
%
n.a.
(47
)%
Total Charge Offs
$
37
$
918
$
(881
)
(96
)%
Charge-offs as a % of Avg. Nonperforming loans(b)
0.06
%
1.34
%
n.m.
(96
)%
Loan Loss Reserve
$
4,905
$
3,963
$
942
24
%
(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
Discussion of results:
Nonperforming loans (NPL) totaled $252.3 million in UPB as of June 30, 2022 , or 8.2% of loans HFI, compared to $315.5 million and 15.3% , respectively, as of June 30, 2021
‒ The year-over-year reduction in NPL loans was driven by the post-pandemic economic recovery and successful loss mitigation activities by Velocity’s in-house special servicing team
Charge-offs in 2Q22 totaled $37.0 thousand compared to $917.6 thousand in 2Q21
‒ 2Q22 charge-offs were significantly lower than the trailing five-quarter average of $350.7 thousand per quarter
The loan loss reserve totaled $4.9 million as of June 30, 2022 , a 23.8% increase from $4.0 million as of June 30, 2021 , driven mainly by portfolio growth
Capitalized interest recovered on COVID forbearance loans granted a deferral totaled $3.8 million since the program's inception in April 2020 , with a remaining balance of $7.1 million as of June 30, 2022 . None of the capitalized interest has been forgiven.
NET REVENUES
($ in thousands)
2Q 2022
2Q 2021
$ Variance
% Variance
Interest income
$
59,243
$
44,978
$
14,265
32
%
Interest expense - portfolio related
(28,752
)
(20,566
)
(8,186
)
40
%
Net Interest Income - portfolio related
30,491
24,412
6,079
25
%
Interest expense - corporate debt
(4,182
)
(4,309
)
127
(3
)%
Net Interest Income
$
26,310
$
20,103
$
6,207
31
%
Loan loss provision
(279
)
1,000
(1,279
)
(128
)%
Gain on disposition of loans
1,776
2,391
(615
)
(26
)%
Other operating income (expense)
1,263
41
1,222
n.m
Total Net Revenues
$
29,069
$
23,535
$
5,534
24
%
Discussion of results:
Total net interest income, including corporate debt interest expense, increased by $6.2 million , or 30.9% from 2Q21
‒ Portfolio-related net interest income (excluding corporate debt interest expense) totaled $30.5 million , an increase of 24.9% from 2Q21, driven by higher net interest income resulting from portfolio growth and the continued realization of default interest and fees from NPL resolutions
Gain on the disposition of loans totaled $1.8 million in 2Q22, compared to $2.4 million in 2Q21
Other operating income growth in 2Q22 was driven by valuation gains in our mortgage servicing right (MSR) asset, driven by the rise in interest rates during the quarter
OPERATING EXPENSES
($ in thousands)
2Q 2022
2Q 2021
$ Variance
% Variance
Compensation and employee benefits
$
6,553
$
4,546
$
2,007
44
%
Rent and occupancy
426
430
(4
)
(1
)%
Loan servicing
3,290
1,922
1,368
71
%
Professional fees
1,062
795
267
34
%
Real estate owned, net
(251
)
1,039
(1,290
)
(124
)%
Other expenses
3,199
1,918
1,281
67
%
Total operating expenses
$
14,279
$
10,650
$
3,629
34
%
Discussion of results:
Operating expenses totaled $14.3 million in 2Q22, an increase of 34.1% from 2Q21
‒ Higher compensation expense resulting from salesforce and production operations growth
‒ Servicing expense growth was driven by the increase in securitizations outstanding to 17 as of June 30, 2022 , from 13 as of June 30, 2021
SECURITIZATIONS
($ in thousands)
Securities
Balance at
Balance at
Trusts
Issued
6/30/2022
W.A. Rate
