# Velocity Financial, Inc. (VEL) Informational only - not investment advice. CIK: 0001692376 SIC: 6199 Finance Services SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [SIC Major Group 61](/major-group/61/) > [SIC 6199 Finance Services](/industry/6199/) Latest 10-K filed: 2026-03-12 SEC page: https://www.sec.gov/edgar/browse/?CIK=1692376 Filing source: https://www.sec.gov/Archives/edgar/data/1692376/000119312526102677/vel-20251231.htm ## At a glance FY2025 · period end 2025-12-31 · filed 2026-03-12 · accession 0001193125-26-102677 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001692376.json | Metric | Value | FY | Provenance | | --- | ---: | ---: | --- | | Revenue | 185,781,000 USD | 2025 | verified | | Net income | 105,054,000 USD | 2025 | verified | | Assets | 7,381,513,000 USD | 2025 | verified | | Free cash flow | 17,880,000 USD | 2025 | computed | | Net margin | 56.55% | 2025 | computed | | Revenue YoY | +36.80% | 2025 | computed | | ROE | 15.62% | 2025 | computed | Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity. No market price, no rating, no forecast on this site. Not investment advice. ### Peer percentile fingerprint | Ratio | VEL | Peer median | Percentile | N | | --- | ---: | ---: | ---: | ---: | | Net margin | 56.5% | 4.4% | 97 | 33 | | Revenue growth | 36.8% | 15.2% | 70 | 34 | | FCF margin | 9.6% | -27.0% | 69 | 30 | | ROE | 15.6% | -2.1% | 81 | 33 | | ROA | 1.4% | -0.1% | 68 | 35 | | Liabilities / equity | 9.97 | 2.00 | 84 | 33 | Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 6199 Finance Services, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking. ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 185781000 | USD | 2025 | 2026-03-12 | | Net income | 105054000 | USD | 2025 | 2026-03-12 | | Assets | 7381513000 | USD | 2025 | 2026-03-12 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-03-12. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001692376.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts. | Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | 48,803,000 | 59,010,000 | 67,447,000 | 75,973,000 | 83,148,000 | 107,751,000 | 135,804,000 | 185,781,000 | | Net income | | 7,631,000 | 17,292,000 | 17,777,000 | 29,224,000 | 32,211,000 | 52,273,000 | 68,419,000 | 105,054,000 | | Diluted EPS | | | | -1.55 | 0.86 | 0.94 | 1.52 | 1.91 | 2.75 | | Operating cash flow | | -72,485,000 | -105,336,000 | 54,892,000 | 57,622,000 | 48,674,000 | 48,835,000 | 37,755,000 | 18,161,000 | | Capital expenditures | | 1,303,000 | 882,000 | 726,000 | 135,000 | 326,000 | 180,000 | 289,000 | 281,000 | | Share buybacks | | | | | | 458,000 | 861,000 | 1,550,000 | 7,335,000 | | Assets | | | 2,214,766,000 | 2,102,874,000 | 2,812,478,000 | 3,748,975,000 | 4,404,573,000 | 5,527,408,000 | 7,381,513,000 | | Liabilities | | | 2,061,922,000 | 1,793,285,000 | 2,467,988,000 | 3,368,475,000 | 3,967,700,000 | 5,007,193,000 | 6,705,825,000 | | Stockholders' equity | 130,943,000 | 136,800,000 | 152,844,000 | 219,589,000 | 341,109,000 | 376,811,000 | 433,444,000 | 516,944,000 | 672,535,000 | | Cash and cash equivalents | | 15,008,000 | 21,465,000 | 13,273,000 | 35,965,000 | 45,248,000 | 40,566,000 | 49,901,000 | 92,103,000 | | Free cash flow | | -73,788,000 | -106,218,000 | 54,166,000 | 57,487,000 | 48,348,000 | 48,655,000 | 37,466,000 | 17,880,000 | ### Ratios ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported. | Metric | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Net margin | | 15.64% | 29.30% | 26.36% | 38.47% | 38.74% | 48.51% | 50.38% | 56.55% | | Return on equity | | 5.58% | 11.31% | 8.10% | 8.57% | 8.55% | 12.06% | 13.24% | 15.62% | | Return on assets | | | 0.78% | 0.85% | 1.04% | 0.86% | 1.19% | 1.24% | 1.42% | | Liabilities / equity | | | 13.49 | 8.17 | 7.24 | 8.94 | 9.15 | 9.69 | 9.97 | ## As-reported value updates No tracked differences above grepcent's stated thresholds and capped precision rule were found between the earliest XBRL-filed value and the value currently on file for the standardized annual metrics grepcent tracks. ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-08-06. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001692376.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2022-Q3 | 2022-09-30 | | | 0.29 | reported discrete quarter | | 2023-Q1 | 2023-03-31 | | | 0.31 | reported discrete quarter | | 2023-Q2 | 2023-06-30 | | | 0.36 | reported discrete quarter | | 2023-Q3 | 2023-09-30 | 27,367,000 | 12,086,000 | 0.35 | reported discrete quarter | | 2023-Q4 | 2023-12-31 | 30,724,000 | 17,355,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q1 | 2024-03-31 | 29,474,000 | 17,251,000 | 0.49 | reported discrete quarter | | 2024-Q2 | 2024-06-30 | 32,417,000 | 14,778,000 | 0.42 | reported discrete quarter | | 2024-Q3 | 2024-09-30 | 35,056,000 | 15,803,000 | 0.44 | reported discrete quarter | | 2024-Q4 | 2024-12-31 | 38,856,000 | 20,587,000 | | derived Q4 = FY annual - nine-month YTD | | 2025-Q1 | 2025-03-31 | 37,510,000 | 18,887,000 | 0.51 | reported discrete quarter | | 2025-Q2 | 2025-06-30 | 47,586,000 | 25,997,000 | 0.69 | reported discrete quarter | | 2025-Q3 | 2025-09-30 | 49,076,000 | 25,373,000 | 0.65 | reported discrete quarter | | 2025-Q4 | 2025-12-31 | 51,609,000 | 34,797,000 | | derived Q4 = FY annual - nine-month YTD | | 2026-Q1 | 2026-03-31 | 43,920,000 | 22,363,000 | 0.57 | reported discrete quarter | | 2026-Q2 | 2026-06-30 | 48,890,000 | 25,163,000 | 0.64 | reported discrete quarter | ## Filed narrative (10-K & 10-Q) ## Business Verbatim Item 1 Business section from VEL's latest 10-K: [/company/VEL/business/](/company/VEL/business/). ## Risk Factors Verbatim Item 1A Risk Factors from VEL's latest 10-K: [/company/VEL/risk-factors/](/company/VEL/risk-factors/). ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1692376/000119312526335807/vel-20260630.htm Extracted structurally from real Item 2 body heading to real Item 3/4 boundary. Confidence: high Filing date: 2026-08-06 Report date: 2026-06-30 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion should be read in conjunction with the information included in our Annual Report on Form 10-K for the year ended December 31, 2025, as well as the unaudited financial statements included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”). In addition, the statements and assumptions in this Quarterly Report that are not statements of historical fact are forward-looking statements within the meaning of federal securities laws. In particular, statements about our plans, strategies and prospects as well as estimates of industry growth for the next quarter and beyond are forward-looking statements. For important information regarding these forward-looking statements, please see the discussion below under the caption “Forward-Looking Statements.” References to “the Company,” “Velocity,” “we,” “us” and “our” refer to Velocity Financial, Inc. and include all of its consolidated subsidiaries, unless otherwise indicated or the context requires otherwise. Business 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 22 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. Our primary source of revenue is interest income earned on our loan portfolio. Our typical loan is secured by a first lien on the underlying property with a personal guarantee, and based on all loans in our portfolio as of June 30, 2026, has an average balance of approximately $383 thousand. As of June 30, 2026, our loan portfolio totaled $7.0 billion of UPB on properties in 48 states and the District of Columbia. The total portfolio had a weighted average loan-to-value ratio, or LTV at origination, of 64.6%, of which the 1-4 unit residential rental loans, which we refer to as investor 1-4 loans, represented 45.6% of the UPB. For the three and six months ended June 30, 2026, the annualized yields on our total portfolio were 9.29% and 9.26%, respectively. We fund our portfolio primarily through a combination of committed and uncommitted secured warehouse facilities, securitized debt, unsecured and secured debt, and equity. The securitized debt market is our primary source of long-term financing. We have successfully executed 49 securitized debt transactions, resulting in a total of approximately $11.5 billion in gross debt proceeds from May 2011 through June 2026. We may also sell loans from time to time for cash in lieu of holding the loans in our loan portfolio. One of our core profitably measurements is our portfolio related net interest margin, which measures the difference between interest income earned on loans and interest expense paid on portfolio-related debt, relative to the amount of loans outstanding over the period. Our portfolio-related debt consists of warehouse facilities and securitized debt and excludes corporate debt and unsecured debt. For the three and six months ended June 30, 2026, our annualized portfolio related net interest margin was 3.66% and 3.61%, respectively, compared to 3.82% and 3.60% for the three and six months ended June 30, 2025. We generate profits to the extent that our portfolio related net interest income exceeds our interest expense on corporate debt and unsecured debt, provision for credit losses and operating expenses. For the three and six months ended June 30, 2026, including net income attributable to noncontrolling interest, we generated pre-tax income of $35.2 million and $66.1 million, and net income of $25.2 million and $47.5 million, respectively. For the three and six months ended June 30, 2025, including net income attributable to noncontrolling interest, we generated pre-tax income of $33.9 million and $60.8 million, and net income of $26.0 million and $44.9 million, respectively. On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”). Century is a licensed Ginnie Mae issuer/servicer that provides government-insured