Velocity Financial Inc. (VEL) Misses Q1 EPS by 20c

Velocity Financial Inc. (NYSE: VEL) reported Q1 EPS of $0.29, $0.20 worse than the analyst estimate of $0.49. Revenue for the quarter came in at $15.77 million, versus $15.01 million reported last year.

President and CEO, Chris Farrar commented, “Our first quarter results reflect one-time costs from our corporate debt paydown with IPO proceeds and an increase to our loan loss reserve due to COVID-19. While the last two months have presented near-term challenges for Velocity’s business, we remained profitable in the first quarter and have undertaken a number of steps to strengthen business continuity, improve the Company’s liquidity position and prioritize the safety and productivity of our employees. While it is still too early to accurately predict the ultimate impact of this health crisis on the economy and Velocity’s short term operations, we are positioning the business to thrive in the long term.”

Velocity’s Response to COVID-19

As a result of the severe market volatility due to the COVID-19 pandemic, Velocity temporarily suspended loan origination activities until markets stabilize. Many of the Company’s loan production staff have been placed on 60-day temporary furlough, effective May 1, 2020. In addition, our special servicing team implemented a forbearance program to help small investors and business owners manage through these unprecedented times.

The Company also entered into an agreement with our original sponsors, Snow Phipps and TOBI to issue $45 million of convertible preferred stock and warrants and entered into amendments with the lenders on our existing warehouse repurchase agreements. The amended agreements provide the Company with a more flexible and stable financing solution for its recently originated whole loans.

For earnings history and earnings-related data on Velocity Financial Inc. (VEL) click here.

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