Velocity Financial (VEL) Q1 2025 earnings summary

Executive summary

• Net income for Q1 2025 was $18.9 million, up 9.5% year-over-year, with core net income at $20.3 million and core EPS at $0.55, driven by record loan originations of $640.4 million, a 69.1% increase year-over-year.

• Total loan portfolio reached $5.5 billion in UPB, up 27.3% year-over-year, with a weighted average LTV of 66.1%.

• Portfolio net interest margin was 3.35%, flat year-over-year but down sequentially, and portfolio yield increased to 9.59%.

• Nonperforming loans were 10.8% of the portfolio, with stable resolutions and proactive management.

• Book value per share rose to $16.19, with adjusted book value at $18.50 as of March 31, 2025.

Financial highlights

• Net revenue was $69.1 million, up 27.4% year-over-year, and net interest income after provision for loan losses was $35.6 million.

• Origination fee income increased 74.1% to $8.7 million, and operating expenses rose 36% to $42.2 million.

• Weighted average coupon on new originations was 10.5% in Q1; portfolio WAC at quarter-end was 9.59%.

• CECL loan loss reserve at quarter-end was $5 million, or 0.22% of the amortized cost portfolio.

• Liquidity at quarter-end was $75.6 million, with $238.2 million in available warehouse line capacity.

Outlook and guidance

• Management expects continued portfolio growth, robust loan demand, and stable NIM in the 3.35–3.50% range.

• Securitization market remains supportive, with the next long-term loan securitization targeted for June 2025.

• U.S. economic outlook remains uncertain, with anticipated volatility and macroeconomic risks.

• Management targets a $10 billion portfolio in five years, supported by technology investments and headcount growth.

• Focus remains on prudent underwriting, active asset management, and strong liquidity.