Velocity Financial (NYSE: VEL) grows Q1 2026 earnings and loan book

Rhea-AI Filing Summary

Velocity Financial, Inc. reported stronger results for the quarter ended March 31, 2026. Net income rose to $22.4 million from $18.9 million a year earlier, while core net income increased to $26.5 million from $20.3 million. Diluted EPS was $0.57 versus $0.51, and core diluted EPS was $0.68 versus $0.55.

Net revenue grew to $85.2 million, up from $69.1 million, driven by higher net interest income of $43.9 million and other operating income of $43.0 million. The loan portfolio expanded to $6.84 billion from $5.45 billion, with total loans outstanding up 25.4%. Portfolio net interest margin improved to 3.56% from 3.35%, while total company net interest margin declined to 2.65% from 2.88%. Nonperforming loans as a percentage of total unpaid principal balance improved to 10.1% from 10.8%. Diluted book value per share increased to $17.75 from $17.19 at year-end 2025.

Positive

• Strong year-over-year earnings growth: Net income rose to $22.4 million from $18.9 million, and core net income increased to $26.5 million from $20.3 million, with core diluted EPS up to $0.68 from $0.55.
• Robust portfolio expansion with improved portfolio NIM: Total loans outstanding grew 25.4% to $6.84 billion, while portfolio net interest margin widened to 3.56% from 3.35%, supporting higher net interest income.
• Credit ratios modestly better: Nonperforming loans as a percentage of total unpaid principal balance improved to 10.1% from 10.8%, indicating slightly stronger portfolio performance despite higher absolute NPL balances.

Negative

• Margin pressure at total company level: Total company net interest margin declined to 2.65% from 2.88%, showing that higher funding and corporate debt costs are offsetting some portfolio-level gains.
• Operating expenses rising faster than a year ago: Operating expenses increased to $54.3 million from $42.2 million, up 28.8%, which is higher than the 23.4% increase in net revenue.
• Higher losses on existing real estate owned: Total loss on existing REO widened to $3.3 million from $1.8 million, reflecting greater valuation and sale-related losses in the period.

Insights

Banking & Specialty Finance Analyst

Velocity delivered double‑digit profit growth with a larger loan book and mixed margin trends.

Velocity Financial posted net income of $22.4 million for Q1 2026, up from $18.9 million, and core net income of $26.5 million. Net revenue rose to $85.2 million, helped by higher portfolio net interest income and other operating income.

The loan portfolio grew to $6.84 billion, up 25.4% year over year, with portfolio net interest margin improving to 3.56%. At the same time, total company net interest margin declined to 2.65%, and operating expenses increased to $54.3 million, outpacing revenue growth.

Credit metrics were generally stable to slightly better: nonperforming loans as a share of total unpaid principal declined to 10.1% from 10.8%, and CECL nonperforming ratios edged lower. Future disclosures in company filings may provide more detail on how growth, funding costs, and credit performance evolve across subsequent quarters.

8-K Event Classification

2 items: 2.02, 9.01

2 items

Item 2.02 Results of Operations and Financial Condition Financial

Disclosure of earnings results, typically an earnings press release or preliminary financials.

Item 9.01 Financial Statements and Exhibits Exhibits

Financial statements, pro forma financial information, and exhibit attachments filed with this report.

Key Figures

Net income Q1 2026: $22.4 million Core net income Q1 2026: $26.5 million Diluted EPS Q1 2026: $0.57 per share +5 more

8 metrics

Net income Q1 2026 $22.4 million Quarter ended March 31, 2026 vs $18.9M in Q1 2025

Core net income Q1 2026 $26.5 million Quarter ended March 31, 2026 vs $20.3M in Q1 2025

Diluted EPS Q1 2026 $0.57 per share Compared to $0.51 per diluted share in Q1 2025

Core diluted EPS Q1 2026 $0.68 per share Compared to $0.55 per diluted share in Q1 2025

Total loans outstanding $6.84 billion As of March 31, 2026 vs $5.45B a year earlier

Portfolio net interest margin 3.56% Quarter ended March 31, 2026 vs 3.35% in Q1 2025

Total company net interest margin 2.65% Quarter ended March 31, 2026 vs 2.88% in Q1 2025

NPL ratio 10.1% Nonperforming loans UPB / total UPB vs 10.8% in Q1 2025

Key Terms

net interest margin, nonperforming loans, CECL, real estate owned, +2 more

6 terms

net interest margin financial

"Net interest margin — portfolio related 3.56% (1) and total company 2.65% (1)"

