Velocity Financial (VEL) Q4 2024 earnings summary

Executive summary

• Achieved record results for Q4 and full year 2024, with net income for 4Q24 at $20.6M (up 18.6% YoY) and full-year net income at $68.4M (up 30.9%).

• Core net income for 4Q24 was $21.8M, up 34.6% YoY; full-year core net income was $72.9M, up 36.5%.

• Loan production in 4Q24 totaled $563.5M, up 60% YoY and 18% sequentially; full-year production reached $1.8B.

• Portfolio growth drove a 37% increase in net revenue and Q4 pre-tax ROE of 26.8%.

• Book value per share rose to $15.70 at year-end, a 16.4% increase from 2023.

Financial highlights

• Q4 core earnings were $0.60 per share; full year core earnings reached $2.03 per share.

• Q4 net interest margin was 3.70%, up 10 bps from Q3 and 18 bps YoY; full-year NIM was 3.56%, up 22 bps.

• Total loan portfolio at year-end was $5.1B, a 6.4% increase from Q3 and 24% YoY.

• Weighted average coupon on new originations was 10.8%; portfolio yield at year-end was 9.53%.

• NPL resolution gains in Q4 were $5.6M on $79M UPB resolved; full year NPL resolution gains were $10.2M.

Outlook and guidance

• Expect continued strong growth in 2025, with current production run rate seen as a good forward forecast and potential for further upside.

• Management expects to build on momentum for sustained earnings growth and enhanced long-term shareholder value.

• Next long-term loan securitization targeted for April 2025; strong securitization market tailwind.

• U.S. economic outlook is uncertain with anticipated volatility in 2025; higher-for-longer interest rates seen as supportive.

• Production growth and stable NIM expected to continue, supporting future earnings growth.