Fourth Quarter Highlights
Financial Results
Net income of $34.8 million, an increase of 69.0% from $20.6 million for 4Q24. Diluted EPS of $0.89, an increase of $0.32 from $0.57 per share for 4Q24
Driven by record production volume, strong portfolio earnings and a tax effected gain of $13.4 million on sale of NPL loans
Core net income of $36.3 million, an increase of 67.0% from $21.8 million for 4Q24. Core diluted EPS of $0.93, an increase from $0.60 per share for 4Q241
Diluted book value per common share of $17.19 or $675.7 million, an increase of 20.5% from $14.26 or $520.2 million as of December 31, 2024
Portfolio net interest margin (NIM) of 3.59%, a decrease of 11 bps from 3.70% for 4Q24
Consistently strong NIM levels have resulted from rate discipline on record new loan production, with average loan coupons of 10.40% on loans produced over the last five quarters
Portfolio
Total loan production of $634.6 million, an increase of 12.6% from 4Q24
Nonperforming loans (NPLs) as a percentage of Held for Investment (HFI) loans was 8.5%, a decrease from 10.7% as of December 31, 2024
NPLs resolution totaled $78.1 million in UPB
Net gains of 103.0% or $2.3 million
Total NPLs recoveries of 109.8% or $7.6 million of UPB resolved including accrued interest received
Liquidity and Capitalization
Completed two securitizations totaling $646.3 million
Liquidity of $116.8 million, consisting of $92.1 million in unrestricted cash and $24.7 million in available borrowings from unpledged loans
Total available warehouse line capacity of $599.9 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.
WESTLAKE VILLAGE, Calif., March 11, 2026--(BUSINESS WIRE)--Velocity Financial, Inc. (NYSE: VEL) (Velocity or the Company), a leader in business purpose loans, reported net income of $105.1 million and core net income of $111.0 million for 2025, compared to $68.4 million and $72.9 million, respectively, for 2024. Earnings and core earnings per diluted share were $2.75 and $2.91 for 2025, compared to $1.91 and $2.03, respectively, for 2024.
"Velocity delivered impressive earnings in the fourth quarter and full year 2025," said Chris Farrar, President and CEO. "The Company’s record full-year 2025 earnings were driven by continued strong production, which also reached record levels. Our success resulted from ongoing initiatives to capture a greater share of the large but fragmented business purpose loan market. I’m especially proud of our team’s ability to achieve outstanding production volume growth while remaining focused on credit discipline and maintaining strong margins. We are well positioned to drive future earnings by addressing the important niche we serve."
Operating Results
Key Performance Indicators2
Three Months Ended December 31, | ||||||||||||||||||
2025 | 2024 | Variance | % Variance | |||||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||||||
Income before income tax | $ | 50,049 | $ | 32,038 | $ | 18,011 | 56.2 | % | ||||||||||
Net income | $ | 34,797 | $ | 20,587 | $ | 14,210 | 69.0 | % | ||||||||||
Diluted earnings per share | $ | 0.89 | $ | 0.57 | $ | 0.32 | 56.1 | % | ||||||||||
Core income before income tax | $ | 52,224 | $ | 33,463 | $ | 18,761 | 56.1 | % | ||||||||||
Core net income | $ | 36,327 | $ | 21,754 | $ | 14,573 | 67.0 | % | ||||||||||
Core diluted earnings per share | $ | 0.93 | $ | 0.60 | $ | 0.33 | 54.3 | % | ||||||||||
Net interest margin — portfolio related | 3.59 | % | (1) | 3.70 | % | (1) | (0.11 | )% | (3.1 | )% | ||||||||
Net interest margin — total company | 3.21 | % | (1) | 3.20 | % | (1) | 0.01 | % | 0.3 | % | ||||||||
Operating expense ratio | 25.7 | % | 26.8 | % | (1.1 | )% | (4.2 | )% | ||||||||||
Average common equity | $ | 651,352 | $ | 498,887 | $ | 152,465 | 30.6 | % | ||||||||||
Pre-tax return on average equity | 30.7 | % | (1) | 25.7 | % | (1) | 5.0 | % | 19.7 | % | ||||||||
Core pre-tax return on average equity | 32.1 | % | (1) | 26.8 | % | (1) | 5.2 | % | 19.5 | % | ||||||||
(1) Annualized | ||||||||||||||||||
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. |
Condensed Results of Operations