Net interest margin measures how much a bank earns from lending and investing compared with what it pays for funding, expressed as a percentage of its interest-earning assets. Think of it like a grocery store’s markup: it shows the gap between buying cost and selling price per dollar of goods — here, the cost is interest paid and the sale is interest received. Investors watch it because a higher margin usually means a bank is more profitable and better at managing interest rate and credit conditions.

nonperforming loans financial

"Nonperforming loans UPB $692,073 and Nonperforming loans UPB / Total UPB 10.1%"

Nonperforming loans are loans on which borrowers have stopped making the scheduled interest or principal payments for an extended period (commonly 90 days or more) or are otherwise in serious danger of default. Think of them as IOUs that aren’t being repaid: they tie up a lender’s money, reduce future interest income, and force the lender to hold extra reserves or take losses. For investors, a rising share of nonperforming loans signals weakening credit quality, higher potential losses, and greater risk to a bank’s profitability and capital.

CECL financial

"Total UPB subject to CECL $1,937,474 and Allowance for credit losses / Total UPB subject to CECL 0.25%"

An accounting standard that requires banks and other lenders to estimate and record expected credit losses for loans and similar financial assets up front, based on historical experience, current conditions and reasonable forecasts. It matters to investors because it changes how much a firm must set aside as a loss reserve, which directly affects reported profits, capital levels and perceived financial strength—think of it as stocking a reserve for future bad loans before the rain starts.

real estate owned financial

"Real estate owned, net $131,849 and Total (loss) on existing REO $(3,346)"

Real estate owned (REO) describes properties that a lender has taken ownership of after a borrower failed to keep up mortgage payments and the bank completed the repossession process. It matters to investors because REO shows up on a lender’s books as unsold inventory—affecting the lender’s financial health, cash flow and future profits—and presents buying opportunities or risks for real estate investors due to repair, holding, and resale costs.

core net income financial

"Core net income $26,482 compared to $20,253 and Core diluted earnings per share $0.68"

Core net income is the company’s profit after taxes from its ordinary, ongoing business activities, excluding one-time gains, losses or unusual items. Think of it like a household’s regular salary minus one-off windfalls or repairs — it shows the steady earnings the business can be expected to produce. Investors use it to judge the company’s underlying performance and to compare profitability across periods without distortion from rare events.

pre-tax return on average equity financial

"Pre-tax return on average equity 18.1% (1) and Core pre-tax return on average equity 21.5% (1)"

Earnings Snapshot

Net income: $22.4 million

Q1 2026

Net income $22.4 million +18.4% YoY

Core net income $26.5 million +30.8% YoY

Diluted EPS $0.57 +11.8% YoY

Core diluted EPS $0.68 +23.6% YoY

Total loans outstanding $6.84 billion +25.4% YoY

Portfolio net interest margin 3.56% +0.21 percentage points YoY

Understanding 8-K Material Events →

false 0001692376 0001692376 2026-05-06 2026-05-06

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 6, 2026

Velocity Financial, Inc.

(Exact name of Registrant as Specified in Its Charter)

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

2945 Townsgate Road, Suite 110
Westlake Village, California		91361
(Address of Principal Executive Offices)		(Zip Code)

Registrant’s Telephone Number, Including Area Code: (818) 532-3700

Not Applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

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

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02 Results of Operations and Financial Condition.

On May 6, 2026 we issued a press release announcing financial results for the quarter ended March 31, 2026. The press release is attached as Exhibit 99 and is incorporated herein by reference.

The information provided in Item 2.02, including Exhibit 99, is intended to be furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.

Item 9.01 Exhibits.

Exhibit Number		Description
99		Press Release dated May 6, 2026
104		Cover Page Interactive Data File (embedded within the Inline XBRL document).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

				Velocity Financial, Inc.
Date: May 6, 2026				By:		/s/ Roland T. Kelly
						Roland T. Kelly
						Chief Legal Officer and General Counsel

Exhibit 99

Velocity Financial, Inc. Reports

First Quarter 2026 Results

First Quarter Highlights

Financial Results

• Net income of $22.4 million, an increase of 18.4% from $18.9 million for 1Q25. Diluted EPS of $0.57, an increase of $0.06 from $0.51 per share for 1Q25

• Driven by loan portfolio growth and strong portfolio earnings

• Core net income of $26.5 million, an increase of 30.8% from $20.3 million for 1Q25. Core diluted EPS of $0.68, an increase from $0.55 per share for 1Q25¹

