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 diluted EPS rising to $0.51; core diluted EPS was $0.55.

• Record loan originations reached $640.4 million in UPB, up 69.1% year-over-year, driving a 27% increase in net revenue and a 17% rise in core pre-tax earnings.

• Total loan portfolio grew to $5.4 billion UPB, a 27.3% increase year-over-year, with a weighted average LTV of 66.1%.

• Maintained disciplined credit standards and robust margins, with strong demand across property types and a growing commercial loan segment.

• Book value per share rose to $16.19, a 15.6% increase from March 31, 2024.

Financial highlights

• Net interest margin (NIM) was 3.35% in Q1 2025, flat year-over-year but down 35 bps sequentially.

• Portfolio yield increased to 9.59% at quarter-end; weighted average coupon on new originations was 10.5%.

• Net revenue was $69.1 million, up 27.4% year-over-year; net interest income after provision for loan losses was $35.6 million, up 25.2%.

• Operating expenses rose to $42.2 million, mainly due to higher compensation and production-related costs.

• Liquidity stood at $75.6 million, with $238.2 million in available warehouse line capacity.

Outlook and guidance

• Management expects continued strong investor loan demand in both commercial and 1-4 family residential rental markets.

• Production growth outlook remains positive, with strong investor property demand and supportive securitization markets.

• NIM expected to remain in the 3.35%-3.5% range for Q2 and potentially stable for the year.

• U.S. economic outlook remains uncertain with anticipated volatility in 2025.

• Confident in sustaining profitable market share growth despite market volatility.