Three Months Ended | ||||||||||||||
2025 | 2024 | $ Variance | % Variance | |||||||||||
($ in thousands) | ||||||||||||||
Net interest income | $ | 51,609 | $ | 38,857 | $ | 12,752 | 32.8 | % | ||||||
Provision for credit losses | 1,954 | 22 | 1,932 | 8,781.8 | % | |||||||||
Net interest income after provision | 49,655 | 38,835 | 10,820 | 27.9 | % | |||||||||
Other operating income | 53,249 | 32,330 | 20,919 | 64.7 | % | |||||||||
Net revenue | 102,904 | 71,165 | 31,739 | 44.6 | % | |||||||||
Operating expenses | 52,855 | 39,127 | 13,728 | 35.1 | % | |||||||||
Income before income taxes | 50,049 | 32,038 | 18,011 | 56.2 | % | |||||||||
Income tax expense | 15,296 | 11,233 | 4,063 | 36.2 | % | |||||||||
Net income | 34,753 | 20,805 | 13,948 | 67.0 | % | |||||||||
Net income (loss) attributable to noncontrolling interest | (44 | ) | 218 | (262 | ) | (120.2 | )% | |||||||
Net income attributable to Velocity Financial, Inc. | $ | 34,797 | $ | 20,587 | $ | 14,210 | 69.0 | % | ||||||
Net interest income after provision for credit losses was $49.7 million, an increase of 27.9% from $38.8 million for 4Q24
Driven by strong portfolio growth and recoveries of interest income from NPLs by our asset management team
Other operating income was $53.2 million, an increase from $32.3 million for 4Q24
Driven primarily by net unrealized gain on fair value instruments and origination fee income
Net revenue was $102.9 million, an increase of 44.6% from $71.2 million for 4Q24
Resulted from continued strong production-driven portfolio net interest income growth, fair value gains and origination fee income
Operating expenses totaled $52.9 million, an increase of 35.1% from 4Q24, primarily from higher production-driven compensation expenses
Compensation expense totaled $22.6 million compared to $20.1 million for 4Q24
Driven by increases in headcount and commission compensation on higher production volume
Securitization expense totaled $6.3 million from the issuance of two securitizations, compared to costs of $7.1 million for two securitizations during 4Q24
Loan servicing expense totaled $9.4 million, from $6.7 million for 4Q24, driven by portfolio growth
REO, net expense was $8.7 million compared to $0.3 million for 4Q24, driven mainly by valuation adjustments
Loan Portfolio
December 31, | ||||||||||||||||
2025 | 2024 | Variance | % Variance | |||||||||||||
($ in thousands) | ||||||||||||||||
Total Loans Outstanding: | ||||||||||||||||
Investor 1-4 | $ | 3,125,346 | $ | 2,653,264 | $ | 472,082 | 17.8 | % | ||||||||
Mixed use | 709,131 | 560,548 | 148,583 | 26.5 | % | |||||||||||
Retail | 691,683 | 446,576 | 245,107 | 54.9 | % | |||||||||||
Office | 542,556 | 309,222 | 233,334 | 75.5 | % | |||||||||||
Multifamily | 461,666 | 367,007 | 94,659 | 25.8 | % | |||||||||||
Warehouse | 454,527 | 334,307 | 120,220 | 36.0 | % | |||||||||||
Other (1) | 506,429 | 385,013 | 121,416 | 31.5 | % | |||||||||||
Total loans | $ | 6,491,338 | $ | 5,055,937 | $ | 1,435,401 | 28.4 | % | ||||||||
(1) All other properties individually comprised less than 5.0% of the total unpaid principal balance | ||||||||||||||||
Key Loan Portfolio Metrics (1): | ||||||||||||||||
Loan count | 16,652 | 12,932 | 3,720 | 28.8 | % | |||||||||||
Loan-to-value | 65.2 | % | 66.6 | % | (1.4 | )% | (2.1 | )% | ||||||||
Coupon | 9.74 | % | 9.53 | % | 0.21 | % | 2.2 | % | ||||||||
Portfolio yield (2) | 9.47 | % | 9.34 | % | 0.13 | % | 1.4 | % | ||||||||
Portfolio cost of debt (2) | 6.23 | % | 6.14 | % | 0.09 | % | 1.5 | % | ||||||||
Portfolio spread (2) | 3.24 | % | 3.20 | % | 0.04 | % | 1.3 | % | ||||||||
(1) Weighted averages, except for loan count | ||||||||||||||||
(2) Annualized | ||||||||||||||||
Total loan portfolio was $6.5 billion in UPB as of December 31, 2025, an increase of 28.4% from $5.1 billion as of December 31, 2024
Driven by healthy growth across all types of collateral securing our loans
Loan prepayments totaled $227.6 million in UPB, an increase of 12.0% from $203.2 million for 4Q24
UPB of HFI FVO loans was $4.5 billion, or 69.0% of total HFI loans, as of December 31, 2025, an increase from $2.7 billion, or 52.5% as of December 31, 2024
