In This Article:
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Net Revenue Increase: 41% over the prior year's quarter.
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Core Earnings Increase: 23% increase, up to $0.45 per share for the quarter.
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Originations Volume: 63% increase compared to Q2 '23, with $422 million in UPB.
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Net Interest Margin (NIM): Increased by 30 basis points year-over-year.
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Non-Performing Loans (NPL): Slight increase to 10.5%.
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Loan Portfolio Growth: 20% year-over-year increase, totaling almost $4.5 billion.
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Weighted Average Coupon: 9.25% for the portfolio as of June 30, an 85 basis point increase year-over-year.
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Liquidity: Just under $84 million at the end of the quarter.
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Securitizations Issued: Two securitizations in Q2, totaling $491 million in securities issued.
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Net Gain from REO Activity: Over $2 million for the quarter.
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CECL Loan Loss Reserve: $5.2 million, or 20 basis points of the outstanding non-fair value loans.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Velocity Financial Inc (NYSE:VEL) reported a 41% increase in net revenue over the prior year's quarter, resulting in a 23% increase in core earnings.
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The company saw a 63% increase in origination volume compared to Q2 2023, maintaining margins and credit standards.
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Two successful securitizations were issued in April and June, both priced well and saw strong demand from bond investors.
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The real estate market is performing well, with strong demand for financing from borrowers, providing a positive outlook.
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The company's liquidity position is strong, with just under $84 million at the end of the quarter and ample warehouse capacity for future growth.
Negative Points
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Non-performing loans (NPL) increased slightly to 10.5%, indicating some challenges in loan performance.
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There was a $0.06 per share drag on current period earnings due to the second securitization, impacting short-term profitability.
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The company faces ongoing competition and market volatility, which could affect future loan production and margins.
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Despite strong performance, the company acknowledges mixed signals in the credit market, which could pose future risks.
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Velocity Financial Inc (NYSE:VEL) had to lower rates slightly in response to market conditions, which could impact future revenue.
Q & A Highlights
Q: Can you provide an outlook on loan production levels for the rest of the year? A: Christopher Farrar, President and CEO, stated that the Q2 run rate feels right for the rest of the year. The product mix may vary slightly, but overall production levels should remain consistent with Q2.