Velocity Financial, Inc.

Good day, and welcome to the Velocity Financial Inc. Fourth Quarter 2025 Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to ajar your question, please press star then two. Please note, today's event is being recorded. I would now like to turn the conference over to Chris Oltman, Treasurer. Please go ahead.

Thanks, Rocco. Hello, everyone, and thank you for joining us today for the discussion of Velocity's fourth quarter and full year results. Joining me today are Chris Farrar, Velocity's President and Chief Executive Officer, and Mark Supaniak, Velocity's Chief Financial Officer. Earlier this afternoon, we released our results, and you can find the press release and accompanying presentation that we will refer to during this call on our investor relations website at www.bellfinance.com. I'd like to remind everyone that today's call may include forward-looking statements, which are uncertain and outside of the company's control, and actual results may differ materially. For a discussion of some of the risks and other factors that could affect results, Please see the risk factors and other cautionary statements made in our communications with shareholders, including the risk factors disclosed in our filings with the Securities and Exchange Commission. Please also note that the content of this conference call contains time-sensitive information that is accurate only as of today and we do not undertake any duty to update forward-looking statements. We may also refer to certain non-GAAP measures on this call. For reconciliations of these non-GAAP measures, you should refer to the earnings materials on our investor relations website. And finally, today's call is being recorded and will be available on the company's website later today. And with that, I will now turn the call over to Chris Farrar.

Thanks, Chris. And I'd like to welcome everyone. Appreciate you joining our 2025 year-end earnings call. Pleased to report another incredible year of performance and very proud of what our team accomplished. Hard work and dedication to our vision, we recognize record levels in originations, portfolio growth, new securitizations, book value, pre-tax ROE, and earnings. Credit belongs to my amazing team members who are talented and passionate about our mission. I believe they are our greatest asset. From a macro perspective, we see healthy activity in the fixed income markets as our deals are oversubscribed and spreads are tight. Our pipeline is growing, our end real estate markets are healthy, and we're optimistic about our prospects going forward. In terms of our specific results, core net income increased by 52% to $111 million, which also drove a new record level of pre-tax ROE of 26%. Importantly, we achieved this growth while maintaining our margins and credit discipline. With respect to originations, we increased volume by 49% to a record $2.7 billion, driven by increases in productivity from our account executives. Increased volume also set a record for our capital markets team with nine new securitizations and $2.6 billion in new issuance. On a net basis, the portfolio grew by 28% versus the prior year, and our asset management team successfully resolved $331 million in NPLs with net recoveries of $30 million. At year end, we entered into a transformative partnership whereby we sold 129 million of NPLs and retained the servicing rights for the entire pool of loans. This transaction drove significant earnings in Q4, but also freed up approximately $50 million in working capital and will drive future earnings from the servicing fees earned. All in all, a great transaction as this team continues to impress and drive meaningful results to the bottom line. From a liquidity perspective, we've never been stronger as we issued our first rated unsecured debt offering for $500 million in January. which gives us greater flexibility and makes us less reliant on short-term warehouse lines. This new capital will help us execute our long-term plan of growing book value and maximizing shareholder returns. Looking forward, we have great momentum and are well-positioned to continue our growth. That concludes my prepared remarks, and we'll turn over to page three in the earnings presentation, summing up 25 It was really just a fantastic year for us. You can see growth across the board, 26% pre-tax ROE, grew book value by 21%, and maintained a very healthy NIM at 3.6%. Turning to page four, digging into the fourth quarter, you can see core net income of $36.3 million, or $0.93 a share. up from 60 cents a share from Q4 24. Mentioned that the NIM was very healthy and stable at 3.59%. In terms of production, $634 million for the quarter, up 12.5% from the prior year, and mentioned the activity of both the portfolio and NPLs. As a result of that NPL sale, NPLs were down to 8.5% at the end of the year. Again, hitting on the asset management team, they continue to do a great job of realizing net gains, and we've expanded our disclosures in this year's 10K, and in these earnings materials, we're reflecting total revenue that we recognize from the NPLs, and not really just – we've always made those fees and made that income, but it's been difficult to – suss out in the financials. So we broke that out and showed the activity from regular accrued interest as well. As you can see, for the quarter that was a total of $7.6 million. So that team continues to do a great job for us. In terms of financing and capital, I mentioned that we've done a number of securitizations in the year. We did do our second private securitization where we had one investor taking down the entire transaction. And we like that execution and think it's a great diversification as we move forward. I mentioned the strong liquidity position, $92 million in unrestricted cash, and plenty of warehouse capacity. As I mentioned in my opening remarks, we're really proud of the NPL transaction that we were able to close in the fourth quarter. recognizing $13.4 million of net income as a result of that sale, and releasing about $50 million of working capital to fund future production. With that, I'll turn it over to Mark for page five.