• Diluted book value per common share of $17.75, an increase of 19.4% from $14.87 as of March 31, 2025

• Portfolio net interest margin (NIM) of 3.56%, an increase of 21 bps from 3.35% for 1Q25

• Consistently strong NIM levels have resulted from rate discipline on new loan production, with average loan coupons of 10.28% on loans produced over the last five quarters

Portfolio

• Loan production of $639.4 million, flat with $640.4 million in 1Q25

• Nonperforming loans (NPL) as a percentage of Held for Investment (HFI) loans was 10.1%, a decrease from 10.8% as of March 31, 2025

• NPL resolutions totaled $70.1 million in UPB

• Net gains of 102.3% or $1.6 million

• Total NPL recoveries of 106.5% or $4.6 million of UPB resolved including accrued interest received

Liquidity and Capitalization

• Completed two securitizations totaling $513.8 million

• Liquidity of $329.0 million, consisting of $87.1 million in unrestricted cash and $241.9 million in available borrowings from unpledged loans

• Total available warehouse line capacity of $835.6 million

¹  Core net income and core diluted EPS are non-GAAP financial measures. Non-GAAP core adjustments include stock-based compensation expenses and costs related to the Company’s employee stock purchase plan. See “Non-GAAP Financial Measures” and “Non-GAAP Financial Measure Reconciliations to GAAP Measures” at the end of this press release for more information regarding the use of non-GAAP measures.

1

Westlake Village, CA – May 6, 2026 – Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company), a leader in business purpose loans, reported net income of $22.4 million and core net income of $26.5 million for 1Q26, compared to $18.9 million and $20.3 million, respectively, for 1Q25. Earnings and core earnings per diluted share were $0.57 and $0.68 for 1Q26, compared to $0.51 and $0.55, respectively, for 1Q25.

“Velocity continued to deliver impressive earnings in the first quarter of 2026” said Chris Farrar, President and CEO. “Velocity’s first quarter 2026 results were driven by higher portfolio net interest income and noninterest income from our growing portfolio and new production volume. Financing demand remained strong during the quarter, in both the traditional commercial and 1-4 family residential rental property markets, as investors continued to see considerable value in smaller commercial properties. We remain confident in Velocity’s long-term growth prospects and our ability to sustain profitable market share growth.”

Operating Results

Key Performance Indicators²

		Three Months Ended March 31,
		2026				2025				Variance				% Variance
		($ in thousands, except per share amounts)
Income before income tax		$	30,877			$	26,894			$	3,983				14.8	%
Net income		$	22,363			$	18,887			$	3,476				18.4	%
Diluted earnings per share		$	0.57			$	0.51			$	0.06				11.8	%
Core income before income tax		$	36,684			$	29,103			$	7,581				26.0	%
Core net income		$	26,482			$	20,253			$	6,229				30.8	%
Core diluted earnings per share		$	0.68			$	0.55			$	0.13				23.6	%
Net interest margin — portfolio related			3.56	%(1)			3.35	%(1)			0.21	%			6.3	%
Net interest margin — total company			2.65	%(1)			2.88	%(1)			(0.23	)%			(8.0	)%
Average common equity		$	682,417			$	534,940			$	147,477				27.6	%
Pre-tax return on average equity			18.1	%(1)			20.1	%(1)			(2.0	)%			(10.0	)%
Core pre-tax return on average equity			21.5	%(1)			21.8	%(1)			(0.3	)%			(1.4	)%

⁽¹⁾  Percentages are annualized

Condensed Results of Operations

		Three Months Ended March 31,
		2026				2025				$ Variance				% Variance
		(In thousands)
Net interest income		$	43,920			$	37,510			$	6,410				17.1	%
Provision for credit losses			1,661				1,872				(211	)			(11.3	)%
Net interest income after provision			42,259				35,638				6,621				18.6	%
Other operating income			42,957				33,446				9,511				28.4	%
Net revenue			85,216				69,084				16,132				23.4	%
Operating expenses			54,339				42,190				12,149				28.8	%
Income before income taxes			30,877				26,894				3,983				14.8	%
Income tax expense			8,578				8,246				332				4.0	%
Net income			22,299				18,648				3,651				19.6	%
Net loss attributable to noncontrolling interest			(64	)			(239	)			175				73.2	%
Net income attributable to Velocity Financial, Inc.		$	22,363			$	18,887			$	3,476				18.4	%

²  Core income before income tax, core net income, core diluted EPS and core pre-tax return on average equity are non-GAAP measures. Please see “Non-GAAP Financial Measures” and “Non-GAAP Financial Measure Reconciliations to GAAP Measures” at the end of this press release.

