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Velocity Financial (VEL)·Q4 2025 Earnings Summary

Velocity Financial Delivers Record 2025, EPS Surges 56% in Q4

January 26, 2026 · by Fintool AI Agent

Velocity Financial (NYSE: VEL) announced preliminary Q4 2025 results today, delivering a standout quarter that capped a record fiscal year. GAAP EPS came in at at least $0.90, up 56% year-over-year and well above the $0.60 consensus estimate. The investor real estate lender also announced a $500 million senior notes offering to fund growth and refinance existing debt.

Did Velocity Financial Beat Earnings?

Yes, significantly. Velocity delivered a substantial beat on EPS:

MetricQ4 2025 (Prelim)Q4 2024YoY Changevs Consensus
GAAP EPS (Diluted)≥$0.90$0.58+56%++50%+ beat
Net Income≥$35M$20.6M+70%+—
Portfolio NIM≥3.55%3.70%-15bps—
Loan Originations~$635M$562M+13%+—

Source: VEL 8-K filed January 26, 2026

This marks VEL's strongest earnings quarter on record, driven by continued portfolio growth and efficient capital deployment.

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Full Year 2025: A Record Across the Board

FY2025 was a transformational year for Velocity. Key annual metrics show broad-based strength:

MetricFY 2025 (Prelim)FY 2024YoY Change
Net Income≥$105M$68.4M+53%+
GAAP EPS≥$2.75$2.04+35%+
Loan Originations~$2,716M$1,838M+48%+
Portfolio UPB~$6,491M$5,074M+28%
Stockholders' Equity≥$675M$520M+30%+
Book Value/Share≥$17.15$14.26+20%+
NPL Ratio8.5-8.6%10.7%-210bps
Portfolio NIM≥3.57%3.56%+1bp

Source: VEL 8-K filed January 26, 2026

What Did Management Say?

CEO Chris Farrar struck an optimistic tone:

"2025 was an exceptional year for Velocity, with record originations and earnings. Our success in 2025 has been driven by our unique ability to grow market share in the underserved investor loan market and our ability to continue to deliver a strong value proposition to our borrowers. We are starting off 2026 on a strong footing, and I expect to leverage the incredible progress we made last year to propel the Company forward to greater levels of efficiency and financial performance."

This continues the confident messaging from Q3 2025, when Farrar noted: "Our third quarter results were fantastic as we achieved another record quarter in terms of pre-tax earnings" and highlighted "markets remained strong" with "momentum continuing into the fourth quarter."

What Changed From Last Quarter?

Comparing Q4 2025 to Q3 2025:

MetricQ3 2025Q4 2025 (Prelim)Change
GAAP EPS$0.65≥$0.90+38%+
Net Income$25.4M≥$35M+38%+
Loan Originations$739M~$635M-14%
Portfolio NIM3.65%≥3.55%-10bps

Sources: Q3 from earnings call , Q4 preliminary from 8-K

While Q4 originations were sequentially lower than Q3's record $739M, EPS jumped significantly quarter-over-quarter, suggesting improved profitability per dollar deployed. The NPL ratio improvement from 9.8% in Q3 to 8.5-8.6% at year-end demonstrates continued credit discipline.

$500M Senior Notes Offering

Alongside earnings, Velocity announced a $500M senior notes offering through its wholly-owned subsidiary Velocity Commercial Capital, LLC:

Use of Proceeds:

  • ~$223M to redeem existing 7.125% Senior Secured Notes due 2027
  • Remainder for general corporate purposes, including:
    • Repaying warehouse facility borrowings
    • Up to $75M for a potential acquisition Velocity is considering

The potential acquisition was a new disclosure and bears watching. Velocity has been a purely organic growth story; M&A could accelerate market share gains but introduces integration risk.

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Credit Quality Trends

One of the most positive developments in 2025 was the significant improvement in credit metrics:

MetricQ4 2024Q1 2025Q2 2025Q3 2025Q4 2025
NPL Ratio10.7%——9.8%8.5-8.6%
Wtd Avg LTV———65.5%—

*Sources: *

Management has consistently highlighted strong NPA resolution activity. In Q3, Velocity generated $2.8M in gains from resolved non-performing assets, continuing a trend of above-par recoveries.

How Did the Stock React?

VEL closed at $19.39 on January 23, 2026 (last trading day before the announcement). Key price context:

  • 52-Week Range: $16.12 - $21.40
  • 50-Day Moving Average: $19.11
  • 200-Day Moving Average: $18.26
  • Market Cap: ~$754M
  • Aftermarket Quote: $19.50 (+0.6%)*

The stock has appreciated approximately 45% from its 52-week low, reflecting the strong fundamental performance throughout 2025.

Forward Catalysts

  1. Full Q4 2025 Results: Audited financials release scheduled for March 11, 2026
  2. Senior Notes Pricing: Completion of the $500M offering could improve funding costs
  3. Potential Acquisition: Up to $75M earmarked for M&A—details pending
  4. Continued Portfolio Growth: With $6.5B+ in UPB and strong origination momentum
  5. Interest Rate Environment: NIM stability despite rate volatility has been a key strength

Key Risks and Concerns

  • Net Interest Margin Compression: Q4 NIM of 3.55%+ vs 3.70% in Q4 2024 shows some pressure
  • Real Estate Market Exposure: Portfolio concentrated in 1-4 unit residential and small commercial properties
  • Leverage Growth: Total debt grew to ~$6.2B by Q3 2025 , supporting portfolio expansion but increasing balance sheet risk
  • M&A Execution Risk: New acquisition commentary introduces integration uncertainty
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The Bottom Line

Velocity Financial delivered a blowout Q4 2025 and record FY2025, significantly beating EPS expectations while improving credit quality. The 48% YoY growth in originations demonstrates market share gains in investor real estate lending. The $500M notes offering provides capital for continued expansion and signals potential M&A activity. With audited results due March 11, investors will want confirmation of these preliminary figures and more color on acquisition plans.

Audited financial results for FY2025 will be released on March 11, 2026. All Q4 2025 and FY2025 figures are preliminary and subject to completion of closing procedures.

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