[10-Q] Velocity Financial, Inc. Quarterly Earnings Report
Velocity Financial (VEL) reported stronger results for the quarter ended September 30, 2025. Net income rose to $25.4 million from $15.8 million a year ago, and diluted EPS increased to $0.65 from $0.44. Net interest income improved to $49.1 million from $35.1 million, reflecting higher interest income against portfolio and corporate funding costs. Other operating income was $37.1 million, driven by a $31.0 million unrealized gain on fair value loans and offset by losses on securitized debt and mortgage servicing rights.
Operating expenses increased to $50.4 million from $34.6 million, with higher compensation, servicing, securitization, and real estate owned costs. The provision for credit losses was $0.4 million versus a small reversal last year. On the balance sheet, total assets expanded to $7.0 billion from $5.5 billion at December 31, 2024, with loans at fair value at $4.37 billion. Total equity rose to $637.5 million from $520.2 million. Cash and equivalents were $99.0 million, and shares outstanding were 38,900,030 as of October 31, 2025.
- None.
- None.
Insights
Solid quarterly growth from core spread income and fair value gains.
Velocity Financial posted higher profitability with net income of
Expenses rose to
The balance sheet scaled, with total assets at
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ______ to _____
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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NYSE Texas, Inc. |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Emerging growth company |
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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. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of October 31, 2025, the registrant had
Table of Contents
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Page |
PART I. |
FINANCIAL INFORMATION |
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Item 1. |
Consolidated Financial Statements (Unaudited) |
2 |
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Consolidated Balance Sheets |
2 |
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Consolidated Statements of Income |
4 |
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Consolidated Statements of Comprehensive Income |
5 |
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Consolidated Statements of Changes in Stockholders’ Equity |
6 |
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Consolidated Statements of Cash Flows |
7 |
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Notes to Consolidated Financial Statements (Unaudited) |
9 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
38 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
60 |
Item 4. |
Controls and Procedures |
60 |
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PART II. |
OTHER INFORMATION |
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Item 1. |
Legal Proceedings |
61 |
Item 1A. |
Risk Factors |
61 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
61 |
Item 3. |
Defaults Upon Senior Securities |
61 |
Item 4. |
Mine Safety Disclosures |
61 |
Item 5. |
Other Information |
61 |
Item 6. |
Exhibits |
62 |
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SIGNATURES |
64 |
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i
PART I—FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (Unaudited)
VELOCITY FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
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September 30, 2025 |
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December 31, 2024 |
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(Unaudited) |
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ASSETS |
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Cash and cash equivalents |
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$ |
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$ |
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Restricted cash |
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Loans held for sale, at fair value |
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— |
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Loans held for investment, at amortized cost (net of allowance for credit losses of $ |
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Loans held for investment, at fair value |
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Total loans, net |
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Accrued interest receivables |
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Receivables due from servicers |
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Other receivables |
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Real estate owned, net |
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Property and equipment, net |
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Deferred tax asset |
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Mortgage servicing rights, at fair value |
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Derivative assets |
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— |
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Goodwill |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Secured financing, net |
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Securitized debt, at amortized cost |
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Securitized debt, at fair value |
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Warehouse and repurchase facilities, net |
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Total liabilities |
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Commitments and contingencies |
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EQUITY |
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Common stock ($ |
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Additional paid-in capital |
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Retained earnings |
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Treasury stock, at cost ( |
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( |
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( |
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Accumulated other comprehensive loss |
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( |
) |
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( |
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Total Velocity Financial, Inc. stockholders' equity |
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Noncontrolling interest in subsidiary |
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Total equity |
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Total liabilities and equity |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
2
VELOCITY FINANCIAL, INC.
CONSOLIDATED BALANCE SHEETS (CONTINUED)
(In thousands)
The following table represents the assets and liabilities of consolidated variable interest entities:
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September 30, 2025 |
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December 31, 2024 |
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(Unaudited) |
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ASSETS |
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Restricted cash |
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$ |
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$ |
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Loans held for investment, at amortized cost |
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Loans held for investment, at fair value |
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Accrued interest and other receivables |
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Real estate owned, net |
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Deferred tax asset |
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Other assets |
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— |
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Total assets |
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$ |
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$ |
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LIABILITIES |
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Accounts payable and accrued expenses |
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$ |
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$ |
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Securitized debt |
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Total liabilities |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
3
VELOCITY FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Interest income |
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$ |
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$ |
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$ |
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$ |
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Interest expense — portfolio related |
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Net interest income — portfolio related |
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Interest expense — corporate debt |
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Net interest income |
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Provision for (reversal of) credit losses |
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( |
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Net interest income after provision for (reversal of) credit losses |
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Other operating income |
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Gain on disposition of loans |
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Unrealized gain on fair value loans |
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Unrealized loss on fair value securitized debt |
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( |
) |
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( |
) |
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( |
) |
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( |
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Unrealized loss on mortgage servicing rights |
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( |
) |
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( |
) |
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( |
) |
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( |
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Origination fee income |
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Interest income on cash balance |
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Other income |
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Total other operating income |
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Operating expenses |
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Compensation and employee benefits |
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Origination expenses |
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Securitization expenses |
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Loan servicing |
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Professional fees |
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Rent and occupancy |
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Real estate owned, net |
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Other operating expenses |
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Total operating expenses |
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Income before income taxes |
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Income tax expense |
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Federal |
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State |
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Income tax expense |
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Net income |
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Net income (loss) attributable to noncontrolling interest |
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( |
) |
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( |
) |
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( |
) |
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Net income attributable to Velocity Financial, Inc. |
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$ |
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$ |
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$ |
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$ |
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Less undistributed earnings attributable to unvested restricted stock awards |
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Net earnings attributable to common stockholders |
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$ |
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$ |
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$ |
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$ |
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Earnings per common share |
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Basic |
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$ |
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$ |
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$ |
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$ |
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Diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted average common shares outstanding |
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Basic |
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Diluted |
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See accompanying Notes to Consolidated Financial Statements.
4
VELOCITY FINANCIAL, INC.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(In thousands)
(Unaudited)
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Three Months Ended September 30, |
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Nine Months Ended September 30, |
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2025 |
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2024 |
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2025 |
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2024 |
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Net income attributable to Velocity Financial, Inc. |
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$ |
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$ |
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$ |
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$ |
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Other comprehensive income (loss), net of tax: |
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Net unrealized gain (loss) on cash flow hedges arising during the period |
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( |
) |
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( |
) |
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( |
) |
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Reclassification adjustments included in net income |
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( |
) |
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( |
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Total other comprehensive income (loss), net of tax |
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( |
) |
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( |
) |
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( |
) |
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Total comprehensive income attributable to Velocity Financial, Inc. |
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$ |
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$ |
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$ |
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$ |
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See accompanying Notes to Consolidated Financial Statements.
5
VELOCITY FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
($ in thousands, except share data)
(Unaudited)
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Common Stock - Number of Shares |
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Stockholders' Equity |
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Shares Issued |
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Treasury Shares |
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Shares Outstanding |
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Common Stock |
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Additional |
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Retained |
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Treasury Stock, at Cost |
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Accumulated Other Comprehensive Income (Loss), Net of Tax |
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Total |
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Noncontrolling Interest |
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Total Equity |
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Balance – December 31, 2023 |
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( |
) |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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Shares surrendered for tax withholding on vested awards |
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— |
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( |
) |
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( |
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— |
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— |
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— |
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( |
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— |
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( |
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— |
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( |
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Restricted stock awarded and stock-based compensation expenses |
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— |
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— |
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— |
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— |
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— |
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— |
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Net income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance – March 31, 2024 |
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( |
) |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
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$ |
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$ |
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$ |
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Issuance of common stock |
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— |
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— |
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— |
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— |
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— |
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Shares surrendered for tax withholding on vested awards |
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— |
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( |
) |
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( |
) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
) |
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— |
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( |
) |
Restricted stock awarded and stock-based compensation expenses |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Distribution to non-controlling interest |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Net income (loss) |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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Other comprehensive income |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Balance – June 30, 2024 |
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|
|
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||||
Issuance of common stock |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Restricted stock awarded and stock-based compensation expenses |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Distribution to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance – September 30, 2024 |
|
|
|
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance – December 31, 2024 |
|
|
|
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Issuance of common stock |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||||
Shares surrendered for tax withholding on vested awards |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Restricted stock awarded and stock-based compensation expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Net income (loss) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
( |
) |
|
|
|
|||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance – March 31, 2025 |
|
|
|
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Issuance of common stock |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||||
Purchase of treasury stock |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Shares surrendered for tax withholding on vested awards |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Restricted stock awarded and stock-based compensation expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Distribution to non-controlling interest |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive loss |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Balance – June 30, 2025 |
|
|
|
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
Issuance of common stock |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||||||
Shares surrendered for tax withholding on vested awards |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Restricted stock awarded and stock-based compensation expenses |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||||
Net income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Other comprehensive income |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Balance – September 30, 2025 |
|
|
|
|
|
( |
) |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
|
|
$ |
|
|
$ |
|
||||||||
See accompanying Notes to Consolidated Financial Statements.
6
VELOCITY FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(Unaudited) |
|
|||||
Cash flows from operating activities: |
|
|
|
|
|
|
||
Net income |
|
$ |
|
|
$ |
|
||
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
|
||
Depreciation and amortization |
|
|
|
|
|
|
||
Amortization of right-of-use assets |
|
|
|
|
|
|
||
Provision for credit losses |
|
|
|
|
|
|
||
Origination of loans held for sale |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of loans held for sale |
|
|
|
|
|
— |
|
|
Net accretion of discount on purchased loans and amortization of deferred loan origination costs |
|
|
|
|
|
|
||
Provision for uncollectible corporate and escrow advances receivable |
|
|
|
|
|
|
||
Gain on disposition of loans |
|
|
( |
) |
|
|
( |
) |
Real estate acquired through foreclosure in excess of recorded investment |
|
|
( |
) |
|
|
( |
) |
Amortization of debt issuance discount and costs |
|
|
|
|
|
|
||
Change in valuation of real estate owned |
|
|
|
|
|
|
||
Change in valuation of fair value loans |
|
|
( |
) |
|
|
( |
) |
Change in valuation of mortgage servicing rights |
|
|
|
|
|
|
||
Change in valuation of fair value securitized debt |
|
|
|
|
|
|
||
Gain on sale of real estate owned |
|
|
( |
) |
|
|
( |
) |
Stock-based compensation |
|
|
|
|
|
|
||
Hedging activities |
|
|
( |
) |
|
|
( |
) |
Deferred tax benefit |
|
|
( |
) |
|
|
( |
) |
Change in operating assets and liabilities: |
|
|
|
|
|
|
||
Accrued interest and other receivables |
|
|
( |
) |
|
|
( |
) |
Other assets |
|
|
( |
) |
|
|
( |
) |
Accounts payable and accrued expenses |
|
|
|
|
|
|
||
Net cash provided by operating activities |
|
|
|
|
|
|
||
Cash flows from investing activities: |
|
|
|
|
|
|
||
Purchase of loans held for investment |
|
|
— |
|
|
|
( |
) |
Origination of loans held for investment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sales of loans originally classified as held for investment |
|
|
— |
|
|
|
|
|
Payments of loans held for investment and loans at fair value |
|
|
|
|
|
|
||
Proceeds from sale of real estate owned |
|
|
|
|
|
|
||
Capitalized improvement on real estate held for sale |
|
|
( |
) |
|
|
— |
|
Change in corporate and escrow advances receivable |
|
|
( |
) |
|
|
( |
) |
Change in impounds and deposits |
|
|
|
|
|
( |
) |
|
Purchase of property and equipment |
|
|
( |
) |
|
|
( |
) |
Proceeds from sale of property and equipment |
|
|
— |
|
|
|
|
|
Purchase of mortgage servicing rights |
|
|
— |
|
|
|
( |
) |
Net cash used in investing activities |
|
|
( |
) |
|
|
( |
) |
Cash flows from financing activities: |
|
|
|
|
|
|
||
Warehouse repurchase facilities advances |
|
|
|
|
|
|
||
Warehouse repurchase facilities repayments |
|
|
( |
) |
|
|
( |
) |
Proceeds from secured financing |
|
|
— |
|
|
|
|
|
Proceeds of securitized debt |
|
|
|
|
|
|
||
Repayment of securitized debt |
|
|
( |
) |
|
|
( |
) |
Debt issuance costs |
|
|
( |
) |
|
|
( |
) |
Deferred stock issuance costs |
|
|
( |
) |
|
|
— |
|
Proceeds from issuance of common stock related to warrants exercised |
|
|
|
|
|
— |
|
|
Proceeds from issuance of common stock, net |
|
|
|
|
|
|
||
Purchase of treasury stock |
|
|
( |
) |
|
|
( |
) |
Distribution to non-controlling interest |
|
|
( |
) |
|
|
( |
) |
Net cash provided by financing activities |
|
|
|
|
|
|
||
Net increase in cash, cash equivalents, and restricted cash |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at beginning of period |
|
|
|
|
|
|
||
Cash, cash equivalents, and restricted cash at end of period |
|
$ |
|
|
$ |
|
||
See accompanying Notes to Consolidated Financial Statements.
7
VELOCITY FINANCIAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In thousands)
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(Unaudited) |
|
|||||
Supplemental cash flow information: |
|
|
|
|
|
|
||
Cash paid during the period for interest |
|
$ |
|
|
$ |
|
||
Cash paid during the period for income taxes, net |
|
|
|
|
|
|
||
Noncash transactions from investing and financing activities: |
|
|
|
|
|
|
||
Transfer of loans held for investment to held for sale |
|
|
— |
|
|
|
|
|
Transfer of loans held for investment to real estate owned |
|
|
|
|
|
|
||
Transfer of accrued interest to loans held for investment |
|
|
|
|
|
|
||
Transfer of loans held for sale to held for investment |
|
|
— |
|
|
|
|
|
Recognition of new leases in exchange for lease obligations |
|
|
|
|
|
|
||
Deferred stock issuance costs charged against additional paid-in capital |
|
|
|
|
|
|
||
See accompanying Notes to Consolidated Financial Statements.
8
VELOCITY FINANCIAL, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements (Unaudited)
Note 1 — Organization and Description of Business
Velocity Financial, LLC (“VF” or “the Company”) was a Delaware limited liability company formed on
VCC, a California LLC formed on June 2, 2004, is a mortgage lender that originates and acquires residential and commercial investor real estate loans, providing capital to the investor real estate loan market. The Company is licensed as a California Finance Lender and, as such, is required to maintain a minimum net worth of $
The Company, through its wholly owned subsidiaries, is the sole beneficial owner of the Velocity Commercial Capital Loan Trusts, from the 2017-2 Trust through and including the 2025-4 Trust, all of which are New York common law trusts, with the exception of the VCC 2025-MC1 Trust, and VCC 2025-RTL1 Trust which are Delaware statutory trusts. The Trusts are bankruptcy remote, variable interest entities (“VIEs”) formed for the purpose of providing secured borrowings to the Company and are consolidated with the accounts of the Company.
On December 28, 2021, the Company acquired an
Note 2 — Basis of Presentation and Summary of Significant Accounting Policies
The accompanying unaudited Consolidated Financial Statements as of and for the three and nine months ended September 30, 2025 and 2024 have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company’s audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.
The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company’s audited Consolidated Financial Statements.
The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period.
9
The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (“SEC”).
There have been no material changes to the Company’s significant accounting policies as described in its 2024 Annual Report.
The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.
The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.
The consolidated financial statements as of September 30, 2025 and December 31, 2024 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.
The Company elected to apply fair value option (“FVO”) accounting to mortgage loans originated effective October 1, 2022. The fair value option loans are presented as a separate line item in the Consolidated Balance Sheets. Interest income on FVO loans is recorded on an accrual basis in the Consolidated Statements of Income under the heading “Interest income.” Changes in the fair value of the loans are recorded as “Unrealized gain (loss) on fair value of loans” in the Consolidated Statements of Income. The Company does not record a current expected credit loss (“CECL”) reserve on fair value option loans.
The Company elected to apply FVO accounting to securitized debt issued effective January 1, 2023 when the underlying collateral is also carried at fair value. The FVO securitized debt is presented as a separate line item in the Consolidated Balance Sheets. The Company reflects interest expense on the FVO securitized debt as “Interest expense – portfolio related” and presents the other fair value changes of the FVO securitized debt separately as “Unrealized gain (loss) on fair value securitized debt” in the Consolidated Statements of Income.
The Company issues fixed rate debt at regular intervals during the year through the securitization of its fixed rate mortgage assets. The Company is subject to interest rate risk on its forecasted debt issuances as these fixed rate debt issuances are priced at then-current market rates. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark Secured Overnight Financing Rate (“SOFR”) between the time the fixed rate mortgages are originated and the fixed rate debt is issued. To accomplish this hedging strategy, the Company may from time to time enter into derivative instruments such as forward starting payer interest rate swaps or interest rate payer and receiver swaptions designated as cash flow hedges that are designed to be highly correlated to the underlying terms of the forecasted debt instruments. To qualify for hedge accounting, the Company formally documents its hedging relationships at inception, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. The Company also formally assesses effectiveness both at the hedge's inception and on an ongoing basis.
The Company's policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements. The fair value of the derivative instruments is recorded as a separate line item on the Consolidated Balance Sheets as an asset or liability with the related gains or losses reported as a component of Accumulated Other Comprehensive Income (“AOCI”). Beginning in the period in which the forecasted debt issuance occurs and the related derivative instruments are terminated, the gains or losses accumulated in AOCI are then reclassified into interest expense as a yield adjustment over the term of the related debt. If the Company determines it is not probable that the forecasted transaction will occur, gains and losses are reclassified immediately to earnings. The related cash flows are recognized on the cash flows from operating activities section on the Consolidated Statements of Cash Flows. The Company uses hedge accounting based on the exposure being hedged as cash flow hedges in operations.
Other comprehensive income (“OCI”) is reported in the Consolidated Statements of Comprehensive Income. OCI is comprised of net income and the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges, net of tax, less amounts reclassified into earnings.
10
Accumulated other comprehensive income represents the cumulative balance of OCI, net of tax, as of the end of the reporting period and relates to unrealized gains or losses on cash flow hedges, net of tax.
Note 3 — Current Accounting Developments
Recently Issued Accounting Standards
Expense Disaggregation
In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40) Expense Disaggregation Disclosures,” clarifies for non-calendar year end entities the interim effective date of ASU 2024-03. All public business entities are required to adopt the guidance in the annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40) Expense Disaggregation Disclosures,” which requires specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively will need to be disclosed. The accounting update is effective January 1, 2027 for the Company. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.
Recently Adopted Accounting Standards
Codification Improvements
In March 2024, the FASB issued ASU 2024-02, “Codification Improvements—Amendments to Remove References to the Concepts Statements,” which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. ASU 2024-02 is effective January 1, 2025, for the Company. The Company adopted the provisions of ASU 2024-02 effective January 1, 2025, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 240): Improvements to Income Tax Disclosures,” which requires additional disclosure and disaggregated information in the Income Tax Rate reconciliation using both percentages and reporting currency amounts, with additional qualitative explanations of individually significant reconciling items. The updated guidance also requires disclosure of the amount of income taxes paid (net of refunds received) disaggregated by jurisdictional categories (federal (national), state, and foreign). The Company adopted the provisions of ASU 2023-09 effective January 1, 2025, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.