Federal Housing Administration (“FHA”) mortgage financing for multifamily housing, senior housing and long-term care/assisted living facilities. Century originates loans through its borrower-direct origination channel and services the loans through its in-house servicing platform, which enables the formation of long-term relationships with its clients and drives strong portfolio retention. Century earns origination fees and servicing fees from the mortgage servicing rights on its servicing portfolio. Items Affecting Comparability of Results Due to a number of factors, our historical financial results may not be comparable, either from period to period, or to our financial results in future periods. We have summarized the key factors affecting the comparability of our financial results below. 41 Recent Developments Securitization of Nonperforming Loans In June 2026, we completed a securitization of nonperforming mortgage loans (the “2026-MC2 Securitization”), through which we sold and transferred the underlying loans to VCC 2026-MC2 Trust (the “Trust”) via our Depositor subsidiary. The transaction qualifies for sale accounting under ASC 860, Transfers and Servicing, resulting in a corresponding decrease in nonperforming loans on our balance sheet during the period. Corporate Debt In January 2026, we completed the issuance and sale of $500.0 million aggregate principal amount of 9.375% Senior Notes due 2031 (“the 2026 Term Notes”), which will mature on February 15, 2031. The 2026 Term Notes bear interest at 9.375% and are guaranteed by us on an unsecured basis. In January 2026, we paid off the $215.0 million secured debt, or the “2022 Term Loan” with proceeds from the issuance and sale of $500.0 million Senior Notes. Securitized Debt In February 2026, we completed the securitization of $355.2 million of investor real estate loans, as measured by UPB, through a consolidated VIE. In March 2026, we completed the securitization of $189.9 million of investor real estate loans, as measured by UPB, through a consolidated VIE. In May 2026, we completed the securitization of $414.5 million of investor real estate loans, as measured by UPB, through a consolidated VIE. Continued Market Uncertainties Our operational and financial performance will depend on certain market developments, including the impact of tariffs, the actions of the Federal Reserve, the Russia/Ukraine war, the ongoing conflicts in the Middle East, heightened stress in the real estate and corporate debt markets, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance. Critical Accounting Policies and Use of Estimates The preparation of financial statements in accordance with U.S. GAAP requires certain judgments and assumptions, based on information available at the time of preparation of the consolidated financial statements, in determining accounting estimates used in preparation of the consolidated financial statements. The following discussion addresses the accounting policies that we believe apply to us based on the nature of our operations. Our most critical accounting policies involve decisions and assessments that could affect our reported assets and liabilities, as well as our reported revenues and expenses. We believe that all the decisions and assessments used to prepare our financial statements are based upon reasonable assumptions given the information available at that time. These policies and estimates relate to the allowance for credit losses and fair value option accounting. Our critical accounting policies and estimates are described in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the year ended December 31, 2025, as filed with the SEC. How We Assess Our Business Performance Net income is the primary metric by which we assess our business performance. Accordingly, we closely monitor the primary drivers of net income which consist of the following: Net Interest Income Net interest income is the largest contributor to our net income and is monitored both on an absolute basis and relative to provision for credit losses and operating expenses. We generate net interest income to the extent that the rate at which we lend in our portfolio exceeds the cost of financing our portfolio, which we primarily achieve through long-term securitized debt. Accordingly, we closely monitor the financing markets and maintain consistent dialogue with investors and financial institutions as we evaluate our financing sources and cost of funds. 