v3.25.3
Document And Entity Information - shares
 9 Months Ended
Sep. 30, 2025
Oct. 31, 2025
Document Information [Line Items]    
Document Type 10-Q  
Amendment Flag false  
Document Period End Date Sep. 30, 2025  
Document Fiscal Year Focus 2025  
Document Fiscal Period Focus Q3  
Entity Registrant Name Velocity Financial, Inc.  
Entity Central Index Key 0001692376  
Current Fiscal Year End Date --12-31  
Entity Filer Category Accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Common Stock, Shares Outstanding   38,900,030
Entity File Number 001-39183  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 46-0659719  
Entity Address, Address Line One 2945 Townsgate Road  
Entity Address, Address Line Two Suite 110  
Entity Address, City or Town Westlake Village  
Entity Address, State or Province CA  
Entity Address, Postal Zip Code 91361  
City Area Code 818  
Local Phone Number 532-3700  
Document Quarterly Report true  
Document Transition Report false  
Common Stock    
Document Information [Line Items]    
Trading Symbol VEL  
Title of 12(b) Security Common stock, par value $0.01 per share  
Security Exchange Name NYSE  
Common Stock One    
Document Information [Line Items]    
Trading Symbol VEL  
Title of 12(b) Security Common stock, par value $0.01 per share  
Security Exchange Name NYSE  
v3.25.3
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)
$ in Thousands
Sep. 30, 2025
Dec. 31, 2024
ASSETS    
Cash and cash equivalents $ 98,964 $ 49,901
Restricted cash 18,846 20,929
Loans held for sale, at fair value 2,590  
Loans held for investment, at amortized cost 2,127,170 2,420,116
Loans held for investment, at fair value 4,371,317 2,766,951
Total loans, net 6,501,077 5,187,067
Accrued interest receivables 46,553 35,235
Receivables due from servicers 131,761 123,494
Other receivables 2,755 1,359
Real estate owned, net 113,700 68,000
Property and equipment, net 1,481 1,650
Deferred tax asset 16,625 13,612
Mortgage servicing rights, at fair value 12,597 13,712
Derivative Asset 18  
Goodwill 6,775 6,775
Other assets 7,531 5,674
Total assets 6,958,683 5,527,408
LIABILITIES    
Accounts payable and accrued expenses 170,584 147,814
Secured financing, net 286,218 284,833
Securitized debt, at amortized cost 1,783,150 2,019,056
Securitized debt, at fair value 3,748,889 2,207,408
Warehouse and repurchase facilities, net 332,386 348,082
Total liabilities 6,321,227 5,007,193
Commitments and contingencies
EQUITY    
Common stock ($0.01 par value, 100,000,000 shares authorized; 39,508,370 and 33,761,147 shares issued, 38,900,030 and 33,545,585 shares outstanding as of September 30, 2025 and December 31, 2024, respectively) 396 339
Additional paid-in capital 379,401 322,954
Retained earnings 267,582 197,325
Treasury stock, at cost (608,340 and 215,562 common shares as of September 30, 2025 and December 31, 2024, respectively) (10,203) (2,869)
Accumulated other comprehensive loss (2,917) (805)
Total Velocity Financial Inc. stockholders' equity 634,259 516,944
Noncontrolling interest in subsidiary 3,197 3,271
Total equity 637,456 520,215
Total liabilities and equity $ 6,958,683 $ 5,527,408
v3.25.3
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parenthetical) - USD ($)
$ in Thousands
Sep. 30, 2025
Dec. 31, 2024
Class Of Stock [Line Items]    
Allowance for credit losses $ 4,586 $ 4,174
Common stock, par or stated value per share $ 0.01 $ 0.01
Common stock, shares authorized 100,000,000 100,000,000
Common stock, shares issued 39,508,370 33,761,147
Common stock, shares, outstanding 38,900,030 33,545,585
Treasury stock, common shares 608,340 215,562
ASSETS    
Restricted cash $ 18,846 $ 20,929
Loans held for investment, at amortized cost 2,127,170 2,420,116
Loans held for investment, at fair value 4,371,317 2,766,951
Real estate owned, net 113,700 68,000
Deferred tax asset 16,625 13,612
Other assets 7,531 5,674
Total assets 6,958,683 5,527,408
LIABILITIES    
Accounts payable and accrued expenses 170,584 147,814
Total liabilities 6,321,227 5,007,193
Variable Interest Entity Primary Beneficiary    
ASSETS    
Restricted cash 14,188 9,847
Loans held for investment, at amortized cost 2,123,222 2,395,394
Loans held for investment, at fair value 3,834,125 2,264,641
Accrued interest and other receivables 173,110 145,891
Real estate owned, net 113,700 57,838
Deferred tax asset 1,130 272
Other assets 7  
Total assets 6,259,482 4,873,883
LIABILITIES    
Accounts payable and accrued expenses 123,417 96,895
Securitized debt 5,532,039 4,226,464
Total liabilities $ 5,655,456 $ 4,323,359
v3.25.3
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)
shares in Thousands, $ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2025
Sep. 30, 2024
Interest income $ 144,119 $ 105,070 $ 398,426 $ 293,359
Interest expense — portfolio related 88,899 63,871 245,825 178,734
Net interest income — portfolio related 55,220 41,199 152,601 114,625
Interest expense — corporate debt 6,144 6,143 18,429 17,677
Net interest income 49,076 35,056 134,172 96,948
Provision for (reversal of) credit losses 381 (69) 3,851 1,151
Net interest income after provision for (reversal of) credit losses 48,695 35,125 130,321 95,797