2

• Net interest income after provision for credit losses was $42.3 million, an increase of 18.6% from $35.6 million for 1Q25

• Driven by strong portfolio growth and recoveries of interest income from NPLs by our asset management team

• Other operating income was $43.0 million, an increase from $33.4 million for 1Q25

• Driven primarily by net unrealized gain on fair value instruments

• Net revenue was $85.2 million, an increase of 23.4% from $69.1 million for 1Q25

• Resulting from continued strong production-driven portfolio net interest income growth and fair value gains.

• Operating expenses totaled $54.3 million, an increase of 28.8% from 1Q25, primarily from higher professional fees related to business development opportunities and the growth in our platform

• Compensation expense totaled $23.5 million, compared to $21.7 million for 1Q25

• Driven by increases in headcount to support future planned growth

• Professional fees totaled $5.8 million, compared to $1.8 million for 1Q25.

• Driven by higher legal fees related to potential merger and acquisition due diligence.

• Securitization expense totaled $5.3 million from the issuance of two securitizations during the quarter, compared to costs of $4.0 million for one securitization during 1Q25

• Loan servicing expense totaled $8.6 million, from $8.0 million for 1Q25, driven by portfolio growth

Loan Portfolio

		$				$				$				$
		March 31,
		2026				2025				Variance				% Variance
		($ in thousands)
Total Loans Outstanding:
Investor 1-4		$	3,203,963			$	2,799,451			$	404,512				14.4	%
Mixed use			744,157				605,722				138,435				22.9	%
Retail			739,426				522,400				217,026				41.5	%
Office			606,938				421,389				185,549				44.0	%
Multifamily			482,152				397,842				84,310				21.2	%
Government Insured Multifamily			—				4,886				(4,886	)			(100.0	)%
Warehouse			493,995				367,289				126,706				34.5	%
Other(1)			565,913				330,922				234,991				71.0	%
Total loans		$	6,836,544			$	5,449,901			$	1,386,643				25.4	%

⁽¹⁾  All other properties individually comprised less than 5.0% of the total unpaid principal balance

		$				$				$				$
Key Loan Portfolio Metrics (1):
Loan count			17,639				13,858				3,781				27.3	%
Loan-to-value			64.9	%			66.1	%			(1.2	)%			(1.8	)%
Coupon			9.75	%			9.60	%			0.15	%			1.6	%
Total portfolio yield			9.23	%			9.11	%			0.12	%			1.3	%
Portfolio cost of debt			6.09	%			6.23	%			(0.14	)%			(2.3	)%

⁽¹⁾ Weighted averages, except for loan count

• Total loan portfolio was $6.8 billion in UPB as of March 31, 2026, an increase of 25.4% from $5.4 billion as of March 31, 2025

• Driven by healthy growth across all types of collateral securing our loans

3

• Loan prepayments totaled $235.0 million in UPB, an increase of 3.2% from $227.6 million for 4Q25, and 19.9% from $196.0 million for 1Q25

• UPB of HFI FVO loans was $4.9 billion, or 71.7% of total HFI loans, as of March 31, 2026, an increase from $3.1 billion, or 57.7% as of March 31, 2025

• Weighted average portfolio loan-to-value ratio was 64.9% as of March 31, 2026, down from 66.1% as of March 31, 2025, and below the five-quarter trailing average of 65.0%

• Weighted average total portfolio yield was 9.23%, an increase of 12 bps from 1Q25, primarily driven by the increase in weighted average loan coupons

• Portfolio-related debt cost was 6.09%, a decrease of 14 bps from 1Q25, driven by lower warehouse financing utilization and securitized debt interest expense

Loan Production Volumes

		Three Months Ended March 31,
		2026				2025				$ Variance				% Variance
		($ in thousands)
Originations Including Advances:
Investor 1-4 rental		$	232,555			$	266,631			$	(34,076	)			(12.8	)%
Traditional commercial			381,298				324,789				56,509				17.4	%
Short-term			23,293				44,117				(20,824	)			(47.2	)%
Government insured multifamily			2,226				4,886				(2,660	)			(54.4	)%
Total		$	639,372			$	640,423			$	(1,051	)			(0.2	)%