Note 4 — Cash, Cash Equivalents, and Restricted Cash
The Company is required to hold cash for potential future advances due to certain borrowers. In accordance with various mortgage servicing and related agreements, Century maintains escrow accounts for mortgage insurance premium, tax and insurance, working capital, sinking fund and other mortgage related escrows. The total escrow balances payable amounted to $
The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s Consolidated Balance Sheets to the total of the same such amounts shown in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024:
|
|
September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(In thousands) |
|
|||||
Cash and cash equivalents |
|
$ |
|
|
$ |
|
||
Restricted cash |
|
|
|
|
|
|
||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows |
|
$ |
|
|
$ |
|
||
11
Note 5 — Loans Held for Sale at Fair Value
The following table summarizes loans held for sale at fair value as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Unpaid principal balance |
|
$ |
|
|
$ |
— |
|
|
Valuation adjustments on FVO loans held for sale |
|
|
|
|
|
— |
|
|
Ending balance |
|
$ |
|
|
$ |
— |
|
|
Note 6 — Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value
The following tables summarize loans held for investment as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
|
|||||||||
|
|
Loans Held for Investment, at Amortized Cost |
|
|
Loans Held for Investment, at Fair Value |
|
|
Total Loans Held for Investment |
|
|||
|
|
(In thousands) |
|
|||||||||
Unpaid principal balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Valuation adjustments on FVO loans |
|
|
— |
|
|
|
|
|
|
|
||
Deferred loan origination costs |
|
|
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|||
Allowance for credit losses |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total loans held for investment |
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
December 31, 2024 |
|
|||||||||
|
|
Loans Held for Investment, at Amortized Cost |
|
|
Loans Held for Investment, at Fair Value |
|
|
Total Loans Held for Investment |
|
|||
|
|
(In thousands) |
|
|||||||||
Unpaid principal balance |
|
$ |
|
|
$ |
|
|
$ |
|
|||
Valuation adjustments on FVO loans |
|
|
— |
|
|
|
|
|
|
|
||
Deferred loan origination costs |
|
|
|
|
|
— |
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|||
Allowance for credit losses |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Total loans held for investment |
|
$ |
|
|
$ |
|
|
$ |
|
|||
The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and nine months ended September 30, 2025 and the year ended December 31, 2024:
|
|
Three Months Ended September 30, 2025 |
|
Nine Months Ended September 30, 2025 |
||||||||||||||||||||
|
|
UPB |
|
|
% |
|
Amortized Cost |
|
|
% |
|
UPB |
|
|
% |
|
Amortized Cost |
|
|
% |
||||
|
|
($ in thousands) |
||||||||||||||||||||||
Beginning balance |
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
||||
Foreclosures |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
|
|
Repayments |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
|
|
|
|
( |
) |
|
|
Ending balance |
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
|
$ |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performing/Accruing |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonperforming/Nonaccrual |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
||||||||
12
|
|
Year Ended December 31, 2024 |
||||||||||
|
|
UPB |
|
|
% |
|
Amortized Cost |
|
|
% |
||
|
|
($ in thousands) |
||||||||||
Beginning balance |
|
$ |
|
|
|
|
$ |
|
|
|
||
Foreclosures |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
Repayments |
|
|
( |
) |
|
|
|
|
( |
) |
|
|
Ending balance |
|
$ |
|
|
|
|
$ |
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Performing/Accruing |
|
$ |
|
|
|
$ |
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
||
Nonperforming/Nonaccrual |
|
$ |
|
|
|
$ |
|
|
||||
Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $
Approximately
13
As of September 30, 2025 and December 31, 2024, the gross unpaid principal balances of loans held for investment pledged as collateral for the Company’s warehouse facilities and securitized debt issued were as follows:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
The 2013 repurchase agreement |
|
$ |
|
|
$ |
|
||
The 2021/2024 repurchase agreements |
|
|
|
|
|
|
||
The 2021 term repurchase agreement |
|
|
|
|
|
|
||
The 2023 repurchase agreement |
|
|
|
|
|
|
||
The 2024 bank credit agreement |
|
|
|
|
|
|
||
Total pledged loans |
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
||
2017-2 Trust |
|
$ |
|
|
$ |
|
||
2018-1 Trust |
|
|
|
|
|
|
||
2018-2 Trust |
|
|
|
|
|
|
||
2019-1 Trust |
|
|
|
|
|
|
||
2019-2 Trust |
|
|
|
|
|
|
||
2019-3 Trust |
|
|
|
|
|
|
||
2020-1 Trust |
|
|
|
|
|
|
||
2021-1 Trust |
|
|
|
|
|
|
||
2021-2 Trust |
|
|
|
|
|
|
||
2021-3 Trust |
|
|
|
|
|
|
||
2021-4 Trust |
|
|
|
|
|
|
||
2022-1 Trust |
|
|
|
|
|
|
||
2022-2 Trust |
|
|
|
|
|
|
||
2022-MC1 Trust |
|
|
— |
|
|
|
|
|
2022-3 Trust |
|
|
|
|
|
|
||
2022-4 Trust |
|
|
|
|
|
|
||
2022-5 Trust |
|
|
|
|
|
|
||
2023-1 Trust |
|
|
|
|
|
|
||
2023-2 Trust |
|
|
|
|
|
|
||
2023-3 Trust |
|
|
|
|
|
|
||
2023-RTL1 Trust |
|
|
— |
|
|
|
|
|
2023-4 Trust |
|
|
|
|
|
|
||
2024-1 Trust |
|
|
|
|
|
|
||
2024-2 Trust |
|
|
|
|
|
|
||
2024-3 Trust |
|
|
|
|
|
|
||
2024-4 Trust |
|
|
|
|
|
|
||
2024-5 Trust |
|
|
|
|
|
|
||
2024-6 Trust |
|
|
|
|
|
|
||
2025-1 Trust |
|
|
|
|
|
— |
|
|
2025-RTL1 Trust |
|
|
|
|
|
— |
|
|
2025-2 Trust |
|
|
|
|
|
— |
|
|
2025-MC1 Trust |
|
|
|
|
|
— |
|
|
2025-3 Trust |
|
|
|
|
|
— |
|
|
2025-P1 Trust |
|
|
|
|
|
— |
|
|
2025-4 Trust |
|
|
|
|
|
— |
|
|
Total |
|
$ |
|
|
$ |
|
||
14
The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment, excluding loans carried at fair value, that were nonperforming and on nonaccrual status as of September 30, 2025 and December 31, 2024.
|
|
September 30, 2025 |
|
|||||||||||||
|
|
Total |
|
|
Nonaccrual with No Allowance for Credit Losses |
|
|
Nonaccrual with Allowance for Credit Losses |
|
|
Allowance for Loans Individually Evaluated |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
December 31, 2024 |
|
|||||||||||||
|
|
Total |
|
|
Nonaccrual with No Allowance for Credit Losses |
|
|
Nonaccrual with Allowance for Credit Losses |
|
|
Allowance for Loans Individually Evaluated |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company has made the accounting policy election not to measure an allowance for accrued interest receivables. The Company has also made the accounting policy election to write off accrued interest receivables by reversing interest income when loans are placed on nonaccrual status, or 90 days or more past due. Any future payments received for these loans will be recognized on a cash basis.
The following tables present the amortized cost basis in loans held for investment, excluding loans held for investment at fair value, as of September 30, 2025 and 2024, and the amount of accrued interest receivable written off by reversing interest income by portfolio segment of loans that have been placed on nonaccrual for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
Amortized Cost |
|
|
Interest Reversal |
|
|
Amortized Cost |
|
|
Interest Reversal |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
15
|
|
Nine Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
Amortized Cost |
|
|
Interest Reversal |
|
|
Amortized Cost |
|
|
Interest Reversal |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $
The following tables present the activity in the allowance for credit losses for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, 2025 |
|
|||||||||||||||||||||||||
|
|
Commercial Purchase |
|
|
Commercial Refinance |
|
|
Residential |
|
|
Residential |
|
|
Short Term |
|
|
Short Term |
|
|
Total |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance - July 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Provision for (reversal of) credit losses |
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
|
|
|
|
|
|
||||
Charge-offs |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Amortized cost related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
Three Months Ended September 30, 2024 |
|
|||||||||||||||||||||||||
|
|
Commercial Purchase |
|
|
Commercial Refinance |
|
|
Residential |
|
|
Residential |
|
|
Short Term |
|
|
Short Term |
|
|
Total |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance - July 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Provision for (reversal of) credit losses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|||
Charge-offs |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Amortized cost related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
16
|
|
Nine Months Ended September 30, 2025 |
|
|||||||||||||||||||||||||
|
|
Commercial Purchase |
|
|
Commercial Refinance |
|
|
Residential |
|
|
Residential |
|
|
Short Term |
|
|
Short Term |
|
|
Total |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance - January 1, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Provision for (reversal of) credit losses |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Charge-offs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Amortized cost related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
Nine Months Ended September 30, 2024 |
|
|||||||||||||||||||||||||
|
|
Commercial Purchase |
|
|
Commercial Refinance |
|
|
Residential |
|
|
Residential |
|
|
Short Term |
|
|
Short Term |
|
|
Total |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Allowance for credit losses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Beginning balance - January 1, 2024 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Provision for (reversal of) credit losses |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Charge-offs |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Allowance related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Amortized cost related to: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
Loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||||
A credit quality indicator is a statistic used by the Company to monitor and assess the credit quality of loans held for investment, excluding loans held for investment at fair value. The Company monitors its charge-offs rate in relation to its nonperforming loans as a credit quality indicator. The annualized charge-offs rates were
17
Other credit quality indicators include aging status and accrual status. Nonperforming loans are loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest. Past due status is based on the contractual terms of the loan.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
September 30, 2025 |
|
30–59 Days |
|
|
60–89 Days |
|
|
90+ Days |
|
|
Total |
|
|
Current |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Loans individually evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Short Term 1-4 Unit - Purchase |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Short Term 1-4 Unit - Refinance |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Total loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Loans collectively evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Short Term 1-4 Unit - Purchase |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Short Term 1-4 Unit - Refinance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
December 31, 2024 |
|
30–59 Days |
|
|
60–89 Days |
|
|
90+ Days |
|
|
Total |
|
|
Current |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Loans individually evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||||
Short Term 1-4 Unit - Purchase |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
|||
Short Term 1-4 Unit - Refinance |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
|
||||
Total loans individually evaluated |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||||
Loans collectively evaluated |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
||||
Short Term 1-4 Unit - Refinance |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total loans collectively evaluated |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
18
In addition to the aging status, the Company also evaluates credit quality by accrual status.
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|||||||||||||||||||||
September 30, 2025: |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Commercial - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Commercial - Refinance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
|
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Residential 1-4 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Residential 1-4 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Total Short Term 1-4 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Short Term 1-4 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Portfolio |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross charge-offs - quarter-ended September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross charge-offs - year-to-date September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
19
|
|
Term Loans Amortized Cost Basis by Origination Year |
|
|||||||||||||||||||||
December 31, 2024 |
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
2019 |
|
|
Prior |
|
|
Total |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Commercial - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Commercial - Refinance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Residential 1-4 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Nonperforming |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Residential 1-4 |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Total Short Term 1-4 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Payment performance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Performing |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
||
Nonperforming |
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Total Short Term 1-4 |
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Total Portfolio |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross charge-offs - quarter-ended December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Gross charge-offs - year-ended December 31, 2024 |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||||
20
Nonaccrual Loans - Loans Held for Investment at Fair Value
The following tables present the aggregate fair value of loans held for investment at fair value that are 90 days or more past due and/or in nonaccrual status, and the difference between the aggregate fair value and the aggregate unpaid principal balance as of September 30, 2025 and December 31, 2024 by loan segments:
|
|
Fair Value |
|
|
Unpaid Principal Balance |
|
|
Difference |
|
|||||||||||||||||||
|
|
Current–89 Days |
|
|
90+ Days Past Due |
|
|
|
|
|
Current–89 Days |
|
|
90+ Days Past Due |
|
|
|
|
|
90+ Days Past Due |
|
|||||||
September 30, 2025 |
|
Past Due |
|
|
or Nonaccrual |
|
|
Total |
|
|
Past Due |
|
|
or Nonaccrual |
|
|
Total |
|
|
or Nonaccrual |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||||
|
|
Fair Value |
|
|
Unpaid Principal Balance |
|
|
Difference |
|
|||||||||||||||||||
|
|
Current–89 Days |
|
|
90+ Days Past Due |
|
|
|
|
|
Current–89 Days |
|
|
90+ Days Past Due |
|
|
|
|
|
90+ Days Past Due |
|
|||||||
December 31, 2024 |
|
Past Due |
|
|
or Nonaccrual |
|
|
Total |
|
|
Past Due |
|
|
or Nonaccrual |
|
|
Total |
|
|
or Nonaccrual |
|
|||||||
|
|
(In thousands) |
|
|||||||||||||||||||||||||
Commercial - Purchase |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||||
Commercial - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Residential 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Residential 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Short Term 1-4 Unit - Purchase |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Short Term 1-4 Unit - Refinance |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
||||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
||||||
Note 7 — Receivables Due From Servicers
The following tables summarize receivables due from servicers as of September 30, 2025 and December 31, 2024:
|
|
|
September 30, 2025 |
|
|||||||||
|
|
|
Securitized Debt |
|
|
Warehouse and Repurchase Facilities and Other |
|
|
Total |
|
|||
|
|
|
(In thousands) |
|
|||||||||
Loan principal payments due from servicers |
$ |
|
|
$ |
|
|
$ |
|
|||||
Other loan servicing receivables |
|
|
|
|
|
|
|
|
|||||
Loan servicing receivables |
|
|
|
|
|
|
|
|
|||||
Corporate and escrow advances receivable |
|
|
|
|
|
|
|
|
|||||
Total receivables due from servicers |
$ |
|
|
$ |
|
|
$ |
|
|||||
|
|
|
December 31, 2024 |
|
|||||||||
|
|
|
Securitized Debt |
|
|
Warehouse and Repurchase Facilities and Other |
|
|
Total |
|
|||
|
|
|
(In thousands) |
|
|||||||||
Loan principal payments due from servicers |
$ |
|
|
$ |
|
|
$ |
|
|||||
Other loan servicing receivables |
|
|
|
|
|
|
|
|
|||||
Loan servicing receivables |
|
|
|
|
|
|
|
|
|||||
Corporate and escrow advances receivable |
|
|
|
|
|
|
|
|
|||||
Total receivables due from servicers |
$ |
|
|
$ |
|
|
$ |
|
|||||
Note 8 — Real Estate Owned, Net
As of September 30, 2025, the carrying value of real estate owned was $
21
$
Note 9 — Mortgage Servicing Rights
Mortgage loans sold with servicing retained are related to the Century business and not included in the Consolidated Balance Sheets. The unpaid principal balance of mortgage loans serviced for others amounted to $
The following table presents the Company's mortgage servicing rights activity during the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Balance at the beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Mortgage servicing rights acquired |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Additions |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
— |
|
|
Fair value adjustments |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Balance at the end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 10 — Goodwill
The following table presents the activity for goodwill as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Balance at the beginning of period |
|
$ |
|
|
$ |
|
||
Balance at the end of period |
|
$ |
|
|
$ |
|
||
Note 11 — Securitized Debt at Amortized Cost and Securitized Debt at Fair Value
As of September 30, 2025, the Company is the sole beneficial interest holder of 33 Trusts, which are variable interest entities included in the consolidated financial statements. The securitization transactions are accounted for as secured borrowings under U.S. GAAP. The securities are subject to redemption by the Company when the stated principal balance is less than a certain percentage, ranging from
The following tables summarize securitized debt at amortized cost and securitized debt at fair value as of September 30, 2025 and December 31, 2024:
Securitized Debt, at Amortized Cost |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Unpaid principal balance |
|
$ |
|
|
$ |
|
||
Deferred issuance costs and discounts |
|
|
( |
) |
|
|
( |
) |
Total securitized debt, at amortized cost |
|
$ |
|
|
$ |
|
||
22
Securitized Debt, at Fair Value |
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Unpaid principal balance |
|
$ |
|
|
$ |
|
||
Adjustment at issuance to recognize fair value (1) |
|
|
( |
) |
|
|
( |
) |
Fair value at issuance |
|
|
|
|
|
|
||
Valuation adjustment subsequent to issuance (2) |
|
|
|
|
|
|
||
Fair value adjustment related to refinance of securitization trust |
|
|
( |
) |
|
|
— |
|
Total securitized debt at fair value |
|
$ |
|
|
$ |
|
||
The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of securitized debt at fair value as of September 30, 2025 and December 31, 2024:
|
|
Fair Value |
|
|
Unpaid Principal Balance |
|
|
Difference |
|
|||
|
|
(In thousands) |
|
|||||||||
September 30, 2025 |
|
$ |
|
|
$ |
|
|
$ |
|
|||
December 31, 2024 |
|
|
|
|
|
|
|
|
( |
) |
||
The following table presents the effective interest rate of securitized debt at amortized cost and securitized debt at fair value for the nine months ended September 30, 2025 and 2024:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
($ in thousands) |
|
|||||
Interest expense |
|
$ |
|
|
$ |
|
||
Average outstanding unpaid principal balance |
|
|
|
|
|
|
||
Effective interest rate (1) |
|
|
% |
|
|
% |
||
Note 12 — Other Debt
Secured financings and warehouse facilities are utilized to finance the origination and purchase of commercial real estate mortgage loans. Warehouse facilities are designated to fund mortgage loans that are purchased and originated within specified underwriting guidelines. Most of these lines of credit fund less than
On March 15, 2022, the Company entered into a
On February 5, 2024, the Company entered into a
The total balance of the 2022 Term Loan and the 2024 Term Loan (“Corporate Debt”) in the Consolidated Balance Sheets is net of debt issuance costs and discount of $
On
23
On
On
On
On
On
Certain loans are pledged as collateral under the warehouse repurchase facilities and the revolving loan facility, which contain covenants. Should the Company fail to adhere to those covenants or otherwise default under the facilities, the lenders have the right to terminate the facilities and demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of September 30, 2025 and December 31, 2024, the Company was in compliance with all covenants.
The following table summarizes the maximum borrowing capacity, current gross balances outstanding, and effective interest rates of the Company’s warehouse facilities and loan agreements as of September 30, 2025 and December 31, 2024:
|
|
|
|
|
|
September 30, 2025 |
|
|
|
December 31, 2024 |
|
|
||||||||||||||||||
|
|
Contract Date |
|
Maturity Date |
|
Period End |
|
|
Maximum |
|
|
Effective Interest Rate |
|
|
|
Period End |
|
|
Maximum |
|
|
Effective Interest Rate |
|
|
||||||
|
|
|
|
|
|
($ in thousands) |
||||||||||||||||||||||||
The September 2022 term repurchase agreement |
|
|
|
$ |
|
|
$ |
|
|
|
|
% |
|
$ |
— |
|
|
$ |
|
|
|
|
% |
|||||||
The 2013 repurchase agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The 2021/2024 repurchase agreements |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The 2021 term repurchase agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The 2023 repurchase agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
The 2024 bank credit agreement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total |
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
|
$ |
|
|
$ |
|
|
|
|
|
||||||
The following table provides an overview of the activity and effective interest rates of the Company’s warehouse facilities and loan agreements for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
($ in thousands) |
|
|||||||||||||
Average outstanding balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Highest outstanding balance at any month-end |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Effective interest rate (1) |
|
|
% |
|
|
% |
|
|
% |
|
|
% |
||||
24
The following table provides a summary of interest expense that includes interest, amortization of discount, and deal cost amortization of the Company’s warehouse facilities, securitizations and other financing for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Warehouse and repurchase facilities |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Securitized debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense — portfolio related |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Interest expense — corporate debt |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total interest expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Note 13 — Commitments and Contingencies
When the Company sells loans, it is required to make normal and customary representations and warranties about the loans to the purchaser. The loan sale agreements generally require the Company to repurchase loans if the Company breaches a representation or warranty given to the loan purchaser. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a loan shortly after its sale.
The Company records a repurchase liability relating to representations and warranties and early payment defaults. The method used to estimate the liability for repurchase is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults. The Company establishes a liability at the time loans are sold and continually updates the estimated repurchase liability. The level of the repurchase liability for representations and warranties and early payment default requires considerable management judgment.
The Company regularly evaluates the adequacy of repurchase reserves based on trends in repurchase, actual loss experience, estimated future loss exposure and other relevant factors including economic conditions. As of September 30, 2025 and December 31, 2024, the balance of repurchase liability was $
The Company is a party to various legal proceedings in the normal course of business. The Company, after consultation with legal counsel, believes the disposition of all pending litigation will not have a material effect on the Company’s consolidated financial condition or results of operations as of September 30, 2025.
Under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company, with the guidance from a third-party specialist, determined it was eligible for a refundable employee retention credit (“ERC”) subject to certain criteria.
The Company applied for ERC for the first three quarters’ wages paid in calendar year 2021. During the second quarter of 2023, the Company received approximately $
Century originated a $
25
Note 14 — Stock-Based Compensation
The Company’s Amended and Restated 2020 Omnibus Incentive Plan, or “the 2020 Plan,” authorizes grants of stock‑based compensation instruments including but not limited to non-qualified stock options, restricted stock awards (“RSAs”) and performance stock unit awards (“PSUs”) to certain employees and non-employee directors of the Company, to purchase or issue up to
Expenses related to the stock-based compensation instruments and Employee Stock Purchase Plan (“ESPP”) are included in “Compensation and employee benefits” and “Other operating expenses” on the Consolidated Statements of Income.
