Form 8-K
8-K — Velocity Financial, Inc.
Accession: 0001193125-26-209160
Filed: 2026-05-06
Period: 2026-05-06
CIK: 0001692376
SIC: 6199 (FINANCE SERVICES)
Item: Results of Operations and Financial Condition
Item: Financial Statements and Exhibits
Documents
8-K — d122273d8k.htm (Primary)
EX-99 (d122273dex99.htm)
XML — IDEA: XBRL DOCUMENT (R1.htm)
8-K
8-K (Primary)
Filename: d122273d8k.htm · Sequence: 1
8-K
false 0001692376 0001692376 2026-05-06 2026-05-06
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 6, 2026
Velocity Financial, Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware
001-39183
46-0659719
(State or Other Jurisdiction
of Incorporation)
(Commission
File Number)
(IRS Employer
Identification No.)
2945 Townsgate Road, Suite 110
Westlake Village, California
91361
(Address of Principal Executive Offices)
(Zip Code)
Registrant’s Telephone Number, Including Area Code: (818) 532-3700
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading
Symbol(s)
Name of each exchange
on which registered
Common stock, par value $0.01 per share
VEL
The New York Stock Exchange
Common stock, par value $0.01 per share
VEL
Indicate by check
NYSE Texas, Inc.
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02
Results of Operations and Financial Condition.
On May 6, 2026 we issued a press release announcing financial results for the quarter ended March 31, 2026. The press release is attached as Exhibit 99 and is incorporated herein by reference.
The information provided in Item 2.02, including Exhibit 99, is intended to be furnished and shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference into any other filing under the Securities Act of 1933, as amended or the Securities Exchange Act of 1934, as amended.
Item 9.01
Exhibits.
Exhibit
Number
Description
99
Press Release dated May 6, 2026
104
Cover Page Interactive Data File (embedded within the Inline XBRL document).
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Velocity Financial, Inc.
Date: May 6, 2026
By:
/s/ Roland T. Kelly
Roland T. Kelly
Chief Legal Officer and General Counsel
EX-99
EX-99
Filename: d122273dex99.htm · Sequence: 2
EX-99
Exhibit 99
Velocity Financial, Inc. Reports
First Quarter 2026 Results
First
Quarter Highlights
Financial Results
•
Net income of $22.4 million, an increase of 18.4% from $18.9 million for 1Q25. Diluted EPS of $0.57, an
increase of $0.06 from $0.51 per share for 1Q25
•
Driven by loan portfolio growth and strong portfolio earnings
•
Core net income of $26.5 million, an increase of 30.8%
from $20.3 million for 1Q25. Core diluted EPS of $0.68, an increase from $0.55 per share for 1Q251
•
Diluted book value per common share of $17.75, an increase of 19.4% from $14.87 as of March 31, 2025
•
Portfolio net interest margin (NIM) of 3.56%, an increase of 21 bps from 3.35% for 1Q25
•
Consistently strong NIM levels have resulted from rate discipline on new loan production, with average loan
coupons of 10.28% on loans produced over the last five quarters
Portfolio
•
Loan production of $639.4 million, flat with $640.4 million in 1Q25
•
Nonperforming loans (NPL) as a percentage of Held for Investment (HFI) loans was 10.1%, a decrease from 10.8% as
of March 31, 2025
•
NPL resolutions totaled $70.1 million in UPB
•
Net gains of 102.3% or $1.6 million
•
Total NPL recoveries of 106.5% or $4.6 million of UPB resolved including accrued interest received
Liquidity and Capitalization
•
Completed two securitizations totaling $513.8 million
•
Liquidity of $329.0 million, consisting of $87.1 million in unrestricted cash and $241.9 million
in available borrowings from unpledged loans
•
Total available warehouse line capacity of $835.6 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.