Other operating income        
Gain on disposition of loans 4,574 2,291 13,694 7,156
Unrealized gain on fair value loans 30,982 35,530 95,724 71,579
Unrealized loss on fair value securitized debt (9,988) (24,995) (31,254) (31,957)
Unrealized loss on mortgage servicing rights (343) (993) (1,115) (922)
Origination fee income 9,723 6,704 27,338 16,762
Interest income on cash balance 1,564 1,676 4,408 5,038
Other income 565 519 1,575 1,412
Total other operating income 37,077 20,732 110,370 69,068
Operating expenses        
Compensation and employee benefits 23,300 17,586 67,589 49,505
Origination expenses 1,154 867 3,185 2,262
Securitization expenses 6,433 3,186 21,997 12,292
Loan servicing 7,748 5,656 23,961 15,639
Professional fees 893 2,305 4,668 6,140
Rent and occupancy 274 519 847 1,633
Real estate owned, net 7,931 1,951 14,258 5,762
Other operating expenses 2,664 2,543 7,995 7,278
Total operating expenses 50,397 34,613 144,500 100,511
Income before income taxes 35,375 21,244 96,191 64,354
Income tax expense 9,963 5,627 25,961 16,693
Net income 25,412 15,617 70,230 47,661
Net income (loss) attributable to noncontrolling interest 39 (186) (27) (171)
Net income attributable to Velocity Financial, Inc. 25,373 15,803 70,257 47,832
Less undistributed earnings attributable to unvested restricted stock awards 352 191 871 580
Net earnings attributable to common stockholders $ 25,021 $ 15,612 $ 69,386 $ 47,252
Earnings per common share        
Basic $ 0.66 $ 0.48 $ 1.91 $ 1.45
Diluted $ 0.65 $ 0.44 $ 1.86 $ 1.34
Weighted average common shares outstanding        
Basic 38,073 32,711 36,335 32,613
Diluted 38,800 35,895 37,817 35,645
Federal        
Operating expenses        
Income tax expense $ 7,603 $ 3,921 $ 19,381 $ 11,759
State        
Operating expenses        
Income tax expense $ 2,360 $ 1,706 $ 6,580 $ 4,934
v3.25.3
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited) - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2025
Sep. 30, 2024
Statement of Comprehensive Income [Abstract]        
Net income attributable to Velocity Financial, Inc. $ 25,373 $ 15,803 $ 70,257 $ 47,832
Other comprehensive income (loss), net of tax:        
Net unrealized gain (loss) on cash flow hedges arising during the period 98 (4,161) (2,571) (1,362)
Reclassification adjustments included in net income 192 (92) 459 (83)
Total other comprehensive income (loss), net of tax 290 (4,253) (2,112) (1,445)
Total comprehensive income attributable to Velocity Financial, Inc. $ 25,663 $ 11,550 $ 68,145 $ 46,387
v3.25.3
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (Unaudited) - USD ($)
$ in Thousands
Total
Common Stock
Additional Paid-in Capital
Retained Earnings
Treasury Stock
Accumulated Other Comprehensive Income (Loss), Net of Tax
Parent
Noncontrolling Interest
Beginning balance at Dec. 31, 2023 $ 436,873 $ 331 $ 306,736 $ 128,906 $ (1,319) $ (1,210) $ 433,444 $ 3,429
Beginning balance, shares at Dec. 31, 2023 32,865,836              
Beginning balance, shares at Dec. 31, 2023         (121,412)      
Beginning Balance, shares issued at Dec. 31, 2023   32,987,248            
Issuance of common stock $ 155 $ 3 152       155  
Issuance of common stock, shares   9,537            
Shares surrendered for tax withholding on vested awards (1,284)       $ (1,284)   (1,284)  
Shares surrendered for tax withholding on vested awards, shares   (79,258)     (79,258)      
Restricted stock awarded and stock-based compensation expenses 1,371   1,371       1,371  
Restricted stock awarded and stock-based compensation expenses, shares   189,679            
Net income (loss) 17,333     17,251     17,251 82
Other comprehensive income (loss) 2,004         2,004 2,004  
Ending balance at Mar. 31, 2024 $ 456,452 $ 334 308,259 146,157 $ (2,603) 794 452,941 3,511
Ending balance, shares at Mar. 31, 2024 32,985,794              
Ending balance, shares at Mar. 31, 2024         (200,670)      
Ending Balance, shares issued at Mar. 31, 2024   33,186,464            
Beginning balance at Dec. 31, 2023 $ 436,873 $ 331 306,736 128,906 $ (1,319) (1,210) 433,444 3,429
Beginning balance, shares at Dec. 31, 2023 32,865,836              
Beginning balance, shares at Dec. 31, 2023         (121,412)      
Beginning Balance, shares issued at Dec. 31, 2023   32,987,248            
Net income (loss) $ 47,661              
Other comprehensive income (loss) (1,445)              
Ending balance at Sep. 30, 2024 $ 487,689 $ 335 313,087 176,738 $ (2,869) (2,655) 484,636 3,053
Ending balance, shares at Sep. 30, 2024 33,114,845              
Ending balance, shares at Sep. 30, 2024         (215,562)      
Ending Balance, shares issued at Sep. 30, 2024   33,330,407            
Beginning balance at Mar. 31, 2024 $ 456,452 $ 334 308,259 146,157 $ (2,603) 794 452,941 3,511
Beginning balance, shares at Mar. 31, 2024 32,985,794              
Beginning balance, shares at Mar. 31, 2024         (200,670)      
Beginning Balance, shares issued at Mar. 31, 2024   33,186,464            
Issuance of common stock $ 1,501 $ 1 1,500       1,501  
Issuance of common stock, shares   127,733            