Below are summaries of the recognized and unrecognized stock-based compensation expense by instrument for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Recognized compensation expense: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Options |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
RSAs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
PSUs |
|
|
|
|
|
|
|
|
|
|
|
|
||||
ESPP |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Total recognized compensation expense |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
|
|
September 30, 2025 |
|
|
|
|
(In thousands) |
|
|
Unrecognized compensation expense: |
|
|
|
|
Options |
|
$ |
|
|
RSAs |
|
|
|
|
PSUs |
|
|
|
|
ESPP |
|
|
|
|
Total unrecognized compensation expense |
|
$ |
|
|
Weighted average period expected to be recognized (in years) |
|
|
|
|
Options |
|
|
|
|
RSAs |
|
|
|
|
Stock Options
Stock option awards provide for the option to purchase the Company's common stock. From the date of the grant, the stock options generally vest ratably over a service period of
The Company uses the Black-Scholes option pricing model to value stock options in determining the stock-based compensation expense. Compensation expense is recognized over the
The Company modified
26
The table below summarizes stock option activity for the nine months ended September 30, 2025 and 2024:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
($ in thousands, except per share amounts) |
|
|||||
Number of shares: |
|
|
|
|
|
|
||
Options outstanding at beginning of period |
|
|
|
|
|
|
||
Granted |
|
|
|
|
|
|
||
Modified |
|
|
( |
) |
|
|
— |
|
Options outstanding at end of period |
|
|
|
|
|
|
||
Options exercisable at end of period |
|
|
|
|
|
|
||
Options expected to vest (1) |
|
|
|
|
|
|
||
Weighted average exercise price per share: |
|
|
|
|
|
|
||
Options outstanding at beginning of period |
|
$ |
|
|
$ |
|
||
Granted |
|
|
|
|
|
|
||
Modified |
|
|
|
|
|
— |
|
|
Options outstanding at end of period |
|
$ |
|
|
$ |
|
||
Options exercisable at end of period |
|
|
|
|
|
|
||
Options expected to vest (1) |
|
|
|
|
|
|
||
Aggregate intrinsic value (2): |
|
|
|
|
|
|
||
Options outstanding at end of period |
|
$ |
|
|
$ |
|
||
Options exercisable at end of period |
|
|
|
|
|
|
||
Options expected to vest (1) |
|
|
|
|
|
|
||
Weighted average remaining contractual life (in years): |
|
|
|
|
|
|
||
Options outstanding at end of period |
|
|
|
|
|
|
||
Options exercisable at end of period |
|
|
|
|
|
|
||
Options expected to vest (1) |
|
|
|
|
|
|
||
RSAs
The fair value of RSAs is determined based on the fair market value of the Company's common shares on the grant date. The estimated fair value of RSA awards is generally amortized as an expense over the
The table below summarizes RSA activity for the nine months ended September 30, 2025 and 2024:
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||||||||||
|
|
Employee |
|
|
Non-Employee Director |
|
|
Total |
|
|
Employee |
|
|
Non-Employee Director |
|
|
Total |
|
||||||
Number of shares: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unvested at beginning of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vested |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unvested at end of period |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Weighted average grant date fair value per share: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unvested at beginning of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
Granted |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Vested |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Unvested at end of period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||||
27
PSUs
In February 2022, the Company began granting PSUs to certain employees, including named executive officers under the 2020 Plan. PSUs are linked to the average core net income annual growth over the three-year period from the year of grant. Settlement of vested PSUs will be made on the date that the Compensation Committee certifies the average core net income annual growth for the three-year period. PSUs are subject to forfeiture until predetermined performance conditions have been achieved. The number of shares issued at the end of any performance period could range between
The table below summarizes PSU activity for the nine months ended September 30, 2025 and 2024:
|
|
Nine Months Ended September 30, |
|
|||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||
|
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value Per Share |
|
|
Number of Shares |
|
|
Weighted Average Grant Date Fair Value Per Share |
|
||||
Outstanding at beginning of period, unvested |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Granted (1) |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Performance adjustment |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Vested |
|
|
( |
) |
|
|
|
|
|
— |
|
|
|
— |
|
|
Outstanding at end of period, unvested |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
ESPP
In July 2022, the Company initiated an ESPP which allows permitted eligible employees to purchase shares of the Company's common stock through payroll deductions of up to
Treasury Stock
Treasury stock represents shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting or exercise of stock-based awards and shares surrendered to the Company to satisfy the warrant price in connection with warrants exercised. During the three months ended September 30, 2025, shares withheld were
Note 15 — Earnings Per Share
The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock that shared in earnings.
28
The following table presents the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands, except per share data) |
|
|||||||||||||
Basic EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Velocity Financial, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Less: undistributed earnings attributable to unvested restricted stock awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net earnings attributable to common stockholders |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Basic earnings per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Diluted EPS: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Net income attributable to Velocity Financial, Inc. |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add dilutive effects for warrants |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Add dilutive effects for stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add dilutive effects of unvested restricted stock awards |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add dilutive effects of unvested performance-based stock units |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Add dilutive effects of employee stock purchase plan |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Weighted average diluted common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Diluted earnings per common share |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025(1) |
|
|
2024 |
|
|
2025(1) |
|
|
2024(1) |
|
||||
Stock options |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Unvested restricted stock awards |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Employee stock purchase plan |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
Share equivalents excluded from EPS |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Note 16 — Warrants and Related Party Transactions
On April 7, 2020, the Company issued and sold in a private placement
On October 8, 2021, the Company exercised its option to convert all of its
In April 2025, three funds affiliated with a related party of the Company completed the exercise of their Warrants to purchase an aggregate
In the ordinary course of business, the Company sells held for sale loans, and issues securitized debt to various financial institutions and investors through a market bidding process. As a result of this process, the Company may sell held for sale loans and/or issue securitized debt to an affiliate.
29
The following table presents the related party transactions completed for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Loans sold to affiliates |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
Securitized debt issued to affiliates |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Note 17 — Derivative Instruments
In September 2023, the Company began utilizing derivative instruments designated as cash flow hedges to manage the exposure to interest rate volatility related to its forecasted issuances of fixed-rate debt through its securitization process. The derivative instruments include forward starting interest rate swaps or interest rate payer and receiver swaptions. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark SOFR between the time the fixed rate mortgages are originated and the fixed rate debt is issued. As of September 30, 2025, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed
The gains or losses on derivative instruments that are designated and qualify as cash flow hedges are reported as a component of AOCI. Beginning in the period in which the forecasted debt is issued and the related derivative instruments are terminated, the accumulated gains or losses associated with the terminated derivatives are then reclassified into interest expense as a yield adjustment over the term of the related debt. For the quarters ended September 30, 2025 and 2024, $
The following tables present the fair value of the Company’s derivative financial instruments on a gross basis, as well as its classification on the Company’s Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024:
|
|
|
|
September 30, 2025 |
|
|||||
Derivatives designated as hedging instruments: |
|
Balance Sheet Location |
|
Notional Amount |
|
|
Fair Value (1) |
|
||
Cash flow hedges: |
|
|
|
(In thousands) |
|
|||||
Interest rate payer and receiver swaptions |
|
Derivative asset |
|
$ |
|
|
$ |
|
||
|
|
|
|
December 31, 2024 |
|
|||||
Derivatives designated as hedging instruments: |
|
Balance Sheet Location |
|
Notional Amount |
|
|
Fair Value (1) |
|
||
Cash flow hedges: |
|
|
|
(In thousands) |
|
|||||
Forward starting payer interest rate swaps |
|
Derivative liability |
|
$ |
— |
|
|
$ |
— |
|
The counterparty to the financial derivatives that the Company enters into is a major institution. The Company is exposed to credit-related losses in the event of non-performance by the counterparty. This credit risk is generally limited to the unrealized gains in such contracts, less collateral held, should the counterparty fail to perform as contracted.
30
Note 18 — Accumulated Other Comprehensive Income (Loss)
The following table presents the changes in the components of accumulated other comprehensive income (loss) balances for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Beginning balance |
|
$ |
( |
) |
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
Net unrealized gain (loss) on cash flow hedges arising during the period, net of tax |
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Reclassification adjustments included in net income |
|
|
|
|
|
( |
) |
|
|
|
|
|
( |
) |
||
Ending balance |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The following tables present the components of other comprehensive income (loss) and the related tax effect for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||||||||||
|
|
Before-Tax |
|
|
Tax Effect |
|
|
Net-of-Tax |
|
|
Before-Tax |
|
|
Tax Effect |
|
|
Net-of-Tax |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps/swaptions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net unrealized gain (loss) arising during the period |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
Reclassification adjustments included in net income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Other comprehensive income (loss) |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|||
|
|
Nine Months Ended September 30, |
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
||||||||||||||||||
|
|
Before-Tax |
|
|
Tax Effect |
|
|
Net-of-Tax |
|
|
Before-Tax |
|
|
Tax Effect |
|
|
Net-of-Tax |
|
||||||
|
|
(In thousands) |
|
|||||||||||||||||||||
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Interest rate swaps/swaptions: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net unrealized loss arising during the period |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Reclassification adjustments included in net income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|||
Other comprehensive loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Note 19 — Fair Value Measurements
Fair Value Determination
ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and requires disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:
Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period in which a change in valuation technique or methodology occurs. Given the nature of some of the Company’s assets and liabilities, clearly determinable
31
market-based valuation inputs are often not available; therefore, these assets and liabilities are valued using internal estimates. As subjectivity exists with respect to the valuation estimates used, the fair values disclosed may not equal prices that can ultimately be realized if the assets are sold or the liabilities are settled with third parties.
Below is a description of the valuation methods for the assets and liabilities recorded at fair value on either a recurring or nonrecurring basis and for estimating fair value of financial instruments not recorded at fair value for disclosure purposes. While management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the measurement date.
Cash, Cash Equivalents and Restricted Cash
Cash and restricted cash are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities and interest rates that approximate market, a Level 1 measurement.
Loans Held for Investment, at Amortized Cost and Loans Held for Investment, at Fair Value
The Company uses a third-party loan valuation specialist to estimate the fair value of its nonperforming mortgage loans, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s nonperforming mortgage loans are interest rates, market yield requirements, the probability of default, loss given default, voluntary prepayment speed and loss timing. The Company uses a third-party loan valuation model to estimate the fair value of its performing mortgage loans, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s performing mortgage loans are discount rate, constant prepayment rate, constant default rate, and loss severity rate. Significant changes in any of those inputs in isolation could result in a significant change to the mortgage loans’ fair value measurement.
Collateral Dependent or Loans Individually Evaluated
Nonaccrual loans held for investment and carried at amortized cost are evaluated individually and are adjusted to the fair value of the collateral when the fair value of the collateral is below the carrying value of the loan. To the extent such a loan is collateral dependent, the Company determines the allowance for credit losses based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is generally based on appraisals or broker price opinions obtained, less estimated costs to sell, a Level 3 measurement.
Loans Held for Sale, at Fair Value
The Company elected to account for certain loans originated with the intent to sell at fair value using FASB ASC Topic 825, Financial Instruments (ASC 825). The FVO loans held for sale are measured based on a discounted cash flow model, or on the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value, including the value attributable to mortgage servicing and credit risk, and current commitments to purchase loans, a Level 2 measurement. Management identified all loans to be accounted for at estimated fair value at the instrument level. Changes in fair value are reflected in income as they occur.
Real Estate Owned, Net (“REO”)
Real estate owned, net is initially recorded at the property’s estimated fair value, based on appraisals or broker price opinions obtained, less estimated costs to sell at acquisition date, a Level 3 measurement. From time to time, nonrecurring fair value adjustments are made to real estate owned, net based on the current updated appraised value of the property, or management’s judgment and estimation of value based on recent market trends or negotiated sales prices with potential buyers.
Mortgage Servicing Rights
The Company determined the fair values based on a third-party valuation specialist using a model that calculates the present value of estimated future net servicing income, a Level 3 measurement.
Derivative Instruments
Derivative financial instruments are measured at fair value using readily observable market inputs and the overall fair value measurement is classified as Level 2.
Secured Financing, Net (“Corporate Debt”)
The Company determined the fair values estimate of the secured financing using the estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.
32
Warehouse Repurchase Facilities, Net
Warehouse repurchase facilities are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities of one-year or less and interest rates that approximate market plus a spread, a Level 2 measurement.
Securitized Debt, at Amortized Cost and Securitized Debt, at Fair Value
The Company obtains the fair value estimates at instrument level from a third-party broker dealer based on trader input on benchmark securities. The fair values take into consideration input factors such as bond structure and collateral characteristics, and performance and pricing factors such as yield, spread, average life, prepayment speeds, default rate, and severity. The fair values are considered a Level 2 measurement. Significant changes in any of the input factors in isolation could result in a significant change to securitized debt’s fair value measurement.
Accrued Interest Receivable and Accrued Interest Payable
The carrying amounts of accrued interest receivable and accrued interest payable approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.
The Company does not have any off-balance sheet financial instruments.
Receivables Due From Servicers
The carrying amounts of receivables due from servicers approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.
Fair Value Disclosures
The following tables present information on assets and liabilities measured and recorded at fair value as of September 30, 2025 and December 31, 2024, by level, in the fair value hierarchy:
|
|
Fair Value Measurements Using |
|
|
Total at |
|
||||||||||
September 30, 2025 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonrecurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Individually evaluated loans requiring specific allowance, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Real estate owned, net |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total nonrecurring fair value measurements |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Recurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans held for sale, at fair value |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Loans held for investment, at fair value |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Mortgage servicing rights |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Derivative assets |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total recurring fair value measurements |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|||
Total assets |
|
$ |
— |
|
|
$ |
|
|
$ |
|
|
$ |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securitized debt, at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total recurring fair value measurements |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
33
|
|
Fair Value Measurements Using |
|
|
Total at |
|
||||||||||
December 31, 2024 |
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Nonrecurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Individually evaluated loans requiring specific allowance, net |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
Real estate owned, net |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total nonrecurring fair value measurements |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Recurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans held for investment, at fair value |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Mortgage servicing rights |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total recurring fair value measurements |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
||
Total assets |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Recurring fair value measurements: |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Securitized debt, at fair value |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
Total recurring fair value measurements |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Total liabilities |
|
$ |
— |
|
|
$ |
|
|
$ |
— |
|
|
$ |
|
||
The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three and nine months ended September 30, 2025 and 2024:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
Gain (Loss) on Assets Measured on a Nonrecurring Basis |
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Real estate owned, net |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Individually evaluated loans requiring specific allowance, net |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total net loss |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
The following tables present the primary valuation techniques and unobservable inputs related to Level 3 assets that are recorded on a recurring and nonrecurring basis as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
||||||||||
Asset Category |
|
Fair Value |
|
|
Primary |
|
Unobservable |
|
Range |
|
Weighted |
|
|
|
($ in thousands) |
||||||||||
Nonrecurring: |
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated |
|
$ |
|
|
Market comparables |
|
Selling costs |
|
|
|||
Real estate owned, net |
|
|
|
|
Market comparables |
|
Selling costs |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for investment, |
|
$ |
|
|
Discounted cash flow |
|
Discount rate |
|
|
|||
|
|
|
|
|
|
|
Prepayment rate |
|
|
|||
|
|
|
|
|
|
|
Default rate |
|
|
|||
|
|
|
|
|
|
|
Loss severity rate |
|
|
|||
Mortgage servicing rights |
|
|
|
|
Discounted cash flow |
|
Discount rate |
|
|
|||
|
|
|
|
|
|
|
Prepayment rate |
|
|
|||
34
|
|
December 31, 2024 |
||||||||||
Asset Category |
|
Fair Value |
|
|
Primary |
|
Unobservable |
|
Range |
|
Weighted |
|
|
|
($ in thousands) |
||||||||||
Nonrecurring: |
|
|
|
|
|
|
|
|
|
|
|
|
Individually evaluated |
|
$ |
|
|
Market comparables |
|
Selling costs |
|
|
|||
Real estate owned, net |
|
|
|
|
Market comparables |
|
Selling costs |
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
Recurring: |
|
|
|
|
|
|
|
|
|
|
|
|
Loans held for investment, |
|
$ |
|
|
Discounted cash flow |
|
Discount rate |
|
|
|||
|
|
|
|
|
|
|
Prepayment rate |
|
|
|||
|
|
|
|
|
|
|
Default rate |
|
|
|||
|
|
|
|
|
|
|
Loss severity rate |
|
|
|||
Mortgage servicing rights |
|
|
|
|
Discounted cash flow |
|
Discount rate |
|
|
|||
|
|
|
|
|
|
|
Prepayment rate |
|
|
|||
The following is a roll-forward of loans held for investment that are measured and recorded at estimated fair value on a recurring basis for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Originations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans liquidated |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Acquisition |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
REO transfer |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Principal paydowns |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Unrealized gain included in net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans transferred to held for sale |
|
|
— |
|
|
|
( |
) |
|
|
— |
|
|
|
( |
) |
Loans repurchased |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The following is a roll-forward of loans held for sale that are measured and recorded at estimated fair value on a recurring basis for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Beginning balance |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
Originations |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loans liquidated |
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Principal paydowns |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
Unrealized gain included in net income |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
||
Realized gain (loss) included in net income |
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|||
Loans transferred from held for investment |
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
35
The following is a roll-forward of securitized debt measured and recorded at estimated fair value on a recurring basis for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Beginning balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
Additions |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Paydowns and payoffs |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Total loss included in net income |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Ending balance |
|
$ |
|
|
$ |
|
|
$ |
|
|
$ |
|
||||
The Company estimates the fair value of certain financial instruments on a quarterly basis. These instruments are recorded at fair value using a valuation allowance only if they are individually evaluated. As described above, these adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. As of September 30, 2025 and December 31, 2024, financial assets and liabilities measured at fair value include loans held for investment at fair value, loans held for sale at fair value, mortgage servicing rights, derivative instruments, and securitized debt at fair value. Financial assets measured at the lower of cost or estimated fair value include certain individually evaluated loans held for investment and REOs, which are measured using unobservable inputs, including appraisals and broker price opinions on the values of the underlying collateral. Individually evaluated loans requiring an allowance were carried at approximately $
A financial instrument is cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity on potentially favorable terms. The methods and assumptions used in estimating the fair values of the Company’s financial instruments are described above.
The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:
|
|
September 30, 2025 |
|
|||||||||||||||||
|
|
Carrying |
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|||||
Asset Category |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
|||||
|
|
(In thousands) |
|
|||||||||||||||||
Assets: |
|
|
|
|||||||||||||||||
Cash |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Restricted cash |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Loans held for sale, at fair value |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Loans held for investment, at amortized cost |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Loans held for investment, at fair value |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Accrued interest receivables |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Mortgage servicing rights |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Derivative assets |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Secured financing, net |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Warehouse and repurchase facilities, net |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Securitized debt, at amortized cost |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Securitized debt, at fair value |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Accrued interest payable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
36
|
|
December 31, 2024 |
|
|||||||||||||||||
|
|
Carrying |
|
|
|
|
|
|
|
|
|
|
|
Estimated |
|
|||||
Asset Category |
|
Value |
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Fair Value |
|
|||||
|
|
(In thousands) |
|
|||||||||||||||||
Assets: |
|
|
|
|||||||||||||||||
Cash |
|
$ |
|
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|||
Restricted cash |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Loans held for investment, at amortized cost |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Loans held for investment, at fair value |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
Accrued interest receivable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Mortgage servicing rights |
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Liabilities: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Secured financing, net |
|
$ |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
|
|
$ |
|
|||
Warehouse repurchase facilities, net |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Securitized debt, at amortized cost |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Securitized debt, at fair value |
|
|
|
|
|
— |
|
|
|
|
|
|
— |
|
|
|
|
|||
Accrued interest payable |
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|||
Note 20 — Segment Information
The Company operates as a single reportable segment, conducting its business activities within the United States. The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis.
Note 21 — Subsequent Events
The Company has evaluated events that have occurred subsequent to September 30, 2025 through the issuance of the accompanying consolidated financial statements and has concluded there are no other subsequent events that would require recognition or disclosure in the accompanying consolidated financial statements.
37
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion should be read in conjunction with the information included in our Annual Report on Form 10-K for the year ended December 31, 2024, as well as the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”).
In addition, the statements and assumptions in this Quarterly Report that are not statements of historical fact are forward-looking statements within the meaning of federal securities laws. In particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the next quarter and beyond are forward-looking statements. For important information regarding these forward-looking statements, please see the discussion below under the caption “Forward-Looking Statements.”
References to “the Company,” “Velocity,” “we,” “us” and “our” refer to Velocity Financial, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise.
Business
We are a vertically integrated real estate finance company founded in 2004. We primarily originate and manage investor loans secured by 1-4 unit residential rental and commercial properties, which we refer to collectively as investor real estate loans. We originate loans nationwide across our extensive network of independent mortgage brokers which we have built and refined over the 21 years since our inception. Our objective is to be the preferred and one of the most recognized brands in our core market, particularly within our network of mortgage brokers.
We operate in a large and highly fragmented market with substantial demand for financing and limited supply of institutional financing alternatives. We have developed the highly specialized skill set required to effectively compete in this market, which we believe has afforded us a durable business model capable of generating attractive risk-adjusted returns for our stockholders throughout various business cycles. We offer competitive pricing to our borrowers by pursuing low-cost financing strategies and by driving front-end process efficiencies through customized technology designed to control the cost of originating a loan. Furthermore, by originating loans through our efficient and scalable network of approved mortgage brokers, we are able to maintain a wide geographical presence and nimble operating infrastructure capable of reacting quickly to changing market environments.
Our primary source of revenue is interest income earned on our loan portfolio. Our typical loan is secured by a first lien on the underlying property with a personal guarantee, and based on all loans in our portfolio as of September 30, 2025, has an average balance of approximately $393 thousand. As of September 30, 2025, our loan portfolio totaled $6.3 billion of UPB on properties in 48 states and the District of Columbia. The total portfolio had a weighted average loan-to-value ratio, or LTV at origination, of 65.5%, of which the 1-4 unit residential rental loans, which we refer to as investor 1-4 loans, represented 49.2% of the UPB. For the three and nine months ended September 30, 2025, the annualized yields on our total portfolio were 9.54% and 9.44%, respectively.
We fund our portfolio primarily through a combination of committed and uncommitted secured warehouse facilities, securitized debt, corporate debt, and equity. The securitized debt market is our primary source of long-term financing. We have successfully executed 44 securitized debt transactions, resulting in a total of over $9.9 billion in gross debt proceeds from May 2011 through September 2025. We may also continue to sell loans from time to time for cash in lieu of holding the loans in our loan portfolio.
One of our core profitably measurements is our portfolio related net interest margin, which measures the difference between interest income earned on loans and interest expense paid on portfolio-related debt, relative to the amount of loans outstanding over the period. Our portfolio-related debt consists of warehouse facilities and securitized debt and excludes corporate debt. For the three and nine months ended September 30, 2025, our annualized portfolio related net interest margin were 3.65% and 3.62%, respectively, compared to 3.60% and 3.50% for the three and nine months ended September 30, 2024, respectively. We generate profits to the extent that our portfolio related net interest income exceeds our interest expense on corporate debt, provision for credit losses and operating expenses. For the three and nine months ended September 30, 2025, including net income attributable to noncontrolling interest, we generated pre-tax income of $35.4 million and $96.2 million, and net income of $25.4 million and $70.2 million, respectively. For the three and nine months ended September 30, 2024, including net income attributable to noncontrolling interest, we generated pre-tax income of $21.2 million and $64.4 million, and net income of $15.8 million and $47.8 million, respectively.