42 To evaluate net interest income, we measure and monitor: (1) the yields on our loans, (2) the costs of our funding sources, (3) our net interest spread and (4) our net interest margin. Net interest spread measures the difference between the rates earned on our loans and the rates paid on our funding sources. Net interest margin measures the difference between our annualized interest income and annualized interest expense, or net interest income, as a percentage of average loans outstanding over the specified time period. Periodic changes in net interest income are primarily driven by: (1) origination volume and changes in average outstanding loan balances and (2) interest rates and changes in interest earned on our portfolio or paid on our debt. Historically, origination volume and portfolio size have been the largest contributors to the growth in our net interest income. We measure net interest income before and after interest expense related to our secured and unsecured corporate debt, and before and after our provision for credit losses. Credit Losses We strive to minimize actual credit losses through our rigorous screening and underwriting process and life of loan portfolio management and special servicing practices. We closely monitor the credit performance of our loan portfolio, including delinquency rates and expected and actual credit losses, as a key factor in assessing our overall business performance. Operating Expenses We incur operating expenses from compensation and benefits related to our employee base, rent and other occupancy costs associated with our leased facilities, our third-party primary loan servicing vendors, professional fees to the extent we utilize third-party legal, consulting and advisory firms, and costs associated with the resolution and disposition of real estate o [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A (excerpt) Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1692376/000119312526102677/vel-20251231.htm Complete FY 2025 MD&A: /company/VEL/mda/fy2025/ Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Filing date: 2026-03-12 Report date: 2025-12-31 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of our financial condition and results of operations should be read together with the consolidated financial statements and related notes and the other financial information included elsewhere in this Annual Report. This discussion contains forward-looking statements, as described above under the heading “Forward-Looking Statements” that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and elsewhere in this Annual Report. Business We are a vertically integrated real estate finance company founded in 2004. We primarily originate and manage investor loans secured by 1-4 unit residential rental and commercial properties, which we collectively refer to as investor real estate loans. Our primary source of revenue is interest income earned on our loan portfolio. Our typical loan is secured by a first lien on the underlying property with a personal guarantee and, based on all loans in our portfolio as of December 31, 2025, has an average balance of approximately $390 thousand. As of December 31, 2025, our loan portfolio totaled $6.5 billion of UPB on properties in 48 states and the District of Columbia. The total portfolio had a weighted average loan-to-value ratio, or LTV at origination, of 65.2%, and was concentrated in 1-4 unit residential rental loans, which we refer to as investor 1-4 loans, representing 48.1% of UPB. For the year ended December 31, 2025, the yield on our total portfolio was 9.45%. We fund our portfolio primarily through a combination of committed and uncommitted secured warehouse facilities, securitized debt, unsecured debt, corporate debt and equity. The securitized debt market is our primary source of long-term, non-recourse financing. We have successfully executed 46 securitized debt offerings, issuing $10.6 billion in principal amount of securities from May 2011 through December 2025. Besides net income, another core profitably measurement is our portfolio related net interest margin, which measures the difference between interest income earned on loans and interest expense paid on portfolio-related debt, relative to the amount of loans outstanding over the period. Our portfolio-related debt consists of warehouse facilities and securitized debt and excludes corporate debt. For the year ended December 31, 2025, our portfolio related net interest margin was 3.61%. We generate profits to the extent that our portfolio related net interest income exceeds our interest expense on corporate debt, provision for credit losses and operating expenses. For the year ended December 31, 2025, including net income attributable to noncontrolling interest, we generated pre-tax and net income of $146.2 million and $105.0 million, respectively, and earned a pre-tax return on average equity and return on average equity of 24.4% and 17.5%, respectively. Items Affecting Comparability of Results Due to a number of factors, our historical financial results may not be comparable, either from period to period, or to our financial results in future periods. We have summarized the key factors affecting the comparability of our financial results below. In January 2026, the Company completed the issuance and sale of $500.0 million