Shares surrendered for tax withholding on vested awards (266)       $ (266)   (266)  
Shares surrendered for tax withholding on vested awards, shares   (14,892)     (14,892)      
Restricted stock awarded and stock-based compensation expenses 1,565   1,565       1,565  
Distribution to non-controlling interest (20)             (20)
Net income (loss) 14,711     14,778     14,778 (67)
Other comprehensive income (loss) 804         804 804  
Ending balance at Jun. 30, 2024 $ 474,747 $ 335 311,324 160,935 $ (2,869) 1,598 471,323 3,424
Ending balance, shares at Jun. 30, 2024 33,098,635              
Ending balance, shares at Jun. 30, 2024         (215,562)      
Ending Balance, shares issued at Jun. 30, 2024   33,314,197            
Issuance of common stock $ 189   189       189  
Issuance of common stock, shares   16,210            
Restricted stock awarded and stock-based compensation expenses 1,574   1,574       1,574  
Distribution to non-controlling interest (185)             (185)
Net income (loss) 15,617     15,803     15,803 (186)
Other comprehensive income (loss) (4,253)         (4,253) (4,253)  
Ending balance at Sep. 30, 2024 $ 487,689 $ 335 313,087 176,738 $ (2,869) (2,655) 484,636 3,053
Ending balance, shares at Sep. 30, 2024 33,114,845              
Ending balance, shares at Sep. 30, 2024         (215,562)      
Ending Balance, shares issued at Sep. 30, 2024   33,330,407            
Beginning balance at Dec. 31, 2024 $ 520,215 $ 339 322,954 197,325 $ (2,869) (805) 516,944 3,271
Beginning balance, shares at Dec. 31, 2024 33,545,585              
Beginning balance, shares at Dec. 31, 2024 215,562       (215,562)      
Beginning Balance, shares issued at Dec. 31, 2024   33,761,147            
Issuance of common stock $ 28,542 $ 20 28,522       28,542  
Issuance of common stock, shares   1,569,255            
Shares surrendered for tax withholding on vested awards (2,162)       $ (2,162)   (2,162)  
Shares surrendered for tax withholding on vested awards, shares   (115,596)     (115,596)      
Restricted stock awarded and stock-based compensation expenses 1,970   1,970       1,970  
Restricted stock awarded and stock-based compensation expenses, shares   385,503            
Net income (loss) 18,648     18,887     18,887 (239)
Other comprehensive income (loss) (994)         (994) (994)  
Ending balance at Mar. 31, 2025 $ 566,219 $ 359 353,446 216,212 $ (5,031) (1,799) 563,187 3,032
Ending balance, shares at Mar. 31, 2025 35,384,747              
Ending balance, shares at Mar. 31, 2025         (331,158)      
Ending Balance, shares issued at Mar. 31, 2025   35,715,905            
Beginning balance at Dec. 31, 2024 $ 520,215 $ 339 322,954 197,325 $ (2,869) (805) 516,944 3,271
Beginning balance, shares at Dec. 31, 2024 33,545,585              
Beginning balance, shares at Dec. 31, 2024 215,562       (215,562)      
Beginning Balance, shares issued at Dec. 31, 2024   33,761,147            
Net income (loss) $ 70,230              
Other comprehensive income (loss) (2,112)              
Ending balance at Sep. 30, 2025 $ 637,456 $ 396 379,401 267,582 $ (10,203) (2,917) 634,259 3,197
Ending balance, shares at Sep. 30, 2025 38,900,030              
Ending balance, shares at Sep. 30, 2025 608,340       (608,340)      
Ending Balance, shares issued at Sep. 30, 2025   39,508,370            
Beginning balance at Mar. 31, 2025 $ 566,219 $ 359 353,446 216,212 $ (5,031) (1,799) 563,187 3,032
Beginning balance, shares at Mar. 31, 2025 35,384,747              
Beginning balance, shares at Mar. 31, 2025         (331,158)      
Beginning Balance, shares issued at Mar. 31, 2025   35,715,905            
Issuance of common stock, shares   1,080,338            
Ending balance, shares at Apr. 30, 2025   258,828            
Beginning balance at Mar. 31, 2025 $ 566,219 $ 359 353,446 216,212 $ (5,031) (1,799) 563,187 3,032
Beginning balance, shares at Mar. 31, 2025 35,384,747              
Beginning balance, shares at Mar. 31, 2025         (331,158)      
Beginning Balance, shares issued at Mar. 31, 2025   35,715,905            
Issuance of common stock $ 13,083 $ 31 13,052       13,083  
Issuance of common stock, shares   3,154,630            
Purchase of treasury stock (4,848)       $ (4,848)   (4,848)  
Purchase of treasury stock, shares         (258,828)      
Purchase of treasury stock, shares   (258,828)            
Shares surrendered for tax withholding on vested awards (145)       $ (145)   (145)  
Shares surrendered for tax withholding on vested awards, shares   (8,754)     (8,754)      
Restricted stock awarded and stock-based compensation expenses 2,029   2,029       2,029  
Restricted stock awarded and stock-based compensation expenses, shares   17,292            
Distribution to non-controlling interest (47)             (47)
Net income (loss) 26,170     25,997     25,997 173
Other comprehensive income (loss) (1,408)         (1,408) (1,408)  
Ending balance at Jun. 30, 2025 $ 601,053 $ 390 368,527 242,209 $ (10,024) (3,207) 597,895 3,158
Ending balance, shares at Jun. 30, 2025 38,289,087              
Ending balance, shares at Jun. 30, 2025         (598,740)      
