Velocity Financial, Inc. · NYSE:VEL
Velocity Financial — Q3 2024 Earnings Presentation
19 slides from Velocity Financial's earnings presentation, Nov 7, 2024
Slide 1: 3Q24 Results Presentation
3Q24 Results Presentation November 7, 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: 3Q24 Highlights
3Q24 Highlights ▪ Net income of $15.8 million, up 30.8% from $12.1 million for 3Q23. Diluted EPS of $0.44 per share, up $0.09 from $0.35 for 3Q23 Earnings ▪ Core net income(1) of $16.9 million, up 31.2% from $12.9 million for 3Q23. Core diluted EPS(1) of $0.47, up from $0.37 per share for 3Q23 ▪ Por
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) $ 2.85 $17.76 GAAP Net Income $15,803 $ 0.19 $ 0.37 $14.91 $14.52 $0.17 Equity award & ESPP costs $1,146 Core Net Income $16,949 Book value Non-Core Other Ops. NII Earnings Book v
Slide 5: Loan Production
Loan Production Production Growth Trend Continues With YTD Production Up Over 60% From Prior Year ▪ Strong production growth trends continued in 3Q24, driven by strong demand from investors to own real estate and tight bank lending standards ▪ Loan production in 3Q24 totaled $476.8 million in UPB, a
Slide 6: Loan Portfolio
Loan Portfolio Portfolio On-Track to Reach $5 billion by Year-End Driven By Strong Production Volume Loan Portfolio by Property Type ▪ The total loan portfolio was $4.8 billion in UPB as (UPB in millions) $4,753.3 of September 30, 2024, an increase of 6.1% from $4,479.9 $4.5 billion as of June 30, 2
Slide 7: Net Interest Margin
Net Interest Margin NIM Stability Supports Strong Interest Income Growth ▪ Portfolio NIM(1) in 3Q24 was 3.60%, an increase of 6 bps from 3.54% for 2Q24 and an increase of 26 bps from 3.34% for 3Q23 ‒ The Q/Q and Y/Y increases are the result of solid loan production growth while maintaining 11.0% rat
Slide 8: Loan Investment Portfolio Performance
Loan Investment Portfolio Performance Nonperforming Loans Modestly Higher; Resolution Gains Up Significantly ▪ Total nonperforming loans (NPL) as a percentage of total HFI loans was 10.6% as of September 30, 2024, a modest increase from 10.5% as of June 30, 2024, and 10.1% as of September 30, 2023 ▪
Slide 9: Asset Resolution Activity
Asset Resolution Activity NPL Realization Activity and Gains Show Strong Growth Resolution Activity RESOLUTION ACTIVITIES ▪ 3Q24 NPL resolutions gains were LONG-TERM LOANS RESOLUTION ACTIVITY THIRD QUARTER 2024 SECOND QUARTER 2024 THIRD QUARTER 2023 $2.3 million, or 3.4% of UPB Gain / (Loss) Gain /
Slide 10: CECL Reserve and Charge-Offs
CECL Reserve and Charge-Offs Reserve Reduction Q/Q; Net Charge-off and REO Gains Continued for 3Q24 ▪ The reserve balance was $4.9 million as of September 30, 2024, a decrease of 7.4% from $5.2 million as of June 30, 2024, and a 3.6% increase from $4.7 million as of September 30, 2023 – Driven by th
Slide 11: Durable Funding and Liquidity Strategy
Durable Funding and Liquidity Strategy One Securitization in 3Q24(1) With Improved Securitization Market Execution ▪ Cash reserves and unfinanced collateral of $92.8 million as of September 30, 2024 Outstanding Debt Balances(2) ▪ Available warehouse line capacity of $349.3 ($ in Millions) $4,572.8 m
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 ▪ Residential property ▪ U.S. economic ▪ Next long-term loan ▪ Strong origination value appreciation outlook continues to securitization volumes and rate (Single and be mixed targeted
Slide 13: Appendix
Appendix
Slide 14: Velocity Financial, Inc. Balance Sheet
Velocity Financial, Inc. Balance Sheet Quarter Ended 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Unaudited Unaudited Unaudited Audited Unaudited (In thousands) Assets Cash and cash equivalents $ 44,094 $ 47,366 $ 34,829 $ 40,566 $ 29,393 Restricted cash 23,167 32,293 24,216 21,361 17,703 Loan
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 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 September 30, 2024 ($ in thousands) $ % $ % $ % $ % $ % Performing/Accruing: Current $ 3,188,015 82.6% $ 3,354,197 82.7% $ 3,517,715 82.2% $ 3,669,659 81.9% $ 3,921,488 82.8% 30-59 days past due 197,24
Slide 17: Loan Portfolio Rollforward
Loan Portfolio Rollforward Total Loan Portfolio UPB Rollforward (UPB in millions) $476.8 $4,753.3 $4,479.9 $(187.9) $(0.9) $(14.6) (1) Loan Porfolio at Principal Loan Sales Foreclosures Loan Production Loan Porfolio at 6/30/24 Payments 9/30/24 . Confidential 17 (1) Includes $1.0 million in UPB of re
Slide 18: HFI Loan Portfolio
HFI Loan Portfolio Portfolio by Property Type Portfolio by State (100% = $4.73 billion UPB)(1) Mixed Use 11.3% Retail California 8.6% 21.5% Other Investor 1-4 Multifamily 41.5% Rental 7.3% 54.2% New York 16.7% Warehouse 6.3% Office Florida 5.6% 12.9% Other 6.7% New Jersey 7.4% Confidential 18 (1) As
Slide 19: Adjusted Financial Metric Reconciliation
Adjusted Financial Metric Reconciliation: Adjusted Financial Metric Reconciliation to GAAP Net Income Core Net Income Quarter Ended ($ in thousands) 9/30/2024 6/30/2024 3/31/2024 12/31/2023 9/30/2023 Net Income $ 15,803 $ 14,778 $ 17,251 $ 17,355 $ 12,086 Tax liability reduction - - (1,866) - Equity