6/30/2021
W.A. Rate
2014-1 Trust
$
161,076
-
-
$
19,973
7.86
%
2015-1 Trust
285,457
$
-
-
24,852
7.63
%
2016-1 Trust
319,809
28,021
8.24
%
43,925
8.12
%
2017-2 Trust
245,601
68,749
3.59
%
101,179
3.33
%
2018-1 Trust
176,816
52,281
3.95
%
79,377
4.02
%
2018-2 Trust
307,988
108,845
4.36
%
175,943
4.48
%
2019-1 Trust
235,580
103,860
3.92
%
159,345
4.06
%
2019-2 Trust
207,020
98,792
3.37
%
141,446
3.51
%
2019-3 Trust
154,419
81,996
3.10
%
112,848
3.28
%
2020-1 Trust
248,700
149,646
2.84
%
199,267
2.86
%
2020-2 Trust
96,352
67,446
4.59
%
97,601
4.44
%
2020-MC1 Trust
179,371
-
-
84,454
4.43
%
2021-1 Trust
251,301
214,835
1.74
%
250,109
1.73
%
2021-2 Trust
194,918
185,448
2.01
%
2021-3 Trust
204,205
195,308
2.46
%
2021-4 Trust
319,116
291,181
3.14
%
2022-1 Trust
273,594
264,936
3.91
%
2022-2 Trust
241,388
240,076
5.08
%
2022-MC1 Trust
84,967
80,931
6.94
%
2022-3 Trust
296,323
294,768
5.67
%
$
4,322,925
$
2,527,119
3.77
%
$
1,580,407
3.83
%
Discussion of results:
The outstanding balance of Velocity’s securitizations as of June 30, 2022 , totaled $2.5 billion , up from $1.6 billion as of June 30, 2022
Completed three VCC securitizations in 2Q22, totaling $622.7 million
‒ The VCC 2022-2 securitization totaling $241.4 million in April
‒ The VCC 2022-MC1 securitization totaling $85.0 million in May
‒ The VCC 2022-3 securitization totaling $296.3 million in June
The weighted average rate on Velocity’s outstanding securitizations decreased 5bps from June 30, 2021 , primarily driven by the collapse of older, higher-cost securitizations and the lower rates on securitizations issued in 2021, partially offset by the increased cost of securitizations issued in 2Q22
RESOLUTION ACTIVITIES
LONG-TERM LOANS
RESOLUTION ACTIVITY
SECOND QUARTER 2022
SECOND QUARTER 2021
($ in thousands)
UPB $
Gain / (Loss) $
UPB $
Gain / (Loss) $
Paid in full
$
16,934
$
3,303
$
21,925
$
1,446
Paid current
17,407
129
14,949
219
REO sold
2,107
816
947
(2
)
Total resolutions
$
36,448
$
4,248
$
37,821
$
1,663
Resolutions as a % of nonperforming UPB
111.7
%
104.4
%
SHORT-TERM AND FORBEARANCE LOANS
RESOLUTION ACTIVITY
SECOND QUARTER 2022
SECOND QUARTER 2021
($ in thousands)
UPB $
Gain / (Loss) $
UPB $
Gain / (Loss) $
Paid in full
$
9,913
$
976
$
13,517
$
682
Paid current
2,877
22
7,794
59
REO sold
1,262
500
164
(73
)
Total resolutions
$
14,052
$
1,498
$
21,475
$
668
Resolutions as a % of nonperforming UPB
110.7
%
103.1
%
Grand total resolutions
$
50,500
$
5,746
$
59,296
$
2,331
Grand total resolutions as a % of nonperforming UPB
111.4
%
103.9
%
Discussion of results:
Total NPL resolution activities in 2Q22 totaled $50.5 million in UPB and realized net gains of $5.7 million , or 111.4% of UPB resolved, compared to $59.3 million in UPB and net gains of $2.3 million , or 103.9% of UPB resolved in 2Q21
‒ Long-term loan resolutions in 2Q22 totaled $36.4 million in UPB and realized gains of $4.2 million , compared to $37.8 million in UPB and realized gains of $1.7 million in 2Q21
‒ Short-term loan resolutions in 2Q22 totaled $14.1 million in UPB and realized gains of $1.5 million , compared to $21.5 million in UPB and realized gains of $0.67 million in 2Q21
_____________________________________________
(1)
Core income and Core EPS are a non-GAAP measures that exclude nonrecurring and unusual activities from GAAP net income.