1
Westlake Village, CA – May 6, 2026 – Velocity Financial, Inc. (NYSE: VEL) (Velocity or the
Company), a leader in business purpose loans, reported net income of $22.4 million and core net income of $26.5 million for 1Q26, compared to $18.9 million and $20.3 million, respectively, for 1Q25. Earnings and core earnings per
diluted share were $0.57 and $0.68 for 1Q26, compared to $0.51 and $0.55, respectively, for 1Q25.
“Velocity continued to deliver impressive
earnings in the first quarter of 2026” said Chris Farrar, President and CEO. “Velocity’s first quarter 2026 results were driven by higher portfolio net interest income and noninterest income from our growing portfolio and new
production volume. Financing demand remained strong during the quarter, in both the traditional commercial and 1-4 family residential rental property markets, as investors continued to see considerable
value in smaller commercial properties. We remain confident in Velocity’s long-term growth prospects and our ability to sustain profitable market share growth.”
Operating Results
Key Performance Indicators2
Three Months Ended March 31,
2026
2025
Variance
% Variance
($ in thousands, except per share amounts)
Income before income tax
$
30,877
$
26,894
$
3,983
14.8
%
Net income
$
22,363
$
18,887
$
3,476
18.4
%
Diluted earnings per share
$
0.57
$
0.51
$
0.06
11.8
%
Core income before income tax
$
36,684
$
29,103
$
7,581
26.0
%
Core net income
$
26,482
$
20,253
$
6,229
30.8
%
Core diluted earnings per share
$
0.68
$
0.55
$
0.13
23.6
%
Net interest margin — portfolio related
3.56
%(1)
3.35
%(1)
0.21
%
6.3
%
Net interest margin — total company
2.65
%(1)
2.88
%(1)
(0.23
)%
(8.0
)%
Average common equity
$
682,417
$
534,940
$
147,477
27.6
%
Pre-tax return on average equity
18.1
%(1)
20.1
%(1)
(2.0
)%
(10.0
)%
Core pre-tax return on average equity
21.5
%(1)
21.8
%(1)
(0.3
)%
(1.4
)%
(1)
Percentages are annualized
Condensed Results of Operations
Three Months Ended March 31,
2026
2025
$ Variance
% Variance
(In thousands)
Net interest income
$
43,920
$
37,510
$
6,410
17.1
%
Provision for credit losses
1,661
1,872
(211
)
(11.3
)%
Net interest income after provision
42,259
35,638
6,621
18.6
%
Other operating income
42,957
33,446
9,511
28.4
%
Net revenue
85,216
69,084
16,132
23.4
%
Operating expenses
54,339
42,190
12,149
28.8
%
Income before income taxes
30,877
26,894
3,983
14.8
%
Income tax expense
8,578
8,246
332
4.0
%
Net income
22,299
18,648
3,651
19.6
%
Net loss attributable to noncontrolling interest
(64
)
(239
)
175
73.2
%
Net income attributable to Velocity Financial, Inc.
$
22,363
$
18,887
$
3,476
18.4
%
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.
2
•
Net interest income after provision for credit losses was $42.3 million, an increase of 18.6% from
$35.6 million for 1Q25
•
Driven by strong portfolio growth and recoveries of interest income from NPLs by our asset management team
•
Other operating income was $43.0 million, an increase from $33.4 million for 1Q25
•
Driven primarily by net unrealized gain on fair value instruments
•
Net revenue was $85.2 million, an increase of 23.4% from $69.1 million for 1Q25
•
Resulting from continued strong production-driven portfolio net interest income growth and fair value gains.
•
Operating expenses totaled $54.3 million, an increase of 28.8% from 1Q25, primarily from higher professional
fees related to business development opportunities and the growth in our platform
•
Compensation expense totaled $23.5 million, compared to $21.7 million for 1Q25
•
Driven by increases in headcount to support future planned growth
•
Professional fees totaled $5.8 million, compared to $1.8 million for 1Q25.
•
Driven by higher legal fees related to potential merger and acquisition due diligence.