Ending Balance, shares issued at Jun. 30, 2025   38,887,827            
Issuance of common stock $ 8,726 $ 6 8,720       8,726  
Issuance of common stock, shares   471,051            
Shares surrendered for tax withholding on vested awards (179)       $ (179)   (179)  
Shares surrendered for tax withholding on vested awards, shares   (9,600)     (9,600)      
Restricted stock awarded and stock-based compensation expenses 2,154   2,154       2,154  
Restricted stock awarded and stock-based compensation expenses, shares   149,492            
Net income (loss) 25,412     25,373     25,373 39
Other comprehensive income (loss) 290         290 290  
Ending balance at Sep. 30, 2025 $ 637,456 $ 396 $ 379,401 $ 267,582 $ (10,203) $ (2,917) $ 634,259 $ 3,197
Ending balance, shares at Sep. 30, 2025 38,900,030              
Ending balance, shares at Sep. 30, 2025 608,340       (608,340)      
Ending Balance, shares issued at Sep. 30, 2025   39,508,370            
v3.25.3
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
 9 Months Ended
Sep. 30, 2025
Sep. 30, 2024
Cash flows from operating activities:    
Net income $ 70,230 $ 47,661
Adjustments to reconcile net income to net cash provided by operating activities:    
Depreciation and amortization 393 650
Amortization of right-of-use assets 875 1,048
Provision for credit losses 3,851 1,151
Origination of loans held for sale (47,879) (18,947)
Proceeds from sales of loans held for sale 46,953  
Net accretion of discount on purchased loans and amortization of deferred loan origination costs 2,989 3,317
Provision for uncollectible borrower advances 711 650
Gain on disposition of loans (1,145) (834)
Real estate acquired through foreclosure in excess of recorded investment (12,549) (6,322)
Amortization of debt issuance discount and costs 7,667 9,468
Change in valuation of real estate owned 10,530 3,903
Change in valuation of fair value loans (95,724) (71,579)
Change in valuation of mortgage servicing rights 1,566 922
Change in valuation of fair value securitized debt 31,254 31,957
Gain on sale of real estate owned (1,242) (864)
Stock-based compensation 6,153 4,510
Hedging activities (3,553) (3,145)
Deferred tax benefit (2,160) (11,104)
Change in operating assets and liabilities:    
Accrued interest and other receivables (14,038) (3,573)
Other assets (2,004) (1,385)
Accounts payable and accrued expenses 19,772 16,998
Net cash provided by operating activities 22,650 4,482
Cash flows from investing activities:    
Purchase of loans held for investment   (16,210)
Origination of loans held for investment (2,033,018) (1,258,725)
Proceeds from sales of loans originally classified as held for investment   50,204
Payments of loans held for investment and loans at fair value 728,965 525,316
Proceeds from sale of real estate owned 34,399 19,798
Capitalized improvement on real estate held for sale (99)  
Change in corporate and escrow advances receivable (2,825) (4,921)
Change in impounds and deposits 1,117 (165)
Purchase of property and equipment (224) (190)
Proceeds from sale of property and equipment   640
Purchase of mortgage servicing rights   (4,760)
Net cash used in investing activities (1,271,685) (689,013)
Cash flows from financing activities:    
Warehouse repurchase facilities advances 2,072,225 1,365,638
Warehouse repurchase facilities repayments (2,087,575) (1,266,288)
Proceeds from secured financing   74,311
Proceeds of securitized debt 2,006,012 1,005,044
Repayment of securitized debt (736,521) (485,826)
Debt issuance costs (1,205) (3,104)
Deferred stock issuance costs (379)  
Proceeds from issuance of common stock related to warrants exercised 10,908  
Proceeds from issuance of common stock, net 39,931 1,845
Purchase of treasury stock (7,334) (1,550)
Distribution to non-controlling interest (47) (205)
Net cash provided by financing activities 1,296,015 689,865
Net increase in cash, cash equivalents, and restricted cash 46,980 5,334
Cash, cash equivalents, and restricted cash at beginning of period 70,830 61,927
Cash, cash equivalents, and restricted cash at end of period 117,810 67,261
Supplemental cash flow information:    
Cash paid during the period for interest 251,053 183,923
Cash paid during the period for income taxes, net 26,801 22,780
Noncash transactions from investing and financing activities:    
Transfer of loans held for investment to held for sale   35,067
Transfer of loans held for investment to real estate owned 76,738 34,608
Transfer of accrued interest to loans held for investment 1,893 1,118
Transfer of loans held for sale to held for investment   2,612
Recognition of new leases in exchange for lease obligations 1,384 1,164
Deferred stock issuance costs charged against additional paid-in capital $ 488 $ 2
v3.25.3
Pay vs Performance Disclosure - USD ($)
$ in Thousands
 3 Months Ended 9 Months Ended
Sep. 30, 2025
Sep. 30, 2024
Sep. 30, 2025
Sep. 30, 2024
Pay vs Performance Disclosure        
Net Income (Loss) $ 25,373 $ 15,803 $ 70,257 $ 47,832
v3.25.3
Insider Trading Arrangements
 3 Months Ended
Sep. 30, 2025
shares
Trading Arrangements, by Individual  
Material Terms of Trading Arrangement

