The following is a summary of the Velocity Financial, Inc. (VEL) Q3 2024 Earnings Call Transcript:

Financial Performance:

• Velocity Financial reported a record third quarter with net interest income increasing by 29%, net interest margin (NIM) up 26 basis points, and earnings growing by 31%.

• The company achieved a robust net portfolio growth of $876 million, representing a 22% increase in total unpaid principal balance (UPB).

• Loan production for Q3 was almost $477 million in UPB, marking an almost 13% increase over Q2.

• The total loan portfolio as of September 30th was almost $4.8 billion, a 6.1% increase from Q2 and a 22.6% increase year-over-year.

• Non-performing loan (NPL) rate at the end of Q3 was 10.6%, relatively flat compared to Q2.

Business Progress:

• Velocity Financial reported an impressive loan origination volume growth of 64% over the prior year quarter, closing just under 1,200 loans.

• The company successfully completed several securitizations, with the most recent deal in early October being six times oversubscribed, demonstrating strong market conditions and investor confidence.

Opportunities:

• The healthy and growing pipeline of over 900 applications for more than $450 million in UPB in October indicates strong demand, positioning the company to surpass its portfolio goal of $5 billion by 2025.

• The company plans to capitalize on robust and supportive capital markets to further fuel its growth and operational success.

Risks:

• The steady state of non-performing loans, with a flat rate of 10.6%, highlights ongoing attention needed for credit performance and potential risks associated with economic fluctuations and market conditions that could influence real estate values and liquidity.

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