• Loan production totaled $639.4 million, including construction loan advances of $2.2 million, consistent with $640.4 million for 1Q25

• 1Q26 production volume was driven by healthy demand for our traditional commercial product

• Weighted average coupon on 1Q26 HFI loan production was 10.15%, a decrease of 36 bps from 10.51% for 1Q25 mirroring a similar reduction in shorter term interest rates

• Government insured multifamily loans are originated by our capital light subsidiary Century Health & Housing Capital and the related GNMA securities are sold to investors for cash gains shortly after closing

Total HFI Portfolio Credit Performance

		Three Months Ended March 31,
		2026				2025				Variance				% Variance
		($ in thousands)
Key Nonperforming Loans Metrics:
Nonperforming loans UPB		$	692,073			$	587,811			$	104,262				17.7	%
Total UPB		$	6,836,544			$	5,445,015			$	1,391,529				25.6	%
Nonperforming loans UPB / Total UPB			10.1	%			10.8	%			(0.7	)%			(6.2	)%

• NPLs totaled $692.1 million in UPB as of March 31, 2026, or 10.1% of total HFI loans, compared to $587.8 million and 10.8% as of March 31, 2025

4

CECL Portfolio Credit Performance

		Three Months Ended March 31,
		2026				2025				Variance				% Variance
		($ in thousands)
Allowance for Credit Losses:
Beginning balance		$	4,521			$	4,174			$	347				8.3	%
Provision for credit losses			1,661				1,872				(211	)			(11.3	)%
Charge-offs			(1,322	)			(1,029	)			(293	)			28.5	%
Ending balance		$	4,860			$	5,017			$	(157	)			(3.1	)%
Total UPB subject to CECL		$	1,937,474			$	2,304,587			$	(367,113	)			(15.9	)%
Nonperforming loans UPB subject to CECL		$	238,407			$	292,811			$	(54,404	)			(18.6	)%
Nonperforming loans UPB subject to CECL / Total UPB subject to CECL			12.3	%			12.7	%			(0.4	)%			(3.2	)%
Allowance for credit losses / Total UPB subject to CECL			0.25	%			0.22	%			0.03	%			15.2	%
Charge-offs / Total UPB subject to CECL			0.27	%(1)			0.18	%(1)			0.09	%			52.8	%

⁽¹⁾  Annualized

• Charge-offs for 1Q26 totaled $1.3 million, compared to $1.0 million for 1Q25

• The trailing five-quarter charge-offs average was $1.4 million

• Credit loss reserve totaled $4.9 million as of March 31, 2026, a decrease of 3.1% from $5.0 million as of March 31, 2025

• Driven by our decreasing loan portfolio subject to credit loss reserve

• CECL reserve rate of 0.25% (CECL reserve as % of HFI loans at amortized cost) was relatively consistent with the recent five-quarter average rate of 0.23%

Real Estate Owned

		Three Months Ended March 31,
		2026				2025				$ Variance				% Variance
		($ in thousands)
Gain (loss) on new REO:
Gain on transfer to REO - amortized cost loans		$	2,832			$	2,834			$	(2	)			(0.1	)%
Valuation gain on transfer to REO - fair value loans			3,971				1,589				2,382				149.9	%
Total gain on new REO		$	6,803			$	4,423			$	2,380				53.8	%
		Three Months Ended March 31,
		2026				2025				$ Variance				% Variance
		($ in thousands)
Gain (loss) on existing REO:
REO valuation loss, net		$	(3,217	)		$	(2,073	)		$	(1,144	)			55.2	%
(Loss) gain on sale of REO			(129	)			300				(429	)			(143.0	)%
Total (loss) on existing REO		$	(3,346	)		$	(1,773	)		$	(1,573	)			88.7	%

• Total gain on new REO was $6.8 million, compared to a gain of $4.4 million for 1Q25, driven by higher valuation gain

• Total loss on existing REO was $3.3 million, compared to a loss of $1.8 million for 1Q25, driven by valuation loss