On March 18, 2025, Jeffrey T. Taylor, our Executive Vice President, Capital Markets, adopted a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) intended to satisfy the affirmative defense of Rule 10b5-1(c) with respect to the sale of up to an aggregate of 21,250 shares of our common stock. The plan will expire June 30, 2026, subject to early termination for certain specified events as set forth in the plan.

On March 20, 2025, Mark R. Szczepaniak, our Chief Financial Officer, adopted a Rule 10b5-1 trading arrangement (as such term is defined in Item 408(a) of Regulation S-K) intended to satisfy the affirmative defense of Rule 10b5-1(c) with respect to the sale of up to an aggregate of 18,870 shares of our common stock. The plan will expire June 30, 2026, subject to early termination for certain specified events as set forth in the plan.

Jeffrey T. Taylor  
Trading Arrangements, by Individual  
Name Jeffrey T. Taylor
Title Executive Vice President
Rule 10b5-1 Arrangement Adopted true
Adoption Date March 18, 2025
Expiration Date June 30, 2026
Aggregate Available 21,250
Mark R. Szczepaniak  
Trading Arrangements, by Individual  
Name Mark R. Szczepaniak
Title Chief Financial Officer
Rule 10b5-1 Arrangement Adopted true
Adoption Date March 20, 2025
Expiration Date June 30, 2026
Aggregate Available 18,870
v3.25.3
Organization and Description of Business
 9 Months Ended
Sep. 30, 2025
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Organization And Description of Business

