Velocity Financial, Inc. · NYSE:VEL
Velocity Financial — Q2 2024 Earnings Presentation
19 slides from Velocity Financial's earnings presentation, Aug 1, 2024
Slide 1: 2Q24 Results Presentation
2Q24 Results Presentation August 1, 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: 2Q24 Highlights
2Q24 Highlights ▪ Net income of $14.7 million, up 21.3% from $12.2 million for 2Q23. Diluted EPS of $0.42 per share, up $0.06 from $0.36 for 2Q23 Earnings ▪ Core net income(1) of $15.9 million, up 23.1% from $12.9 million for 2Q23. Core diluted EPS(1) of $0.45, up from $0.38 per share for 2Q23 ▪ 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) $ 2.39 $16.81 GAAP Net Income $14,778 $ 0.38 $14.52 $14.01 $ 0.14 $0.01 Equity award & ESPP costs $1,140 Core Net Income $15,918 Book value Non-Core Other Ops. Portfolio Book valu
Slide 5: Loan Production
Loan Production Production Growth Trend Continues, Driven by Strong Demand For Commercial Properties ▪ Volume growth continued in 2Q24, driven by continued strong demand for Traditional Commercial financing, aided by tighter bank credit conditions ▪ Loan production in 2Q24 totaled $422.2 million in
Slide 6: Loan Portfolio
Loan Portfolio Portfolio Growth Driven by Healthy Borrower Demand ▪ The total loan portfolio was $4.5 billion in UPB as Loan Portfolio by Property Type of June 30, 2024, an increase of 4.6% from (UPB in millions) $4.3 billion in UPB as of March 31, 2024, and $4,479.9 $4,281.5 20.4% from $3.7 billion
Slide 7: Net Interest Margin
Net Interest Margin Maintaining Higher Loan Coupons and Strong Loan Resolutions Drives NIM Stability ▪ Portfolio NIM(1) in 2Q24 was 3.54%, an increase of 19 bps from 3.35% for 1Q24 and an increase of 30 bps from 3.24% for 2Q23 ‒ The Q/Q and Y/Y increase is due to disciplined focus on maintaining 11.
Slide 8: Loan Investment Portfolio Performance
Loan Investment Portfolio Performance Modest Nonperforming Growth with Continued Resolution Gains ▪ Nonperforming loans (NPL) as a percentage of total HFI loans was 10.5% as of June 30, 2024, a modest increase from 10.1% as of March 31, 2024, and 10.0% as of June 30, 2023 ▪ Gains on NPL resolutions
Slide 9: Asset Resolution Activity
Asset Resolution Activity NPL UPB Resolved Increases for 2Q24 Resolution Activity RESOLUTION ACTIVITIES ▪ 2Q24 NPL resolutions totaled 80.7 LONG-TERM LOANS RESOLUTION ACTIVITY SECOND QUARTER 2024 FIRST QUARTER 2024 SECOND QUARTER 2023 million in UPB, realizing 101.3% of Gain / Gain / Gain / UPB reso
Slide 10: CECL Reserve and Charge-Offs
CECL Reserve and Charge-Offs Reserve Stable Q/Q; Net Charge-off and REO Activity Realized Strong Gains ▪ The reserve balance was $5.24 million as of June 30, 2024, relatively flat compared to $5.27 million as of March 31, 2024, and a 13.3% increase from $4.63 million as of June 30, 2023 ▪ Velocity’s
Slide 11: Durable Funding and Liquidity Strategy
Durable Funding and Liquidity Strategy Two Securitizations in 2Q24(1); Conservative Leverage With Recourse Debt to Equity of 1.1X Outstanding Debt Balances(2) ▪ Cash reserves and unfinanced collateral of ($ in Millions) $4,047.8 $4,260.2 $83.8 million as of June 30, 2024 $3,842.1 $283.9 $3,600.2 $28
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 value ▪ U.S. economic ▪ Next long-term loan ▪ Strong origination appreciation to outlook to remain securitization volumes and rate continue and remain mixed targeted for Aug
Slide 13: Appendix
Appendix
Slide 14: Velocity Financial, Inc. Balance Sheet
Velocity Financial, Inc. Balance Sheet Quarter Ended 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 Unaudited Unaudited Audited Unaudited Unaudited (In thousands) Assets Cash and cash equivalents $ 47,366 $ 34,829 $ 40,566 $ 29,393 $ 33,987 Restricted cash 32,293 24,216 21,361 17,703 16,786 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 June 30, 2023 September 30, 2023 December 31, 2023 March 31, 2024 June 30, 2024 ($ in thousands) $ % $ % $ % $ % $ % Performing/Accruing: Current $ 3,114,091 83.7% $ 3,188,015 82.6% $ 3,354,197 82.7% $ 3,517,715 82.2% $ 3,669,659 81.9% 30-59 days past due 164,586 4.4
Slide 17: Loan Portfolio Rollforward
Loan Portfolio Rollforward Total Loan Portfolio UPB Rollforward (UPB in millions) $425.7 $4,479.9 $4,281.5 $(180.9) $(33.9) $(12.5) (1) Loan Porfolio at Principal Loan Sales Foreclosures Loan Production Loan Porfolio at 3/31/24 Payments 6/30/24 . Confidential 17 (1) Includes $0.19 million in UPB of
Slide 18: HFI Loan Portfolio
HFI Loan Portfolio Portfolio by Property Type Portfolio by State (100% = $4.48 billion UPB)(1) Mixed Use 11.4% California 21.3% Investor 1-4 Retail Other Rental 8.6% 35.7% 54.1% New York 17.2% Multifamily 7.5% Florida Warehouse 13.3% Texas 6.4% 5.1% Office New Jersey Other 5.7% 7.4% 6.3% Confidentia
Slide 19: Adjusted Financial Metric Reconciliation
Adjusted Financial Metric Reconciliation: Adjusted Financial Metric Reconciliation to GAAP Net Income Core Net Income Quarter Ended ($ in thousands) 6/30/2024 3/31/2024 12/31/2023 9/30/2023 6/30/2023 Net Income $ 14,778 $ 17,251 $ 17,355 $ 12,086 $ 12,183 Tax liability reduction - - (1,866) - - Equi