Velocity Financial, Inc. ((VEL)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call for Velocity Financial, Inc. painted a largely positive picture of the company’s performance and future outlook. The management expressed optimism about 2024, highlighting robust growth in originations and revenue, alongside successful securitization efforts. Despite facing challenges such as high non-performing loans and the impact of wildfires, the company remains confident in its financial position and anticipates continued strength into 2025.
Record-Breaking Year-End Results
Velocity Financial, Inc. concluded 2024 with record-breaking results, showcasing a 64% increase in originations and a 37% rise in net revenue. The company reported an impressive Q4 pretax return on equity (ROE) of 26.8%, underscoring its strong financial performance.
Strong Loan Production Growth
The company achieved significant growth in loan production, with Q4 figures reaching $563.5 million, marking an 18.2% increase over the previous quarter. Over 1,200 loans were funded, with a weighted average coupon of 10.8% on new health investment originations.
Positive NPL Resolution
Velocity Financial reported $5.6 million in gains from resolving non-performing loans (NPLs) on $79 million in unpaid balances, reflecting effective collection efforts and favorable outcomes.
Robust Capital and Liquidity Position
The company ended the year with a solid liquidity position, holding nearly $96 million, which includes $50 million in cash and cash equivalents, and $46 million in available liquidity on unfinanced collateral.
Successful Securitizations
In Q4, Velocity Financial executed two securitizations, raising over $586 million. An additional $351 million was issued in early 2025, demonstrating the company’s strong performance in capital markets.
Impact of California Wildfires
The wildfires in Southern California affected two properties; however, there was no financial impact due to comprehensive insurance coverage, ensuring stability in the company’s financials.
High Non-Performing Loan Rate
The non-performing loan rate remained high at 10.7% at the end of Q4, consistent with a five-quarter average of about 10.3%, indicating ongoing challenges in managing delinquent assets.
Forward-Looking Guidance
Looking ahead, Velocity Financial anticipates continued growth and strong market demand in 2025. The company expects to build on its record 2024 performance, leveraging its solid loan portfolio and successful securitization efforts to drive future success.
In summary, Velocity Financial, Inc.’s earnings call highlighted a strong performance in 2024, with record growth in originations and revenue. The company’s robust financial position, successful securitizations, and positive outlook for 2025 suggest continued strength, despite challenges such as high non-performing loans and external factors like wildfires. Investors and stakeholders can look forward to the company’s promising trajectory in the coming year.