Note 1 — Organization and Description of Business

Velocity Financial, LLC (“VF” or “the Company”) was a Delaware limited liability company formed on July 9, 2012, for the purpose of acquiring all membership units in Velocity Commercial Capital, LLC (“VCC”). On January 16, 2020, Velocity Financial, LLC converted from a Delaware limited liability company to a Delaware corporation and changed its name to Velocity Financial, Inc. Upon completion of the conversion, Velocity Financial, LLC’s Class A equity units of 97,513,533 and Class D equity units of 60,193,989 were converted to 11,749,994 shares of Velocity Financial, Inc. common stock. On January 22, 2020, the Company completed its initial public offering of 7,250,000 shares of common stock at a price of $13.00 per share to the public. On January 28, 2020, the Company completed the sale of an additional 1,087,500 shares of its common stock, representing the full exercise of the underwriters’ option to purchase additional shares, at a public offering price of $13.00 per share. The Company’s stock trades on The New York Stock Exchange under the symbol “VEL.” The Company's stock also trades on the NYSE Texas, Inc. under the same symbol “VEL.” starting August 2025.

VCC, a California LLC formed on June 2, 2004, is a mortgage lender that originates and acquires residential and commercial investor real estate loans, providing capital to the investor real estate loan market. The Company is licensed as a California Finance Lender and, as such, is required to maintain a minimum net worth of $250 thousand. The Company does not believe there is any potential risk of not being able to meet this regulatory requirement. The Company uses its equity capital and borrowed funds to originate and invest in investor real estate loans and seeks to generate income based primarily on the difference between the yield on its investor real estate loan portfolio and the cost of its borrowings. The Company may also sell loans from time to time. The Company does not originate or acquire investments outside of the United States of America.

The Company, through its wholly owned subsidiaries, is the sole beneficial owner of the Velocity Commercial Capital Loan Trusts, from the 2017-2 Trust through and including the 2025-4 Trust, all of which are New York common law trusts, with the exception of the VCC 2025-MC1 Trust, and VCC 2025-RTL1 Trust which are Delaware statutory trusts. The Trusts are bankruptcy remote, variable interest entities (“VIEs”) formed for the purpose of providing secured borrowings to the Company and are consolidated with the accounts of the Company.

On December 28, 2021, the Company acquired an 80% ownership interest in Century Health & Housing Capital, LLC (“Century”). Century is a licensed Government National Mortgage Association (“Ginnie Mae” or “GNMA”) 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 is a consolidated subsidiary of the Company as of completion of the acquisition. In addition, as a servicer of Ginnie Mae loans, Century is required to maintain a minimum net worth, and Century is in compliance with this requirement as of September 30, 2025.

v3.25.3
Basis of Presentation and Summary of Significant Accounting Policies
 9 Months Ended
Sep. 30, 2025
Accounting Policies [Abstract]  
Basis of Presentation and Summary of Significant Accounting Policies

Note 2 — Basis of Presentation and Summary of Significant Accounting Policies

The accompanying unaudited Consolidated Financial Statements as of and for the three and nine months ended September 30, 2025 and 2024 have been prepared on a basis that is substantially consistent with the accounting principles applied to the Company’s audited Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.

