VEL · Velocity Financial, Inc.

Velocity Financial, Inc. delivered solid Q1 2026 results, with net income of $22.4 million marking an 18.4% year-over-year increase from $18.9 million. This growth in earnings per diluted share to $0.57, up 11.8% from $0.51, underscores our ability to grow profitability in a market characterized by substantial financing demand and limited institutional supply. Historically, origination volume and portfolio size have been the primary drivers of net interest income expansion, which continues to support our performance as we monitor key origination terms like interest rates, loan-to-value ratios, and expected duration to optimize earnings impact.

Operating efficiency shone through in cash flow generation, with net cash provided by operating activities reaching $12.1 million, a significant improvement from $3.5 million in the prior-year quarter. After minimal capital expenditures of $42 thousand—down from $80 thousand—this translated to $12.0 million in free cash flow. We prudently manage operating expenses to balance current profitability with investments in platform development, including recent headcount increases and salary adjustments to position for future loan production growth.

While total nonperforming loans rose from prior periods due to portfolio growth and aging, our focus remains on monitoring credit quality alongside origination trends. Operating results for this interim period are not necessarily indicative of full-year outcomes, as volume fluctuations can amplify factor impacts on earnings. This quarter's performance positions us well to capitalize on market fragmentation through continued origination discipline and expense control.