•
Securitization expense totaled $5.3 million from the issuance of two securitizations during the quarter,
compared to costs of $4.0 million for one securitization during 1Q25
•
Loan servicing expense totaled $8.6 million, from $8.0 million for 1Q25, driven by portfolio growth
Loan Portfolio
$
$
$
$
March 31,
2026
2025
Variance
% Variance
($ in thousands)
Total Loans Outstanding:
Investor 1-4
$
3,203,963
$
2,799,451
$
404,512
14.4
%
Mixed use
744,157
605,722
138,435
22.9
%
Retail
739,426
522,400
217,026
41.5
%
Office
606,938
421,389
185,549
44.0
%
Multifamily
482,152
397,842
84,310
21.2
%
Government Insured Multifamily
—
4,886
(4,886
)
(100.0
)%
Warehouse
493,995
367,289
126,706
34.5
%
Other(1)
565,913
330,922
234,991
71.0
%
Total loans
$
6,836,544
$
5,449,901
$
1,386,643
25.4
%
(1)
All other properties individually comprised less than 5.0% of the total unpaid principal balance
$
$
$
$
Key Loan Portfolio Metrics
(1):
Loan count
17,639
13,858
3,781
27.3
%
Loan-to-value
64.9
%
66.1
%
(1.2
)%
(1.8
)%
Coupon
9.75
%
9.60
%
0.15
%
1.6
%
Total portfolio yield
9.23
%
9.11
%
0.12
%
1.3
%
Portfolio cost of debt
6.09
%
6.23
%
(0.14
)%
(2.3
)%
(1)
Weighted averages, except for loan count
•
Total loan portfolio was $6.8 billion in UPB as of March 31, 2026, an increase of 25.4% from
$5.4 billion as of March 31, 2025
•
Driven by healthy growth across all types of collateral securing our loans
3
•
Loan prepayments totaled $235.0 million in UPB, an increase of 3.2% from $227.6 million for 4Q25, and
19.9% from $196.0 million for 1Q25
•
UPB of HFI FVO loans was $4.9 billion, or 71.7% of total HFI loans, as of March 31, 2026, an increase
from $3.1 billion, or 57.7% as of March 31, 2025
•
Weighted average portfolio
loan-to-value ratio was 64.9% as of March 31, 2026, down from 66.1% as of March 31, 2025, and below the five-quarter trailing average of 65.0%
•
Weighted average total portfolio yield was 9.23%, an increase of 12 bps from 1Q25, primarily driven by the
increase in weighted average loan coupons
•
Portfolio-related debt cost was 6.09%, a decrease of 14 bps from 1Q25, driven by lower warehouse financing
utilization and securitized debt interest expense
Loan Production Volumes
Three Months Ended March 31,
2026
2025
$ Variance
% Variance
($ in thousands)
Originations Including Advances:
Investor 1-4 rental
$
232,555
$
266,631
$
(34,076
)
(12.8
)%
Traditional commercial
381,298
324,789
56,509
17.4
%
Short-term
23,293
44,117
(20,824
)
(47.2
)%
Government insured multifamily
2,226
4,886
(2,660
)
(54.4
)%
Total
$
639,372
$
640,423
$
(1,051
)
(0.2
)%
•
Loan production totaled $639.4 million, including construction loan advances of $2.2 million,
consistent with $640.4 million for 1Q25
•
1Q26 production volume was driven by healthy demand for our traditional commercial product
•
Weighted average coupon on 1Q26 HFI loan production was 10.15%, a decrease of 36 bps from 10.51% for 1Q25
mirroring a similar reduction in shorter term interest rates
•
Government insured multifamily loans are originated by our capital light subsidiary Century Health &
Housing Capital and the related GNMA securities are sold to investors for cash gains shortly after closing
Total HFI Portfolio
Credit Performance
Three Months Ended March 31,
2026
2025
Variance
% Variance
($ in thousands)
Key Nonperforming Loans Metrics:
Nonperforming loans UPB
$
692,073
$
587,811
$
104,262
17.7
%
Total UPB
$
6,836,544
$
5,445,015
$
1,391,529
25.6
%
Nonperforming loans UPB / Total UPB
10.1
%
10.8
%
(0.7
)%
(6.2
)%
•
NPLs totaled $692.1 million in UPB as of March 31, 2026, or 10.1% of total HFI loans, compared to