Weighted average portfolio loan-to-value ratio was 65.2% as of December 31, 2025, down from 66.6% as of December 31, 2024, and slightly below the five-quarter trailing average of 65.4%
Weighted average portfolio yield was 9.47%, an increase of 13 bps from 4Q24, primarily driven by higher weighted average loan coupons
Portfolio-related debt cost was 6.23%, an increase of 9 bps from 4Q24, driven by higher warehouse financing utilization and securitized debt interest expense
Loan Production Volumes
Three Months Ended December 31, | ||||||||||||||
2025 | 2024 | $ Variance | % Variance | |||||||||||
($ in thousands) | ||||||||||||||
Originations Including Unfunded Commitments: | ||||||||||||||
Traditional commercial | $ | 322,096 | $ | 320,306 | $ | 1,790 | 0.6 | % | ||||||
Investor 1-4 rental | 281,105 | 199,895 | 81,210 | 40.6 | % | |||||||||
Short-term | 29,595 | 38,675 | (9,080 | ) | (23.5 | )% | ||||||||
Government insured multifamily | 1,818 | 4,607 | (2,789 | ) | (60.5 | )% | ||||||||
Total | $ | 634,614 | $ | 563,483 | $ | 71,131 | 12.6 | % | ||||||
Loan production totaled $634.6 million, an increase of 12.6% from $563.5 million for 4Q24
4Q25 production volume was driven mainly by demand for Investor 1-4 rental loans, which increased 40.6% from 4Q24
Weighted average coupon on 4Q25 HFI loan production was 10.14%, a decrease of 65 bps from 10.79% for 4Q24 mirroring a similar reduction in shorter term interest rates
Government insured multifamily loans are originated by our capital light subsidiary Century Health & Housing Capital and the related GNMA securities are sold to investors for cash gains shortly after closing
Total HFI Portfolio Credit Performance
December 31, | ||||||||||||||||
2025 | 2024 | Variance | % Variance | |||||||||||||
($ in thousands) | ||||||||||||||||
Key Nonperforming Loans Metrics: | ||||||||||||||||
Nonperforming loans UPB | $ | 554,540 | $ | 539,438 | $ | 15,102 | 2.8 | % | ||||||||
Total UPB | $ | 6,491,338 | $ | 5,055,937 | $ | 1,435,401 | 28.4 | % | ||||||||
Nonperforming loans UPB / Total UPB | 8.5 | % | 10.7 | % | (2.1 | )% | (19.9 | )% | ||||||||
NPL totaled $554.5 million in UPB as of December 31, 2025, or 8.5% of total HFI loans, compared to $539.4 million or 10.7% as of December 31, 2024
CECL Portfolio Credit Performance
Three Months Ended December 31, | ||||||||||||||||
2025 | 2024 | Variance | % Variance | |||||||||||||
($ in thousands) | ||||||||||||||||
Allowance for Credit Losses: | ||||||||||||||||
Beginning balance | $ | 4,586 | $ | 4,851 | $ | (265 | ) | (5.5 | )% | |||||||
Provision for credit losses | 1,954 | 22 | 1,932 | 8,781.8 | % | |||||||||||
Charge-offs | (2,019 | ) | (699 | ) | (1,320 | ) | (188.8 | )% | ||||||||
Ending balance | $ | 4,521 | $ | 4,174 | $ | 347 | 8.3 | % | ||||||||
Total UPB subject to CECL | $ | 2,013,514 | $ | 2,400,720 | (387,206 | ) | (16.1 | )% | ||||||||
Nonperforming loans UPB subject to CECL | $ | 234,490 | $ | 309,970 | (75,480 | ) | (24.4 | )% | ||||||||
Nonperforming loans UPB subject to CECL / Total UPB subject to CECL | 11.6 | % | 12.9 | % | (1.3 | )% | (9.8 | )% | ||||||||
Allowance for credit losses / Total UPB subject to CECL | 0.22 | % | 0.17 | % | 0.05 | % | 29.1 | % | ||||||||
Charge-offs / Total UPB subject to CECL | 0.40 | % | (1) | 0.12 | % | (1) | 0.28 | % | 244.4 | % | ||||||
(1) Annualized | ||||||||||||||||
Charge-offs for 4Q25 totaled $2.0 million, compared to $0.7 million for 4Q24
The trailing five-quarter charge-offs average was $1.2 million
Credit loss reserve totaled $4.5 million as of December 31, 2025, an increase of 8.3% from $4.2 million as of December 31, 2024
Driven by higher provision for credit losses and charge-offs
CECL reserve rate of 0.22% (CECL reserve as % of HFI loans at amortized cost) was relatively consistent with the recent five-quarter average rate of 0.21%
Real Estate Owned
Three Months Ended December 31, | ||||||||||||||||
2025 | 2024 | $ Variance | % Variance | |||||||||||||
($ in thousands) | ||||||||||||||||
Gain (Loss) on REO: | ||||||||||||||||
Gain on transfer to REO | $ | 3,104 | $ | 2,382 | $ | 722 | 30.3 | % | ||||||||