aggregate principal amount of 9.375% Senior Notes (“the 2026 Term Notes”) which will mature on February 15, 2031. In February 2024, the Company issued $75.0 million principal amount of five-year Senior Secured Notes. The Notes bear interest at 9.875% and mature on February 15, 2029. From September 2023, the Company utilized forward starting interest rate swaps or interest rate payer and receiver swaptions designated as cash flow hedges to manage the exposure to interest rate volatility associated with future issuances of fixed-rate debt. The gains or losses on these interest rate derivative instruments that are designated and qualify as cash flow hedges are reported as a component of accumulated other comprehensive income. Fair Value Option (“FVO”) Accounting We made an election to apply FVO accounting to all our originated mortgage loans on a go-forward basis beginning October 1, 2022. The fair value option loans are presented as a separate line item in the Consolidated Balance Sheets. We do not record an allowance for credit losses on fair value option loans. The FVO accounting for our securitized debt is on a case-by-case basis effective January 1, 2023. The fair value option securitized debt is presented as a separate line item in the Consolidated Balance Sheets. 35 Income Taxes Our REMIC transactions can create significant U.S. GAAP versus tax differences. The U.S. GAAP treatment considers each REMIC as a variable interest entity that is required to be consolidated in our financial statements, accounting for the securitization as a secured borrowing. Under IRS rules, the REMICs require sale treatment, and we are required to either recognize taxable income or loss to the extent the fair market value of the REMICs is greater than or less than our cost basis, the payment of which creates either a deferred tax asset or deferred tax liability. We will continue to recognize deferred tax assets and liabilities for future tax consequences attributable to differences between the financial statement carrying amounts of our existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the statements of operations in the period that included the enactment date, as applicable. Interest Expense on Corporate Debt In March 2022, we entered into a five-year $215.0 million syndicated corporate debt agreement (“the 2022 Term Loan”). The 2022 Term Loan was paid off on January 30, 2026 with proceeds from the issuance and sale of $500 million Senior Notes. In February 2024, we entered into a five-year $75.0 million syndicated corporate debt agreement (“the 2024 Term Loan”). We incurred $24.6 million, $23.8 million and $16.6 million of interest expense related to our corporate debt for the years ended December 31, 2025, 2024 and 2023, respectively. Recent Developments Corporate Debt On January 30, 2026, we completed the issuance and sale of $500 million aggregate principal amount of 9.375% Senior Notes due 2031 (“the 2026 Term Notes”). The 2026 Term Notes bear interest at 9.375% and are guaranteed by us on an unsecured basis. Securitized Debt In February 2026, we completed the securitization of $355.2 million of investor real estate loans, as measured by UPB, through a consolidated VIE. Market Uncertainties Our operational and financial performance will depend on certain market developments, including the actions of the Federal Reserve, the ongoing Russia/Ukraine war and conflicts in the Middle East, a possible global recession, heightened stress in the real estate and corporate debt markets, and macroeconomic conditions and market fundamentals, which can all affect each of these factors and potentially impact our business performance. Critical Accounting Estimates and Significant Accounting Policies Our consolidated financial statements are prepared in accordance with GAAP in the United States and follow general practices within the financial services industry. Application of these principles requires management to make estimates, assumptions, and judgments that affect the amounts reported in the consolidated financial statements and accompanying notes. The most significant accounting policies we follow are summarized in “Note 2 — Basis of Presentation and Summary of Significant Accounting Policies.” Management considers an accounting estimate to be critical to reported financial results if: (1) the accounting estimates require management to make assumptions about matters that are highly uncertain, and (2) different estimates that management reasonably could have used for the accounting estimate in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, could have a material impact on our consolidated financial statements, results of operations, or liquidity. Our critical accounting estimates are summarized below. 