(2)
Available liquidity includes unrestricted cash reserves of $46.2 million and available liquidity in unfinanced loans of $87.8 million as of June 30, 2022 .
Velocity’s executive management team will host a conference call and webcast to review 2Q22 financial results on August 4 th , 2022, at 3:00 p.m. Pacific Time / 6:00 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 go to 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 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 August 29, 2022 , 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 #9239674. 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 18 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 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 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,” 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-K filed with the SEC on May 10, 2021 , 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
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
(In thousands)
Assets
Cash and cash equivalents
$
46,250
$
36,629
$
35,965
$
35,497
$
27,741
Restricted cash
9,217
10,837
11,639
9,586
7,921
Loans held for sale, net
0
77,503
87,908
0
7,916
Loans held for investment, at fair value
1,351
1,352
1,359
1,360
1,370
Loans held for investment
3,084,045
2,793,968
2,494,204
2,265,922
2,057,046
Net deferred loan costs
34,755
34,334
33,360
29,775
26,707
Total loans, net
3,120,150
2,907,157
2,616,831
2,297,057
2,093,039
Accrued interest receivables
15,820
14,169
13,159
11,974
11,094
Receivables due from servicers
75,688
78,278
74,330
57,058
73,517
Other receivables
1,320
4,527
1,812
870
10,169
Real estate owned, net
19,218
16,177
17,557
17,905
20,046
Property and equipment, net
3,632
3,690
3,830
3,348
3,625
Deferred tax asset
15,195
16,477
16,604
17,026
13,196
Mortgage Servicing Rights, at fair value
8,438
7,661
7,152
-
-
Goodwill
6,775
6,775
6,775
-
-
Other assets
11,036
7,345
6,824
6,843
7,257
Total Assets
$
3,332,739
$
3,109,722
$
2,812,478
$
2,457,164
$
2,267,605
Liabilities and members' equity
Accounts payable and accrued expenses
$
78,384
$
92,768
$
92,195
$
79,360
$
70,049
Secured financing, net
209,227
208,956
162,845
163,449
164,053
Securitizations, net
2,477,226
2,035,374
1,911,879
1,623,674
1,558,163
Warehouse & repurchase facilities
208,390
424,692
301,069
258,491
151,872
Total Liabilities
2,973,227
2,761,790
2,467,988
2,124,974
1,944,137
Mezzanine Equity
Series A Convertible preferred stock
-
-
-
90,000
90,000
Stockholders' Equity
Stockholders' equity
355,895
344,441
341,109
242,190
233,468
Noncontrolling interest in subsidiary
3,617
3,491
3,381
-
-
Total equity
359,512
347,932
344,490
242,190
233,468
Total Liabilities and members' equity
$
3,332,739
$
3,109,722
$
2,812,478
$
2,457,164
$
2,267,605
Book value per share
$
11.26
$
10.90
$
10.84
$
12.05
$
11.62
Shares outstanding
31,922
31,913
31,787
20,098
20,087
Velocity Financial, Inc.