On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”). Century is a licensed Ginnie Mae issuer/servicer that provides government-insured Federal Housing Administration (“FHA”) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century earns origination fees and servicing fees from the mortgage servicing rights on its servicing portfolio.
Items Affecting Comparability of Results
Due to a number of factors, our historical financial results may not be comparable, either from period to period, or to our financial results in future periods. We have summarized the key factors affecting the comparability of our financial results below.
38
Recent Developments
Continued Market Uncertainties
Our operational and financial performance will depend on certain market developments, including the impact of tariffs, the actions of the Federal Reserve, the Russia/Ukraine war, the ongoing conflicts in the Middle East, the prolonged government shutdown, heightened stress in the real estate and corporate debt markets, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance.
Critical Accounting Policies and Use of Estimates
The preparation of financial statements in accordance with U.S. GAAP requires certain judgments and assumptions, based on information available at the time of preparation of the consolidated financial statements, in determining accounting estimates used in preparation of the consolidated financial statements. The following discussion addresses the accounting policies that we believe apply to us based on the nature of our operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all the decisions and assessments used to prepare our financial statements are based upon reasonable assumptions given the information available at that time.
These policies and estimates relate to the allowance for credit losses and fair value option accounting. Our critical accounting policies and estimates are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the SEC.
How We Assess Our Business Performance
Net income is the primary metric by which we assess our business performance. Accordingly, we closely monitor the primary drivers of net income which consist of the following:
Net Interest Income
Net interest income is the largest contributor to our net income and is monitored both on an absolute basis and relative to provision for credit losses and operating expenses. We generate net interest income to the extent that the rate at which we lend in our portfolio exceeds the cost of financing our portfolio, which we primarily achieve through long-term securitized debt. Accordingly, we closely monitor the financing markets and maintain consistent dialogue with investors and financial institutions as we evaluate our financing sources and cost of funds.
To evaluate net interest income, we measure and monitor: (1) the yields on our loans, (2) the costs of our funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread measures the difference between the rates earned on our loans and the rates paid on our funding sources. Net interest margin measures the difference between our annualized interest income and annualized interest expense, or net interest income, as a percentage of average loans outstanding over the specified time period.
Periodic changes in net interest income are primarily driven by: (1) origination volume and changes in average outstanding loan balances and (2) interest rates and changes in interest earned on our portfolio or paid on our debt. Historically, origination volume and portfolio size have been the largest contributors to the growth in our net interest income. We measure net interest income before and after interest expense related to our corporate debt and before and after our provision for credit losses.
Credit Losses
We strive to minimize actual credit losses through our rigorous screening and underwriting process and life of loan portfolio management and special servicing practices. We closely monitor the credit performance of our loan portfolio, including delinquency rates and expected and actual credit losses, as a key factor in assessing our overall business performance.
Operating Expenses
We incur operating expenses from compensation and benefits related to our employee base, rent and other occupancy costs associated with our leased facilities, our third-party primary loan servicing vendors, professional fees to the extent we utilize third-party legal, consulting and advisory firms, and costs associated with the resolution and disposition of real estate owned, and securitization expenses, among other items. We monitor and strive to prudently manage operating expenses and to balance current period profitability with investment in the continued development of our platform. Because volume and portfolio size determine the magnitude of the impact of each of the above factors on our earnings, we also closely monitor origination volume along with all key terms of new loan originations, such as interest rates, loan-to-value ratios, estimated credit losses and expected duration.
39
Factors Affecting Our Results of Operations
Our results of operations depend on, among other things, the level of our net interest income, the credit performance of our loan portfolio and the efficiency of our operating platform. These measures are affected by various factors, including the demand for investor real estate loans, the competitiveness of the market for originating or acquiring investor real estate loans, the cost of financing our portfolio, operating costs, the availability of funding sources and the underlying performance of the collateral supporting our loans. While we have been successful at managing these elements in the past, there are certain circumstances beyond our control, including the ongoing geopolitical conflicts, the changing economic policies, an expected recession, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance.
Competition
The investor real estate loan market is highly competitive which could affect our profitability and growth. We believe we compete favorably through diversified borrower access driven by our extensive network of mortgage brokers and by emphasizing a high level of real estate and financial expertise, customer service, and flexibility in structuring transactions, as well as by attracting and retaining experienced managerial and marketing personnel. However, some of our competitors may be better positioned to market their services and financing programs because of their ability to offer more favorable rates and terms and other services.
Availability and Cost of Funding
Our primary funding sources have historically included cash from operations, warehouse facilities, term securitized debt, corporate debt, and equity. We believe we have an established brand in the term securitized debt market and that this market will continue to support our portfolio growth with long-term financing. Changes in macroeconomic conditions can adversely impact our ability to issue securitized debt and, thereby, limit our options for long-term financing. In consideration of this potential risk, we have entered into a credit facility for longer-term financing that will provide us with capital resources to fund loan growth in the event we are not able to issue securitized debt.
All our warehouse repurchase and revolving loan facilities have interest payment obligations tied to the Secured Overnight Offering Rate (“SOFR”).
Loan Performance
We underwrite and structure our loans to minimize potential losses. We believe our fully amortizing loan structures and avoidance of large balloon payments, coupled with meaningful borrower equity in properties, limit the probability of losses and that our proven in-house asset management capability allows us to minimize potential losses in situations where there is insufficient equity in the property. Our income is highly dependent upon borrowers making their payments and resolving delinquent loans as favorably as possible. Macroeconomic conditions can, however, impact credit trends in our core market and adversely affect financial results.
Macroeconomic Conditions
The investor real estate loan market may be impacted by a wide range of macroeconomic factors such as interest rates, residential and commercial real estate prices, home ownership and unemployment rates, and availability of credit, among others. We believe our prudent underwriting, conservative loan structures and interest rate protections, and proven in-house asset management capability leave us well positioned to manage changing macroeconomic conditions.
Portfolio and Asset Quality
Key Portfolio Statistics
|
|
September 30, 2025 |
|
|
June 30, 2025 |
|
|
September 30, 2024 |
|
|||
|
|
($ in thousands) |
|
|||||||||
Total loans (UPB) |
|
$ |
6,275,369 |
|
|
$ |
5,859,653 |
|
|
$ |
4,753,266 |
|
Loan count |
|
|
15,978 |
|
|
|
14,854 |
|
|
|
12,235 |
|
Average loan balance |
|
$ |
393 |
|
|
$ |
394 |
|
|
$ |
388 |
|
Weighted average loan-to-value |
|
|
65.5 |
% |
|
|
65.8 |
% |
|
|
67.0 |
% |
Weighted average coupon |
|
|
9.74 |
% |
|
|
9.70 |
% |
|
|
9.37 |
% |
Nonperforming loans (UPB) (A) |
|
$ |
614,226 |
|
|
$ |
601,757 |
|
|
$ |
503,939 |
|
Nonperforming loans (% of total) (A) |
|
|
9.8 |
% |
|
|
10.3 |
% |
|
|
10.6 |
% |
(A) Reflects the UPB of loans 90 days or more past due or placed on nonaccrual status. Includes $31.6 million, $31.7 million and $43.2 million of COVID-19 forbearance-granted loans 90 days or more past due or placed on nonaccrual status as of September 30, 2025, June 30, 2025, and September 30, 2024, respectively.
40
Total Loans. Total loans reflects the aggregate UPB at the end of the period. It excludes deferred origination costs, acquisition discounts, fair value adjustments and allowance for credit losses.
Loan Count. Loan count reflects the number of loans at the end of the period. It includes all loans with an outstanding principal balance.
Average Loan Balance. Average loan balance reflects the average UPB at the end of the period (i.e., total loans divided by loan count).
Weighted Average Loan-to-Value. Loan-to-value, or LTV, reflects the ratio of the original loan amount to the appraised value of the underlying property at the time of origination. In instances where the LTV at origination is not available for an acquired loan, the LTV reflects our best estimate of value at the time of acquisition. Weighted average LTV is calculated for the population of loans outstanding at the end of each specified period using the original loan amounts and appraised LTVs at the time of origination of each loan. LTV is a key statistic because requiring the borrower to invest more equity in the collateral minimizes our exposure for future credit losses.
Weighted Average Coupon. Weighted average coupon reflects the weighted average loan rate at the end of the period.
Nonperforming Loans. Loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest, are considered nonperforming loans. The dollar amount of nonperforming loans presented in the table above reflects the UPB of all loans that meet this definition.
Originations and Acquisitions
The following table presents new loan originations including unfunded commitments and acquisitions and includes average loan size, weighted average coupon and weighted average loan-to-value for the periods indicated:
|
|
Loan Count |
|
|
Loan Balance |
|
|
Average |
|
|
Weighted |
|
|
Weighted |
|
|||||
|
|
($ in thousands) |
|
|||||||||||||||||
Three Months Ended September 30, 2025: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loan originations — held for investment |
|
|
1,778 |
|
|
$ |
713,016 |
|
|
$ |
401 |
|
|
|
10.48 |
% |
|
|
62.8 |
% |
Loan originations — held for sale |
|
|
1 |
|
|
|
2,071 |
|
|
|
2,071 |
|
|
|
5.90 |
% |
|
|
85.0 |
% |
Total loan originations |
|
|
1,779 |
|
|
$ |
715,087 |
|
|
|
402 |
|
|
|
10.46 |
% |
|
|
62.8 |
% |
Unfunded commitments |
|
|
|
|
|
23,869 |
|
|
|
|
|
|
|
|
|
|
||||
Total loans originations including unfunded commitments |
|
|
1,779 |
|
|
$ |
738,956 |
|
|
$ |
415 |
|
|
|
10.46 |
% |
|
|
62.8 |
% |
Three Months Ended June 30, 2025: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loan originations — held for investment |
|
|
1,630 |
|
|
$ |
684,465 |
|
|
$ |
420 |
|
|
|
10.47 |
% |
|
|
62.7 |
% |
Loan originations — held for sale |
|
|
1 |
|
|
|
40,922 |
|
|
|
40,922 |
|
|
|
5.64 |
% |
|
|
61.4 |
% |
Total loan originations |
|
|
1,631 |
|
|
$ |
725,387 |
|
|
$ |
445 |
|
|
|
10.20 |
% |
|
|
62.6 |
% |
Three Months Ended September 30, 2024: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Loan originations — held for investment |
|
|
1,180 |
|
|
$ |
457,828 |
|
|
$ |
388 |
|
|
|
10.85 |
% |
|
|
63.0 |
% |
Loan originations — held for sale |
|
|
1 |
|
|
|
18,947 |
|
|
|
18,947 |
|
|
|
5.16 |
% |
|
|
65.8 |
% |
Total loan originations |
|
|
1,181 |
|
|
$ |
476,775 |
|
|
$ |
404 |
|
|
|
10.62 |
% |
|
|
63.1 |
% |
During the third quarter of 2025, loan originations including unfunded commitments increased $13.6 million and $262.2 million from the quarters ended June 30, 2025 and September 30, 2024, respectively.
41
Loans Held for Investment
Our total portfolio of loans held for investment consists of both loans held for investment carried at amortized cost and loans held for investment at fair value, which are presented in the Consolidated Balance Sheets as “Loans held for investment, at amortized cost” and “Loans held for investment, at fair value,” respectively. The following table shows the various components of loans held for investment as of the dates indicated:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
Unpaid principal balance |
|
$ |
6,273,298 |
|
|
$ |
5,055,937 |
|
Valuation adjustments on FVO loans |
|
|
209,588 |
|
|
|
111,734 |
|
Deferred loan origination costs |
|
|
20,187 |
|
|
|
23,570 |
|
Total loans held for investment, gross |
|
|
6,503,073 |
|
|
|
5,191,241 |
|
Allowance for credit losses |
|
|
(4,586 |
) |
|
|
(4,174 |
) |
Loans held for investment, net |
|
$ |
6,498,487 |
|
|
$ |
5,187,067 |
|
The following table illustrates the contractual maturities of our loans held for investment in aggregate UPB and as a percentage of total held for investment loan portfolio as of the dates indicated:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||||||||||
|
|
UPB |
|
|
% |
|
|
UPB |
|
|
% |
|
||||
|
|
($ in thousands) |
|
|||||||||||||
Loans due in less than one year |
|
$ |
170,111 |
|
|
|
2.7 |
% |
|
$ |
157,521 |
|
|
|
3.1 |
% |
Loans due in one to five years |
|
|
85,967 |
|
|
|
1.4 |
|
|
|
83,993 |
|
|
|
1.7 |
|
Loans due in more than five years |
|
|
6,017,220 |
|
|
|
95.9 |
|
|
|
4,814,423 |
|
|
|
95.2 |
|
Total loans held for investment |
|
$ |
6,273,298 |
|
|
|
100.0 |
% |
|
$ |
5,055,937 |
|
|
|
100.0 |
% |
Charge-offs, Gain (Loss) on REO
Our actual charge-offs have been minimal as a percentage of nonperforming loans held for investment. The valuation impact to our earnings from loans becoming REO or in REO is a combination of: (1) loan charge-offs, (2) gain on transfer to REO included in “Gain on disposition of loans” in the Consolidated Statements of Income, (3) net valuation adjustments on REO, and (4) net gain or loss on sale of REO.
The table below shows our actual charge-offs, gain on transfer of nonperforming loans to REO, net valuation adjustments on REO, and gain on sale of REO, for the periods indicated:
|
|
Nine Months Ended |
|
|
Nine Months Ended |
|
|
||
|
|
September 30, 2025 |
|
|
September 30, 2024 |
|
|
||
|
|
($ in thousands) |
|
|
|||||
Average nonperforming loans for the period (1) |
|
$ |
283,580 |
|
|
$ |
320,306 |
|
|
Charge-offs |
|
|
3,439 |
|
|
|
1,069 |
|
|
Charge-offs / Average nonperforming loans for the period (1) |
|
|
1.62 |
% |
(2) |
|
0.44 |
% |
(2) |
Gain (loss) on REO: |
|
|
|
|
|
|
|
||
Gain on transfer to REO |
|
$ |
12,549 |
|
|
$ |
6,322 |
|
|
REO valuation loss, net |
|
|
(10,530 |
) |
|
|
(3,903 |
) |
|
Gain on sale of REO |
|
|
1,242 |
|
|
|
864 |
|
|
Total gain on REO |
|
$ |
3,261 |
|
|
$ |
3,283 |
|
|
Allowance for Credit Losses
For the September 30, 2025 current expected credit loss (“CECL”) estimate, we considered a severe stress scenario with a seven-quarter reasonable and supportable forecast period followed by a three-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate and reflected the uncertainties of a volatile market in light of the economic uncertainties surrounding tariffs and federal government layoffs and prolonged shutdown, contributing to a forecasted decreasing GDP and rising unemployment.
For the June 30, 2025 CECL estimate, we considered a severe stress scenario with a seven-quarter reasonable and supportable forecast period followed by a three-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate and reflected the uncertainties of a volatile market in light of the announced tariffs and federal government layoffs, contributing to a forecasted decreasing GDP and rising unemployment.
42
For the March 31, 2025 CECL estimate, we considered a severe stress scenario with a seven-quarter reasonable and supportable forecast period followed by a three-quarter straight-line reversion period. Management concluded that applying the severe stress scenario was appropriate and reflected the uncertainties of a volatile market in light of the announced tariffs and federal government layoffs, contributing to a forecasted decreasing GDP and rising unemployment.
Our allowance for credit losses as of September 30, 2025 was $4.6 million compared to $4.9 million as of September 30, 2024. The decrease in allowance for credit losses from September 30, 2024 was primarily due to a decrease in the amortized cost loan portfolio subject to CECL, and the removal of COVID pandemic era data from the macroeconomic forecasts in the latest CECL model update. We strive to minimize actual credit losses through our rigorous screening and underwriting process, life of loan portfolio management and special servicing practices. Additionally, we believe borrower equity of 25% to 40% provides significant protection against credit losses. The various scenarios, the weighting of scenarios, as well as the forecast period and reversion to historical loss are subject to change as conditions in the market change and our ability to forecast as economic events evolve.
To estimate the allowance for credit losses in our portfolio of loans held for investment carried at amortized cost, we follow a detailed internal review process, considering a number of different factors including, but not limited to, our ongoing analyses of loans, historical loss rates, relevant environmental factors, relevant market research, trends in delinquencies, effects and changes in credit concentrations, and ongoing evaluation of fair values.
The following table illustrates the activity in our allowance for credit losses of loans held for investment, excluding loans held for investment, at fair value over the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
|
||||
Allowance for credit losses: |
|
($ in thousands) |
|
|
|||||||||||||
Beginning balance |
|
$ |
4,882 |
|
|
$ |
5,240 |
|
|
$ |
4,174 |
|
|
$ |
4,769 |
|
|
Provision for (reversal of) credit losses |
|
|
381 |
|
|
|
(69 |
) |
|
|
3,851 |
|
|
|
1,151 |
|
|
Charge-offs |
|
|
(677 |
) |
|
|
(320 |
) |
|
|
(3,439 |
) |
|
|
(1,069 |
) |
|
Ending balance |
|
$ |
4,586 |
|
|
$ |
4,851 |
|
|
$ |
4,586 |
|
|
$ |
4,851 |
|
|
Total UPB(1) |
|
$ |
2,111,569 |
|
|
$ |
2,506,426 |
|
|
$ |
2,111,569 |
|
|
$ |
2,506,426 |
|
|
Nonperforming loans UPB |
|
$ |
259,683 |
|
|
$ |
314,456 |
|
|
$ |
259,683 |
|
|
$ |
314,456 |
|
|
Nonperforming loans UPB / Total UPB(1) |
|
|
12.3 |
% |
|
|
12.5 |
% |
|
|
12.3 |
% |
|
|
12.5 |
% |
|
Allowance for credit losses / Total UPB(1) |
|
|
0.22 |
% |
|
|
0.19 |
% |
|
|
0.22 |
% |
|
|
0.19 |
% |
|
Charge-offs / Total UPB(1) |
|
|
0.13 |
% |
(2) |
|
0.05 |
% |
(2) |
|
0.22 |
% |
(2) |
|
0.06 |
% |
(2) |
The allowance for credit losses was 0.22% of total UPB of loans held for investment carried at amortized cost as of September 30, 2025. Nonperforming loans were 12.3% of total UPB of loans held for investment carried at amortized cost as of September 30, 2025. We believe the allowance for credit losses is adequate because historically, most loans that become nonperforming resolve prior to converting to REO. This is due to low LTVs at origination and active management of our portfolio. Historically, our actual annual charge-offs rate was 0.07% over the last six years.
Credit Quality – Loans Held for Investment
The following table provides delinquency information on our loans held for investment by UPB as of the dates indicated:
|
|
September 30, 2025 (A) |
|
|
COVID-19 |
|
|
June 30, 2025 (A) |
|
|
COVID-19 |
|
|
September 30, 2024 (A) |
|
|
COVID-19 |
|
||||||||||||||||||
|
|
($ in thousands) |
|
|||||||||||||||||||||||||||||||||
Performing/Accruing: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Current |
|
$ |
5,202,058 |
|
|
82.9 |
|
% |
$ |
85,206 |
|
|
$ |
4,878,317 |
|
|
|
83.3 |
|
% |
$ |
91,325 |
|
|
$ |
3,921,488 |
|
|
|
82.8 |
|
% |
$ |
90,815 |
|
|
30-59 days past due |
|
|
322,091 |
|
|
|
5.1 |
|
|
|
8,827 |
|
|
|
263,390 |
|
|
|
4.4 |
|
|
|
3,971 |
|
|
|
197,890 |
|
|
|
4.2 |
|
|
|
8,962 |
|
60-89 days past due |
|
|
134,923 |
|
|
|
2.2 |
|
|
|
3,738 |
|
|
|
116,189 |
|
|
|
2.0 |
|
|
|
3,506 |
|
|
|
111,002 |
|
|
|
2.4 |
|
|
|
10,893 |
|
Total Performing Loans |
|
|
5,659,072 |
|
|
|
90.2 |
|
|
|
97,771 |
|
|
|
5,257,896 |
|
|
|
89.7 |
|
|
|
98,802 |
|
|
|
4,230,380 |
|
|
|
89.4 |
|
|
|
110,670 |
|
Nonperforming/Nonaccrual: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
<90 days past due |
|
|
33,560 |
|
|
|
0.5 |
|
|
|
835 |
|
|
|
29,136 |
|
|
|
0.5 |
|
|
|
2,302 |
|
|
|
20,055 |
|
|
|
0.4 |
|
|
|
1,557 |
|
90+ days past due |
|
|
54,812 |
|
|
|
0.9 |
|
|
|
1,772 |
|
|
|
50,269 |
|
|
|
0.9 |
|
|
|
— |
|
|
|
46,584 |
|
|
|
1.0 |
|
|
|
2,632 |
|
Bankruptcy |
|
|
67,522 |
|
|
|
1.1 |
|
|
|
4,490 |
|
|
|
79,327 |
|
|
|
1.4 |
|
|
|
4,564 |
|
|
|
54,087 |
|
|
|
1.1 |
|
|
|
6,272 |
|
In foreclosure |
|
|
458,332 |
|
|
|
7.3 |
|
|
|
24,475 |
|
|
|
443,025 |
|
|
|
7.5 |
|
|
|
24,871 |
|
|
|
383,213 |
|
|
|
8.1 |
|
|
|
32,724 |
|
Total nonperforming loans |
|
|
614,226 |
|
|
|
9.8 |
|
|
|
31,572 |
|
|
|
601,757 |
|
|
|
10.3 |
|
|
|
31,737 |
|
|
|
503,939 |
|
|
|
10.6 |
|
|
|
43,185 |
|
Total loans held for investment |
|
$ |
6,273,298 |
|
|
|
100.0 |
|
% |
$ |
129,343 |
|
|
$ |
5,859,653 |
|
|
|
100.0 |
|
% |
$ |
130,539 |
|
|
$ |
4,734,319 |
|
|
|
100.0 |
|
% |
$ |
153,855 |
|
43
Loans that are 90+ days past due, in bankruptcy, in foreclosure, or not accruing interest are considered nonperforming loans. Nonperforming loans were $614.2 million, or 9.8% of our held for investment loan portfolio as of September 30, 2025, compared to $601.8 million, or 10.3% as of June 30, 2025, and $503.9 million, or 10.6% as of September 30, 2024. The increase in total nonperforming loans as of September 30, 2025 compared to June 30, 2025 and September 30, 2024 was due to an increase in the size of our portfolio and management’s decision to move loans into foreclosure early in the delinquency process.