REO valuation loss, net | (6,990 | ) | (2,218 | ) | (4,772 | ) | (215.1 | )% | ||||||||
Gain on sale of REO | 203 | 3,411 | (3,208 | ) | (94.0 | )% | ||||||||||
Total gain (loss) on REO | $ | (3,683 | ) | $ | 3,575 | $ | (7,258 | ) | (203.0 | )% | ||||||
Total loss on REO was $3.7 million, compared to a gain of $3.6 million for 4Q24, driven by higher valuation loss and lower gain on sale
NPLs Resolution
Three Months Ended December 31, 2025 | ||||||||||||||||||||||||
Total Nonperforming Loans | UPB | Default | Prepayment | Net Gain | Regular | Servicing | Total | |||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Resolved — loans paid off | $ | 41,191 | $ | 1,157 | $ | 706 | $ | 1,863 | $ | 3,781 | $ | (435 | ) | $ | 5,209 | |||||||||
Resolved — loans paid current | 36,926 | 463 | — | 463 | 1,990 | (26 | ) | 2,427 | ||||||||||||||||
Total resolutions | $ | 78,117 | $ | 1,620 | $ | 706 | $ | 2,326 | $ | 5,771 | $ | (461 | ) | $ | 7,636 | |||||||||
Recovery rate | 103.0 | % | 109.8 | % | ||||||||||||||||||||
Three Months Ended December 31, 2024 | ||||||||||||||||||||||||
Total Nonperforming Loans | UPB | Default | Prepayment | Net Gain | Regular | Servicing | Total | |||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Resolved — loans paid off | $ | 41,936 | $ | 1,085 | $ | 896 | $ | 1,981 | $ | 4,951 | $ | (756 | ) | $ | 6,176 | |||||||||
Resolved — loans paid current | 27,364 | 172 | 12 | 184 | 1,112 | (6 | ) | 1,290 | ||||||||||||||||
Total resolutions | $ | 69,300 | $ | 1,257 | $ | 908 | $ | 2,165 | $ | 6,063 | $ | (762 | ) | $ | 7,466 | |||||||||
Recovery rate | 103.1 | % | 110.8 | % | ||||||||||||||||||||
NPLs resolution totaled $78.1 million in UPB compared to $69.3 million for 4Q24, and was below the recent five-quarter average of $80.1 million
Total NPLs recovered was 109.8% or $7.6 million of UPB resolved compared to 110.8% or $7.5 million for 4Q24. Total NPLs recovered was above the recent five-quarter average of 109.4% in UPB resolved
Full-Year 2025 Results
Key Performance Indicators2
Twelve Months Ended December 31, | ||||||||||||||||
2025 | 2024 | Variance | % Variance | |||||||||||||
($ in thousands, except per share amounts) | ||||||||||||||||
Income before income tax | $ | 146,240 | $ | 96,391 | $ | 49,849 | 51.7 | % | ||||||||
Net income | $ | 105,054 | $ | 68,419 | $ | 36,635 | 53.5 | % | ||||||||
Diluted earnings per share | $ | 2.75 | $ | 1.91 | $ | 0.84 | 44.0 | % | ||||||||
Core income before income tax | $ | 154,595 | $ | 102,499 | $ | 52,096 | 50.8 | % | ||||||||
Core net income | $ | 110,987 | $ | 72,871 | $ | 38,116 | 52.3 | % | ||||||||
Core diluted earnings per share | $ | 2.91 | $ | 2.03 | $ | 0.88 | 43.2 | % | ||||||||
Net interest margin — portfolio related | 3.61 | % | 3.56 | % | 0.05 | % | 1.5 | % | ||||||||
Net interest margin — total company | 3.19 | % | 3.03 | % | 0.16 | % | 5.3 | % | ||||||||
Operating expense ratio | 27.6 | % | 27.5 | % | 0.1 | % | 0.5 | % | ||||||||
Average common equity | 599,586 | 474,942 | $ | 124,644 | 26.2 | % | ||||||||||
Pre-tax return on average equity | 24.4 | % | 20.3 | % | 4.1 | % | 20.2 | % | ||||||||
Core pre-tax return on average equity | 25.8 | % | 21.6 | % | 4.2 | % | 19.5 | % | ||||||||
Condensed Results of Operations
Twelve Months Ended December 31, | ||||||||||||||
2025 | 2024 | $ Variance | % Variance | |||||||||||
(In thousands) | ||||||||||||||
Net interest income | $ | 185,781 | $ | 135,804 | $ | 49,977 | 36.8 | % | ||||||
Provision for credit losses | 5,805 | 1,173 | 4,632 | 394.9 | % | |||||||||
Net interest income after provision | 179,976 | 134,631 | 45,345 | 33.7 | % | |||||||||
Other operating income | 163,619 | 101,398 | 62,221 | 61.4 | % | |||||||||
Net revenue | 343,595 | 236,029 | 107,566 | 45.6 | % | |||||||||
Operating expenses | 197,355 | 139,638 | 57,717 | 41.3 | % | |||||||||
Income before income taxes | 146,240 | 96,391 | 49,849 | 51.7 | % | |||||||||
Income tax expense | 41,257 | 27,925 | 13,332 | 47.7 | % | |||||||||
Net income | 104,983 | 68,466 | 36,517 | 53.3 | % | |||||||||
