Velocity Financial (VEL) Q3 2024 earnings summary

Executive summary

• Net income for Q3 2024 was $15.8 million, up 30.8% year-over-year; diluted EPS rose to $0.44 from $0.35, and core net income reached $16.9 million.

• Loan production for Q3 2024 was $476.8 million, up 64.1% year-over-year and 12.9% sequentially; total loan portfolio grew to $4.8 billion, a 22.6% increase.

• Portfolio net interest margin improved to 3.60%, up 26 basis points year-over-year; portfolio yield was 9.18%.

• Book value per share increased to $14.91, up 14.7% year-over-year.

• Nonperforming loans were 10.6% of the portfolio, up from 10.1% a year ago, reflecting both portfolio growth and proactive foreclosure actions.

Financial highlights

• Net interest income for Q3 2024 was $35.1 million, up from $27.4 million in Q3 2023; net revenue was $55.9 million, up 25.3% year-over-year.

• Interest income for Q3 2024 was $105.1 million, up from $79.1 million in Q3 2023.

• Operating expenses rose 26.6% to $34.6 million, mainly due to higher compensation and origination costs.

• Origination fee income doubled to $6.7 million, reflecting improved origination fees on new loans.

• Allowance for credit losses was $4.9 million (0.19% of UPB), with annualized charge-offs at 0.06% of UPB.

Outlook and guidance

• Management expects continued growth in loan originations and portfolio yield, supported by strong demand and established funding channels.

• On track to achieve an all-time full-year funding record in 2024 and targeting a $5 billion loan portfolio by 2025.

• Anticipate over $150 million in government-insured multifamily originations in 2025, contributing high ROE and capital-light earnings.

• Ongoing macroeconomic and geopolitical uncertainties, including interest rate volatility and real estate market stress, may impact future performance.

• The company remains focused on prudent underwriting, active portfolio management, and maintaining liquidity to navigate market risks.