Resolution of Nonperforming Assets
Historically, most loans that become nonperforming resolve prior to converting to REO. This is due to low LTVs at origination and our active management of the portfolio. The following tables summarize the resolution activities of loans that became nonperforming prior to the beginning of the periods indicated or became nonperforming and subsequently resolved during the periods indicated. We resolved $108.0 million of long-term and short-term nonperforming assets for the quarter ended September 30, 2025, which was higher compared to $104.0 million for the quarter ended June 30, 2025, and $68.6 million for the quarter ended September 30, 2024. From these resolution activities, we realized net gains of $2.8 million, $3.6 million, and $2.3 million for the quarters ended September 30, 2025, June 30, 2025, and September 30, 2024, respectively. This is largely the result of collecting default interest and prepayment penalties in excess of the principal on loans and selling our REOs at prices higher than their carrying value.
The table below includes resolutions of our long-term nonperforming loans and REOs for the periods indicated:
|
|
Three Months Ended |
|
|||||||||||||||||||||
Long-Term Nonperforming Assets |
|
September 30, 2025 |
|
|
June 30, 2025 |
|
|
September 30, 2024 |
|
|||||||||||||||
|
|
UPB |
|
|
Gain / |
|
|
UPB |
|
|
Gain / |
|
|
UPB |
|
|
Gain / |
|
||||||
|
|
($ in thousands) |
|
|||||||||||||||||||||
Resolved — loans paid in full |
|
$ |
37,901 |
|
|
$ |
1,980 |
|
|
$ |
32,220 |
|
|
$ |
2,078 |
|
|
$ |
23,875 |
|
|
$ |
965 |
|
Resolved — loans paid current |
|
|
45,055 |
|
|
|
448 |
|
|
|
45,396 |
|
|
|
390 |
|
|
|
34,957 |
|
|
|
567 |
|
Resolved — REO sold |
|
|
9,954 |
|
|
|
97 |
|
|
|
11,167 |
|
|
|
548 |
|
|
|
1,431 |
|
|
|
290 |
|
Total resolutions |
|
$ |
92,910 |
|
|
$ |
2,525 |
|
|
$ |
88,783 |
|
|
$ |
3,016 |
|
|
$ |
60,263 |
|
|
$ |
1,822 |
|
Recovery rate on resolved |
|
|
|
|
|
102.7 |
% |
|
|
|
|
|
103.4 |
% |
|
|
|
|
|
103.0 |
% |
|||
Short-term loans, or loans with a maturity of two-year or less, do not require prepayment fees and usually result in a lower gain when paid in full, as compared to long-term loans. The table below includes resolutions of our short-term nonperforming loans and REOs, and loans granted a COVID-19 forbearance in 2020, for the periods indicated:
|
|
Three Months Ended |
|
|||||||||||||||||||||
Short-Term and Forbearance Nonperforming Assets |
|
September 30, 2025 |
|
|
June 30, 2025 |
|
|
September 30, 2024 |
|
|||||||||||||||
|
|
UPB |
|
|
Gain / |
|
|
UPB |
|
|
Gain / |
|
|
UPB |
|
|
Gain / |
|
||||||
|
|
($ in thousands) |
|
|||||||||||||||||||||
Resolved — loans paid in full |
|
$ |
5,695 |
|
|
$ |
197 |
|
|
$ |
8,963 |
|
|
$ |
371 |
|
|
$ |
4,974 |
|
|
$ |
151 |
|
Resolved — loans paid current |
|
|
6,091 |
|
|
|
25 |
|
|
|
3,770 |
|
|
|
4 |
|
|
|
2,122 |
|
|
|
7 |
|
Resolved — REO sold |
|
|
3,335 |
|
|
|
55 |
|
|
|
2,440 |
|
|
|
243 |
|
|
|
1,260 |
|
|
|
325 |
|
Total resolutions |
|
$ |
15,121 |
|
|
$ |
277 |
|
|
$ |
15,173 |
|
|
$ |
618 |
|
|
$ |
8,356 |
|
|
$ |
483 |
|
Recovery rate on resolved |
|
|
|
|
|
101.8 |
% |
|
|
|
|
|
104.1 |
% |
|
|
|
|
|
105.8 |
% |
|||
Real Estate Owned, Net (“REO”)
REO includes real estate we acquire through foreclosure or by deed-in-lieu of foreclosure. REO assets are initially recorded at fair value, less estimated costs to sell on the date of foreclosure. Adjustments that reduce the carrying value of the loan to the fair value of the real estate at the time of foreclosure are recognized as charge-offs in the allowance for credit losses. Gains at the time of foreclosure are recognized in other operating income. After foreclosure, we periodically obtain new valuations and any subsequent changes to fair value, less estimated costs to sell, are reflected as valuation adjustments, included in “Real estate owned, net” in the Consolidated Statements of Income.
As of September 30, 2025, REO included 223 properties with a lower of cost or estimated fair value of $113.7 million compared to 175 properties with a lower of cost or estimated fair value of $93.4 million as of June 30, 2025, and 112 properties with a lower of cost or estimated fair value of $62.4 million as of September 30, 2024.
44
Concentrations – Loans Held for Investment
As of September 30, 2025, our held for investment loan portfolio was concentrated in Investor 1-4 loans, representing 49.3% of the UPB. Mixed use and Retail properties represented 10.7% and 10.2%, respectively, of the UPB. No other property type represented more than 10.0% of our held for investment loan portfolio. Geographically, the principal balance of our loans held for investment were concentrated 21.1% in California, 13.8% in New York, 12.3% in Florida, 7.4% in New Jersey, and 6.0% in Texas.
Property Type |
|
September 30, 2025 |
|
|||||||||
|
|
Loan Count |
|
|
UPB |
|
|
% of Total UPB |
|
|||
|
|
($ in thousands) |
|
|||||||||
Investor 1-4 |
|
|
9,923 |
|
|
$ |
3,089,325 |
|
|
|
49.3 |
% |
Mixed use |
|
|
1,578 |
|
|
|
670,470 |
|
|
|
10.7 |
|
Retail |
|
|
1,230 |
|
|
|
640,005 |
|
|
|
10.2 |
|
Office |
|
|
1,074 |
|
|
|
504,282 |
|
|
|
8.0 |
|
Multifamily |
|
|
772 |
|
|
|
459,166 |
|
|
|
7.3 |
|
Warehouse |
|
|
670 |
|
|
|
421,276 |
|
|
|
6.7 |
|
Other (1) |
|
|
730 |
|
|
|
488,774 |
|
|
|
7.8 |
|
Total loans held for investment |
|
|
15,977 |
|
|
$ |
6,273,298 |
|
|
|
100.0 |
% |
Geography (State) |
|
September 30, 2025 |
|
|||||||||
|
|
Loan Count |
|
|
UPB |
|
|
% of Total UPB |
|
|||
|
|
($ in thousands) |
|
|||||||||
California |
|
|
1,871 |
|
|
$ |
1,318,571 |
|
|
|
21.1 |
% |
New York |
|
|
1,645 |
|
|
|
866,980 |
|
|
|
13.8 |
|
Florida |
|
|
1,907 |
|
|
|
772,823 |
|
|
|
12.3 |
|
New Jersey |
|
|
1,219 |
|
|
|
465,382 |
|
|
|
7.4 |
|
Texas |
|
|
1,024 |
|
|
|
377,504 |
|
|
|
6.0 |
|
Other (1) |
|
|
8,311 |
|
|
|
2,472,038 |
|
|
|
39.4 |
|
Total loans held for investment |
|
|
15,977 |
|
|
$ |
6,273,298 |
|
|
|
100.0 |
% |
Key Performance Metrics
|
|
Three Months Ended |
|
|||||||||
|
|
September 30, 2025 (1) |
|
|
June 30, 2025 (1) |
|
|
September 30, 2024 (1) |
|
|||
|
|
($ in thousands) |
|
|||||||||
Average loans |
|
$ |
6,044,277 |
|
|
$ |
5,620,763 |
|
|
$ |
4,578,911 |
|
Portfolio yield |
|
|
9.54 |
% |
|
|
9.65 |
% |
|
|
9.18 |
% |
Average debt — portfolio related |
|
|
5,674,297 |
|
|
|
5,245,799 |
|
|
|
4,152,040 |
|
Average debt — total company |
|
|
5,964,297 |
|
|
|
5,535,799 |
|
|
|
4,442,040 |
|
Cost of funds — portfolio related |
|
|
6.27 |
% |
|
|
6.24 |
% |
|
|
6.15 |
% |
Cost of funds — total company |
|
|
6.37 |
% |
|
|
6.36 |
% |
|
|
6.30 |
% |
Net interest margin — portfolio related |
|
|
3.65 |
% |
|
|
3.82 |
% |
|
|
3.60 |
% |
Net interest margin — total company |
|
|
3.25 |
% |
|
|
3.39 |
% |
|
|
3.06 |
% |
Charge-offs/Average loans held for investment at amortized cost |
|
|
0.13 |
% |
|
|
0.31 |
% |
|
|
0.05 |
% |
Pre-tax return on average equity |
|
|
22.7 |
% |
|
|
23.0 |
% |
|
|
17.6 |
% |
Return on average equity |
|
|
16.3 |
% |
|
|
17.8 |
% |
|
|
12.9 |
% |
Average Loans
Average loans reflects the daily average of total outstanding loans, including both loans held for investment and loans held for sale, as measured by UPB, over the specified time period.
45
Portfolio Yield
Portfolio yield is an annualized measure of the total interest income earned on our loan portfolio as a percentage of average loans over the given period. Interest income includes interest earned on performing loans, cash interest received on nonperforming loans, default interest and prepayment fees. The increase in our portfolio yield for the three months ended September 30, 2025 as compared to the three months ended September 30, 2024 was primarily driven by the increase in weighted average loan coupons. Portfolio yield for the three months ended September 30, 2025 decreased slightly from three months ended June 30, 2025 mainly attributable to less interest income and default interest collected on nonperforming loans.
Average Debt — Portfolio Related and Total Company
Portfolio-related debt consists of borrowings related directly to financing our loan portfolio, which includes our warehouse facilities and securitized debt. Total company debt consists of portfolio-related debt and corporate debt. The measures presented here reflect the monthly average of all portfolio-related and total company debt, as measured by outstanding principal balance, over the specified time period.
Cost of Funds — Portfolio Related and Total Company
Portfolio related cost of funds is an annualized measure of the interest expense incurred on our portfolio-related debt as a percentage of average portfolio-related debt outstanding over the given period. Total company cost of funds is an annualized measure of the interest expense incurred on our portfolio-related debt and corporate debt outstanding over the given period. Interest expense includes the amortization of expenses incurred in connection with our portfolio related financing activities and corporate debt. Through the issuance of long-term securitized debt, we have been able to fix a significant portion of our borrowing costs over time. The strong credit performance on our securitized debt has allowed us to issue debt at attractive rates.
Our portfolio related cost of funds slightly increased to 6.27% for the three months ended September 30, 2025 from 6.24% for the prior quarter and 6.15% for the three months ended September 30, 2024. The increase was primarily due to higher securitized debt interest expense.
Net Interest Margin — Portfolio Related and Total Company
Portfolio related net interest margin measures the difference between the interest income earned on our loan portfolio and the interest expense paid on our portfolio-related debt as a percentage of average loans over the specified time period. Total company net interest margin measures the difference between the interest income earned on our loan portfolio and the interest expense paid on our portfolio-related debt and corporate debt as a percentage of average loans over the specified time period.
Over the periods shown in the tables below, portfolio related net interest margin increased to 3.65% for the three months ended September 30, 2025 from 3.60% for the three months ended September 30, 2024. Portfolio related net interest margin increased to 3.62% for the nine months ended September 30, 2025 from 3.50% for the nine months ended September 30, 2024. The increases were primarily due to higher average yields and balances.
Total company net interest margin of 3.25% for the three months ended September 30, 2025 increased from 3.06% for the three months ended September 30, 2024. Total company net interest margin of 3.18% for the nine months ended September 30, 2025 increased from 2.96% for the nine months ended September 30, 2024. The increases were primarily due to the higher increase in the average yields on our loan portfolio than the increase in our average cost of funds.
46
The following tables show the average outstanding balance of our loan portfolio and portfolio-related debt, together with interest income and the corresponding yield earned on our portfolio, and interest expense and the corresponding rate paid on our portfolio-related debt for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
||||||||||||||||||
|
|
|
|
|
Interest |
|
|
Average |
|
|
|
|
|
Interest |
|
|
Average |
|
|
||||||
|
|
Average |
|
|
Income / |
|
|
Yield / |
|
|
Average |
|
|
Income / |
|
|
Yield / |
|
|
||||||
|
|
Balance |
|
|
Expense |
|
|
Rate (1) |
|
|
Balance |
|
|
Expense |
|
|
Rate (1) |
|
|
||||||
|
|
($ in thousands) |
|
|
|||||||||||||||||||||
Loan portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans held for sale |
|
$ |
161 |
|
|
|
|
|
|
|
|
$ |
3,166 |
|
|
|
|
|
|
|
|
||||
Loans held for investment |
|
|
6,044,116 |
|
|
|
|
|
|
|
|
|
4,575,745 |
|
|
|
|
|
|
|
|
||||
Total loans |
|
$ |
6,044,277 |
|
|
$ |
144,119 |
|
|
|
9.54 |
% |
|
$ |
4,578,911 |
|
|
$ |
105,070 |
|
|
|
9.18 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warehouse facilities |
|
$ |
404,509 |
|
|
$ |
8,277 |
|
|
|
8.18 |
% |
|
$ |
311,560 |
|
|
$ |
7,105 |
|
|
|
9.12 |
% |
|
Securitized debt |
|
|
5,269,788 |
|
|
|
80,622 |
|
|
|
6.12 |
% |
|
|
3,840,480 |
|
|
|
56,766 |
|
|
|
5.91 |
% |
|
Total debt - portfolio related |
|
|
5,674,297 |
|
|
|
88,899 |
|
|
|
6.27 |
% |
|
|
4,152,040 |
|
|
|
63,871 |
|
|
|
6.15 |
% |
|
Corporate debt |
|
|
290,000 |
|
|
|
6,144 |
|
|
|
8.47 |
% |
|
|
290,000 |
|
|
|
6,143 |
|
|
|
8.47 |
% |
|
Total debt |
|
$ |
5,964,297 |
|
|
$ |
95,043 |
|
|
|
6.37 |
% |
|
$ |
4,442,040 |
|
|
$ |
70,014 |
|
|
|
6.30 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest spread - |
|
|
|
|
|
|
|
|
3.27 |
% |
|
|
|
|
|
|
|
|
3.03 |
% |
|
||||
Net interest margin - |
|
|
|
|
|
|
|
|
3.65 |
% |
|
|
|
|
|
|
|
|
3.60 |
% |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest spread - |
|
|
|
|
|
|
|
|
3.16 |
% |
|
|
|
|
|
|
|
|
2.87 |
% |
|
||||
Net interest margin - |
|
|
|
|
|
|
|
|
3.25 |
% |
|
|
|
|
|
|
|
|
3.06 |
% |
|
||||
|
|
Nine Months Ended September 30, |
|
|
|||||||||||||||||||||
|
|
2025 |
|
|
2024 |
|
|
||||||||||||||||||
|
|
|
|
|
Interest |
|
|
Average |
|
|
|
|
|
Interest |
|
|
Average |
|
|
||||||
|
|
Average |
|
|
Income / |
|
|
Yield / |
|
|
Average |
|
|
Income / |
|
|
Yield / |
|
|
||||||
|
|
Balance |
|
|
Expense |
|
|
Rate (1) |
|
|
Balance |
|
|
Expense |
|
|
Rate (1) |
|
|
||||||
|
|
($ in thousands) |
|
|
|||||||||||||||||||||
Loan portfolio: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Loans held for sale |
|
$ |
4,612 |
|
|
|
|
|
|
|
|
$ |
7,602 |
|
|
|
|
|
|
|
|
||||
Loans held for investment |
|
|
5,621,796 |
|
|
|
|
|
|
|
|
|
4,357,152 |
|
|
|
|
|
|
|
|
||||
Total loans |
|
$ |
5,626,408 |
|
|
$ |
398,426 |
|
|
|
9.44 |
% |
|
$ |
4,364,754 |
|
|
$ |
293,359 |
|
|
|
8.96 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Debt: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Warehouse facilities |
|
$ |
417,247 |
|
|
$ |
25,037 |
|
|
|
8.00 |
% |
|
$ |
280,716 |
|
|
$ |
19,612 |
|
|
|
9.32 |
% |
|
Securitized debt |
|
|
4,829,808 |
|
|
|
220,788 |
|
|
|
6.10 |
% |
|
|
3,668,377 |
|
|
|
159,122 |
|
|
|
5.78 |
% |
|
Total debt - portfolio related |
|
|
5,247,055 |
|
|
|
245,825 |
|
|
|
6.25 |
% |
|
|
3,949,093 |
|
|
|
178,734 |
|
|
|
6.03 |
% |
|
Corporate debt |
|
|
290,000 |
|
|
|
18,429 |
|
|
|
8.47 |
% |
|
|
280,517 |
|
|
|
17,677 |
|
|
|
8.40 |
% |
|
Total debt |
|
$ |
5,537,055 |
|
|
$ |
264,254 |
|
|
|
6.36 |
% |
|
$ |
4,229,610 |
|
|
$ |
196,411 |
|
|
|
6.19 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest spread - |
|
|
|
|
|
|
|
|
3.20 |
% |
|
|
|
|
|
|
|
|
2.93 |
% |
|
||||
Net interest margin - |
|
|
|
|
|
|
|
|
3.62 |
% |
|
|
|
|
|
|
|
|
3.50 |
% |
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Net interest spread - |
|
|
|
|
|
|
|
|
3.08 |
% |
|
|
|
|
|
|
|
|
2.77 |
% |
|
||||
Net interest margin - |
|
|
|
|
|
|
|
|
3.18 |
% |
|
|
|
|
|
|
|
|
2.96 |
% |
|
||||
47
Charge-Offs
Our annualized charge-offs rate over average loans held for investment carried at amortized cost for the three months ended September 30, 2025 decreased to 0.13% as compared to 0.31% for the three months ended June 30, 2025 and increased from 0.05% for the three months ended September 30, 2024. The charge-offs rate reflects year-to-date annualized charge-offs as a percentage of average loans held for investment at amortized cost, for the respective quarters. We do not record charge-offs on loans carried at estimated fair value and loans held for sale.
Return on Average Equity
Pre-tax return on average equity and return on average equity reflect income before income taxes and net income including income attributable to noncontrolling interest, respectively, as a percentage of the monthly average total stockholders’ equity including noncontrolling interest over the specified period. Pre-tax return on average equity and return on average equity decreased during the quarter ended September 30, 2025 as compared to the quarter ended June 30, 2025 primarily due to a higher tax rate and the higher average shareholders' equity. Pre-tax return on average equity and return on average equity increased as compared to the quarter ended September 30, 2024 primarily due to improved operating margins.
|
|
Three Months Ended |
|
|||||||||
|
|
September 30, 2025 |
|
|
June 30, 2025 |
|
|
September 30, 2024 |
|
|||
|
|
($ in thousands) |
|
|||||||||
Income before income taxes (A) |
|
$ |
35,375 |
|
|
$ |
33,922 |
|
|
$ |
21,244 |
|
Net income (B) |
|
|
25,412 |
|
|
|
26,170 |
|
|
|
15,617 |
|
|
|
|
|
|
|
|
|
|
|
|||
Monthly average balance: |
|
|
|
|
|
|
|
|
|
|||
Stockholders' equity (C) |
|
|
623,239 |
|
|
|
588,814 |
|
|
|
484,197 |
|
|
|
|
|
|
|
|
|
|
|
|||
Pre-tax return on average equity (A)/(C) (1) |
|
|
22.7 |
% |
|
|
23.0 |
% |
|
|
17.5 |
% |
|
|
|
|
|
|
|
|
|
|
|||
Return on average equity (B)/(C) (1) |
|
|
16.3 |
% |
|
|
17.8 |
% |
|
|
12.9 |
% |
Components of Results of Operations
Interest Income
We accrue interest on the UPB of our loans in accordance with the individual terms and conditions of each loan, discontinuing interest and reversing previously accrued interest once a loan becomes 90 days or more past due (nonaccrual status). When a loan is placed on nonaccrual status, the accrued and unpaid interest is reversed as a reduction to interest income and accrued interest receivable. Interest income is subsequently recognized only to the extent that cash payments are received or when the loan has returned to accrual status. Payments received on nonaccrual loans are first applied to interest due, then principal. Interest accrual resumes once a borrower has made all principal and interest payments due, bringing the loan back to current status.
