Velocity Financial, Inc. (NYSE:VEL) has reported financial results for the third quarter of 2025 that surpassed analyst expectations, demonstrating robust growth across its core lending operations. The company's performance was driven by record loan production and increased net interest income, signaling strong demand in its target markets.
Earnings and Revenue Performance
The company delivered a strong quarterly performance, exceeding Wall Street forecasts on both the top and bottom lines. The results highlight the company's ability to capitalize on favorable market conditions for business-purpose lending.
- Earnings Per Share (EPS): Velocity reported core diluted earnings per share of $0.69 for the third quarter. This figure comfortably exceeded the analyst consensus estimate of $0.61.
- Revenue: The company posted net revenue of $85.8 million for the quarter, a significant increase of 53.6% compared to the same period last year. This also came in well above the revenue estimate of $44.0 million.
The substantial beat on revenue was primarily fueled by two key factors: a 40.0% year-over-year increase in net interest income, which reached $49.1 million, and a 78.8% surge in other operating income, which totaled $37.1 million. This growth was attributed to higher portfolio net interest income and record origination volumes.
Market Reaction
Following the earnings release, the market responded positively. The stock has shown strength in after-market trading and has posted gains across multiple timeframes, including over the past month. This positive price action suggests investor approval of the company's strong quarterly results and its growth trajectory.
Operational and Financial Highlights
The earnings report was characterized by significant expansion in Velocity's core business activities.
- Record Loan Production: The company originated $739.0 million in loans during the quarter, a 55.0% increase from the third quarter of 2024. This was driven by heightened demand for both traditional commercial loans and investor 1-4 family rental loans.
- Portfolio Growth: Velocity's total loan portfolio grew to $6.3 billion in unpaid principal balance (UPB), a 32.0% increase year-over-year. The portfolio's weighted average yield also improved to 9.54%.
- Profitability Metrics: The company reported a core pre-tax return on average equity of 24.1%, up from 19.0% in the prior year, indicating more efficient use of shareholder capital.
- Credit Quality: The ratio of nonperforming loans to total loans showed improvement, declining to 9.8% from 10.6% a year ago.
Looking Ahead
While the press release did not provide a specific quantitative financial outlook for the coming quarters, management expressed confidence in Velocity's long-term growth prospects. CEO Chris Farrar stated, "We remain confident in Velocity’s long-term growth prospects and our ability to sustain profitable market share growth." For context, analysts currently estimate revenue of $46.5 million and EPS of $0.62 for the fourth quarter of 2025.
The company's continued emphasis on its core lending segments and its record production levels suggest an expectation that the positive momentum will continue.
Conclusion
Velocity Financial's third-quarter results paint a picture of a company in a strong growth phase, successfully exceeding financial targets and expanding its loan portfolio. The combination of higher-than-expected earnings and revenue, coupled with a positive market reaction, underscores the strength of its business model in the current economic environment. The key challenge for the company will be to maintain this growth trajectory and manage credit quality as its portfolio continues to expand.
For a detailed look at historical earnings and future analyst estimates for Velocity Financial, Inc., visit its earnings and estimates page.
Disclaimer: This article is for informational purposes only and does not constitute financial advice or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.