Consolidated Statements of Income (Quarterly)
Quarter Ended
($ in thousands)
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Unaudited
Unaudited
Unaudited
Unaudited
Unaudited
Revenues
Interest income
$
59,243
$
52,049
$
49,360
$
46,923
$
44,978
Interest expense - portfolio related
28,752
23,556
23,666
20,321
20,566
Net interest income - portfolio related
30,491
28,493
25,694
26,602
24,412
Interest expense - corporate debt
4,182
17,140
4,462
4,488
4,309
Net interest income
26,309
11,353
21,232
22,114
20,103
Provision for loan losses
279
730
377
228
(1,000
)
Net interest income after provision for loan losses
26,030
10,623
20,855
21,886
21,103
Other operating income
Gain on disposition of loans
1,776
4,540
2,357
306
2,391
Unrealized gain/(loss) on fair value loans
6
11
11
0
20
Other income (expense)
1,257
1,097
249
33
21
Other operating income (expense)
3,039
5,648
2,617
339
2,432
Total net revenues
29,070
16,271
23,472
22,225
23,535
Operating expenses
Compensation and employee benefits
6,553
5,323
4,720
4,738
4,546
Rent and occupancy
426
442
429
447
430
Loan servicing
3,290
2,450
2,480
2,014
1,922
Professional fees
1,062
1,362
1,716
736
795
Real estate owned, net
(251
)
(175
)
417
1,186
1,039
Other operating expenses
3,199
2,848
2,333
2,177
1,918
Total operating expenses
14,279
12,250
12,095
11,298
10,650
Income before income taxes
14,790
4,021
11,377
10,927
12,885
Income tax expense
4,019
790
3,024
2,905
3,432
Net income
10,771
3,231
8,353
8,022
9,453
Net income attributable to noncontrolling interest
126
110
-
-
-
Net income attributable to Velocity Financial, Inc.
10,645
3,121
8,353
8,022
9,453
Less undistributed earnings attributable to participating securities
164
48
362
3,030
3,571
Net earnings attributable to common stockholders
$
10,481
$
3,073
$
7,991
$
4,992
$
5,882
Basic earnings (loss) per share
$
0.33
$
0.10
$
0.26
$
0.25
$
0.29
Diluted earnings (loss) per common share
$
0.31
$
0.09
$
0.24
$
0.23
$
0.28
Basic weighted average common shares outstanding
31,917
31,892
30,897
20,090
20,087
Diluted weighted average common shares outstanding
34,057
34,204
34,257
34,212
33,960
Velocity Financial, Inc.
Net Interest Margin ‒ Portfolio Related and Total Company
(Unaudited)
Quarter Ended June 30, 2022
Quarter Ended June 30, 2021
Interest
Average
Interest
Average
Average
Income /
Yield /
Average
Income /
Yield /
($ in thousands)
Balance
Expense
Rate(1)
Balance
Expense
Rate(1)
Loan portfolio:
Loans held for sale
$
62,987
$
11,524
Loans held for investment
2,910,693
2,010,962
Total loans
$
2,973,680
$
59,243
7.97
%
$
2,022,486
$
44,978
8.90
%
Debt:
Warehouse and repurchase facilities
$
318,960
4,115
5.16
%
$
166,981
2,361
5.66
%
Securitizations
2,332,340
24,637
4.23
%
1,543,295
18,205
4.72
%
Total debt - portfolio related
2,651,300
28,752
4.34
%
1,710,276
20,566
4.81
%
Corporate debt
215,000
4,182
7.78
%
166,335
4,309
10.36
%
Total debt
$
2,866,300
$
32,934
4.60
%
$
1,876,611
$
24,875
5.30
%
Net interest spread - portfolio related (2)
3.63
%
4.08
%
Net interest margin - portfolio related
4.10
%
4.83
%
Net interest spread - total company (3)
3.37
%
3.59
%
Net interest margin - total company
3.54
%
3.98
%
(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)
6/30/2022
3/31/2022
12/31/2021
9/30/2021
6/30/2021
Net Income
$
10,645
$
3,121
$
8,353
$
8,022
$
9,453
Deal cost write-off - collapsed securitizations
-
-
$
1,104
-
-
One-time Century Health & Housing Capital deal costs
-
-
$
624
-
-
Recovery of Loan Loss Provision
-
-
-
-
$
(1,000
)
Corporate debt refinancing costs
-
$
9,286
-
-
-
Core Income
$
10,645
$
12,407
$
10,081
$
8,022
$
8,453
Diluted weighted average common shares outstanding
34,057
34,204
34,257
34,212
33,960
Core diluted earnings per share
$
0.31
$
0.36
$
0.29
$
0.23
$
0.25
View source version on businesswire.com : https://www.businesswire.com/news/home/20220804005753/en/
Investors and Media:
Chris Oltmann
(818) 532-3708
Source: Velocity Financial, Inc.