Interest income on loans held for investment is comprised of interest income on loans and prepayment fees, less the amortization of deferred net costs related to the origination of loans carried at amortized cost. Interest income on loans held for sale is comprised of interest income earned on loans prior to their sale. The net fees and costs associated with loans held for sale carried at the lower of cost or fair value, are deferred as part of the carrying value of the loan and recognized as a gain or loss on the sale of the loan. The fees and costs associated with loans carried at fair value are recognized and expensed as incurred.
Interest Expense — Portfolio Related
Portfolio related interest expense is incurred on the debt we obtained to fund our loan origination and portfolio activities and consists of our warehouse facilities and securitized debt. Portfolio related interest expense also includes the amortization of other comprehensive income or loss from terminated derivative instruments, amortization of expenses incurred as a result of issuing the debt when the debt is carried at amortized cost. Other comprehensive income or loss, and deferred debt issuance costs are amortized using the level yield method. Key drivers of interest expense include the debt amounts outstanding, interest rates, other comprehensive income or loss from terminated derivative instruments, and the mix of our securitized debt and warehouse liabilities.
Net Interest Income — Portfolio Related
Portfolio related net interest income represents the difference between interest income and portfolio related interest expense.
48
Interest Expense — Corporate Debt
Interest expense on corporate debt primarily consists of interest expense paid with respect to the 2022 Term Loan and the 2024 Term Loan (“Corporate Debt”), as reflected in “Secured financing, net” on our Consolidated Balance Sheets, and the related amortization of deferred debt issuance costs.
Net Interest Income
Net interest income represents the difference between portfolio related net interest income and interest expense on corporate debt.
Provision for Credit Losses
Under the CECL methodology, the allowance for credit losses is calculated using a third-party model with our historical loss rates by segment, loan position as of the balance sheet date, and assumptions from us. We do not record provision for credit losses on loans held for sale, or loans carried at fair value.
Other Operating Income
Gain (Loss) on Disposition of Loans. When we sell a loan held for sale, we record a gain or loss that reflects the difference between the proceeds received for the sale of the loans and their respective carrying values. The gain or loss that we ultimately realize on the sale of our loans held for sale is primarily determined by the terms of the originated loans, current market interest rates and the sale price of the loans. In addition, when we transfer a loan to REO, we record the REO at its fair value, less estimated costs to sell, at the time of the transfer. The difference between the fair value of the real estate and the carrying value of the loan is recorded as a gain or a loan charge-off.
Unrealized Gain (Loss) on Fair Value Loans. We have elected to apply fair value option accounting to all our originated mortgage loans on a go-forward basis beginning October 1, 2022. We have elected to account for certain purchased distressed loans at fair value using FASB ASC Topic 825, Financial Instruments (ASC 825). We regularly estimate the fair value of these loans. Changes in fair value, subsequent to initial recognition of fair value loans are reported as “Unrealized gain (loss) on fair value loans,” a component of other operating income within the Consolidated Statements of Income.
Unrealized Gain (Loss) on Mortgage Servicing Rights. We have elected to record our mortgage servicing rights using the fair value measurement method. Changes in fair value are reported as “Unrealized gain (loss) on mortgage servicing rights,” a component of other operating income within the Consolidated Statements of Income.
Unrealized Gain (Loss) on Fair Value Securitized Debt. We have elected to apply fair value option accounting to securitized debt issued effective January 1, 2023 when the underlying collateral is also carried at fair value. We regularly estimate the fair value of securitized debt. Changes in fair value subsequent to initial recognition of fair value securitized debt are reported as “Unrealized gain (loss) on fair value securitized debt,” a component of other operating income within the Consolidated Statements of Income.
Origination Income. Fee income related to our loan origination activities.
Interest Income on Cash Balance. Interest income on bank balances.
Other Income. Other income primarily consists of servicing fee income and other miscellaneous income. Century earns servicing fees for servicing mortgage loans for others.
Operating Expenses
Compensation and Employee Benefits. Costs related to employee compensation, commissions and related employee benefits, such as health, retirement, and payroll taxes.
Origination Expenses. Costs related to our loan origination activities.
Securitization Expenses. Costs related to issuance of our securitized debt.
Loan Servicing. Costs related to our third-party servicers.
Professional Fees. Costs related to professional services, such as external audits, legal fees, tax, compliance and outside consultants.
Rent and Occupancy. Costs related to occupying our locations, including rent, maintenance and property taxes.
Real Estate Owned, Net. Costs related to our real estate owned, net, including gains (losses) on disposition of REO, maintenance of REO properties, and taxes and insurance.
49
Other Operating Expenses. Other operating expenses consist of general and administrative costs such as travel and entertainment, marketing, data processing, insurance and office equipment.
Provision for Income Taxes
The provision for income taxes consists of the current and deferred U.S. federal and state income taxes we expect to pay, currently and in future years, with respect to the net income for the year. The amount of the provision is derived by adjusting our reported net income with various permanent differences. The tax-adjusted net income amount is then multiplied by the applicable federal and state income tax rates to arrive at the provision for income taxes.
Consolidated Results of Operations
The following table summarizes our unaudited consolidated results of operations for the periods indicated:
|
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
|
(In thousands) |
|
|||||||||||||
Interest income |
|
$ |
144,119 |
|
|
$ |
105,070 |
|
|
$ |
398,426 |
|
|
$ |
293,359 |
|
Interest expense - portfolio related |
|
|
88,899 |
|
|
|
63,871 |
|
|
|
245,825 |
|
|
|
178,734 |
|
Net interest income - portfolio related |
|
|
55,220 |
|
|
|
41,199 |
|
|
|
152,601 |
|
|
|
114,625 |
|
Interest expense - corporate debt |
|
|
6,144 |
|
|
|
6,143 |
|
|
|
18,429 |
|
|
|
17,677 |
|
Net interest income |
|
|
49,076 |
|
|
|
35,056 |
|
|
|
134,172 |
|
|
|
96,948 |
|
Provision for (reversal of) credit losses |
|
|
381 |
|
|
|
(69 |
) |
|
|
3,851 |
|
|
|
1,151 |
|
Net interest income after provision for (reversal of) credit losses |
|
|
48,695 |
|
|
|
35,125 |
|
|
|
130,321 |
|
|
|
95,797 |
|
Other operating income |
|
|
37,077 |
|
|
|
20,732 |
|
|
|
110,370 |
|
|
|
69,068 |
|
Total operating expenses |
|
|
50,397 |
|
|
|
34,613 |
|
|
|
144,500 |
|
|
|
100,511 |
|
Income before income taxes |
|
|
35,375 |
|
|
|
21,244 |
|
|
|
96,191 |
|
|
|
64,354 |
|
Income tax expense |
|
|
9,963 |
|
|
|
5,627 |
|
|
|
25,961 |
|
|
|
16,693 |
|
Net income |
|
|
25,412 |
|
|
|
15,617 |
|
|
|
70,230 |
|
|
|
47,661 |
|
Net income (loss) attributable to noncontrolling interest |
|
|
39 |
|
|
|
(186 |
) |
|
|
(27 |
) |
|
|
(171 |
) |
Net income attributable to Velocity Financial, Inc. |
|
$ |
25,373 |
|
|
$ |
15,803 |
|
|
$ |
70,257 |
|
|
$ |
47,832 |
|
Net Interest Income — Portfolio Related
|
|
Three Months Ended September 30, |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
|
||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
||||||
|
|
(In thousands) |
|
|
|||||||||||||||||||||
Interest income |
|
$ |
144,119 |
|
|
$ |
105,070 |
|
|
$ |
39,049 |
|
|
$ |
398,426 |
|
|
$ |
293,359 |
|
|
$ |
105,067 |
|
|
Interest expense - portfolio related |
|
|
88,899 |
|
|
|
63,871 |
|
|
|
25,028 |
|
|
|
245,825 |
|
|
|
178,734 |
|
|
|
67,091 |
|
|
Net interest income - portfolio related |
|
$ |
55,220 |
|
|
$ |
41,199 |
|
|
$ |
14,021 |
|
|
$ |
152,601 |
|
|
$ |
114,625 |
|
|
$ |
37,976 |
|
|
Portfolio related net interest income is the largest contributor to our net income. Our portfolio related net interest income increased 34.0% to $55.2 million from $41.2 million for the three months ended September 30, 2025 and 2024, respectively. Our portfolio related net interest income increased 33.1% to $152.6 million from $114.6 million for the nine months ended September 30, 2025 and 2024, respectively.
Interest Income. Interest income increased by $39.0 million to $144.1 million for the three months ended September 30, 2025, compared to $105.1 million for the three months ended September 30, 2024, attributable to higher average loan portfolio balances and yield. For the three months ended September 30, 2025, the average loan yield was 9.54% compared to 9.18% for the three months ended September 30, 2024. Interest income increased by $105.1 million to $398.4 million for the nine months ended September 30, 2025, compared to $293.4 million for the nine months ended September 30, 2024. The increase in interest income for the nine months ended September 30, 2025 was primarily attributable to higher portfolio balances due to loan originations and higher average loan yield.
50
The following tables distinguish between the changes in interest income attributable to changes in average loan balance (volume) and the changes in interest income attributable to changes in annualized yield (rate) for the three and nine months ended September 30, 2025 and 2024.
|
|
Average Loans |
|
|
Interest Income |
|
|
Average Yield(1) |
|
|||
|
|
($ in thousands) |
|
|||||||||
Three months ended September 30, 2025 |
|
$ |
6,044,277 |
|
|
$ |
144,119 |
|
|
|
9.54 |
% |
Three months ended September 30, 2024 |
|
|
4,578,911 |
|
|
|
105,070 |
|
|
|
9.18 |
% |
Volume variance |
|
|
1,465,366 |
|
|
|
33,625 |
|
|
|
|
|
Rate variance |
|
|
|
|
|
5,424 |
|
|
|
0.36 |
% |
|
Total interest income variance |
|
|
|
|
|
39,049 |
|
|
|
|
||
|
|
Average Loans |
|
|
Interest Income |
|
|
Average Yield(1) |
|
|||
|
|
($ in thousands) |
|
|||||||||
Nine months ended September 30, 2025 |
|
$ |
5,626,408 |
|
|
$ |
398,426 |
|
|
|
9.44 |
% |
Nine months ended September 30, 2024 |
|
|
4,364,754 |
|
|
|
293,359 |
|
|
|
8.96 |
% |
Volume variance |
|
|
1,261,654 |
|
|
|
84,797 |
|
|
|
|
|
Rate variance |
|
|
|
|
|
20,270 |
|
|
|
0.48 |
% |
|
Total interest income variance |
|
|
|
|
|
105,067 |
|
|
|
|
||
Interest Expense — Portfolio Related. Portfolio related interest expense, which consists of interest incurred on our warehouse facilities and securitized debt, increased to $88.9 million for the three months ended September 30, 2025 from $63.9 million for the three months ended September 30, 2024. Portfolio related interest expense increased to $245.8 million for the nine months ended September 30, 2025 from $178.7 million for the nine months ended September 30, 2024. The increases were primarily attributable to a higher loan portfolio being financed and increased interest rates.
The following tables present information regarding portfolio related interest expense and distinguish between the changes in interest expense attributable to changes in the average outstanding debt balance (volume) and changes in cost of funds (rate) for the three and nine months ended September 30, 2025 and 2024.
|
|
Average Debt(1) |
|
|
Interest Expense |
|
|
Cost of Funds(2) |
|
|||
|
|
($ in thousands) |
|
|||||||||
Three months ended September 30, 2025 |
|
$ |
5,674,297 |
|
|
$ |
88,899 |
|
|
|
6.27 |
% |
Three months ended September 30, 2024 |
|
|
4,152,040 |
|
|
|
63,871 |
|
|
|
6.15 |
% |
Volume variance |
|
|
1,522,257 |
|
|
|
23,417 |
|
|
|
|
|
Rate variance |
|
|
|
|
|
1,611 |
|
|
|
0.11 |
% |
|
Total interest expense variance |
|
|
|
|
|
25,028 |
|
|
|
|
||
|
|
Average Debt(1) |
|
|
Interest Expense |
|
|
Cost of Funds(2) |
|
|||
|
|
($ in thousands) |
|
|||||||||
Nine months ended September 30, 2025 |
|
$ |
5,247,055 |
|
|
$ |
245,825 |
|
|
|
6.25 |
% |
Nine months ended September 30, 2024 |
|
|
3,949,093 |
|
|
|
178,734 |
|
|
|
6.03 |
% |
Volume variance |
|
|
1,297,962 |
|
|
|
58,745 |
|
|
|
|
|
Rate variance |
|
|
|
|
|
8,346 |
|
|
|
0.21 |
% |
|
Total interest expense variance |
|
|
|
|
|
67,091 |
|
|
|
|
||
51
Net Interest Income After Provision for Credit Losses
|
|
Three Months Ended September 30, |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
|
||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
||||||
|
|
(In thousands) |
|
|
|||||||||||||||||||||
Net interest income - portfolio related |
|
$ |
55,220 |
|
|
$ |
41,199 |
|
|
$ |
14,021 |
|
|
$ |
152,601 |
|
|
$ |
114,625 |
|
|
$ |
37,976 |
|
|
Interest expense - corporate debt |
|
|
6,144 |
|
|
|
6,143 |
|
|
|
1 |
|
|
|
18,429 |
|
|
|
17,677 |
|
|
|
752 |
|
|
Net interest income |
|
|
49,076 |
|
|
|
35,056 |
|
|
|
14,020 |
|
|
|
134,172 |
|
|
|
96,948 |
|
|
|
37,224 |
|
|
Provision for (reversal of) credit losses |
|
|
381 |
|
|
|
(69 |
) |
|
|
450 |
|
|
|
3,851 |
|
|
|
1,151 |
|
|
|
2,700 |
|
|
Net interest income after provision for (reversal of) credit losses |
|
$ |
48,695 |
|
|
$ |
35,125 |
|
|
$ |
13,570 |
|
|
$ |
130,321 |
|
|
$ |
95,797 |
|
|
$ |
34,524 |
|
|
Interest Expense — Corporate Debt. Corporate debt interest expense remained consistent at $6.1 million for each of the three months ended September 30, 2025 and 2024. Corporate debt interest expense increased to $18.4 million for the nine months ended September 30, 2025, compared to $17.7 million for the nine months ended September 30, 2024, primarily due to the issuance of $75.0 million of additional secured debt in February 2024.
Provision for Credit Losses. Our provision for credit losses increased to $0.4 million for the three months ended September 30, 2025 from a $0.1 million reversal of provision for the three months ended September 30, 2024, due mainly to an increase in individually-assessed allowance. Our provision for credit losses increased to $3.9 million for the nine months ended September 30, 2025 from $1.2 million for the nine months ended September 30, 2024. The increased provision for credit losses was primarily attributable to charge-offs taken during the quarter ended June 30, 2025 and an increase in the individually-assessed allowance.
Other Operating Income
The $16.3 million increase in total other operating income from the three months ended September 30, 2024 to the three months ended September 30, 2025 was primarily due to improved securitized bond prices resulting in lower unrealized loss on fair value securitized debt and increased loan origination fee income, offset by lower unrealized gain on fair value loans. The $41.3 million increase from the nine months ended September 30, 2024 to the nine months ended September 30, 2025 was mainly due to increased origination volumes driving a higher unrealized gain on fair value loans and an increase in loan origination fee income.
|
|
Three Months Ended September 30, |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
|
||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
||||||
|
|
(In thousands) |
|
|
|||||||||||||||||||||
Gain on disposition of loans |
|
$ |
4,574 |
|
|
$ |
2,291 |
|
|
$ |
2,283 |
|
|
$ |
13,694 |
|
|
$ |
7,156 |
|
|
$ |
6,538 |
|
|
Unrealized gain on fair value loans |
|
|
30,982 |
|
|
|
35,530 |
|
|
|
(4,548 |
) |
|
|
95,724 |
|
|
|
71,579 |
|
|
|
24,145 |
|
|
Unrealized loss on fair value securitized debt |
|
|
(9,988 |
) |
|
|
(24,995 |
) |
|
|
15,007 |
|
|
|
(31,254 |
) |
|
|
(31,957 |
) |
|
|
703 |
|
|
Unrealized loss on mortgage servicing rights |
|
|
(343 |
) |
|
|
(993 |
) |
|
|
650 |
|
|
|
(1,115 |
) |
|
|
(922 |
) |
|
|
(193 |
) |
|
Origination fee income |
|
|
9,723 |
|
|
|
6,704 |
|
|
|
3,019 |
|
|
|
27,338 |
|
|
|
16,762 |
|
|
|
10,576 |
|
|
Interest income on cash balance |
|
|
1,564 |
|
|
|
1,676 |
|
|
|
(112 |
) |
|
|
4,408 |
|
|
|
5,038 |
|
|
|
(630 |
) |
|
Other income |
|
|
565 |
|
|
|
519 |
|
|
|
46 |
|
|
|
1,575 |
|
|
|
1,412 |
|
|
|
163 |
|
|
Total other operating income |
|
$ |
37,077 |
|
|
$ |
20,732 |
|
|
$ |
16,345 |
|
|
$ |
110,370 |
|
|
$ |
69,068 |
|
|
$ |
41,302 |
|
|
Gain on Disposition of Loans. Gain on disposition of loans increased by $2.3 million to $4.6 million for the three months ended September 30, 2025 compared to $2.3 million for the three months ended September 30, 2024. Gain on disposition of loans increased by $6.5 million to $13.7 million for the nine months ended September 30, 2025 compared to $7.2 million for the nine months ended September 30, 2024. The increases were primarily due to the increase in gain on transfer to REO upon foreclosure.
Unrealized Gain on Fair Value Loans. Unrealized gain on fair value loans decreased by $4.5 million to $31.0 million for the three months ended September 30, 2025 compared to $35.5 million for the three months ended September 30, 2024. The decrease was mainly driven by a higher nonperforming loan balance. Unrealized gain on fair value loans increased by $24.1 million to $95.7 million for the nine months ended September 30, 2025 compared to $71.6 million for the nine months ended September 30, 2024. The increase was mainly driven by new loan originations.
Unrealized Loss on Fair Value Securitized Debt. Unrealized loss on fair value securitized debt decreased by $15.0 million to $10.0 million for the three months ended September 30, 2025 from $25.0 million for the three months ended September 30, 2024. Unrealized loss on fair value securitized debt decreased by $0.7 million to $31.3 million for the nine months ended September 30, 2025 from $32.0 million for the nine months ended September 30, 2024. The decreases in unrealized loss on fair value securitized debt were primarily attributable to the decrease in market interest rates and spreads.
52
Unrealized Gain (Loss) on Mortgage Servicing Rights. Unrealized loss on mortgage servicing rights was $0.3 million for the three months ended September 30, 2025 as compared to $1.0 million for the three months ended September 30, 2024. The decrease in unrealized loss on mortgage servicing rights was mainly driven by an increase in the loan servicing portfolio. Unrealized loss on mortgage servicing rights was $1.1 million for the nine months ended September 30, 2025 as compared to $0.9 million for the nine months ended September 30, 2024. The increase in unrealized loss on mortgage servicing rights resulted from an increase in prepayment rate.
Origination Fee Income. Origination fee income increased by $3.0 million to $9.7 million for the three months ended September 30, 2025 compared to $6.7 million for the three months ended September 30, 2024. Origination fee income increased by $10.6 million to $27.3 million for the nine months ended September 30, 2025 compared to $16.8 million for the nine months ended September 30, 2024. The increases were driven by higher loan originations.
Interest Income on Cash Balance. Interest income on cash balance decreased by $0.1 million to $1.6 million for the three months ended September 30, 2025 compared to $1.7 million for the three months ended September 30, 2024. Interest income on cash balance decreased by $0.6 million to $4.4 million for the nine months ended September 30, 2025 compared to $5.0 million for the nine months ended September 30, 2024. The decreases were attributable to a decrease in interest rates.
Other Income. Other income was $0.6 million and $0.5 for the three months ended September 30, 2025 and 2024, respectively. Other income increased to $1.6 million for the nine months ended September 30, 2025 compared to $1.4 million for the nine months ended September 30, 2024. The increase was mainly driven by higher servicing fee income from the increase in our loan servicing portfolio.