$587.8 million and 10.8% as of March 31, 2025
4
CECL Portfolio Credit Performance
Three Months Ended March 31,
2026
2025
Variance
% Variance
($ in thousands)
Allowance for Credit Losses:
Beginning balance
$
4,521
$
4,174
$
347
8.3
%
Provision for credit losses
1,661
1,872
(211
)
(11.3
)%
Charge-offs
(1,322
)
(1,029
)
(293
)
28.5
%
Ending balance
$
4,860
$
5,017
$
(157
)
(3.1
)%
Total UPB subject to CECL
$
1,937,474
$
2,304,587
$
(367,113
)
(15.9
)%
Nonperforming loans UPB subject to CECL
$
238,407
$
292,811
$
(54,404
)
(18.6
)%
Nonperforming loans UPB subject to CECL / Total UPB subject to CECL
12.3
%
12.7
%
(0.4
)%
(3.2
)%
Allowance for credit losses / Total UPB subject to CECL
0.25
%
0.22
%
0.03
%
15.2
%
Charge-offs / Total UPB subject to CECL
0.27
%(1)
0.18
%(1)
0.09
%
52.8
%
(1)
Annualized
•
Charge-offs for 1Q26 totaled $1.3 million, compared to $1.0 million for 1Q25
•
The trailing five-quarter charge-offs average was $1.4 million
•
Credit loss reserve totaled $4.9 million as of March 31, 2026, a decrease of 3.1% from
$5.0 million as of March 31, 2025
•
Driven by our decreasing loan portfolio subject to credit loss reserve
•
CECL reserve rate of 0.25% (CECL reserve as % of HFI loans at amortized cost) was relatively consistent with the
recent five-quarter average rate of 0.23%
Real Estate Owned
Three Months Ended March 31,
2026
2025
$ Variance
% Variance
($ in thousands)
Gain (loss) on new REO:
Gain on transfer to REO - amortized cost loans
$
2,832
$
2,834
$
(2
)
(0.1
)%
Valuation gain on transfer to REO - fair value loans
3,971
1,589
2,382
149.9
%
Total gain on new REO
$
6,803
$
4,423
$
2,380
53.8
%
Three Months Ended March 31,
2026
2025
$ Variance
% Variance
($ in thousands)
Gain (loss) on existing REO:
REO valuation loss, net
$
(3,217
)
$
(2,073
)
$
(1,144
)
55.2
%
(Loss) gain on sale of REO
(129
)
300
(429
)
(143.0
)%
Total (loss) on existing REO
$
(3,346
)
$
(1,773
)
$
(1,573
)
88.7
%
•
Total gain on new REO was $6.8 million, compared to a gain of $4.4 million for 1Q25, driven by higher
valuation gain
•
Total loss on existing REO was $3.3 million, compared to a loss of $1.8 million for 1Q25, driven by
valuation loss
5
Nonperforming loans (NPLs) Resolution
Three Months Ended March 31, 2026
Total Nonperforming Loans
UPB
Default
Interest
Prepayment
Penalty
Net Gain
Regular
Accrued
Interest
Servicing
Advances
Write-Offs
Total
Recovered
($ in thousands)
Resolved — loans paid off
$
36,800
$
710
$
434
$
1,144
$
1,873
$
(677
)
$
2,340
Resolved — loans paid current
33,289
437
—
437
1,824
(31
)
2,230
Total resolutions
$
70,089
$
1,147
$
434
$
1,581
$
3,697
$
(708
)
$
4,570
Recovery rate
102.3
%
106.5
%
Three Months Ended March 31, 2025
Total Nonperforming Loans
UPB
Default
Interest
Prepayment
Penalty
Net Gain
Regular
Accrued
Interest
Servicing
Advances
Write-Offs
Total
Recovered
($ in thousands)
Resolved — loans paid off
$
25,930
$
753
$
418
$
1,171
$
2,152
$
(425
)
$
2,898
Resolved — loans paid current
42,408
389
—
389
1,936
(10
)
2,315
Total resolutions
$
68,338
$
1,142
$
418
$
1,560
$
4,088
$
(435
)
$
5,213
Recovery rate
102.3
%
107.6
%
•
NPLs resolution totaled $70.1 million in UPB, realizing gains of 102.3% of UPB resolved compared to
$68.3 million in UPB and similar gains of 102.3% of UPB resolved for 1Q25
•
UPB of NPLs resolution for 1Q26 was below the recent five-quarter average of $80.3 million in UPB resolved
and below the average gains of 108.5% of UPB resolved
6
Velocity’s executive management team will host a conference call and webcast on May 6, 2026, at
2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time to review Velocity’s 1Q26 financial results.