5

Nonperforming loans (NPLs) Resolution

		Three Months Ended March 31, 2026
Total Nonperforming Loans		UPB				Default Interest				Prepayment Penalty				Net Gain				Regular Accrued Interest				Servicing Advances Write-Offs				Total Recovered
		($ in thousands)
Resolved — loans paid off		$	36,800			$	710			$	434			$	1,144			$	1,873			$	(677	)		$	2,340
Resolved — loans paid current			33,289				437				—				437				1,824				(31	)			2,230
Total resolutions		$	70,089			$	1,147			$	434			$	1,581			$	3,697			$	(708	)		$	4,570
Recovery rate															102.3	%											106.5	%
		Three Months Ended March 31, 2025
Total Nonperforming Loans		UPB				Default Interest				Prepayment Penalty				Net Gain				Regular Accrued Interest				Servicing Advances Write-Offs				Total Recovered
		($ in thousands)
Resolved — loans paid off		$	25,930			$	753			$	418			$	1,171			$	2,152			$	(425	)		$	2,898
Resolved — loans paid current			42,408				389				—				389				1,936				(10	)			2,315
Total resolutions		$	68,338			$	1,142			$	418			$	1,560			$	4,088			$	(435	)		$	5,213
Recovery rate															102.3	%											107.6	%

• NPLs resolution totaled $70.1 million in UPB, realizing gains of 102.3% of UPB resolved compared to $68.3 million in UPB and similar gains of 102.3% of UPB resolved for 1Q25

• UPB of NPLs resolution for 1Q26 was below the recent five-quarter average of $80.3 million in UPB resolved and below the average gains of 108.5% of UPB resolved

6

Velocity’s executive management team will host a conference call and webcast on May 6, 2026, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to review Velocity’s 1Q26 financial results.

Investors and Media:

Chris Oltmann

(818) 532-3708

Webcast Information

The conference call will be webcast live in listen-only mode and can be accessed through the Events and Presentations section of the Velocity Financial Investor Relations website: https://www.velfinance.com/events-and-presentations. To listen to the webcast, please visit Velocity’s website at least 15 minutes before the call to register, download, and install any needed software. An audio replay of the call will also be available on Velocity’s website following the completion of the conference call.

Conference Call Information

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

A replay of the call will be available through midnight on May 29, 2026, and can be accessed by dialing 1-855-669-9658 in the U.S and Canada or 1-412-317-0088 internationally. The passcode for the replay is 6829289. The replay will also be available on the Investor Relations section of the Company’s website under “Events and Presentations.”

About Velocity Financial, Inc.

Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that primarily originates and manages business purpose loans secured by 1-4 unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers built and refined over 22 years.

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with United States generally accepted accounting principles (GAAP), the Company uses non-GAAP core net income, core income before income tax, core pre-tax return on average equity and core diluted EPS, which are non-GAAP financial measures.

Non-GAAP core net income and non-GAAP core diluted EPS are non-GAAP financial measures that represent our net income (loss) and net income (loss) per diluted share, adjusted to eliminate the effect of certain costs, costs incurred from activities that are not normal recurring operating expenses, and costs associated with acquisitions. To calculate non-GAAP core diluted EPS, we use the weighted average number of shares of common stock outstanding that is used to calculate net income per diluted share under GAAP. Non-GAAP core income before income tax is core net income before deducting income taxes. Non-GAAP core pre-tax return on average equity is core income before income tax divided by our average shareholders’ equity.

7

We have included non-GAAP core net income, non-GAAP core income before income tax, non-GAAP core pre-tax return on average equity and non-GAAP core diluted EPS because they are key measures used by our management to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that non-GAAP core net income, non-GAAP core income before income tax, non-GAAP core pre-tax return on average equity and non-GAAP core diluted EPS provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. In addition, they provide useful measures for period-to-period comparisons of our business, as they remove the effect of certain items that we expect to be nonrecurring.

These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies.

For more information on Core Net Income, please refer to the section of this press release below titled “Non-GAAP Financial Measure Reconciliations to GAAP Measures” at the end of this press release.

Forward-Looking Statements

Some of the statements contained in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to anticipated results, expectations, projections, plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as “may,” “will,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “goal,” ”position,” or “potential” or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.

The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions, and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement. While forward-looking statements reflect our good faith projections, assumptions, and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to, (1) changes in federal government fiscal and monetary policies, (2) general economic and real estate market conditions, including the risk of recession, (3) regulatory and/or legislative changes, (4) our customers’ continued interest in loans and doing business with us, (5) market conditions and investor interest in our future securitizations, and (6) geopolitical conflicts.

Additional information relating to these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements can be found in other cautionary statements we make in our current and periodic filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.velfinance.com.

8

Velocity Financial, Inc.