Operating Expenses
Operating expenses are presented in the following table. Changes in operating expenses comparing to the same period prior year are discussed below.
|
|
Three Months Ended September 30, |
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
|
|
||||||||||||
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
2025 |
|
|
2024 |
|
|
$ Change |
|
|
||||||
|
|
(In thousands) |
|
|
|||||||||||||||||||||
Compensation and employee benefits |
|
$ |
23,300 |
|
|
$ |
17,586 |
|
|
$ |
5,714 |
|
|
$ |
67,589 |
|
|
$ |
49,505 |
|
|
$ |
18,084 |
|
|
Origination expenses |
|
|
1,154 |
|
|
|
867 |
|
|
|
287 |
|
|
|
3,185 |
|
|
|
2,262 |
|
|
|
923 |
|
|
Securitization expenses |
|
|
6,433 |
|
|
|
3,186 |
|
|
|
3,247 |
|
|
|
21,997 |
|
|
|
12,292 |
|
|
|
9,705 |
|
|
Loan servicing |
|
|
7,748 |
|
|
|
5,656 |
|
|
|
2,092 |
|
|
|
23,961 |
|
|
|
15,639 |
|
|
|
8,322 |
|
|
Professional fees |
|
|
893 |
|
|
|
2,305 |
|
|
|
(1,412 |
) |
|
|
4,668 |
|
|
|
6,140 |
|
|
|
(1,472 |
) |
|
Rent and occupancy |
|
|
274 |
|
|
|
519 |
|
|
|
(245 |
) |
|
|
847 |
|
|
|
1,633 |
|
|
|
(786 |
) |
|
Real estate owned, net |
|
|
7,931 |
|
|
|
1,951 |
|
|
|
5,980 |
|
|
|
14,258 |
|
|
|
5,762 |
|
|
|
8,496 |
|
|
Other operating expenses |
|
|
2,664 |
|
|
|
2,543 |
|
|
|
121 |
|
|
|
7,995 |
|
|
|
7,278 |
|
|
|
717 |
|
|
Total operating expenses |
|
$ |
50,397 |
|
|
$ |
34,613 |
|
|
$ |
15,784 |
|
|
$ |
144,500 |
|
|
$ |
100,511 |
|
|
$ |
43,989 |
|
|
Compensation and Employee Benefits. Compensation and employee benefits increased by $5.7 million to $23.3 million for the three months ended September 30, 2025 compared to $17.6 million for the three months ended September 30, 2024. Compensation and employee benefits increased by $18.1 million to $67.6 million for the nine months ended September 30, 2025 compared to $49.5 million for the nine months ended September 30, 2024. The increases were mainly driven by higher headcount and commissions expense as loan originations increased.
Origination Expenses. Origination expenses increased by $0.3 million to $1.2 million for the three months ended September 30, 2025 from $0.9 million for the three months ended September 30, 2024. Origination expenses increased by $0.9 million to $3.2 million for the nine months ended September 30, 2025 from $2.3 million for the nine months ended September 30, 2024. The increases in origination expenses were due to higher loan originations.
Securitization Expenses. Securitization expenses were $6.4 million for the three months ended September 30, 2025 compared to $3.2 million for the three months ended September 30, 2024. Securitization expenses were $22.0 million for the nine months ended September 30, 2025 compared to $12.3 million for the nine months ended September 30, 2024. The increases in securitization expenses resulted from more securitization transactions and securitized debt issued in 2025 as compared to the prior year.
Loan Servicing. Loan servicing expenses increased to $7.7 million for the three months ended September 30, 2025 from $5.7 million for the three months ended September 30, 2024. Loan servicing expenses increased to $24.0 million for the nine months ended September 30, 2025 from $15.6 million for the nine months ended September 30, 2024. The increases were primarily attributable to the growth of our loan portfolio.
53
Professional Fees. Professional fees decreased to $0.9 million for the three months ended September 30, 2025 compared to $2.3 million for the three months ended September 30, 2024. Professional fees were $4.7 million and $6.1 million for the nine months ended September 30, 2025 and 2024, respectively. The decreases were primarily attributable to lower legal fees.
Rent and Occupancy. Rent and occupancy expenses decreased to $0.3 million for the three months ended September 30, 2025 compared to $0.5 million for the three months ended September 30, 2024. Rent and occupancy expenses decreased to $0.8 million for the nine months ended September 30, 2025 compared to $1.6 million for the nine months ended September 30, 2024. The decreases resulted from the relocation to offices with less space and lower rent expense.
Real Estate Owned, Net. Net expenses of real estate owned increased to $7.9 million for the three months ended September 30, 2025 from $2.0 million for the three months ended September 30, 2024. Net expenses of real estate owned increased to $14.3 million for the nine months ended September 30, 2025 from $5.8 million for the nine months ended September 30, 2024. The increases were mainly due to the increase in REOs combined with higher valuation adjustments.
Other Operating Expenses. Other operating expenses increased to $2.7 million for the three months ended September 30, 2025 from $2.5 million for the three months ended September 30, 2024. Other operating expenses increased to $8.0 million for the nine months ended September 30, 2025 from $7.3 million for the nine months ended September 30, 2024. The increases were mainly due to higher information technology maintenance and data processing costs.
Income Tax Expense. Income tax expense was $10.0 million and $5.6 million for the three months ended September 30, 2025 and 2024, respectively, and $26.0 million and $16.7 million for the nine months ended September 30, 2025 and 2024, respectively. Our annual consolidated effective tax rates were 27.4% and 28.5% for the years 2025 and 2024, respectively.
Quarterly Results of Operations
The following table sets forth certain unaudited financial information for each of the last eight completed quarters. The quarterly information has been prepared on the same basis as the consolidated financial statements and includes all adjustments (consisting of normal recurring adjustments) that, in the opinion of management, are necessary for a fair presentation of the information presented. This information should be read in conjunction with the consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report. Operating results for interim periods are not necessarily indicative of the results that may be expected for a full year.
|
|
Three Months Ended |
|
|
|||||||||||||||||||||||||||||
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
September 30, |
|
|
June 30, |
|
|
March 31, |
|
|
December 31, |
|
|
||||||||
|
|
($ in thousands) |
|
|
|||||||||||||||||||||||||||||
|
|
(Unaudited) |
|
|
|||||||||||||||||||||||||||||
Interest income |
|
$ |
144,119 |
|
|
$ |
135,567 |
|
|
$ |
118,740 |
|
|
$ |
113,484 |
|
|
$ |
105,070 |
|
|
$ |
97,760 |
|
|
$ |
90,529 |
|
|
$ |
86,269 |
|
|
Interest expense - portfolio related |
|
|
88,899 |
|
|
|
81,838 |
|
|
|
75,088 |
|
|
|
68,484 |
|
|
|
63,871 |
|
|
|
59,188 |
|
|
|
55,675 |
|
|
|
51,405 |
|
|
Net interest income - portfolio related |
|
|
55,220 |
|
|
|
53,729 |
|
|
|
43,652 |
|
|
|
45,000 |
|
|
|
41,199 |
|
|
|
38,572 |
|
|
|
34,854 |
|
|
|
34,864 |
|
|
Net interest margin - portfolio related |
|
|
3.65 |
% |
|
|
3.82 |
% |
|
|
3.35 |
% |
|
|
3.70 |
% |
|
|
3.60 |
% |
|
|
3.54 |
% |
|
|
3.35 |
% |
|
|
3.52 |
% |
|
Interest expense - corporate debt |
|
|
6,144 |
|
|
|
6,143 |
|
|
|
6,142 |
|
|
|
6,143 |
|
|
|
6,143 |
|
|
|
6,155 |
|
|
|
5,380 |
|
|
|
4,140 |
|
|
Net interest income |
|
|
49,076 |
|
|
|
47,586 |
|
|
|
37,510 |
|
|
|
38,857 |
|
|
|
35,056 |
|
|
|
32,417 |
|
|
|
29,474 |
|
|
|
30,724 |
|
|
Net interest margin - total company |
|
|
3.25 |
% |
|
|
3.39 |
% |
|
|
2.88 |
% |
|
|
3.20 |
% |
|
|
3.06 |
% |
|
|
2.98 |
% |
|
|
2.83 |
% |
|
|
3.10 |
% |
|
Provision for (reversal of) credit losses |
|
|
381 |
|
|
|
1,598 |
|
|
|
1,872 |
|
|
|
22 |
|
|
|
(69 |
) |
|
|
218 |
|
|
|
1,002 |
|
|
|
827 |
|
|
Net interest income after provision for (reversal of) credit losses |
|
|
48,695 |
|
|
|
45,988 |
|
|
|
35,638 |
|
|
|
38,835 |
|
|
|
35,125 |
|
|
|
32,199 |
|
|
|
28,472 |
|
|
|
29,897 |
|
|
Other operating income |
|
|
37,077 |
|
|
|
39,847 |
|
|
|
33,446 |
|
|
|
32,330 |
|
|
|
20,732 |
|
|
|
22,561 |
|
|
|
25,775 |
|
|
|
21,670 |
|
|
Operating expenses |
|
|
50,397 |
|
|
|
51,913 |
|
|
|
42,190 |
|
|
|
39,127 |
|
|
|
34,613 |
|
|
|
34,887 |
|
|
|
31,011 |
|
|
|
29,260 |
|
|
Income before income taxes |
|
|
35,375 |
|
|
|
33,922 |
|
|
|
26,894 |
|
|
|
32,038 |
|
|
|
21,244 |
|
|
|
19,873 |
|
|
|
23,236 |
|
|
|
22,307 |
|
|
Income tax expense |
|
|
9,963 |
|
|
|
7,752 |
|
|
|
8,246 |
|
|
|
11,233 |
|
|
|
5,627 |
|
|
|
5,162 |
|
|
|
5,903 |
|
|
|
5,141 |
|
|
Net income |
|
|
25,412 |
|
|
|
26,170 |
|
|
|
18,648 |
|
|
|
20,805 |
|
|
|
15,617 |
|
|
|
14,711 |
|
|
|
17,333 |
|
|
|
17,166 |
|
|
Net income (loss) attributable to noncontrolling interest |
|
|
39 |
|
|
|
173 |
|
|
|
(239 |
) |
|
|
218 |
|
|
|
(186 |
) |
|
|
(67 |
) |
|
|
82 |
|
|
|
(189 |
) |
|
Net income attributable to Velocity Financial, Inc. |
|
$ |
25,373 |
|
|
$ |
25,997 |
|
|
$ |
18,887 |
|
|
$ |
20,587 |
|
|
$ |
15,803 |
|
|
$ |
14,778 |
|
|
$ |
17,251 |
|
|
$ |
17,355 |
|
|
54
Liquidity and Capital Resources
Sources and Uses of Liquidity
We fund our lending activities primarily through borrowings under our warehouse repurchase facilities, securitized debt, other corporate-level debt, equity and debt securities, and net cash provided by operating activities to manage our business. We use cash to originate and acquire investor real estate loans, repay principal and interest on our borrowings, fund our operations and meet other general business needs.
Cash and Cash Equivalents
Our total liquidity was $143.5 million as of September 30, 2025, comprised of $99.0 million in cash and $44.5 million in borrowings from available warehouse capacity on unencumbered loans. Our additional available warehouse capacity as of September 30, 2025, was $555.8 million, bringing total liquidity plus available warehouse capacity to $699.3 million.
We had cash of $99.0 million and $44.1 million, excluding restricted cash of $18.8 million and $23.2 million as of September 30, 2025 and 2024, respectively.
Cash Flows
The following table summarizes the net cash provided by (used in) operating activities, investing activities and financing activities for the periods indicated:
|
|
Nine Months Ended September 30, |
|
|||||
|
|
2025 |
|
|
2024 |
|
||
|
|
(In thousands) |
|
|||||
Cash provided by (used in): |
|
|
|
|
|
|
||
Operating activities |
|
$ |
22,650 |
|
|
$ |
4,482 |
|
Investing activities |
|
|
(1,271,685 |
) |
|
|
(689,013 |
) |
Financing activities |
|
|
1,296,015 |
|
|
|
689,865 |
|
Net change in cash, cash equivalents, and restricted cash |
|
$ |
46,980 |
|
|
$ |
5,334 |
|
Cash flows from operating activities primarily includes net income adjusted for: (1) cash used for origination of held for sale loans and the related cash proceeds from the sales of such loans, (2) non-cash items including valuation changes, provision for credit losses, discount accretion, and amortization of debt issuance discount and costs, and (3) changes in the balances of operating assets and liabilities.
For the nine months ended September 30, 2025, our net cash provided by operating activities consisted mainly of $70.2 million in net income, $47.0 million in proceeds from sale of loans held for sale, and $31.3 million change in valuation of securitized debt at fair value, partially offset by $95.7 million change in valuation of loans carried at fair value and $47.9 million in origination of loans held for sale.
For the nine months ended September 30, 2025, our net cash used in investing activities consisted mainly of $2.0 billion in cash used to originate loans held for investment at fair value, partially offset by $0.7 billion in cash received from payments of loans held for investment.
For the nine months ended September 30, 2025, our net cash provided by financing activities consisted mainly of $2.1 billion in borrowings from our warehouse and repurchase facilities and $2.0 billion in proceeds from issuing securitized debt. The cash generated was partially offset by repayments of $2.1 billion and $0.7 billion, on our warehouse and repurchase facilities and securitized debt, respectively.
During the nine months ended September 30, 2025 and 2024, we generated approximately $47.0 million and $5.3 million, respectively, of net cash and cash equivalents on operating, investing and financing activities.
Warehouse Facilities
As of September 30, 2025, we had five non-mark-to-market warehouse facilities, one mark-to-market warehouse facility, and one modified mark-to-market warehouse facility to support our loan origination and acquisition facilities. The maturity of our warehouse facilities ranges from one to three years. The borrowings are collateralized primarily by performing loans. All warehouse facilities are based on SOFR, plus margins ranging from 1.60% to 4.00%. Borrowing under these facilities was $334.7 million with $600.3 million of available capacity as of September 30, 2025.
Six warehouse facilities fund less than 100% and one warehouse facility funds at 100% of the principal balance of the mortgage loans we own, requiring us to use working capital to fund the remaining portion. We may need to use additional working
55
capital if loans become delinquent, because the amount permitted to be financed by the facilities may change based on the delinquency performance of the pledged collateral.
All borrower payments on loans financed under the warehouse facilities are segregated into pledged accounts with the loan servicer. All principal amounts in excess of the interest due are applied to reduce the outstanding borrowings under the warehouse facilities. The warehouse facilities also contain customary covenants, including financial covenants that require us to maintain minimum liquidity, a minimum net worth, a maximum debt-to-net worth ratio and a ratio of a minimum earnings before interest, taxes, depreciation and amortization of interest expense. If we fail to meet any of the covenants, or otherwise default under the facilities, the lenders have the right to terminate their facility and require immediate repayment, which may require us to sell our loans at less than optimal terms. As of September 30, 2025, we were in compliance with these covenants.
Securitized debt
From May 2011 through September 2025, we have completed 44 transactions, issuing $9.9 billion in principal amount of securities to third parties. All borrower payments are segregated into remittance accounts at the primary servicer and remitted to the trustee of each trust monthly. We are the sole beneficial interest holder of the applicable trusts, which are variable interest entities included in our consolidated financial statements. The transactions are accounted for as secured borrowings under U.S. GAAP. The following table summarizes the securities issued, securities retained by us at the time of the securitization, as of September 30, 2025 and December 31, 2024, and the stated maturity for each securitized debt. The securities are callable by us when the stated principal balance is less than a certain percentage, ranging from 10% to 30%, of the original stated principal balance of loans at issuance. As a result, the actual maturity date of the securities issued will likely be earlier than their respective stated maturity date.
|
|
|
|
|
Securities Retained as of |
|
|
|
||||||||||
Trusts |
|
Securities |
|
|
Issuance |
|
|
September 30, |
|
|
December 31, |
|
|
Stated Maturity |
||||
|
|
(In thousands) |
|
|
|
|||||||||||||
2017-2 Trust |
|
$ |
245,601 |
|
|
$ |
12,927 |
|
|
$ |
2,416 |
|
|
$ |
2,416 |
|
|
October 2047 |
2018-1 Trust |
|
|
176,816 |
|
|
|
9,308 |
|
|
|
1,602 |
|
|
|
1,602 |
|
|
April 2048 |
2018-2 Trust |
|
|
307,988 |
|
|
|
16,210 |
|
|
|
2,656 |
|
|
|
2,698 |
|
|
October 2048 |
2019-1 Trust |
|
|
235,580 |
|
|
|
12,399 |
|
|
|
2,167 |
|
|
|
— |
|
|
March 2049 |
2019-2 Trust |
|
|
207,020 |
|
|
|
10,901 |
|
|
|
1,887 |
|
|
|
— |
|
|
July 2049 |
2019-3 Trust |
|
|
154,419 |
|
|
|
8,127 |
|
|
|
1,926 |
|
|
|
— |
|
|
October 2049 |
2020-1 Trust |
|
|
248,700 |
|
|
|
13,159 |
|
|
|
3,935 |
|
|
|
— |
|
|
February 2050 |
2021-1 Trust |
|
|
251,301 |
|
|
|
13,227 |
|
|
|
7,147 |
|
|
|
— |
|
|
May 2051 |
2021-2 Trust |
|
|
194,918 |
|
|
|
10,260 |
|
|
|
— |
|
|
|
— |
|
|
August 2051 |
2021-3 Trust |
|
|
204,205 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
October 2051 |
2021-4 Trust |
|
|
319,116 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
December 2051 |
2022-1 Trust |
|
|
273,594 |
|
|
|
5,015 |
|
|
|
3,549 |
|
|
|
3,876 |
|
|
February 2052 |
2022-2 Trust |
|
|
241,388 |
|
|
|
11,202 |
|
|
|
8,446 |
|
|
|
9,246 |
|
|
March 2052 |
2022-MC1 Trust (1) |
|
|
84,967 |
|
|
|
40,911 |
|
|
|
— |
|
|
|
47,936 |
|
|
May 2047 |
2022-3 Trust |
|
|
296,323 |
|
|
|
18,914 |
|
|
|
17,013 |
|
|
|
15,489 |
|
|
May 2052 |
2022-4 Trust |
|
|
308,357 |
|
|
|
25,190 |
|
|
|
11,742 |
|
|
|
10,362 |
|
|
July 2052 |
2022-5 Trust |
|
|
188,754 |
|
|
|
65,459 |
|
|
|
16,443 |
|
|
|
12,649 |
|
|
October 2052 |
2023-1 Trust |
|
|
198,715 |
|
|
|
41,593 |
|
|
|
7,522 |
|
|
|
4,043 |
|
|
December 2052 |
2023-1R Trust (1) (2) |
|
|
64,833 |
|
|
|
66,228 |
|
|
|
— |
|
|
|
66,228 |
|
|
October 2025 |
2023-2 Trust |
|
|
202,210 |
|
|
|
24,229 |
|
|
|
3,357 |
|
|
|
6,714 |
|
|
April 2053 |
2023-RTL1 Trust (1) |
|
|
81,608 |
|
|
|
4,296 |
|
|
|
— |
|
|
|
4,296 |
|
|
July 2028 |
2023-3 Trust |
|
|
234,741 |
|
|
|
28,718 |
|
|
|
— |
|
|
|
9,146 |
|
|
July 2053 |
2023-4 Trust |
|
|
202,890 |
|
|
|
26,623 |
|
|
|
3,995 |
|
|
|
3,995 |
|
|
November 2053 |
2024-1 Trust |
|
|
209,862 |
|
|
|
11,278 |
|
|
|
— |
|
|
|
11,229 |
|
|
January 2054 |
2024-2 Trust |
|
|
286,235 |
|
|
|
8,853 |
|
|
|
8,767 |
|
|
|
8,767 |
|
|
April 2054 |
2024-3 Trust |
|
|
204,599 |
|
|
|
5,255 |
|
|
|
— |
|
|
|
5,211 |
|
|
June 2054 |
2024-4 Trust |
|
|
253,612 |
|
|
|
3,080 |
|
|
|
2,372 |
|
|
|
3,064 |
|
|
July 2054 |
2024-5 Trust |
|
|
292,880 |
|
|
|
7,510 |
|
|
|
3,740 |
|
|
|
7,481 |
|
|
October 2054 |
2024-6 Trust |
|
|
293,895 |
|
|
|
7,690 |
|
|
|
7,627 |
|
|
|
7,687 |
|
|
December 2054 |
2025-1 Trust |
|
|
342,791 |
|
|
|
8,790 |
|
|
|
8,779 |
|
|
|
— |
|
|
February 2055 |
2025-RTL1 Trust |
|
|
111,395 |
|
|
|
5,864 |
|
|
|
5,864 |
|
|
|
— |
|
|
March 2030 |
2025-2 Trust |
|
|
377,526 |
|
|
|
15,117 |
|
|
|
14,773 |
|
|
|
— |
|
|
April 2055 |
2025-MC1 Trust |
|
|
114,136 |
|
|
|
27,210 |
|
|
|
25,703 |
|
|
|
— |
|
|
May 2055 |
2025-3 Trust |
|
|
382,461 |
|
|
|
9,809 |
|
|
|
9,749 |
|
|
|
— |
|
|
June 2055 |
2025-P1 Trust |
|
|
190,865 |
|
|
|
3,895 |
|
|
|
3,852 |
|
|
|
— |
|
|
July 2055 |
2025-4 Trust |
|
|
457,543 |
|
|
|
11,731 |
|
|
|
11,706 |
|
|
|
— |
|
|
September 2055 |
Total |
|
$ |
8,441,844 |
|
|
$ |
590,978 |
|
|
$ |
198,735 |
|
|
$ |
244,135 |
|
|
|
56
The following table summarizes outstanding bond balances for each securitized debt as of September 30, 2025 and December 31, 2024:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
|
|
(In thousands) |
|
|||||
2017-2 Trust |
|
$ |
24,777 |
|
|
$ |
33,012 |
|
2018-1 Trust |
|
|
20,316 |
|
|
|
24,482 |
|
2018-2 Trust |
|
|
49,537 |
|
|
|
59,091 |
|
2019-1 Trust |
|
|
51,857 |
|
|
|
60,459 |
|
2019-2 Trust |
|
|
40,578 |
|
|
|
46,872 |
|
2019-3 Trust |
|
|
39,517 |
|
|
|
46,827 |
|
2020-1 Trust |
|
|
80,474 |
|
|
|
91,135 |
|
2021-1 Trust |
|
|
133,860 |
|
|
|
152,995 |
|
2021-2 Trust |
|
|
113,156 |
|
|
|
125,391 |
|
2021-3 Trust |
|
|
122,053 |
|
|
|
136,510 |
|
2021-4 Trust |
|
|
196,435 |
|
|
|
214,284 |
|
2022-1 Trust |
|
|
196,937 |
|
|
|
217,190 |
|
2022-2 Trust |
|
|
174,872 |
|
|
|
191,764 |
|
2022-MC1 Trust (1) |
|
|
— |
|
|
|
12,041 |
|
2022-3 Trust |
|
|
209,884 |
|
|
|
234,647 |
|
2022-4 Trust |
|
|
210,757 |
|
|
|
232,064 |
|
2022-5 Trust |
|
|
148,323 |
|
|
|
132,519 |
|
2023-1 Trust |
|
|
143,066 |
|
|
|
144,724 |
|
2023-1R Trust (1) |
|
|
— |
|
|
|
38,508 |
|
2023-2 Trust |
|
|
128,229 |
|
|
|
157,198 |
|
2023-RTL1 Trust (1) |
|
|
— |
|
|
|
81,608 |
|
2023-3 Trust |
|
|
157,912 |
|
|
|
195,799 |
|
2023-4 Trust |
|
|
143,803 |
|
|
|
181,307 |
|
2024-1 Trust |
|
|
143,970 |
|
|
|
178,234 |
|
2024-2 Trust |
|
|
211,331 |
|
|
|
260,500 |
|
2024-3 Trust |
|
|
172,893 |
|
|
|
191,583 |
|
2024-4 Trust |
|
|
199,697 |
|
|
|
243,945 |
|
2024-5 Trust |
|
|
258,487 |
|
|
|
290,552 |
|
2024-6 Trust |
|
|
266,804 |
|
|
|
293,767 |
|
2025-1 Trust |
|
|
322,347 |
|
|
|
— |
|
2025-RTL1 Trust |
|
|
111,395 |
|
|
|
— |
|
2025-2 Trust |
|
|
358,915 |
|
|
|
— |
|
2025-MC1 Trust |
|
|
101,164 |
|
|
|
— |
|
2025-3 Trust |
|
|
374,345 |
|
|
|
— |
|
2025-P1 Trust |
|
|
188,775 |
|
|
|
— |
|
2025-4 Trust |
|
|
456,573 |
|
|
|
— |
|
Total |
|
$ |
5,553,039 |
|
|
$ |
4,269,008 |
|
57
As of September 30, 2025 and December 31, 2024, the weighted average annualized rates on the securities and certificates for the Trusts were as follows:
|
|
September 30, 2025 |
|
|
December 31, 2024 |
|
||
2017-2 Trust |
|
|
4.21 |
% |
|
|
4.09 |
% |
2018-1 Trust |
|
|
4.38 |
|
|
|
4.13 |
|
2018-2 Trust |
|
|
4.52 |
|
|
|
4.47 |
|
2019-1 Trust |
|
|
4.10 |
|
|
|
4.07 |
|
2019-2 Trust |
|
|
3.48 |
|
|
|
3.41 |
|
2019-3 Trust |
|
|
3.30 |
|
|
|
3.30 |
|
2020-1 Trust |
|
|
2.86 |
|
|
|
2.88 |
|
2021-1 Trust |
|
|
1.78 |
|
|
|
1.76 |
|
2021-2 Trust |
|
|
2.05 |
|
|
|
2.04 |
|
2021-3 Trust |
|
|
2.47 |
|
|
|
2.47 |
|
2021-4 Trust |
|
|
3.27 |
|
|
|
3.25 |
|
2022-1 Trust |
|
|
3.95 |
|
|
|
3.94 |
|
2022-2 Trust |
|
|
5.00 |
|
|
|
5.06 |
|
2022-MC1 Trust |
|
|
— |
|
|
|
6.90 |
|
2022-3 Trust |
|
|
5.64 |
|
|
|
5.72 |
|
2022-4 Trust |
|
|
6.22 |
|
|
|
6.21 |
|
2022-5 Trust |
|
|
7.29 |
|
|
|
7.04 |
|
2023-1 Trust |
|
|
7.21 |
|
|
|
7.02 |
|
2023-1R Trust |
|
|
— |
|
|
|
7.57 |
|
2023-2 Trust |
|
|
7.72 |
|
|
|
7.33 |
|
2023-RTL1 Trust |
|
|
— |
|
|
|
8.24 |
|
2023-3 Trust |
|
|
8.21 |
|
|
|
7.94 |
|
2023-4 Trust |
|
|
8.31 |
|
|
|
8.33 |
|
2024-1 Trust |
|
|
8.11 |
|
|
|
7.75 |
|
2024-2 Trust |
|
|
7.03 |
|
|
|
7.11 |
|
2024-3 Trust |
|
|
7.20 |
|
|
|
7.20 |
|
2024-4 Trust |
|
|
7.38 |
|
|
|
7.08 |
|
2024-5 Trust |
|
|
6.18 |
|
|
|
6.14 |
|
2024-6 Trust |
|
|
6.14 |
|
|
|
5.92 |
|
2025-1 Trust |
|
|
6.61 |
|
|
|
— |
|
2025-RTL1 Trust |
|
|
7.17 |
|
|
|
— |
|
2025-2 Trust |
|
|
6.60 |
|
|
|
— |
|
2025-MC1 Trust |
|
|
8.40 |
|
|
|
— |
|
2025-3 Trust |
|
|
6.45 |
|
|
|
— |
|
2025-P1 Trust |
|
|
6.56 |
|
|
|
— |
|
2025-4 Trust |
|
|
5.80 |
|
|
|
— |
|
Our intent is to use the proceeds from the issuance of new securities primarily to repay our warehouse borrowings and originate new investor real estate loans in accordance with our underwriting guidelines, as well as for general corporate purposes. Our financing sources may include borrowings in the form of additional bank credit facilities (including term loans and revolving credit facilities), agreements, warehouse facilities and other sources of private financing. We also plan to continue using securitized debt as long-term financing for our portfolio, and we do not plan to structure any securitized debt as sales or utilize off-balance-sheet vehicles. We believe any financing of assets and/or securitized debt we may undertake will be sufficient to fund our working capital requirements.