Investors and Media:
Chris Oltmann
(818)
532-3708
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 May 29,
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 6829289. 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 22
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.
7
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.
8
Velocity Financial, Inc.
Condensed Consolidated Balance Sheets
(In thousands, except per share amounts)
March 31, 2026
December 31, 2025
(Unaudited)
(Audited)
ASSETS
Cash, cash equivalents, and restricted cash
$
112,050
$
249,237
Total loans, net
7,105,538
6,758,131
Accrued interest and receivables
196,303
202,477
Real estate owned, net
131,849
118,289
Other assets
45,703
53,379
Total assets
$
7,591,443
$
7,381,513
LIABILITIES
Accounts payable and accrued expenses
$
173,076
$
168,314
Secured financing, net
73,274
286,679
Unsecured senior notes, net
485,445
—
Securitized debt, at amortized cost
1,638,995
1,705,589
Securitized debt, at fair value
4,426,240
4,236,737
Warehouse and repurchase facilities, net
98,009
308,506
Total liabilities
6,895,039
6,705,825
Commitments and contingencies
EQUITY
Stockholders’ equity
693,348
672,535
Noncontrolling interest in subsidiary
3,056
3,153
Total equity
696,404
675,688
Total liabilities and equity
$
7,591,443
$
7,381,513
Diluted book value per share
$
17.75
$
17.19
Diluted shares at period end
39,245
39,297
9
Velocity Financial, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended
March 31,
2026
December 31,
2025
March 31,
2025
(Unaudited)
(Unaudited)
(Unaudited)
Interest income
$
153,080
$
152,403
$
118,740
Interest expense - portfolio related
94,027
94,652
75,088
Net interest income - portfolio related
59,053
57,751
43,652
Interest expense - corporate debt
15,133
6,142
6,142
Net interest income
43,920
51,609
37,510
Provision for credit losses
1,661
1,954
1,872
Net interest income after provision for credit losses
42,259
49,655
35,638
Other operating income
Gain on disposition of loans
Unrealized gain on fair value loans
1,039
21,129
34,836
Unrealized gain (loss) on fair value securitized debt
26,254
800
(13,682
)
Origination fee income
7,970
6,644
8,679
Other income
7,694
24,676
3,613
Total other operating income
42,957
53,249
33,446
Operating expenses
Compensation and employee benefits
23,520
22,628
21,684
Loan servicing
8,563
9,448
8,008
Real estate owned, net
6,862
8,651
3,029
Other operating expenses
15,394
12,128
9,469
Total operating expenses
54,339
52,855
42,190
Income before income taxes
30,877
50,049
26,894
Income tax expense
8,578
15,296
8,246
Net income
22,299
34,753
18,648
Net loss attributable to noncontrolling interest
(64
)
(44
)
(239
)
Net income attributable to Velocity Financial, Inc.
