On November 8, 2024, Velocity Financial Inc (VEL, Financial) released its 8-K filing, showcasing a robust performance for the third quarter of 2024. The company, a prominent player in the real estate finance sector, reported net income of $15.8 million and core net income of $16.9 million, marking a significant increase from the previous year's figures of $12.1 million and $12.9 million, respectively. Earnings per diluted share were reported at $0.44, surpassing the analyst estimate of $0.39, while core earnings per diluted share reached $0.47.
Company Overview
Velocity Financial Inc is a United States-based real estate finance company that specializes in originating and managing investor loans secured by residential rental and small commercial properties. The company generates revenue primarily through interest income and operates in key states such as New York, California, Florida, and New Jersey.
Performance and Challenges
The third quarter of 2024 marked Velocity Financial Inc's sixth consecutive quarter of profitable production volume growth, a notable achievement in a challenging lending environment. The company's ability to expand its production platform and sales force has been instrumental in increasing its reach within the broker community and enhancing its visibility among real estate investors. However, the company faces challenges such as maintaining this growth trajectory amidst potential economic fluctuations and regulatory changes.
Financial Achievements
Velocity Financial Inc's financial achievements are significant, particularly in the context of the banking industry. The company successfully issued its fourth securitization of 2024, which was met with strong investor demand and improved pricing. This strategic move not only unlocked capital for future growth but also positioned the company to achieve a record full-year funding milestone in 2024.
Key Financial Metrics
| Metric | 3Q 2024 | 3Q 2023 | Variance | % Variance |
|---|---|---|---|---|
| Pretax Income | $21,244.2 | $17,238.5 | $4,005.7 | 23.2% |
| Net Income | $15,803.2 | $12,085.9 | $3,717.2 | 30.8% |
| Diluted EPS | $0.44 | $0.35 | $0.09 | 25.7% |
| Total Loan Portfolio | $4,734.3 million | $3,857.8 million | $876.5 million | 22.7% |
These metrics highlight the company's strong financial health and its ability to generate substantial returns on equity, with a pretax return on equity of 17.55% and a core pretax return on equity of 19.00%.
Analysis and Commentary
Velocity Financial Inc's performance in the third quarter of 2024 underscores its strategic focus on disciplined capital and asset management. The company's success in resolving nonperforming loans and refinancing capital-inefficient securitized debt has been pivotal in supporting its growth objectives. As Chris Farrar, President and CEO, noted,
These strong results have us on track to achieve an all-time full-year funding record for the Company in 2024 while also realizing our goal of a $5 billion loan portfolio by 2025."
Overall, Velocity Financial Inc's third-quarter results reflect its resilience and adaptability in a competitive market, positioning it well for future growth and success.
Explore the complete 8-K earnings release (here) from Velocity Financial Inc for further details.
