Velocity Financial, Inc. (VEL) Earnings
Velocity Financial, Inc. is expected to report next earnings on November 5, 2026 (in NaN days), with a consensus EPS estimate of $0.72. VEL has beaten EPS estimates in 11 of its last 12 reported quarters (average surprise +13.7% over the last four).
| Report date | EPS est | EPS actual | Surprise | Revenue | Rev. surprise |
|---|---|---|---|---|---|
| Aug 5, 2026 | $0.66 | $0.71 | +7.7% | $95M | +2.7% |
| May 6, 2026 | $0.64 | $0.68 | +5.8% | $85M | +13.8% |
| Mar 11, 2026 | $0.67 | $0.93 | +38.2% | $182M | +240.2% |
| Nov 6, 2025 | $0.67 | $0.69 | +3.1% | $172M | +223.9% |
| Aug 7, 2025 | $0.54 | $0.73 | +34.4% | $152M | +252.2% |
| May 1, 2025 | $0.52 | $0.55 | +5.2% | $119M | +195.4% |
| Mar 6, 2025 | $0.48 | $0.60 | +24.2% | $125M | +192.4% |
| Nov 7, 2024 | $0.48 | $0.47 | -2.3% | $49M | +7.3% |
| Aug 1, 2024 | $0.41 | $0.45 | +9.0% | $107M | +108.8% |
| May 2, 2024 | $0.39 | $0.51 | +30.8% | $99M | +110.3% |
| Mar 7, 2024 | $0.38 | $0.46 | +21.7% | $94M | +102.0% |
| Nov 2, 2023 | $0.35 | $0.37 | +6.0% | $35M | -16.4% |
Source: company filings + earnings calendar. For informational purposes only — not investment advice.
Earnings call summary
Q2 FY2026 · August 5, 2026
AI summary of management’s prepared remarks and analyst Q&A. For informational purposes only — not investment advice.
Management highlights
### NPL and REO Resolution Strategy - The firm has a consistent track record of achieving net gains on NPL resolution, and does not plan to sell non-performing loans at a discount in the secondary market under normal operations. - All NPL resolution activity in Q2 2026 continued to deliver positive net gains, with recoveries above UPB consistent with historical performance. ### Liquidity and Capital Structure - Total liquidity as of June 30, 2026 was $240 million, consisting of $76 million in cash and cash equivalents plus $164 million in available liquidity from unfinanced loan collateral. - Available capacity on the firm's existing warehouse lines was just under $662 million, against a maximum total line capacity of $975 million, leaving significant unused capacity. - The firm completed two securitizations in Q2 2026: a $398 million 2026-2 security, and the 2026-MC2 security backed by non-performing loans. Velocity retained a $30 million CMBS trust certificate from the MC2 securitization, which generated $11 million in net proceeds. - End-of-quarter leverage ratios remained conservative: recourse debt-to-equity was 1.2x, and total debt-to-equity (including all non-recourse securitizations) was 9.7x. ### Overall Market Assessment - Management views the current market as healthy, with stable credit performance and highly supportive, open capital markets that align well with the firm's business model.
Guidance
- Management reaffirmed that it expects to maintain a net interest margin (NIM) above 3.5% and deliver continued solid earnings growth through the remainder of 2026 and into 2027. - After a multi-period slowdown tied to interest rate volatility, HUD-insured multifamily origination volumes stabilized in Q2 2026, and management expects similar robust volumes going forward, rather than Q2 being an outlier. - Management expects loan growth to accelerate in the second half of 2026 in line with typical seasonal trends, and forecasts full-year 2026 loan volumes will exceed 2025 volumes. The firm does not provide formal numerical guidance for loan growth size. - Management plans to maintain leverage at a maximum of ~10x total debt-to-equity, and will access debt or equity capital markets as needed to support balance sheet growth, with current market conditions open for both types of fundraising.
Segment performance
The provided transcript only discloses detailed financial performance for the firm's non-performing loan (NPL) and real estate owned (REO) segments, with no full segment reporting: - **Non-performing loan (NPL) portfolio**: As of June 30, 2026, the combined valuation loss allowance for the amortized cost NPL portfolio ($5.1 million CECL loss reserve) and fair value NPL portfolio ($24.3 million valuation adjustment loss allowance) totaled 42 basis points of the overall held-for-investment (HFI) loan portfolio. The CECL reserve for the amortized cost HFI portfolio (which is steadily paying down) was $5.1 million, equal to 28 basis points of the outstanding amortized cost HFI portfolio. In Q2 2026, the firm resolved $91 million in unpaid principal balance (UPB) of NPLs, recovering $6.9 million (7.7%) above UPB, for a net gain of $2.5 million (2.7%) after covering all UPB and past due contractual interest, compared to a $2.8 million (3.1%) net gain in Q2 2025. - **Real Estate Owned (REO) segment**: In Q2 2026, the firm recorded a $5.4 million gain on transfers of non-performing loans to new REOs (down from $7.1 million in Q2 2025), and a $3 million loss on activities related to existing REOs (wider than the $1.4 million loss in Q2 2025). Combined net REO results for Q2 2026 were a net gain of $2.4 million, down from a $5.7 million net gain in Q2 2025. The ratio of REO assets to total HFI loans remained stable over the prior 12 months. - **Century Health and Housing (HUD multifamily loans)**: Originations jumped in Q2 2026, with a $80+ million loan sale from this division as part of the quarter's securitization activity, but no full absolute financials or revenue contribution share are provided.
Risks & headwinds
No explicit discussion of material business risks, operational failures, or emerging downside risks was included in the provided transcript.
Analyst Q&A
Q: Analyst Chris Muller asked why government-insured multifamily originations spiked in Q2, whether the jump was an outlier, and if strong volumes will continue. /
A: CEO Chris explained these HUD multifamily loans are large, average UPB, and inherently lumpy. Volume slowed in prior years due to Fed interest rate volatility, but market rate expectations have now stabilized, leading to better traction. He noted the pipeline is currently robust, so the strong Q2 performance is not an outlier, and similar volumes are expected going forward.
Q: Muller asked for details on the reported $222 million in loan sales, confirming if they were separate from the NPL MC2 securitization, including the percent of par achieved. /
A: CFO Mark clarified that most of the $222 million in loan sales is part of the 2026-MC2 securitization. This trust was structured so Velocity is not the primary beneficiary, meaning the loans are removed from Velocity's books (treated as true sales, unlike prior consolidated securitizations), with Velocity retaining a $30 million CMBS interest. Roughly $80 million of the total comes from an additional sale of a Century Health and Housing loan, completing the $222 million total. No par percent was disclosed.
Q: Analyst Doug Harder asked management to quantify the expected acceleration in loan growth for the second half of 2026. /
A: Chris stated the firm does not provide formal forward guidance on the size of loan growth. He noted July 2026 was the firm's best month for new loan submissions in recent history, volumes have picked up in the past 45 days, second half seasonality is typically strong, and full year 2026 volumes will definitely exceed 2025 volumes.
Q: Harder asked how management is evaluating balance sheet capacity to support continued growth, and how the firm will manage efficient capital use. /
A: Chris responded that the existing portfolio generates strong cash flow, but aggressive growth will require accessing new external capital. The firm updates its capital plan regularly, and both equity and debt markets are currently open. The firm will not exceed ~10x total leverage, which acts as a constraint, and will choose between equity or debt fundraising based on best execution.