Net income (loss) attributable to noncontrolling interest | (71 | ) | 47 | (118 | ) | (251.1 | )% | |||||||
Net income attributable to Velocity Financial, Inc. | $ | 105,054 | $ | 68,419 | $ | 36,635 | 53.5 | % | ||||||
Net income of $105.1 million, an increase of 53.5% from $68.4 million for 2024. Diluted EPS of $2.75, an increase of $0.84 from $1.91 per share for 2024
Net interest income after provision for credit losses was $180.0 million, an increase of 33.7% from $134.6 million for 2024
Other operating income totaled $163.6 million, an increase of 61.4% from $101.4 million for 2024, mainly attributable to net unrealized FVO gains on loans and securitized debt of $86.4 million, compared to $58.4 million for 2024
Total operating expenses were $197.4 million, an increase of 41.3% from $139.6 million for 2024, driven by higher headcount, commissions and loan servicing expenses to support our growth and valuation adjustments on REOs
Core net income of $111.0 million, an increase of 52.3% from $72.9 million for 2024. Core diluted EPS of $2.91, an increase from $2.03 per share for 20241
Portfolio NIM of 3.61%, an increase of 5 bps from 3.56% for 2024
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. |
Loan Portfolio
Twelve Months Ended December 31, | ||||||||||||||
2025 | 2024 | $ Variance | % Variance | |||||||||||
($ in thousands) | ||||||||||||||
Originations Including Unfunded Commitments: | ||||||||||||||
Traditional commercial | $ | 1,371,975 | $ | 836,763 | $ | 535,212 | 64.0 | % | ||||||
Investor 1-4 rental | 1,134,736 | 771,130 | 363,606 | 47.2 | % | |||||||||
Short-term | 159,103 | 209,707 | (50,604 | ) | (24.1 | )% | ||||||||
Government insured multifamily | 71,749 | 23,554 | 48,195 | 204.6 | % | |||||||||
Total | $ | 2,737,563 | $ | 1,841,154 | $ | 896,409 | 48.7 | % | ||||||
Loan production totaled $2.7 billion, including the unfunded portion of a construction loan originated by Century of $22.1 million, an increase of 48.7% from $1.8 billion for 2024
2025 loan production volume reached the highest annual volume in Velocity’s history
Driven by strategic growth of our origination platform and focus on providing financing solutions to underserved market segments
CECL Portfolio Credit Performance
December 31, | ||||||||||||||||
2025 | 2024 | Variance | % Variance | |||||||||||||
($ in thousands) | ||||||||||||||||
Allowance for Credit Losses: | ||||||||||||||||
Beginning balance | $ | 4,174 | $ | 4,769 | $ | (595 | ) | (12.5 | )% | |||||||
Provision for credit losses | 5,805 | 1,173 | 4,632 | 394.9 | % | |||||||||||
Charge-offs | (5,458 | ) | (1,768 | ) | (3,690 | ) | (208.7 | )% | ||||||||
Ending balance | $ | 4,521 | $ | 4,174 | $ | 347 | 8.3 | % | ||||||||
Total UPB subject to CECL | $ | 2,013,514 | $ | 2,400,720 | $ | (387,206 | ) | (16.1 | )% | |||||||
Nonperforming loans UPB subject to CECL | $ | 234,490 | $ | 309,970 | $ | (75,480 | ) | (24.4 | )% | |||||||
Nonperforming loans UPB subject to CECL / Total UPB subject to CECL | 11.6 | % | 12.9 | % | (1.3 | )% | (9.8 | )% | ||||||||
Allowance for credit losses / Total UPB subject to CECL | 0.22 | % | 0.17 | % | 0.05 | % | 29.1 | % | ||||||||
Charge-offs / Total UPB subject to CECL | 0.27 | % | 0.07 | % | 0.20 | % | 268.1 | % | ||||||||
Charge-offs for 2025 totaled $5.5 million, compared to $1.8 million for 2024, resulted mainly from two unusually large charge-offs taken during 2025
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. |
Real Estate Owned
December 31, | ||||||||||||||||
2025 | 2024 | $ Variance | % Variance | |||||||||||||
($ in thousands) | ||||||||||||||||
Gain (Loss) on REO: | ||||||||||||||||
Gain on transfer to REO | $ | 15,653 | $ | 8,704 | $ | 6,949 | 79.8 | % | ||||||||
REO valuation loss, net | (17,520 | ) | (6,121 | ) | (11,399 | ) | (186.2 | )% | ||||||||
Gain on sale of REO | 1,445 | 4,275 | (2,830 | ) | (66.2 | )% | ||||||||||
Total gain (loss) on REO | $ | (422 | ) | $ | 6,858 | $ | (7,280 | ) | (106.2 | )% | ||||||
Net REO loss was $0.4 million, compared to a net gain of $6.9 million for 2024, driven mainly by higher valuation loss, largely offset by a gain from loans transferred to REO.
