Velocity Financial, Inc. Files 2023 Annual Report on Form 10-K

TL;DR

<b>Velocity Financial, Inc. has submitted its 2023 10-K filing, detailing financial performance and operational segments.</b>

AI Summary

Velocity Financial, Inc. (VEL) filed a Annual Report (10-K) with the SEC on March 15, 2024. Velocity Financial, Inc. filed its annual report on Form 10-K for the fiscal year ending December 31, 2023. The filing covers the period from January 1, 2023, to December 31, 2023. Key financial terms and concepts such as 'InterestExpenseBorrowings', 'DerivativeLiabilities', and 'AccountsPayableAndAccruedLiabilitiesCurrent' are referenced. The report details various loan portfolio segments including 'CommercialPurchasePortfolioSegment', 'ResidentialRealEstate', and 'CommercialRefinancePortfolioSegment'. Specific dates like '2023-12-31' and '2022-12-31' are used to denote reporting periods for financial assets and liabilities.

Why It Matters

For investors and stakeholders tracking Velocity Financial, Inc., this filing contains several important signals. This 10-K filing provides a comprehensive overview of Velocity Financial's financial health, operational segments, and risk factors for the fiscal year 2023, crucial for investors to assess the company's performance and outlook. The detailed breakdown of loan portfolios and financial instruments offers insights into the company's lending strategies, asset quality, and exposure to market risks, which are vital for understanding its business model and potential vulnerabilities.

Risk Assessment

Risk Level: medium — Velocity Financial, Inc. shows moderate risk based on this filing. The filing references various financial instruments and loan portfolio segments, indicating potential exposure to market and credit risks inherent in the financial services industry, which could impact the company's profitability and stability.

Analyst Insight

Investors should carefully review the detailed financial statements and risk factor disclosures within the 10-K to understand Velocity Financial's performance and potential challenges in the current economic environment.

Key Numbers

• 2023-12-31 — Fiscal Year End (The end date of the reporting period.)
• 2024-03-15 — Filing Date (The date the 10-K was filed.)
• 165 — Public Document Count (Number of documents included in the filing.)
• 6199 — Standard Industrial Classification (Industry code for Finance Services.)

Key Players & Entities

• Velocity Financial, Inc. (company) — Filer of the 10-K report.
• 2023-12-31 (date) — Conformed period of report.
• 2024-03-15 (date) — Filed as of date.
• 0000950170-24-032142 (filing_id) — Accession number for the filing.
• 30699 RUSSELL RANCH ROAD (address) — Business and mailing address of the company.
• WESTLAKE VILLAGE (location) — City of the company's business address.
• DE (state) — State of incorporation.
• 001-39183 (filing_id) — SEC file number.

FAQ

Risk Factors

• Financial Asset Past Due [medium — financial]: The filing references 'FinancialAssetPastDueMember' and 'FinancingReceivables30To59DaysPastDueMember', indicating potential credit risk and delinquencies within the loan portfolio.
• Geographic Concentration Risk [medium — market]: The mention of 'GeographicConcentrationRiskMember' suggests that the company's operations or loan portfolio may be concentrated in specific geographic areas, increasing vulnerability to regional economic downturns.
• Variable Interest Entity Primary Beneficiary [medium — operational]: The reference to 'VariableInterestEntityPrimaryBeneficiaryMember' implies potential consolidation of VIEs, which can introduce complex financial reporting and risks associated with these entities.
• COVID-19 Pandemic Impact [medium — regulatory]: Multiple references to 'COVID19PandemicMember' and 'COVID19ForbearanceProgramMember' suggest ongoing impacts and potential risks related to the pandemic on loan performance and business operations.

Key Financial Figures

• $0.01 — ch registered Common stock, par value $0.01 per share VEL The New York Stock Ex
• $11.53 — .7 million, based on a closing price of $11.53. As of March 1, 2024, the registrant
• $52 — U.S. residential housing sector is over $52 trillion. Ownership of residential prop
• $6.4 billion — our investor real estate loans, issuing $6.4 billion in principal amount of securities betwe
• $124.3 million — rom rising interest rates. We generated $124.3 million in portfolio related net interest incom

