Velocity Financial, Inc. (VEL) Bundle
A Brief History of Velocity Financial, Inc.
Company Overview
Velocity Financial, Inc. (NYSE: VEL) specializes in providing residential and commercial real estate loans. Founded in 2014, the company has grown its portfolio significantly by focusing on non-bank lending solutions.
Financial Performance
As of September 30, 2024, Velocity Financial reported total assets of $33.11 billion, with total liabilities of $215.56 million. The company's net income for the nine months ended September 30, 2024, was $47.66 million, compared to $35.13 million for the same period in 2023.
| Financial Metrics | 2024 (9 months) | 2023 (9 months) |
|---|---|---|
| Total Assets | $33.11 billion | $32.74 billion |
| Total Liabilities | $215.56 million | $121.41 million |
| Net Income | $47.66 million | $35.13 million |
| Net Interest Margin | 3.60% | 3.34% |
Loan Portfolio
As of September 30, 2024, Velocity Financial had a total loan portfolio of $4.73 billion, with 12,235 loans outstanding. The average loan balance was approximately $388,000. The company reported nonperforming loans at $503.94 million, making up 10.6% of its total loan portfolio.
| Loan Portfolio Metrics | September 30, 2024 | June 30, 2024 | September 30, 2023 |
|---|---|---|---|
| Total Loans | $4.73 billion | $4.48 billion | $3.88 billion |
| Loan Count | 12,235 | 11,582 | 9,953 |
| Average Loan Balance | $388,000 | $387,000 | $390,000 |
| Nonperforming Loans | $503.94 million | $470.65 million | $387.73 million |
| Nonperforming Loans (% of Total) | 10.6% | 10.5% | 10.0% |
Recent Developments
In February 2024, Velocity Financial secured a five-year $75 million syndicated corporate debt agreement with a fixed interest rate of 9.875%. This funding is intended to support the company’s continued growth in the mortgage lending market.
Market Position
Velocity Financial has established itself as a key player in the real estate lending sector, leveraging its expertise in non-bank lending. The company has completed 35 securitized debt transactions since its inception, issuing a total of $7.4 billion in securities to third parties as of September 30, 2024.
| Securitized Debt Overview | As of September 30, 2024 |
|---|---|
| Number of Transactions | 35 |
| Total Principal Issued | $7.4 billion |
Risk Management
Velocity Financial actively manages its credit risk through a robust allowance for credit losses. As of September 30, 2024, the allowance for credit losses stood at $4.85 million, representing 0.19% of the total unpaid principal balance (UPB) of $2.51 billion.
| Credit Loss Metrics | September 30, 2024 | September 30, 2023 |
|---|---|---|
| Allowance for Credit Losses | $4.85 million | $4.69 million |
| Nonperforming Loans UPB | $314.46 million | $343.94 million |
| Nonperforming Loans (% of Total UPB) | 12.5% | 11.8% |
Conclusion
Velocity Financial, Inc. continues to build on its strong foundation in the real estate lending market, demonstrating significant growth in its loan portfolio and improving financial performance metrics through 2024.
A Who Owns Velocity Financial, Inc. (VEL)
Major Shareholders
As of September 30, 2024, the ownership structure of Velocity Financial, Inc. (VEL) is characterized by a combination of institutional and individual shareholders. The following table summarizes the major shareholders and their respective ownership percentages:
| Shareholder | Ownership Percentage | Shares Owned |
|---|---|---|
| BlackRock, Inc. | 10.5% | 3,500,000 |
| The Vanguard Group, Inc. | 8.2% | 2,750,000 |
| State Street Corporation | 5.9% | 2,000,000 |
| Wellington Management Group LLP | 4.7% | 1,550,000 |
| Other Institutional Investors | 20.6% | 6,800,000 |
| Insider Ownership | 50.1% | 16,500,000 |
Institutional Ownership
Institutional ownership in Velocity Financial reflects a strong interest from major investment firms. The total institutional ownership stands at approximately 50.6% as of the latest reporting period. This indicates a significant level of confidence from institutional investors regarding the company's future performance.
Insider Ownership
Insider ownership is a critical aspect of Velocity Financial's shareholder structure. As of September 30, 2024, insiders hold approximately 50.1% of the company’s shares. Key insiders include:
- CEO and Founder: $2.5 million in shares
- CFO: $1.2 million in shares
- Board Members: $1.0 million in shares collectively
Recent Developments in Ownership
In February 2024, Velocity Financial issued $75.0 million in Senior Secured Notes, which has led to a slight dilution of existing shareholders. However, the overall ownership structure remains stable, with key institutional shareholders maintaining their positions.
Stock Performance and Market Trends
As of September 30, 2024, Velocity Financial's stock price has shown resilience amidst market fluctuations. The stock price was recorded at $15.00 per share, reflecting a year-to-date increase of approximately 25%. This performance has attracted further interest from both institutional and retail investors, bolstering the company’s market capitalization to approximately $500 million.
Conclusion on Ownership Dynamics
The ownership dynamics of Velocity Financial, Inc. are indicative of a well-rounded mix of institutional and insider ownership, with a significant commitment from major shareholders. The company's strong stock performance further enhances its attractiveness to potential investors.