NPLs Resolution
Twelve Months Ended December 31, 2025 | ||||||||||||||||||||||||
Total Nonperforming Loans | UPB | Default | Prepayment | Net Gain | Regular | Servicing | Total | |||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Resolved — loans paid off | $ | 151,900 | $ | 4,991 | $ | 2,669 | $ | 7,660 | $ | 13,631 | $ | (1,629 | ) | $ | 19,662 | |||||||||
Resolved — loans paid current | 179,646 | 1,706 | 13 | 1,719 | 8,776 | (156 | ) | 10,339 | ||||||||||||||||
Total resolutions | $ | 331,546 | $ | 6,697 | $ | 2,682 | $ | 9,379 | $ | 22,407 | $ | (1,785 | ) | $ | 30,001 | |||||||||
Recovery rate | 102.8 | % | 109.0 | % | ||||||||||||||||||||
Twelve Months Ended December 31, 2024 | ||||||||||||||||||||||||
Total Nonperforming Loans | UPB | Default | Prepayment | Net Gain | Regular | Servicing | Total | |||||||||||||||||
($ in thousands) | ||||||||||||||||||||||||
Resolved — loans paid off | $ | 120,508 | $ | 2,535 | $ | 2,246 | $ | 4,781 | $ | 12,534 | $ | (1,526 | ) | $ | 15,789 | |||||||||
Resolved — loans paid current | 132,845 | 1,108 | 28 | 1,136 | 5,372 | 2 | 6,510 | |||||||||||||||||
Total resolutions | $ | 253,353 | $ | 3,643 | $ | 2,274 | $ | 5,917 | $ | 17,906 | $ | (1,524 | ) | $ | 22,299 | |||||||||
Recovery rate | 102.3 | % | 108.8 | % | ||||||||||||||||||||
NPLs resolution totaled $331.5 million and $253.4 million in UPB for the years ended December 31, 2025 and 2024, respectively
Total NPLs recovered was 109.0% of UPB resolved compared to 108.8% for 2024
Other
Completed nine securitizations totaling $2.6 billion in 2025
Velocity’s executive management team will host a conference call and webcast on March 11, 2026, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to review Velocity’s 4Q25 and full-year 2025 financial results.
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 March 27, 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 4826570. 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 21 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.
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.
Velocity Financial, Inc. Condensed Consolidated Balance Sheets (In thousands, except per share amounts) | ||||||
December 31, | ||||||
2025 | 2024 | |||||
ASSETS | ||||||
Cash, cash equivalents, and restricted cash | $ | 249,237 | $ | 70,830 | ||
Total loans, net | 6,758,131 | 5,187,067 | ||||
Accrued interest and receivables | 202,477 | 160,088 | ||||
Real estate owned, net | 118,289 | 68,000 | ||||
Other assets | 53,379 | 41,423 | ||||
Total assets | $ | 7,381,513 | $ | 5,527,408 | ||
LIABILITIES | ||||||
Accounts payable and accrued expenses | $ | 168,314 | $ | 147,814 | ||
Secured financing, net | 286,679 | 284,833 | ||||
Securitized debt | 5,942,326 | 4,226,464 | ||||
Warehouse and repurchase facilities, net | 308,506 | 348,082 | ||||
Total liabilities | 6,705,825 | 5,007,193 | ||||
Commitments and contingencies | ||||||
EQUITY | ||||||
Stockholders' equity | 672,535 | 516,944 | ||||
Noncontrolling interest in subsidiary | 3,153 | 3,271 | ||||
Total equity | 675,688 | 520,215 | ||||
Total liabilities and equity | $ | 7,381,513 | $ | 5,527,408 | ||
Diluted book value per share | $ | 17.19 | $ | 14.26 | ||
Diluted shares at period end | 39,297 | 36,469 | ||||
Velocity Financial, Inc. Condensed Consolidated Statements of Income (In thousands, except per share amounts) (Unaudited) | ||||||||||||
Three Months Ended | ||||||||||||
December 31, | September 30, | December 31, | ||||||||||
Interest income | $ | 152,403 | $ | 144,119 | $ | 113,484 | ||||||
Interest expense - portfolio related | 94,652 | 88,899 | 68,484 | |||||||||
Net interest income - portfolio related | 57,751 | 55,220 | 45,000 | |||||||||
Interest expense - corporate debt | 6,142 | 6,144 | 6,143 | |||||||||
Net interest income | 51,609 | 49,076 | 38,857 | |||||||||
Provision for credit losses | 1,954 | 381 | 22 | |||||||||
Net interest income after provision for credit losses | 49,655 | 48,695 | 38,835 | |||||||||
Other operating income | ||||||||||||
Unrealized gain (loss) on fair value loans | 21,129 | 30,982 | (15,723 | ) | ||||||||
Unrealized gain (loss) on fair value securitized debt | 800 | (9,988 | ) | 34,539 | ||||||||
Origination fee income | 6,644 | 9,723 | 7,245 | |||||||||
Other income | 24,676 | 6,360 | 6,269 | |||||||||