The information furnished in these interim statements reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for each respective period presented. Such adjustments are of a normal, recurring nature. The results of operations in the interim statements are not necessarily indicative of the results that may be expected for any other quarter or for the full year. The interim financial information should be read in conjunction with the Company’s audited Consolidated Financial Statements.

(a)
Use of Estimates

The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period.

(b)
Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (“SEC”).

There have been no material changes to the Company’s significant accounting policies as described in its 2024 Annual Report.

(c)
Principles of Consolidation

The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.

The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.

The consolidated financial statements as of September 30, 2025 and December 31, 2024 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.

(d)
Fair Value Option Accounting

The Company elected to apply fair value option (“FVO”) accounting to mortgage loans originated effective October 1, 2022. The fair value option loans are presented as a separate line item in the Consolidated Balance Sheets. Interest income on FVO loans is recorded on an accrual basis in the Consolidated Statements of Income under the heading “Interest income.” Changes in the fair value of the loans are recorded as “Unrealized gain (loss) on fair value of loans” in the Consolidated Statements of Income. The Company does not record a current expected credit loss (“CECL”) reserve on fair value option loans.

The Company elected to apply FVO accounting to securitized debt issued effective January 1, 2023 when the underlying collateral is also carried at fair value. The FVO securitized debt is presented as a separate line item in the Consolidated Balance Sheets. The Company reflects interest expense on the FVO securitized debt as “Interest expense – portfolio related” and presents the other fair value changes of the FVO securitized debt separately as “Unrealized gain (loss) on fair value securitized debt” in the Consolidated Statements of Income.

(e)
Derivative Instruments and Hedge Accounting

The Company issues fixed rate debt at regular intervals during the year through the securitization of its fixed rate mortgage assets. The Company is subject to interest rate risk on its forecasted debt issuances as these fixed rate debt issuances are priced at then-current market rates. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark Secured Overnight Financing Rate (“SOFR”) between the time the fixed rate mortgages are originated and the fixed rate debt is issued. To accomplish this hedging strategy, the Company may from time to time enter into derivative instruments such as forward starting payer interest rate swaps or interest rate payer and receiver swaptions designated as cash flow hedges that are designed to be highly correlated to the underlying terms of the forecasted debt instruments. To qualify for hedge accounting, the Company formally documents its hedging relationships at inception, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. The Company also formally assesses effectiveness both at the hedge's inception and on an ongoing basis.

The Company's policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements. The fair value of the derivative instruments is recorded as a separate line item on the Consolidated Balance Sheets as an asset or liability with the related gains or losses reported as a component of Accumulated Other Comprehensive Income (“AOCI”). Beginning in the period in which the forecasted debt issuance occurs and the related derivative instruments are terminated, the gains or losses accumulated in AOCI are then reclassified into interest expense as a yield adjustment over the term of the related debt. If the Company determines it is not probable that the forecasted transaction will occur, gains and losses are reclassified immediately to earnings. The related cash flows are recognized on the cash flows from operating activities section on the Consolidated Statements of Cash Flows. The Company uses hedge accounting based on the exposure being hedged as cash flow hedges in operations.

(f)
Other Comprehensive Income

Other comprehensive income (“OCI”) is reported in the Consolidated Statements of Comprehensive Income. OCI is comprised of net income and the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges, net of tax, less amounts reclassified into earnings.

Accumulated other comprehensive income represents the cumulative balance of OCI, net of tax, as of the end of the reporting period and relates to unrealized gains or losses on cash flow hedges, net of tax.
v3.25.3
Current Accounting Developments
 9 Months Ended
Sep. 30, 2025
Accounting Changes and Error Corrections [Abstract]  
Current Accounting Developments

Note 3 — Current Accounting Developments

Recently Issued Accounting Standards

Expense Disaggregation

In January 2025, the FASB issued ASU 2025-01, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40) Expense Disaggregation Disclosures,” clarifies for non-calendar year end entities the interim effective date of ASU 2024-03. All public business entities are required to adopt the guidance in the annual reporting periods beginning after December 15, 2026, and interim periods within annual reporting periods beginning after December 15, 2027. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, “Income Statement - Reporting Comprehensive Income (Subtopic 220-40) Expense Disaggregation Disclosures,” which requires specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to employee compensation, depreciation, and intangible asset amortization. In addition, qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively will need to be disclosed. The accounting update is effective January 1, 2027 for the Company. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

Recently Adopted Accounting Standards

Codification Improvements

In March 2024, the FASB issued ASU 2024-02, “Codification Improvements—Amendments to Remove References to the Concepts Statements,” which amends the Codification to remove references to various concepts statements and impacts a variety of topics in the Codification. The amendments apply to all reporting entities within the scope of the affected accounting guidance, but in most instances the references removed are extraneous and not required to understand or apply the guidance. ASU 2024-02 is effective January 1, 2025, for the Company. The Company adopted the provisions of ASU 2024-02 effective January 1, 2025, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.