22,363
34,797
18,887
Less undistributed earnings attributable to unvested restricted stock awards
312
477
233
Net earnings attributable to common stockholders
$
22,051
$
34,320
$
18,654
Earnings per common share:
Basic
$
0.57
$
0.89
$
0.55
Diluted
$
0.57
$
0.89
$
0.51
Weighted average common shares outstanding:
Basic
38,626
38,378
33,687
Diluted
39,174
39,243
36,811
10
Velocity Financial, Inc.
Net Interest Margin - Portfolio Related and Total Company
($ in thousands)
Three Months Ended
March 31, 2026
March 31, 2025
Average
Balance
Interest
Income /
Expense
Average
Yield /
Rate (1)
Average
Balance
Interest
Income /
Expense
Average
Yield /
Rate (1)
Loan Portfolio:
Loans held for sale
$
189
$
998
Loans held for investment
6,632,799
5,213,188
Total loans
$
6,632,988
$
153,080
9.23
%
$
5,214,186
$
118,740
9.11
%
Debt:
Warehouse facilities
$
176,760
$
3,723
8.42
%
$
433,790
$
8,505
7.84
%
Securitized debt
6,003,318
90,304
6.02
%
4,387,277
66,583
6.07
%
Total debt - portfolio related
6,180,078
94,027
6.09
%
4,821,067
75,088
6.23
%
Corporate - Secured debt
142,043
6,681
18.81
%(4)
290,000
6,142
8.47
%
Corporate - Unsecured debt
333,333
8,452
10.14
%(5)
—
—
—
Total debt
$
6,655,454
$
109,160
6.56
%
$
5,111,067
$
81,230
6.36
%
Net interest spread -
portfolio related (2)
3.15
%
2.88
%
Net interest margin - portfolio related
3.56
%
3.35
%
Net interest spread - total company
(3)
2.67
%
2.75
%
Net interest margin - total company
2.65
%
2.88
%
(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
(4)
The average yield of 18.81% for corporate secured debt reflects a lower average balance given that the
$215.0 million secured debt was paid off at the end of January 2026, and interest expense also included $1.3 million write-off of debt issuance costs and $3.2 million interest expense for the
quarter. Excluding these non-recurring costs, the adjusted average yield on the remaining secured debt would be 10.50% going forward.
(5)
The average yield of 10.14% for corporate unsecured debt reflects a lower average balance given that the
$500.0 million unsecured debt was not issued until the end of January 2026; on a full-quarter basis, the average yield would be 9.98%.
11
Velocity Financial, Inc.
Non-GAAP Financial Measure Reconciliations to GAAP Measures
(In thousands, except per share amounts)
(Unaudited)
Three Months Ended March 31,
2026
2025
Income before income tax
$
30,877
$
26,894
Equity award & ESPP expenses
2,695
1,970
Debt issuance costs write-off
1,340
—
Potential M&A due diligence
4,100
—
IRS Employee Retention Credit
(2,392
)
—
Net income (loss) attributable to noncontrolling interest
(64
)
(239
)
Core income before income tax
$
36,684
$
29,103
Average common equity
682,417
534,940
Pre-tax return on average equity
18.1
%
20.1
%
Tax effect of equity award & ESPP expenses
1.6
%
1.5
%
Tax effect of debt issuance costs write-off
0.8
%
0.0
%
Tax effect of potential M&A due diligence
2.4
%
0.0
%
Tax effect of IRS Employee Retention Credit
(1.4
)%
0.0
%
Tax effect of net income (loss) attributable to noncontrolling interest
(0.0
)%
(0.2
)%
Core pre-tax return on average equity
21.5
%
21.8
%
Three Months Ended March 31,
2026
2025
Net income
22,363
$
18,887
Equity award & ESPP expenses
1,933
1,366
Debt issuance costs write-off
961
—
Due diligence and advisory fees
2,941
—
IRS Employee Retention Credit
(1,716
)
—
Core net income
$
26,482
$
20,253
Diluted weighted average common shares outstanding
39,174
36,811
Core diluted earnings per share
$
0.68
$
0.55
12
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