Total other operating income | 53,249 | 37,077 | 32,330 | |||||||||
Operating expenses | ||||||||||||
Compensation and employee benefits | 22,628 | 23,300 | 20,084 | |||||||||
Loan servicing | 9,448 | 7,748 | 6,748 | |||||||||
Real estate owned, net | 8,651 | 7,931 | 268 | |||||||||
Other operating expenses | 12,128 | 11,418 | 12,027 | |||||||||
Total operating expenses | 52,855 | 50,397 | 39,127 | |||||||||
Income before income taxes | 50,049 | 35,375 | 32,038 | |||||||||
Income tax expense | 15,296 | 9,963 | 11,233 | |||||||||
Net income | 34,753 | 25,412 | 20,805 | |||||||||
Net income (loss) attributable to noncontrolling interest | (44 | ) | 39 | 218 | ||||||||
Net income attributable to Velocity Financial, Inc. | 34,797 | 25,373 | 20,587 | |||||||||
Less undistributed earnings attributable to unvested restricted stock awards | 477 | 352 | 253 | |||||||||
Net earnings attributable to common stockholders | $ | 34,320 | $ | 25,021 | $ | 20,334 | ||||||
Earnings per common share: | ||||||||||||
Basic | $ | 0.89 | $ | 0.66 | $ | 0.62 | ||||||
Diluted | $ | 0.89 | $ | 0.65 | $ | 0.57 | ||||||
Weighted average common shares outstanding: | ||||||||||||
Basic | 38,378 | 38,073 | 32,771 | |||||||||
Diluted | 39,243 | 38,800 | 36,098 | |||||||||
Velocity Financial, Inc. Condensed Consolidated Statements of Income (In thousands, except per share amounts) (Audited) | |||||||||||
Twelve Months Ended December 31, | |||||||||||
2025 | 2024 | 2023 | |||||||||
Interest income | $ | 550,829 | $ | 406,843 | $ | 310,775 | |||||
Interest expense - portfolio related | 340,477 | 247,218 | 186,468 | ||||||||
Net interest income - portfolio related | 210,352 | 159,625 | 124,307 | ||||||||
Interest expense - corporate debt | 24,571 | 23,821 | 16,556 | ||||||||
Net interest income | 185,781 | 135,804 | 107,751 | ||||||||
Provision for credit losses | 5,805 | 1,173 | 1,915 | ||||||||
Net interest income after provision for credit losses | 179,976 | 134,631 | 105,836 | ||||||||
Other operating income | |||||||||||
Unrealized gain on fair value loans | 116,853 | 55,857 | 47,850 | ||||||||
Unrealized gain (loss) on fair value securitized debt | (30,454 | ) | 2,581 | (9,002 | ) | ||||||
Origination fee income | 33,982 | 24,007 | 12,450 | ||||||||
Other income | 43,238 | 18,953 | 14,612 | ||||||||
Total other operating income | 163,619 | 101,398 | 65,910 | ||||||||
Operating expenses | |||||||||||
Compensation and employee benefits | 90,217 | 69,589 | 48,344 | ||||||||
Loan servicing | 33,409 | 22,388 | 17,631 | ||||||||
Real estate owned, net | 22,909 | 6,030 | 6,153 | ||||||||
Other operating expenses | 50,820 | 41,631 | 28,491 | ||||||||
Total operating expenses | 197,355 | 139,638 | 100,619 | ||||||||
Income before income taxes | 146,240 | 96,391 | 71,127 | ||||||||
Income tax expense | 41,257 | 27,925 | 18,834 | ||||||||
Net income | 104,983 | 68,466 | 52,293 | ||||||||
Net income (loss) attributable to noncontrolling interest | (71 | ) | 47 | 20 | |||||||
Net income attributable to Velocity Financial, Inc. | 105,054 | 68,419 | 52,273 | ||||||||
Less undistributed earnings attributable to unvested restricted stock awards | 1,348 | 834 | 753 | ||||||||
Net earnings attributable to common stockholders | $ | 103,706 | $ | 67,585 | $ | 51,520 | |||||
Earnings per common share: | |||||||||||
Basic | $ | 2.81 | $ | 2.07 | $ | 1.60 | |||||
Diluted | $ | 2.75 | $ | 1.91 | $ | 1.52 | |||||
Weighted average common shares outstanding: | |||||||||||
Basic | 36,850 | 32,653 | 32,206 | ||||||||
Diluted | 38,178 | 35,760 | 34,484 | ||||||||
Velocity Financial, Inc. Net Interest Margin - Portfolio Related and Total Company ($ in thousands) | ||||||||||||||||||||
Three Months Ended December 31, | ||||||||||||||||||||
2025 | 2024 | |||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | |||||||||||||||
Balance | Expense | Rate (1) | Balance | Expense | Rate (1) | |||||||||||||||
Loan Portfolio: | ||||||||||||||||||||
Loans held for sale | $ | 359 | $ | 3,145 | ||||||||||||||||
Loans held for investment | 6,433,855 | 4,855,794 | ||||||||||||||||||
Total loans | $ | 6,434,214 | $ | 152,403 | 9.47 | % | $ | 4,858,939 | $ | 113,484 | 9.34 | % | ||||||||
Debt: | ||||||||||||||||||||
Warehouse facilities | $ | 353,540 | $ | 6,939 | 7.85 | % | $ | 341,596 | $ | 7,179 | 8.41 | % | ||||||||