Filing Documents

• vel-20231231.htm (10-K) — 7945KB
• vel-ex10_16.htm (EX-10.16) — 39KB
• vel-ex21_1.htm (EX-21.1) — 34KB
• vel-ex23_1.htm (EX-23.1) — 4KB
• vel-ex31_1.htm (EX-31.1) — 18KB
• vel-ex31_2.htm (EX-31.2) — 18KB
• vel-ex32_1.htm (EX-32.1) — 11KB
• vel-ex32_2.htm (EX-32.2) — 12KB
• img108913134_0.jpg (GRAPHIC) — 21KB
• img108913134_1.jpg (GRAPHIC) — 16KB
• img108913134_2.jpg (GRAPHIC) — 20KB
• img108913134_3.jpg (GRAPHIC) — 17KB
• 0000950170-24-032142.txt (&nbsp;) — 35736KB
• vel-20231231.xsd (EX-101.SCH) — 3152KB
• vel-20231231_htm.xml (XML) — 10014KB

Business

Business 1 Item 1A.

Risk Factors

Risk Factors 8 Item 1B. Unresolved Staff Comments 8 Item 1C Cybersecurity 8 Item 2.

Properties

Properties 8 Item 3.

Legal Proceedings

Legal Proceedings 8 Item 4. Mine Safety Disclosures 8 PART II 9 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 9 Item 6. [Reserved] 9 Item 7.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Management's Discussion and Analysis of Financial Condition and Results of Operations 10 Item 8.

Financial Statements and Supplementary Data

Financial Statements and Supplementary Data 37 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure 38 Item 9A.

Controls and Procedures

Controls and Procedures 38 Item 9B. Other Information 39 PART III 40 Item 10. Directors, Executive Officers and Corporate Governance 40 Item 11.

Executive Compensation

Executive Compensation 40 Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 40 Item 13. Certain Relationships and Related Transactions, and Director Independence 40 Item 14. Principal Accounting Fees and Services 40 PART IV 41 Item 15. Exhibits, Financial Statement Schedules 41 Item 16. Form 10-K Summary 42

Signatures

Signatures 98 Velocity Financial, Inc. Unless otherwise stated or the context otherwise indicates, references to "we," "us," "our," "the Company," "Velocity" and similar references refer to Velocity Financial, Inc. and its consolidated subsidiaries. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, which are subject to the "safe harbor" created by those sections. All statements (other than statements of historical facts) in this Annual Report regarding the prospects of the industry and our prospects, plans, financial position and business strategy may constitute forward-looking statements. In addition, forward-looking statements generally can be identified by the use of forward-looking terminology such as "may," "should," "expect," "intend," "will," "estimate," "anticipate," "plan," "believe," "predict," "potential" and "continue" or the negatives of these terms or variations of them or similar terminology. Although we believe that the expectations reflected in these forward-looking statements are reasonable, we cannot provide any assurance that these expectations will prove to be correct. Such statements reflect the current views of our management with respect to our future. The following factors are among those that may cause actual results to differ materially from the forward-looking statements: the continued impact of the coronavirus, COVID-19, or an outbreak of another highly infectious or contagious disease; conditions in the real estate markets, the financial markets and the economy generally; failure of a third-party servicer or the failure of our own internal servicing system to effectively service our portfolio of mortgage loans; the high degree of risk involved in loans to small businesses, self-employed borrowers, properties

B usiness

Item 1. B usiness. Our Company We are a vertically integrated real estate finance company founded in 2004. We originate, securitize, and manage a nationwide portfolio of loans secured by real estate to earn attractive risk adjusted spreads for our shareholders. We primarily originate investor loans secured by 1-4 unit residential rental properties, as well as loans for multi-family, mixed use and commercial properties. We originate loans nationwide across our extensive network of independent mortgage brokers and direct borrower relationships, which we have built and refined over the 19 years since our inception. Our objective is to be the preferred and one of the most recognized brands in our core market. We operate in a large and highly fragmented market with substantial demand for financing and limited supply of institutional financing alternatives. We have developed the highly-specialized skill set required to effectively compete in this market, which we believe has afforded us a durable business model capable of generating attractive risk-adjusted returns for our stockholders throughout various business cycles. We offer competitive pricing to our borrowers by pursuing low-cost financing strategies and by driving front-end process efficiencies through customized technology designed to control the cost of originating a loan. Furthermore, by originating loans through our efficient and scalable network of approved mortgage brokers, we are able to maintain a wide geographical presence and nimble operating infrastructure capable of reacting quickly to changing market environments. We believe there is a substantial and durable market opportunity for investor real estate loans across 1-4 unit residential rental and small commercial properties, and that our institutionalized approach to serving these fragmented market segments underpins our long-term business strategy. Our growth to date has validated the need for scaled lenders with dedication to individual inve