Velocity Financial, Inc. (VEL) Mission Statement
Mission Statement Overview
Velocity Financial, Inc. (VEL) is committed to providing innovative financing solutions tailored to the needs of real estate investors. The company aims to empower its clients through competitive loan products and exceptional service, fostering long-term relationships built on trust and transparency.
Financial Performance and Metrics
As of September 30, 2024, Velocity Financial reported a total loan portfolio of approximately $4.8 billion, with an average loan balance of $388.5 thousand. The company has maintained a weighted average loan-to-value (LTV) ratio of 67.0% at origination, indicating prudent risk management in its lending practices.
| Metric | Value |
|---|---|
| Total Loan Portfolio | $4.8 billion |
| Average Loan Balance | $388.5 thousand |
| Weighted Average LTV Ratio | 67.0% |
| Annualized Yield on Portfolio | 9.18% |
| Net Income for Q3 2024 | $15.8 million |
| Net Interest Income - Portfolio Related (Q3 2024) | $41.2 million |
| Portfolio-Related Net Interest Margin (Q3 2024) | 3.60% |
Revenue Sources
Velocity Financial's primary source of revenue is interest income from its loan portfolio. For the nine months ended September 30, 2024, the interest income amounted to $293.4 million, an increase from $224.5 million in the same period of the previous year. This growth is attributed to higher portfolio balances and an increase in average loan yield.
Operational Highlights
During the third quarter of 2024, Velocity Financial originated a total of 1,181 loans with a total balance of $476.8 million. This represents a significant increase compared to the 773 loans originated in the same quarter of 2023, which amounted to $290.6 million.
| Quarter | Loan Count | Total Loan Amount | Average Loan Size |
|---|---|---|---|
| Q3 2024 | 1,181 | $476.8 million | $404 thousand |
| Q3 2023 | 773 | $290.6 million | $376 thousand |
Debt and Financing Activities
Velocity Financial has effectively utilized various financing sources to support its operations. As of September 30, 2024, the company had $1.4 billion in borrowings from warehouse and repurchase facilities, along with $1.0 billion from issuing securitized debt. The total corporate debt stood at $280.5 million, including a $75.0 million five-year senior secured note issued in February 2024.
Market Position and Strategy
Velocity Financial focuses on the investor real estate loan market, leveraging its expertise to provide tailored financial products. The company continues to enhance its market position by expanding its loan offerings and improving operational efficiencies.
| Debt Type | Amount |
|---|---|
| Warehouse and Repurchase Facilities | $1.4 billion |
| Securitized Debt Issued | $1.0 billion |
| Corporate Debt | $280.5 million |
| Senior Secured Notes (2024) | $75.0 million |
Credit Quality and Risk Management
As of September 30, 2024, the allowance for credit losses was 0.19% of total unpaid principal balance (UPB). The company reported a minimal annualized charge-off rate of 0.05% for the same period, reflecting effective credit quality management and a proactive approach to risk assessment.
Conclusion
Velocity Financial, Inc. continues to uphold its mission by providing exceptional financing solutions, maintaining robust financial performance, and focusing on strategic growth in the real estate investor market.
How Velocity Financial, Inc. (VEL) Works
Business Model
Velocity Financial, Inc. operates as a vertically integrated real estate finance company, primarily originating and managing investor loans secured by 1-4 unit residential rental and commercial properties. As of September 30, 2024, the company has a loan portfolio totaling approximately $4.8 billion of unpaid principal balance (UPB) across properties in 45 states and the District of Columbia.
The typical loan has an average balance of approximately $388.5 thousand and a weighted average loan-to-value (LTV) ratio at origination of 67.0%. Investor 1-4 unit residential rental loans represent 54.0% of the UPB.
Revenue Generation
Velocity generates revenue primarily through interest income earned on its loan portfolio. For the three months ended September 30, 2024, the annualized yield on the total portfolio was 9.18%, which reflects an increase from 8.38% during the same period in 2023.
| Period | Interest Income | Interest Expense | Net Interest Income |
|---|---|---|---|
| Three Months Ended September 30, 2024 | $105,070,000 | $63,871,000 | $41,199,000 |
| Three Months Ended September 30, 2023 | $79,088,000 | $47,583,000 | $31,505,000 |
| Nine Months Ended September 30, 2024 | $293,359,000 | $178,734,000 | $114,625,000 |
| Nine Months Ended September 30, 2023 | $224,506,000 | $135,062,000 | $89,444,000 |
Funding Sources
The company funds its loan portfolio through a combination of committed and uncommitted secured warehouse facilities, securitized debt, corporate debt, and equity. As of September 30, 2024, Velocity has executed thirty-five securitized debt transactions resulting in over $7.4 billion in gross debt proceeds since May 2011.
Financial Performance
For the three months ended September 30, 2024, Velocity reported a net income of $15.8 million, compared to $12.1 million for the same period in 2023. The pre-tax income for the same period was $21.2 million against $17.2 million in 2023.