Condensed Consolidated Balance Sheets

(In thousands, except per share amounts)

		March 31, 2026				December 31, 2025
		(Unaudited)				(Audited)
ASSETS
Cash, cash equivalents, and restricted cash		$	112,050			$	249,237
Total loans, net			7,105,538				6,758,131
Accrued interest and receivables			196,303				202,477
Real estate owned, net			131,849				118,289
Other assets			45,703				53,379
Total assets		$	7,591,443			$	7,381,513
LIABILITIES
Accounts payable and accrued expenses		$	173,076			$	168,314
Secured financing, net			73,274				286,679
Unsecured senior notes, net			485,445				—
Securitized debt, at amortized cost			1,638,995				1,705,589
Securitized debt, at fair value			4,426,240				4,236,737
Warehouse and repurchase facilities, net			98,009				308,506
Total liabilities			6,895,039				6,705,825
Commitments and contingencies
EQUITY
Stockholders’ equity			693,348				672,535
Noncontrolling interest in subsidiary			3,056				3,153
Total equity			696,404				675,688
Total liabilities and equity		$	7,591,443			$	7,381,513
Diluted book value per share		$	17.75			$	17.19
Diluted shares at period end			39,245				39,297

9

Velocity Financial, Inc.

Condensed Consolidated Statements of Income

(In thousands, except per share amounts)

(Unaudited)

		Three Months Ended
		March 31, 2026				December 31, 2025				March 31, 2025
		(Unaudited)				(Unaudited)				(Unaudited)
Interest income		$	153,080			$	152,403			$	118,740
Interest expense - portfolio related			94,027				94,652				75,088
Net interest income - portfolio related			59,053				57,751				43,652
Interest expense - corporate debt			15,133				6,142				6,142
Net interest income			43,920				51,609				37,510
Provision for credit losses			1,661				1,954				1,872
Net interest income after provision for credit losses			42,259				49,655				35,638
Other operating income
Gain on disposition of loans
Unrealized gain on fair value loans			1,039				21,129				34,836
Unrealized gain (loss) on fair value securitized debt			26,254				800				(13,682	)
Origination fee income			7,970				6,644				8,679
Other income			7,694				24,676				3,613
Total other operating income			42,957				53,249				33,446
Operating expenses
Compensation and employee benefits			23,520				22,628				21,684
Loan servicing			8,563				9,448				8,008
Real estate owned, net			6,862				8,651				3,029
Other operating expenses			15,394				12,128				9,469
Total operating expenses			54,339				52,855				42,190
Income before income taxes			30,877				50,049				26,894
Income tax expense			8,578				15,296				8,246
Net income			22,299				34,753				18,648
Net loss attributable to noncontrolling interest			(64	)			(44	)			(239	)
Net income attributable to Velocity Financial, Inc.			22,363				34,797				18,887
Less undistributed earnings attributable to unvested restricted stock awards			312				477				233
Net earnings attributable to common stockholders		$	22,051			$	34,320			$	18,654
Earnings per common share:
Basic		$	0.57			$	0.89			$	0.55
Diluted		$	0.57			$	0.89			$	0.51
Weighted average common shares outstanding:
Basic			38,626				38,378				33,687
Diluted			39,174				39,243				36,811

10

Velocity Financial, Inc.

Net Interest Margin - Portfolio Related and Total Company

($ in thousands)

		Three Months Ended
		March 31, 2026												March 31, 2025
		Average Balance				Interest Income / Expense				Average Yield / Rate (1)				Average Balance				Interest Income / Expense				Average Yield / Rate (1)
Loan Portfolio:
Loans held for sale		$	189											$	998
Loans held for investment			6,632,799												5,213,188
Total loans		$	6,632,988			$	153,080				9.23	%		$	5,214,186			$	118,740				9.11	%
Debt:
Warehouse facilities		$	176,760			$	3,723				8.42	%		$	433,790			$	8,505				7.84	%
Securitized debt			6,003,318				90,304				6.02	%			4,387,277				66,583				6.07	%
Total debt - portfolio related			6,180,078				94,027				6.09	%			4,821,067				75,088				6.23	%
Corporate - Secured debt			142,043				6,681				18.81	%(4)			290,000				6,142				8.47	%
Corporate - Unsecured debt			333,333				8,452				10.14	%(5)			—				—				—
Total debt		$	6,655,454			$	109,160				6.56	%		$	5,111,067			$	81,230				6.36	%
Net interest spread - portfolio related (2)											3.15	%											2.88	%
Net interest margin - portfolio related											3.56	%											3.35	%
Net interest spread - total company (3)											2.67	%											2.75	%
Net interest margin - total company											2.65	%											2.88	%

