Velocity Financial, Inc.

Moving to page six, our first quarter net interest margin was 3.56%. That's consistent with Q4's net interest margin of 3.59. Kind of looking at the individual components over to the right of our net interest margin, our portfolio yield increased by 12 basis points year over year due to continued loan production at those healthy WACs. The higher portfolio yield in Q4-25 was due to more cash being received during that period on our non-performing loans. As we said, some of that cash on non-performing loans kind of comes in lumpy time over time, so it was a little bit elevated in Q4. Our portfolio cost of funds decreased by 14 basis points, both quarter over quarter and year over year, compared to Q1-26. And that's mainly due to paying down the portfolio warehouse lines in Q1 with proceeds from the unsecured corporate debt issuance that Chris had mentioned. On page seven, our non-performing loan rate at the end of Q1 in those left table was 10.1%, and that's a 70 basis point year-over-year decrease compared to Q1 of 25. We continue to see strong collection efforts by our special servicing department that have resulted in favorable gain resolutions of our non-performing assets, which are comprised of both the non-performing loans as well as the REOs. The table to the right shows our loans held for investment portfolio including both our amortized cost loans and our fair value loans, and it shows the total year-over-year non-performing loan valuation allowance we have for our non-performing loans. As of March 31st, 26, the amortized cost loan portfolio had a $4.9 million CECL loss reserve, and the fair value loan portfolio had a $52.2 million valuation adjustment loss allowance for a combined valuation loss allowance of 83 basis points on the entire HFI portfolio. Both these valuation adjustments are required under U.S. GAAP. The unrealized loss valuation adjustment on our non-performing fair value loans represents what could be achieved for those loans transacted between a willing buyer and a willing seller in the secondary market. However, we do not plan on selling these NPL loans since our in-house special servicing department has a history of producing net gains on the resolutions of these non-performing assets. And again, that 83 basis points of total loss allowance on our entire HFI portfolio, our actual historical trends on losses has been nowhere near that 83 basis points. There's been fractions of that. On page eight, page eight just shows the CECL loan loss reserve activity. The CECL reserve, remember, is only applicable on the amortized cost loan portfolio, which is continuing to pay down as all our new loans are fair value. So it does not include the fair value portfolio. And again, that CECL reserve at the end of the quarter was 4.9 million or 25 basis points of our outstanding amortized cost portfolio. So it's been very consistent. Moving to page 10 on the real estate owned. I'm sorry, page 9. I'm moving to page 9. Get my pages straight here. Page 9 shows the real estate owned activity. And the left-hand side just shows the percentage of our real estate assets to the total HFI portfolio. And you can see year over year, it's been very, very consistent. You're talking about, you know, basis point movement from 1.5% to 1.9%. On the right-hand side, it's an expanded disclosure that we have on total gain or loss on REO activity. And what we've done on this page is we've actually broken out the gain or loss activity on new REOs compared to the gain or loss on existing REOs. So the top half of the table shows the gain or loss for recording new REOs in that period. And it segregates that REO activity between being sourced from either the amortized cost or the fair value loan portfolios. So you can see in Q1 of 26, there was a total $6.8 million gain on transfers of non-performing loans to new REOs in the quarter. compared to 4.4 million gain year-over-year in Q1-25. The second half of that table shows the gain or loss on activities on existing REOs subsequent to the initial recording of the REO in future periods or subsequent periods, reflecting the lower of cost or market accounting. For Q1-26, there was a 3.3 million loss on REO activities compared to 1.8 in Q1. And if you take those two sections combined, that presents a holistic picture of our overall REO P&L activity for the period, which for Q1 of 26 was a net gain of $3.5 million compared to a net gain of $2.7 million for Q1 of 25. The thing to keep in mind there is the REOs in that bottom half are not the same REOs. The REOs in the top half are new REOs that have come on. The bottom half is the activities of REOs that we've had on the books for a while are now making adjustments to based on requirements of GAAP under lower of cost or market accounting. That kind of gives you the full picture of all the REO activity. On page 10, page 10 shows our non-performing loan resolutions. Chris mentioned continued very, very strong resolutions of our non-performing assets. In Q1 of 26, we resolved a little over $70 million in UPB non-performing loans and had total resolution dollars recovered including the past due net contractual interest of $4.6 million, or 6.5% over the UPB principle of the loans. And that's compared to $68 million in UPB of loans resolved in Q1 of 25, with $5.2 million in total recovered revenue, or 7.6% over. And if you wanted to know just the gain based on the default interest and prepayment fees, that's still there. That would be in the column that just says gains. So for the first quarter of 26, the total gains on just on default interest and prepayment would be 1.6 of that 4.6 million, with the difference being all the collection of that past due accrued interest. Turning to page 11 on the durable funding and liquidity, a position at the end of the first quarter, total liquidity as of March 31st was $329 million. That's comprised of $87 million in cash-to-cash equivalents and almost another $242 million in available liquidity and unfinanced collateral. The available warehouse line capacity at the end of the quarter was $835.6 million with the maximum line capacity of 935. During Q1, as Chris mentioned, we issued our first publicly rated unsecured debt deal, a $500 million deal. We used the proceeds to pay off Our 2022 corporate secured note of $215 million. So we paid off the secured note of $215 million that was issued in 22. And then we also paid down a number of our warehouse lines with those proceeds. Also in Q1, we issued the first regular securitization of the year, 2026-1. That had a little over $335 million in securities issued. And we issued another private security, 2026-P1, and that had about $178 million in securities issued. And then we get the bottom table. Our recourse debt to equity ratio at the end of Q1 remained very low at 1.0 times. Our total debt to equity ratio, which includes all the non-recourse securizations that we do, was at 9.6 times as of the end of the quarter. That kind of wraps up my Q1 26 financial recap. And with that, I'll turn the presentation back over to Chris for an overview of Velocity's outlook on key business drivers this year. Chris.