36 Allowance for Credit Losses For our loans held for investment where we have not elected FVO accounting, we calculate an allowance for credit losses. Under the current expected credit loss (“CECL”) methodology, the allowance for credit losses is measured on a collective (pool) basis when similar risk characteristics exist. We identified the following portfolio segments based on risk characteristics of the loans in its loan portfolio (pool): • Residential 1– 4 Unit – Purchase (loans to purchase 1– 4 unit residential rental properties); • Residential 1– 4 Unit – Refinance (refinance loans on 1– 4 unit residential rental properties); • Commercial – Purchase (loans to purchase traditional commercial properties); • Commercial – Refinance (refinance loans on traditional commercial properties); • Short Term 1– 4 Unit – Purchase (short-term loans to purchase 1– 4 unit residential rental properties); and • Short Term 1– 4 Unit – Refinance (short-term refinance loans on 1– 4 unit residential rental properties). We determined the collectability of our loans by evaluating certain risk characteristics. The segmentation of our loan portfolio was determined based on analyses of our loan portfolio performance over the past ten years. Based on analyses of the loan portfolio’s historical performance, we concluded that loan purpose and product types are the most significant risk factors in determining our expectation of future credit losses. Loan purpose considers whether a borrower is acquiring the property or refinancing an existing property. Our historical experience shows that refinance loans have higher loss rates than loans for property acquisitions. Product type includes residential 1-4 unit property and traditional commercial property. Our historical experience shows that traditional commercial property loans have higher loss rates than residential 1-4 unit property loans. Short term loans have a maturity of one to two years from origination. Long term loans have a maturity of up to 30 years from origination. We estimate the allowance for credit losses using relevant available information, from internal and external sources, relating to historical performance, current conditions, and reasonable and supportable macroeconomic forecasts. Historical credit loss experience provides the basis for the estimation of expected credit losses. Adjustments to historical loss information are considered for differences in current loan-specific risk characteristics such as differences in underwriting standards, portfolio mix, delinquency levels, or term, as well as for changes in environmental conditions, such as unemployment rates, property values and changes in the competitive or regulatory environment. We use an open pool loss rate methodology to model expected credit losses. To determine the loss rates using the open pool method, we start with our historical database of losses, segmenting the loans by loan purpose, product type and repayment period. A third-party model applying the open pool method is used to estimate an annual average loss rate by dividing the respective pool’s quarterly historical losses by the pool’s respective prior quarters’ ending unamortized loan cost balance and deriving an annual average loss rate from the historical quarterly loss rates. The model then adjusts the annual average loss rates bas [Excerpt truncated for page length; the complete text is on the linked full-MD&A page.] Read the full FY 2025 MD&A: /company/VEL/mda/fy2025/ All MD&A years: /company/VEL/mda/ ## MD&A history Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page. - [FY 2024 MD&A](/company/VEL/mda/fy2024/): filed 2025-03-12; accession 0000950170-25-037433 (https://www.sec.gov/Archives/edgar/data/1692376/000095017025037433/vel-20241231.htm) - [FY 2023 MD&A](/company/VEL/mda/fy2023/): filed 2024-03-15; accession 0000950170-24-032142 (https://www.sec.gov/Archives/edgar/data/1692376/000095017024032142/vel-20231231.htm) - [FY 2022 MD&A](/company/VEL/mda/fy2022/): filed 2023-03-13; accession 0000950170-23-007616 (https://www.sec.gov/Archives/edgar/data/1692376/000095017023007616/vel-20221231.htm) - [FY 2021 MD&A](/company/VEL/mda/fy2021/): filed 2022-03-15; accession 0000950170-22-003636 (https://www.sec.gov/Archives/edgar/data/1692376/000095017022003636/vel-20211231.htm) ## Macro cross-references Indicators mapped to this company's SIC classification (industry 6199 Finance Services) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim. - [M2SL](/indicator/M2SL/): M2 - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units Macro-to-micro threads including this sector: [Interest rates & the Fed](/thread/interest-rates-fed/), [Money & trade](/thread/money-trade/), [Consumer & credit](/thread/consumer-credit/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/). All macro indicators: /indicators/ ## For LLMs & downloads Markdown twin: /company/VEL.md · JSON record: /company/VEL.json · verified financials: /company/VEL/financials.json / /company/VEL/financials.csv · machine TOC for the whole site: /llms.txt