⁽¹⁾ Annualized

⁽²⁾ Net interest spread — portfolio related is the difference between the rate earned on our loan portfolio and the interest rates paid on our portfolio-related debt

⁽³⁾ Net interest spread — total company is the difference between the rate earned on our loan portfolio and the interest rates paid on our total debt

⁽⁴⁾ The average yield of 18.81% for corporate secured debt reflects a lower average balance given that the $215.0 million secured debt was paid off at the end of January 2026, and interest expense also included $1.3 million write-off of debt issuance costs and $3.2 million interest expense for the quarter. Excluding these non-recurring costs, the adjusted average yield on the remaining secured debt would be 10.50% going forward.

⁽⁵⁾ The average yield of 10.14% for corporate unsecured debt reflects a lower average balance given that the $500.0 million unsecured debt was not issued until the end of January 2026; on a full-quarter basis, the average yield would be 9.98%.

11

Velocity Financial, Inc.

Non-GAAP Financial Measure Reconciliations to GAAP Measures

(In thousands, except per share amounts)

(Unaudited)

		Three Months Ended March 31,
		2026				2025
Income before income tax		$	30,877			$	26,894
Equity award & ESPP expenses			2,695				1,970
Debt issuance costs write-off			1,340				—
Potential M&A due diligence			4,100				—
IRS Employee Retention Credit			(2,392	)			—
Net income (loss) attributable to noncontrolling interest			(64	)			(239	)
Core income before income tax		$	36,684			$	29,103
Average common equity			682,417				534,940
Pre-tax return on average equity			18.1	%			20.1	%
Tax effect of equity award & ESPP expenses			1.6	%			1.5	%
Tax effect of debt issuance costs write-off			0.8	%			0.0	%
Tax effect of potential M&A due diligence			2.4	%			0.0	%
Tax effect of IRS Employee Retention Credit			(1.4	)%			0.0	%
Tax effect of net income (loss) attributable to noncontrolling interest			(0.0	)%			(0.2	)%
Core pre-tax return on average equity			21.5	%			21.8	%
		Three Months Ended March 31,
		2026				2025
Net income			22,363			$	18,887
Equity award & ESPP expenses			1,933				1,366
Debt issuance costs write-off			961				—
Due diligence and advisory fees			2,941				—
IRS Employee Retention Credit			(1,716	)			—
Core net income		$	26,482			$	20,253
Diluted weighted average common shares outstanding			39,174				36,811
Core diluted earnings per share		$	0.68			$	0.55

12

FAQ

How did Velocity Financial (VEL) perform in Q1 2026 compared to Q1 2025?

Velocity Financial’s net income increased to $22.4 million from $18.9 million, and core net income rose to $26.5 million from $20.3 million. Diluted EPS grew to $0.57, with core diluted EPS at $0.68, reflecting solid year-over-year earnings growth.

What were Velocity Financial’s key earnings per share metrics for Q1 2026?

For Q1 2026, Velocity Financial reported diluted EPS of $0.57, up from $0.51 a year earlier. Core diluted EPS, which adjusts for specified non-recurring items, was $0.68 versus $0.55, highlighting stronger underlying profitability.

How large was Velocity Financial’s loan portfolio in Q1 2026?

Velocity Financial’s total loans outstanding reached $6.84 billion at March 31, 2026, compared with $5.45 billion a year earlier. This 25.4% increase was driven by growth across investor 1-4 rental, mixed use, retail, office, multifamily, warehouse, and other loan categories.

What happened to Velocity Financial’s net interest margin in Q1 2026?

Portfolio net interest margin improved to 3.56% from 3.35%, reflecting better spread on portfolio-related activities. However, total company net interest margin declined to 2.65% from 2.88%, as corporate debt costs and other factors weighed on overall margin.

How did Velocity Financial’s credit quality and nonperforming loans trend in Q1 2026?

Nonperforming loans unpaid principal balance increased to $692.1 million, but as a share of total UPB, the ratio improved to 10.1% from 10.8%. Under CECL, nonperforming UPB and related ratios also declined slightly, indicating modestly better credit performance.

What was Velocity Financial’s book value per share at March 31, 2026?

Diluted book value per share was $17.75 at March 31, 2026, compared with $17.19 at December 31, 2025. This reflects growth in stockholders’ equity to $693.3 million alongside a relatively stable diluted share count of about 39.2 million.

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