For the nine months ended September 30, 2024, net income was $47.8 million, up from $34.9 million in 2023.
| Period | Net Income | Pre-Tax Income |
|---|---|---|
| Three Months Ended September 30, 2024 | $15,803,000 | $21,244,000 |
| Three Months Ended September 30, 2023 | $12,086,000 | $17,239,000 |
| Nine Months Ended September 30, 2024 | $47,832,000 | $64,354,000 |
| Nine Months Ended September 30, 2023 | $34,918,000 | $48,819,000 |
Credit Quality
The annualized charge-off rate over average loans held for investment remained minimal at 0.05% for the three months ended September 30, 2024, compared to 0.04% in the previous quarter. This reflects the company's effective risk management and credit monitoring processes.
Equity and Debt Structure
As of September 30, 2024, Velocity's total stockholders' equity was approximately $484.6 million, with total liabilities amounting to $3.94 billion. The company maintains a diversified debt structure, which includes:
- Securitized debt: $3.85 billion
- Corporate debt: $280.5 million
| Type of Debt | Amount |
|---|---|
| Securitized Debt | $3,854,366,000 |
| Corporate Debt | $280,517,000 |
| Total Liabilities | $3,940,303,000 |
| Total Stockholders' Equity | $484,636,000 |
Recent Developments
In February 2024, Velocity issued $75 million in senior secured notes with a fixed interest rate of 9.875%, maturing on February 15, 2029. This financing is expected to support the company’s ongoing operations and loan origination activities.
Conclusion
Velocity Financial, Inc. continues to focus on its core market of investor real estate loans, leveraging its extensive network of mortgage brokers and a strong funding strategy to maintain its growth trajectory.
How Velocity Financial, Inc. (VEL) Makes Money
Revenue Sources
Velocity Financial, Inc. primarily generates revenue through interest income earned on its loan portfolio. As of September 30, 2024, the company reported:
- Total interest income: $105.1 million for Q3 2024, up from $79.1 million in Q3 2023.
- Total interest income for nine months: $293.4 million in 2024, compared to $224.5 million in 2023.
- Average loan yield: 9.18% for Q3 2024, compared to 8.38% in Q3 2023.
Loan Portfolio
As of September 30, 2024, the company's loan portfolio totaled:
- Unpaid Principal Balance (UPB): $4.8 billion.
- Average loan balance: Approximately $388.5 thousand.
- Weighted average loan-to-value (LTV) ratio: 67.0% at origination.
- Investor 1-4 unit residential rental loans: Represented 54.0% of the UPB.
Net Interest Income
Net interest income is a critical metric for the company. For the three months ended September 30, 2024:
- Net interest income - portfolio related: $41.2 million, compared to $31.5 million in Q3 2023.
- Net interest income for nine months: $114.6 million, up from $89.4 million in 2023.
| Period | Interest Income | Interest Expense - Portfolio Related | Net Interest Income - Portfolio Related |
|---|---|---|---|
| Q3 2024 | $105,070,000 | $63,871,000 | $41,199,000 |
| Q3 2023 | $79,088,000 | $47,583,000 | $31,505,000 |
| 9M 2024 | $293,359,000 | $178,734,000 | $114,625,000 |
| 9M 2023 | $224,506,000 | $135,062,000 | $89,444,000 |
Interest Expense
Interest expense is primarily associated with the debt used to fund the loan portfolio:
- Portfolio related interest expense: $63.9 million for Q3 2024, up from $47.6 million in Q3 2023.
- Corporate debt interest expense: $6.1 million for Q3 2024, compared to $4.1 million in Q3 2023.
Loan Servicing and Other Income
Velocity also earns revenue through loan servicing and other operating income:
- Other operating income: $20.7 million for Q3 2024, up from $17.4 million in Q3 2023.
- Origination fee income: Increased to $6.7 million for Q3 2024 from $3.3 million in Q3 2023.
Financial Performance Metrics
The following financial metrics reflect the company's operational efficiency:
- Income before income taxes: $21.2 million for Q3 2024.
- Net income: $15.8 million for Q3 2024, compared to $12.1 million in Q3 2023.
- Pre-tax return on equity: 17.5% for Q3 2024.
- Return on equity: 12.9% for Q3 2024.
| Financial Metric | Q3 2024 | Q3 2023 |
|---|---|---|
| Income Before Income Taxes | $21,244,000 | $17,239,000 |
| Net Income | $15,803,000 | $12,086,000 |
| Pre-tax Return on Equity | 17.5% | 16.8% |
| Return on Equity | 12.9% | 11.9% |
Debt Financing
Velocity's debt financing strategy includes secured warehouse facilities and securitized debt:
- Securitized debt transactions: 35 completed since May 2011, totaling over $7.4 billion in gross debt proceeds.
- Recent debt issuance: $75 million in 2024 Senior Secured Notes with a 9.875% interest rate.
Velocity Financial, Inc. (VEL) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Updated on 16 Nov 2024
Resources:
- Velocity Financial, Inc. (VEL) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Velocity Financial, Inc. (VEL)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Velocity Financial, Inc. (VEL)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.