Velocity Financial, Inc. · NYSE:VEL
Velocity Financial — Q1 2024 Earnings Presentation
19 slides from Velocity Financial's earnings presentation, May 2, 2024
Slide 1: 1Q24 Results Presentation
1Q24 Results Presentation May 2, 2024
Slide 2: Forward-looking statements
Forward-looking statements Some of the statements contained in this presentation may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to expectations, projections, plans and strategies, positioning, anticipated events or trend
Slide 3: 1Q24 Highlights
1Q24 Highlights ▪ Net income of $17.3 million, up 62.0% from $10.6 million for 1Q23. Diluted EPS of $0.49, up $0.18 from $0.31 per share for 1Q23 ▪ Core net income(1) of $18.2 million, up 60.4% from $11.4 million for 1Q23. Core diluted Earnings EPS(1) of $0.51, up from $0.33 per share for 1Q23 ▪ NIM
Slide 4: Core Income, Book Value and Adjusted Book Value Per Share
Core Income, Book Value and Adjusted Book Value Per Share Core Income(1) Book Value and Adjusted Book Value Per Share(2) $ 3.08 $17.09 GAAP Net Income $17,251 $ 0.50 $14.01 $13.49 $0.03 Equity award & ESPP costs $998 Core Net Income $18,249 Book value at Non-Core Core Earnings Book value at Adjustme
Slide 5: Loan Production
Loan Production Production Volume Continues Strong Growth Trend ▪ 1Q24 volume growth continued, driven by strong borrower demand and benefitted from continued tight credit conditions with banks ▪ Loan production in 1Q24 totaled $378.7 million in UPB, a 7.5% increase from $352.1 million in UPB for 4Q
Slide 6: Loan Portfolio
Loan Portfolio Continued Strong Portfolio Growth Trend ▪ The total loan portfolio was $4.3 billion in UPB as Loan Portfolio by Property Type of March 31, 2024, an increase of 5.1% from (UPB in millions) $4.1 billion in UPB as of December 31, 2023, and $4,281.5 $4,072.9 19.1% from $3.6 billion as of
Slide 7: Net Interest Margin
Net Interest Margin Higher Loan Coupons and Favorable NPL Resolutions Drive Y/Y Portfolio NIM Expansion ▪ Portfolio NIM(1) in 1Q24 was 3.35%, an increase of 12 bps from 3.23% for 1Q23, and a decrease of 17 bps from 3.52% for 4Q23 ‒ The Y/Y increase is mainly due to the WAC(2) on loan portfolio incre
Slide 8: Loan Investment Portfolio Performance
Loan Investment Portfolio Performance NPL Performance and Resolution Gain In-line With Recent Trends ▪ Nonperforming loans (NPL) as a percentage of total HFI loans was 10.1% as of March 31, 2024, an increase from 9.7% as of December 31, 2023, and 8.7% as of March 31, 2023 – Driven by loans transitio
Slide 9: 1Q24 Asset Resolution Activity
1Q24 Asset Resolution Activity NPL Loan Resolutions UPB and Gains Resolution Activity ▪ 1Q24 NPL resolutions totaled 54.5 RESOLUTION ACTIVITIES LONG-TERM LOANS RESOLUTION ACTIVITY FIRST QUARTER 2024 FOURTH QUARTER 2023 FIRST QUARTER 2023 million in UPB, realizing 102.3% of Gain / Gain / Gain / UPB r
Slide 10: CECL Reserve and Charge-Offs
CECL Reserve and Charge-Offs Reserve Growth Q/Q from Increased Reserve on Individually-Assessed Loans ▪ The reserve balance was $5.3 million as of March 31, 2024, a 10.4% increase from $4.8 million as of December 31, 2023, and a 4.4% increase from $5.0 million as of March 31, 2023 ▪ Velocity’s 0.19%
Slide 11: Durable Funding and Liquidity Strategy
Durable Funding and Liquidity Strategy One Securitization in 1Q24(1); New Corporate Debt Issuance to Drive Investment Growth ▪ Cash reserves and unfinanced collateral of Outstanding Debt Balances(2) $78.5 million as of March 31, 2024 ($ in Millions) $4,048.4 ▪ Available warehouse line capacity of $3
Slide 12: Outlook for Velocity's Key Business Drivers
Outlook for Velocity’s Key Business Drivers Improving Outlook for Markets and Growth MARKET CREDIT CAPITAL EARNINGS ▪ Property values ▪ U.S. economic ▪ Next long-term loan ▪ Stable NIM, healthy remain well-supported outlook is mixed, but securitization securitization market ▪ Limited cautious regard
Slide 13: Appendix
Appendix
Slide 14: Velocity Financial, Inc. Balance Sheet
Velocity Financial, Inc. Balance Sheet Confidential 14
Slide 15: Velocity Financial, Inc. Income Statement (Quarters)
Velocity Financial, Inc. Income Statement (Quarters) Confidential 15
Slide 16: HFI Portfolio Delinquency Trends
HFI Portfolio Delinquency Trends March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 ($ in thousands) $ % $ % $ % $ % $ % Performing/Accruing: Current $ 3,049,110 85.2% $ 3,114,091 83.7% $ 3,188,015 82.6% $ 3,354,197 82.7% $ 3,517,715 82.2% 30-59 days past due 141,253 3.
Slide 17: Loan Portfolio Rollforward
Loan Portfolio Rollforward Total Loan Portfolio UPB Rollforward (UPB in millions) $390.9 $4,281.5 $4,072.9 $(159.3) $(14.5) $(8.4) Loan Porfolio at Principal Payments Loan Sales Foreclosures Loan Production Loan Porfolio at 12/31/23 3/31/24 . Confidential 17
Slide 18: HFI Loan Portfolio
HFI Loan Portfolio Portfolio by Property Type Portfolio by State (100% = $4.28 billion UPB)(1) Mixed Use 11.5% California 21.6% Investor 1-4 Rental Retail 54.6% 8.5% Other 40.0% New York 17.8% Multifamily 7.6% Warehouse Florida 6.4% 13.2% New Jersey Office 7.4% Other 5.4% 6.0% Confidential 18 (1) As
Slide 19: Adjusted Financial Metric Reconciliation
Adjusted Financial Metric Reconciliation: Adjusted Financial Metric Reconciliation to GAAP Net Income Core Net Income Quarter Ended ($ in thousands) 3/31/2024 12/31/2023 9/30/2023 6/30/2023 3/31/2023 Net Income $ 17,251 $ 17,355 $ 12,086 $ 12,183 $ 10,649 Tax liability reduction - (1,866) - - - Equi