Secured Financing (Corporate Debt)
On March 15, 2022, we entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. Interest on the 2022 Term Loan is paid every six months.
On February 5, 2024, the Company entered into a five-year $75.0 million syndicated corporate debt agreement, (“the 2024 Term Loan”). The 2024 Term Loan bears interest at 9.875% and matures on February 15, 2029. Interest on the 2024 Term Loan is paid every six months.
58
At-The-Market Equity Offering Program
On September 3, 2021, we entered into separate Equity Distribution Agreements with counterparties to establish an at-the-market equity offering program (“ATM Program”) where we may issue and sell, from time to time, shares of our common stock. Our ATM Program allows for aggregate gross sales of our common stock of up to $50,000,000 provided that the number of shares sold under the ATM Program does not exceed 4,000,000.
On May 3, 2024, we entered into separate Equity Distribution Agreements, each as amended by Amendment No. 1 to such agreement, dated December 12, 2024, with counterparties to establish a successor ATM Program, with substantially the same terms as the prior Equity Distribution Agreements noted above, under which we may issue and sell, from time to time, shares of our common stock up to $50,000,000 provided that the number of shares sold under the ATM Program does not exceed 4,000,000.
On April 11, 2025, we entered into separate Amendment No. 2 (the “Amendments”) to the Equity Distribution Agreements, each dated as of May 3, 2024, each as amended by Amendment No. 1 thereto, each dated December 12, 2024. The Amendments increased the maximum aggregate offering amount of shares of the Company’s common stock that may be sold pursuant to the Equity Distribution Agreements, from $50,000,000 to $100,000,000, and increased the maximum number of shares that may be sold pursuant to the Equity Distribution Agreements from 4,000,000 to 6,000,000.
The following table summarizes the activity in our ATM Program for the periods indicated:
|
Three Months Ended September 30, |
|
|
Nine Months Ended September 30, |
|
||||||||||
|
2025 |
|
|
2024 |
|
|
2025 |
|
|
2024 |
|
||||
|
(In thousands, except per share amount) |
|
|||||||||||||
Number of shares sold |
|
471 |
|
|
|
11 |
|
|
|
2,067 |
|
|
|
20 |
|
Net sale proceeds |
$ |
8,834 |
|
|
$ |
190 |
|
|
$ |
38,120 |
|
|
$ |
344 |
|
Weighted average price per share |
$ |
19.04 |
|
|
$ |
18.10 |
|
|
$ |
18.74 |
|
|
$ |
17.34 |
|
Contractual Obligations and Commitments
On March 15, 2022, we entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. Interest on the 2022 Term Loan is paid every six months.
On February 5, 2024, the Company entered into a five-year $75.0 million syndicated corporate debt agreement, (“the 2024 Term Loan”). The 2024 Term Loan bears interest at 9.875% and matures on February 15, 2029. Interest on the 2024 Term Loan is paid every six months.
As of September 30, 2025, we maintained warehouse facilities to finance our investor real estate loans and had approximately $334.7 million in outstanding borrowings with $600.3 million of available capacity under our warehouse and repurchase facilities.
Off-Balance-Sheet Arrangements
At no time have we maintained any relationships with unconsolidated entities or financial partnerships, such as entities referred to as structured finance, or special-purpose or variable interest entities, established for the purpose of facilitating off-balance-sheet arrangements or other contractually narrow or limited purposes. Further, we have never guaranteed any obligations of unconsolidated entities or entered into any commitment or intent to provide funding to any such entities.
59
Forward-Looking Statements
This Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the “safe harbor” created by those sections. All statements (other than statements of historical facts) in this Quarterly Report regarding the prospects of the industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as “may,” “should,” “expect,” “intend,” “will,” “estimate,” “anticipate,” “plan,” “believe,” “predict,” “potential” or “continue” or the negatives of these terms or variations of them or similar terminology. Forward-looking statements may contain expectations regarding our operations, including our loan originations, our ability to resolve non-performing loans and avoid losses on non-performing loans and the disposition of REOs and other results, and may include statements of future performance, plans and objectives. Forward looking statements also include statements pertaining to our strategies for future funding and development of our business and products, including the future results of our at-the-market equity offering program. Although we believe that the expectations reflected in these forward-looking statements have a reasonable basis, we cannot provide any assurance that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our operations, results of operations and future financial performance. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in this Quarterly Report and other documents we file. You should read and interpret any forward-looking statement together with these documents, including the following:
Any forward-looking statement speaks only as of the date on which that statement is made. We will not update any forward-looking statement to reflect events or circumstances that occur after the date on which the statement is made, except as required by applicable law.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Intentionally omitted pursuant to smaller reporting company reduced disclosure requirements.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Exchange Act as of the end of the period covered by this report. Our disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosure. Any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objective, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.
In accordance with Rule 13a-15(b) of the Exchange Act, our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by this quarterly report and has concluded that our disclosure controls and procedures, as of such date, were effective to accomplish their objectives at a reasonable assurance level. Management concluded that the consolidated financial statements for the periods covered by and included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations and cash flows for the periods presented in conformity with U.S. GAAP.
Changes in Internal Control over Financial Reporting.
During the period to which this report relates, there have not been any changes in the Company's internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected, or that are reasonably likely to materially affect, such controls.
60
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
From time to time, in the ordinary course of business, we are involved in various judicial, regulatory or administrative claims, proceedings and investigations. These proceedings and actions may include, among other things, allegations of violation of banking and other applicable regulations, competition law, labor laws and consumer protection laws, as well as claims or litigation relating to intellectual property, securities, breach of contract and tort. Although occasional adverse decisions or settlements may occur, our management does not believe that the final disposition of any currently pending or threatened matter will have a material adverse effect on our business, financial position, results of operations or cash flows.
Item 1A. Risk Factors.
Intentionally omitted pursuant to smaller reporting company reduced disclosure requirements.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
The following table provides information on common stock purchases made by us during the three months ended September 30, 2025.
Period |
|
Total Number of Shares Purchased (1) (2) |
|
|
Average Price Paid Per Share |
|
|
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
|
|
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs |
|
||||
July 2025 |
|
|
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
August 2025 |
|
|
9,600 |
|
|
|
18.74 |
|
|
|
— |
|
|
|
— |
|
September 2025 |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Total |
|
|
9,600 |
|
|
$ |
18.74 |
|
|
|
— |
|
|
$ |
— |
|
Item 3. Defaults Upon Senior Securities.
Not applicable.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Trading Arrangements and Policies
On
On
61
Item 6. Exhibits.
The exhibits below are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
|
|
|
Incorporated by Reference |
|||
Exhibit Number |
|
Exhibit Title |
Form |
File No. |
Exhibit |
Filing Date |
|
|
|
|
|
|
|
3.1 |
|
Certificate of Conversion |
8-K |
001-39183 |
3.1 |
1/22/2020 |
|
|
|
|
|
|
|
3.2 |
|
Restated Certificate of Incorporation of Velocity Financial, Inc. |
8-K |
001-39183 |
3 |
5/23/2022 |
|
|
|
|
|
|
|
3.3 |
|
Amended and Restated Bylaws of Velocity Financial, Inc. |
8-K |
001-39183 |
3.2 |
3/25/2022 |
|
|
|
|
|
|
|
4.1 |
|
Form of Stock Certificate for Common Stock |
S-1 |
333-234250 |
4.1 |
10/18/2019 |
|
|
|
|
|
|
|
4.2 |
|
Form of Warrant to Purchase Common Stock |
8-K |
001-39183 |
4.1 |
4/7/2020 |
|
|
|
|
|
|
|
4.3 |
|
Description of the Registrant’s Securities |
10K |
001-39183 |
4.3 |
4/7/2020 |
|
|
|
|
|
|
|
10.1 |
|
Stockholders Agreement, dated as of January 16, 2020 |
10-K |
001-39183 |
10.1 |
4/7/2020 |
|
|
|
|
|
|
|
10.2 |
|
Registration Rights Agreement, dated as of January 16, 2020 |
10-K |
001-39183 |
10.2 |
4/7/2020 |
|
|
|
|
|
|
|
10.3 |
|
Registration Rights Agreement, dated as of April 7, 2020 |
8-K |
333-234250 |
10.1 |
4/7/2020 |
|
|
|
|
|
|
|
10.4 |
|
Securities Purchase Agreement among Velocity Financial, Inc. and the Purchasers Party thereto dated April 5, 2020 |
8-K |
001-39183 |
10.1 |
4/6/2020 |
|
|
|
|
|
|
|
10.5 |
|
Velocity Financial, Inc. Employee Stock Purchase Plan* |
DEF 14A |
001-39183 |
AII |
4/8/2022 |
|
|
|
|
|
|
|
10.6 |
|
Amended and Restated Velocity Financial, Inc. 2020 Omnibus Incentive Plan* |
DEF 14A |
001-39183 |
AI |
4/11/2025 |
|
|
|
|
|
|
|
10.7 |
|
Form of Nonqualified Stock Option Award Notice and Agreement under the 2020 Omnibus Incentive Plan* |
S-1/A |
333-234250 |
10.6 |
1/6/2020 |
|
|
|
|
|
|
|
10.8 |
|
Form of Nonqualified Stock Option Award Notice and Agreement (Director Grant-IPO) under the 2020 Omnibus Incentive Plan* |
S-1/A |
333-234250 |
10.7 |
1/6/2020 |
|
|
|
|
|
|
|
10.9 |
|
Form of Nonqualified Stock Option Award Notice and Agreement (Executive Officer Grant-IPO) under the 2020 Omnibus Incentive Plan* |
S-1/A |
333-234250 |
10.8 |
1/6/2020 |
|
|
|
|
|
|
|
10.10 |
|
Form of Restricted Stock Unit Grant and Agreement (Director Grant) under the 2020 Omnibus Incentive Plan* |
S-1/A |
333-234250 |
10.9 |
1/6/2020 |
|
|
|
|
|
|
|
10.11 |
|
Form of Restricted Stock Unit Grant and Agreement (Standard Grant) under the 2020 Omnibus Incentive Plan* |
S-1/A |
333-234250 |
10.10 |
1/6/2020 |
|
|
|
|
|
|
|
10.12 |
|
Form of Restricted Stock Grant and Agreement under the 2020 Omnibus Incentive Plan* |
S-1/A |
333-234250 |
10.11 |
1/6/2020 |
|
|
|
|
|
|
|
10.13 |
|
Velocity Financial 2025 Annual Cash Incentive and Performance Stock Units Programs for Messrs. Farrar, Szczepaniak and Taylor* |
8-K |
001-39183 |
- |
1/22/2025 |
|
|
|
|
|
|
|
10.14 |
|
Form of Equity Distribution Agreement, dated May 3, 2024 |
8-K |
001-39183 |
1.1 |
5/3/2024 |
|
|
|
|
|
|
|
10.15 |
|
Form of Amendment No. 1 to Equity Distribution Agreement, dated December 12, 2024 |
10-K |
001-39183 |
10.15 |
3/12/2025 |
|
|
|
|
|
|
|
10.16 |
|
Form of Officer and Director Indemnity Agreement* |
S-1/A |
333-234250 |
10.37 |
11/6/2019 |
|
|
|
|
|
|
|
10.17 |
|
Form of Performance Stock Unit Grant and Agreement* |
10-K |
001-39183 |
10.16 |
3/15/2024 |
|
|
|
|
|
|
|
10.18 |
|
Note Purchase Agreement Dated as of March 15, 2022, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association, as collateral agent, and the respective purchasers of the Notes. |
8-K |
001-39183 |
10.1 |
3/16/2022 |
|
|
|
|
|
|
|
10.19 |
|
Security Agreement, dated as of March 15, 2022, among Velocity Financial, Inc., Velocity Commercial Capital, LLC and U.S. Bank Trust Company, National Association, as collateral agent. |
8-K |
001-39183 |
10.2 |
3/16/2022 |
|
|
|
|
|
|
|
10.20 |
|
Velocity Financial, Inc. Incentive Compensation Clawback Policy* |
8-K |
001-39183 |
99 |
2/7/2024 |
|
|
|
|
|
|
|
62
10.21 |
|
Form of Note Purchase Agreement, dated as of February 5, 2024, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association, as Collateral Agent and the respective purchasers of the Notes. |
8-K |
001-39183 |
10.1 |
2/6/2024 |
|
|
|
|
|
|
|
10.22 |
|
Security Agreement, dated as of February 5, 2024, among Velocity Financial, Inc., Velocity Commercial Capital, LLC and U.S. Bank Trust Company, National Association. |
8-K |
001-39183 |
10.2 |
2/6/2024 |
|
|
|
|
|
|
|
10.23 |
|
Equal Priority Intercreditor Agreement, dated as of February 5, 2024, among Velocity Financial, Inc., Velocity Commercial Capital, LLC, U.S. Bank Trust Company, National Association as the 2027 Notes Collateral Agent and U.S. Bank Trust Company, National Association as the 2029 Notes Collateral Agent. |
8-K |
001-39183 |
10.3 |
2/6/2024 |
|
|
|
|
|
|
|
10.24 |
|
Form of Amendment No. 2 to Equity Distribution Agreement, dated April 11, 2025 |
10-Q |
001-39183 |
10.24 |
5/1/2025 |
|
|
|
|
|
|
|
19.1 |
|
Securities Trading Policy |
10-K |
001-39183 |
19.1 |
3/12/2025 |
|
|
|
|
|
|
|
31.1 |
|
Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
31.2 |
|
Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 |
|
|
|
|
|
|
|
|
|
|
|
32.1 |
|
Certification of Principal Executive Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ |
|
|
|
|
|
|
|
|
|
|
|
32.2 |
|
Certification of Principal Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002+ |
|
|
|
|
|
|
|
|
|
|
|
101 |
|
Interactive data files pursuant to Rule 405 of Regulation S-T: (i) the Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024 (ii) the Consolidated Statements of Income for the three and nine months ended September 30, 2025 and 2024, (iii) the Consolidated Statements of Changes in Stockholders’ Equity for the three and nine months ended September 30, 2025 and 2024, (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024 and (v) the Notes to unaudited Consolidated Financial Statements. |
||||
101.INS |
|
Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
||||
101.SCH |
|
Inline XBRL Taxonomy Extension Schema with Embedded Linkbases Document |
||||
104 |
|
Cover Page Interactive Data File (embedded within the Inline XBRL document). |
||||
* Management contract or compensatory plan or arrangement.
+ This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act
63
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
|
|
VELOCITY FINANCIAL, INC. |
||
|
|
|
|
|
Date: November 6, 2025 |
|
By: |
|
/s/ Christopher D. Farrar |
|
|
|
|
Christopher D. Farrar |
|
|
|
|
Chief Executive Officer |
|
|
|
|
|
Date: November 6, 2025 |
|
By: |
|
/s/ Mark R. Szczepaniak |
|
|
|
|
Mark R. Szczepaniak |
|
|
|
|
Chief Financial Officer |
64
FAQ
What was Velocity Financial (VEL) Q3 2025 net income and EPS?
How did VEL’s net interest income change year over year?
What drove other operating income for VEL in Q3 2025?
What were Velocity Financial’s total assets as of September 30, 2025?
How did operating expenses trend for VEL in Q3 2025?
What was VEL’s total equity at quarter end?
How many VEL shares were outstanding as of October 31, 2025?