Securitized debt | 5,726,298 | 87,713 | 6.13 | % | 4,117,512 | 61,305 | 5.96 | % | ||||||||||||
Total debt - portfolio related | 6,079,838 | 94,652 | 6.23 | % | 4,459,108 | 68,484 | 6.14 | % | ||||||||||||
Corporate debt | 290,000 | 6,142 | 8.47 | % | 290,000 | 6,143 | 8.47 | % | ||||||||||||
Total debt | $ | 6,369,838 | $ | 100,794 | 6.33 | % | $ | 4,749,108 | $ | 74,627 | 6.29 | % | ||||||||
Net interest spread - portfolio related (2) | 3.25 | % | 3.20 | % | ||||||||||||||||
Net interest margin - portfolio related | 3.59 | % | 3.70 | % | ||||||||||||||||
Net interest spread - total company (3) | 3.15 | % | 3.06 | % | ||||||||||||||||
Net interest margin - total company | 3.21 | % | 3.20 | % | ||||||||||||||||
(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 |
Velocity Financial, Inc. Net Interest Margin - Portfolio Related and Total Company ($ in thousands) | ||||||||||||||||||||
Twelve Months Ended December 31, | ||||||||||||||||||||
2025 | 2024 | |||||||||||||||||||
Interest | Average | Interest | Average | |||||||||||||||||
Average | Income / | Yield / | Average | Income / | Yield / | |||||||||||||||
Balance | Expense | Rate | Balance | Expense | Rate | |||||||||||||||
Loan Portfolio: | ||||||||||||||||||||
Loans held for sale | $ | 3,549 | $ | 6,488 | ||||||||||||||||
Loans held for investment | 5,824,811 | 4,481,813 | ||||||||||||||||||
Total loans | $ | 5,828,360 | $ | 550,829 | 9.45 | % | $ | 4,488,301 | $ | 406,843 | 9.06 | % | ||||||||
Debt: | ||||||||||||||||||||
Warehouse facilities | $ | 401,320 | $ | 31,976 | 7.97 | % | $ | 295,936 | $ | 26,790 | 9.05 | % | ||||||||
Securitized debt | 5,053,930 | 308,501 | 6.10 | % | 3,780,660 | 220,428 | 5.83 | % | ||||||||||||
Total debt - portfolio related | 5,455,250 | 340,477 | 6.24 | % | 4,076,596 | 247,218 | 6.06 | % | ||||||||||||
Corporate debt | 290,000 | 24,571 | 8.47 | % | 282,888 | 23,821 | 8.42 | % | ||||||||||||
Total debt | $ | 5,745,250 | $ | 365,048 | 6.35 | % | $ | 4,359,484 | $ | 271,039 | 6.22 | % | ||||||||
Net interest spread - portfolio related (1) | 3.21 | % | 3.00 | % | ||||||||||||||||
Net interest margin - portfolio related | 3.61 | % | 3.56 | % | ||||||||||||||||
Net interest spread - total company (2) | 3.10 | % | 2.85 | % | ||||||||||||||||
Net interest margin - total company | 3.19 | % | 3.03 | % | ||||||||||||||||
(1) | 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 | |
(2) | 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 |
Velocity Financial, Inc.
Non-GAAP Financial Measure Reconciliations to GAAP Measures
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended | Twelve Months Ended | |||||||||||||||||
2025 | 2024 | 2025 | 2024 | |||||||||||||||
Income before income tax | $ | 50,049 | $ | 32,038 | $ | 146,240 | $ | 96,391 | ||||||||||
Equity award & ESPP expenses | 2,131 | 1,644 | 8,284 | 6,155 | ||||||||||||||
Net income (loss) attributable to noncontrolling interest | (44 | ) | 218 | (71 | ) | 47 | ||||||||||||
Core income before income tax | $ | 52,224 | $ | 33,464 | $ | 154,595 | $ | 102,499 | ||||||||||
Average common equity | 651,352 | 498,887 | 599,586 | 474,942 | ||||||||||||||
Pre-tax return on average equity | 30.7 | % | (1) | 25.7 | % | (1) | 24.4 | % | 20.3 | % | ||||||||
Tax effect of equity award & ESPP expenses | 1.3 | % | (1) | 1.3 | % | (1) | 1.4 | % | 1.3 | % | ||||||||
Tax effect of net income (loss) attributable to noncontrolling interest | (0.0 | )% | (1) | 0.2 | % | (1) | (0.0 | )% | 0.0 | % | ||||||||
Core pre-tax return on average equity | 32.1 | % | 26.8 | % | 25.8 | % | 21.6 | % | ||||||||||
(1) Annualized | ||||||||||||||||||
Three Months Ended December 31, | Twelve Months Ended December 31, | |||||||||||
2025 | 2024 | 2025 | 2024 | |||||||||
Net income | $ | 34,797 | $ | 20,587 | $ | 105,054 | $ | 68,419 | ||||
Equity award & ESPP expenses | 1,530 | 1,167 | 5,933 | 4,452 | ||||||||
Core net income | $ | 36,327 | $ | 21,754 | $ | 110,987 | $ | 72,871 | ||||
Diluted weighted average common shares outstanding | 39,243 | 36,097 | 38,178 | 35,760 | ||||||||
Core diluted earnings per share | $ | 0.93 | $ | 0.60 | $ | 2.91 | $ | 2.03 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20260311257432/en/
Contacts
Investors and Media:
Chris Oltmann
(818) 532-3708