Thanks, Mark. On page 12, we think the markets are healthy and continue to see strong demand. Credit remains very stable for us and where we expect it to be in terms of capital. I mentioned that all capital markets are healthy and functioning well, so we're in really good shape there. And from an earnings perspective, we continue to expect a 3.5% NIM and the portfolio to continue to grow this year as we see origination volumes tick up in the latter half of the year. That concludes our prepared remarks, and we can open it up for questions.

We will now begin the question and answer session. Again, to ask a question, you may press star and 1 on your telephone keypad. If you're using a speakerphone, please pick up your handset before pressing the keys. And to withdraw a question, you may press star, then two. At this time, we will pause just momentarily to assemble our roster. And our first question here will come from Chris Muller with Citizens. Please go ahead.

Hey, guys. Thanks for taking the questions. The originations feel like they've been on a pretty steady pace here for, I guess, the last year, year and a half or so. Do you guys expect origination volumes in 2026 to continue on a similar path to what we saw last year with a pickup later in the year?

Yeah. Yeah, we do. I think we felt a little bit of a slowdown kind of the end of the year, the beginning of this year. I think it was more seasonal in nature. Maybe it was the market. I'm not sure. But We've already seen kind of new origination volumes starting to pick up a little bit, and we think similar to last year, kind of Q2, Q3, those volumes will accelerate.

Got it. And then you guys are generating some really impressive ROEs. Do you think that that can hold in the high teens? It seems like a bunch of the inputs are suggesting that it can hold there, at least in the near term. So how are you guys thinking about ROEs going forward?

Yeah, we expect them to hold in there. As I mentioned, we're very disciplined on margin. The margin is probably the most important thing to us. We treat our capital as precious and we need to make sure we earn those returns. So we don't have to chase volume because we have this in-place portfolio. We're far more focused on maintaining margin, which obviously translates into ROE. So yes, is the short answer.

I appreciate you guys taking the questions and congrats on a really strong quarter.

Thank you.

This concludes our question and answer session. I'd like to turn the conference back over to Chris Farrar for any closing remarks.

Great. Thanks, everyone who joined us today. We appreciate your continued interest in Velocity. As always, the investor relations team is available for follow-up conversations, and we look forward to speaking with many of you over the coming weeks. Have a great evening. Thank you, everybody. Have a nice evening.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.