Velocity Financial, Inc. · NYSE:VEL
Velocity Financial — Q1 2021 Earnings Presentation
16 slides from Velocity Financial's earnings presentation, May 6, 2021
Slide 1: 1Q21 Earnings Presentation
1Q21 Earnings Presentation May 6, 2021
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, anticipated events or trends, and simila
Slide 3: 1Q21 Highlights
1Q21 Highlights ▪ Net Income of $3.4 million and Core income (1) of $6.7 million; diluted EPS of $0.10 and Core diluted EPS of $0.20 – Results driven by improved loan portfolio performance partially offset by nonrecurring debt refinancing costs Earnings ▪ Portfolio net interest margin (NIM) of 4.10%
Slide 4: Core Income and Book Value Growth
Core Income and Book Value Growth Core Income Book Value Per Share 0.10 0.26 $11.12 $10.93 0.17 GAAP Net Income $3,396 Nonrecurring Debt Amortization $3,326 Core Income $6,722 Book value at Loan Sales Non recurring Portfolio Book value at 12/31/20 (1) debt Earnings (2) 3/31/21(1) amortization ▪ Core
Slide 5: Production Momentum Continues to Build
Production Momentum Continues to Build Quarter-over-growth driven by strong demand for investor loans ▪ Loan production totaled $233.0 million in UPB in 1Q21, a 30% Q/Q increase from $179.3 million in UPB in 4Q20 ▪ In April, Velocity launched a new Flex I/O short-term loan product and resumed produc
Slide 6: Loan Portfolio
Loan Portfolio ▪ Total loan portfolio as of March 31, 2021, was $1.99 billion in UPB, a 2% Q/Q increase from $1.94 billion in UPB as of December 31, 2020 – Net Portfolio growth of $46 million driven by strong production activity, partially offset by increased payoff activity and opportunistic loan s
Slide 7: 1Q21 Asset Resolution Activity
1Q21 Asset Resolution Activity Nonperforming asset and REO resolutions remained strong, realization of gains continued Resolution Activity LONG-TERM LOANS RESOLUTION ACTIVITY FIRST QUARTER 2021 FOURTH QUARTER 2020 ▪ Resolution activity in 1Q21 has been Gain / Gain / split between long-term loans and
Slide 8: Net Interest Margin
Net Interest Margin Portfolio NIM increased with improved loan performance and strong resolution activity ▪ 1Q21 Portfolio NIM(1) was 4.10%, an increase of 3 bps from 4.07% in 4Q20 – Primarily driven by strong nonperforming asset resolutions ▪ Weighted average portfolio yield increased 1 bps Q/Q whi
Slide 9: Loan Investment Portfolio Performance
Loan Investment Portfolio Performance ▪ Total nonaccrual loans as of March 31, 2021, totaled $335.0 million in UPB, or 16.83% of total loans held for investment, compared to $332.8 million, or 17.23% as of December 31, 2020 – Decrease in nonaccrual loan rate and strong NPL resolutions in 1Q21 provid
Slide 10: CECL Reserve and Charge-Offs
CECL Reserve and Charge-Offs Loan Loss Reserve essentially unchanged as economy shows moderate improvement ▪ Velocity’s CECL reserve as a percentage of the HFI portfolio as of March 31, 2021, was 29 bps compared to 30 bps as of December 31, 2020, and 18 bps as of March 31, 2021 – While the vaccine r
Slide 11: Outlook for Velocity's Business
Outlook for Velocity’s Business ▪ Strong demand for investor properties expected to grow Large – Paradigm shifts in demographics to endure post-Pandemic, driving increased investor Addressable loan demand and growing the addressable market Market With ▪ Rising rates are not expected to adversely imp
Slide 12: Appendix
Appendix
Slide 13: Velocity Financial, Inc. Balance Sheet
Velocity Financial, Inc. Balance Sheet Quarter Ended 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Unaudited Audited Unaudited Unaudited Unaudited (In thousands) Assets Cash and cash equivalents $ 20,434 $ 13,273 $ 19,210 $ 9,803 $ 7,649 Restricted cash 6,808 7,020 7,821 6,735 4,483 Loans held
Slide 14: Velocity Financial, Inc. Income Statement
Velocity Financial, Inc. Income Statement Quarter Ended ($ in thousands) 3/31/2021 12/31/2020 9/30/2020 6/30/2020 3/31/2020 Unaudited Audited Unaudited Unaudited Unaudited Revenues Interest income $ 40,707 $ 41,556 $ 41,374 $ 39,755 $ 44,637 Interest expense - portfolio related 20,832 21,442 22,347
Slide 15: HFI Loan Portfolio
HFI Loan Portfolio Portfolio by Property Type Portfolio by State (100% = $1.99 billion UPB)(1) Mixed Use 14% New York 23% Multifamily Investor 1-4 9% Other Rental 34% 49% Retail California 9% 23% Office 6% Florida New Jersey 12% Warehouse 8% Other 6% 7% Confidential 15 (1) As of March 31, 2021
Slide 16: HFI Portfolio Delinquency Trends
HFI Portfolio Delinquency Trends March 31, 2020 December 31, 2020 March 31, 2021 ($ in thousands) $ % $ % $ % Performing/Accruing: Current $ 1,571,822 82.6% $ 1,445,131 74.8% $ 1,528,684 76.8% 30-59 days past due 126,740 6.7% 89,284 4.6% 67,100 3.4% 60-89 days past due 52,868 2.8% 62,694 3.2% 59,700