Income Taxes

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 240): Improvements to Income Tax Disclosures,” which requires additional disclosure and disaggregated information in the Income Tax Rate reconciliation using both percentages and reporting currency amounts, with additional qualitative explanations of individually significant reconciling items. The updated guidance also requires disclosure of the amount of income taxes paid (net of refunds received) disaggregated by jurisdictional categories (federal (national), state, and foreign). The Company adopted the provisions of ASU 2023-09 effective January 1, 2025, and the adoption of this standard did not have a material impact on the Company's consolidated financial statements and related disclosures.
v3.25.3
Cash, Cash Equivalents, and Restricted Cash
 9 Months Ended
Sep. 30, 2025
Cash and Cash Equivalents [Abstract]  
Cash, Cash Equivalents, and Restricted Cash

Note 4 — Cash, Cash Equivalents, and Restricted Cash

The Company is required to hold cash for potential future advances due to certain borrowers. In accordance with various mortgage servicing and related agreements, Century maintains escrow accounts for mortgage insurance premium, tax and insurance, working capital, sinking fund and other mortgage related escrows. The total escrow balances payable amounted to $83.3 million and $81.1 million as of September 30, 2025 and 2024, respectively. These amounts are not reflected on the Consolidated Balance Sheets of the Company.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s Consolidated Balance Sheets to the total of the same such amounts shown in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024:

 

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Cash and cash equivalents

 

$

98,964

 

 

$

44,094

 

Restricted cash

 

 

18,846

 

 

 

23,167

 

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

117,810

 

 

$

67,261

 
v3.25.3
Loans Held for Sale at Fair Value
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
Loans Held for Sale at Fair Value

Note 5 — Loans Held for Sale at Fair Value

The following table summarizes loans held for sale at fair value as of September 30, 2025 and December 31, 2024:

 

 

September 30, 2025

 

 

December 31, 2024

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

2,071

 

 

$

—

 

Valuation adjustments on FVO loans held for sale

 

 

519

 

 

 

—

 

Ending balance

 

$

2,590

 

 

$

—

 
v3.25.3
Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value

Note 6 — Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value

The following tables summarize loans held for investment as of September 30, 2025 and December 31, 2024:

 

 

September 30, 2025

 

 

 

Loans Held for Investment, at Amortized Cost

 

 

Loans Held for Investment, at Fair Value

 

 

Total Loans Held for Investment

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

2,111,569

 

 

$

4,161,729

 

 

$

6,273,298

 

Valuation adjustments on FVO loans

 

 

—

 

 

 

209,588

 

 

 

209,588

 

Deferred loan origination costs

 

 

20,187

 

 

 

—

 

 

 

20,187

 

 

 

2,131,756

 

 

 

4,371,317

 

 

 

6,503,073

 

Allowance for credit losses

 

 

(4,586

)

 

 

—

 

 

 

(4,586

)

Total loans held for investment

 

$

2,127,170

 

 

$

4,371,317

 

 

$

6,498,487

 

 

 

December 31, 2024

 

 

 

Loans Held for Investment, at Amortized Cost

 

 

Loans Held for Investment, at Fair Value

 

 

Total Loans Held for Investment

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

2,400,720

 

 

$

2,655,217

 

 

$

5,055,937

 

Valuation adjustments on FVO loans

 

 

—

 

 

 

111,734

 

 

 

111,734

 

Deferred loan origination costs

 

 

23,570

 

 

 

—

 

 

 

23,570

 

 

 

2,424,290

 

 

 

2,766,951

 

 

 

5,191,241

 

Allowance for credit losses

 

 

(4,174

)

 

 

—

 

 

 

(4,174

)

Total loans held for investment

 

$

2,420,116

 

 

$

2,766,951

 

 

$

5,187,067

 

The following tables summarize the Unpaid Principal Balance (“UPB”) and amortized cost basis of loans in the Company's COVID-19 forbearance program for the three and nine months ended September 30, 2025 and the year ended December 31, 2024:

 

 

Three Months Ended September 30, 2025

 

Nine Months Ended September 30, 2025

 

 

UPB

 

 

%

 

Amortized Cost

 

 

%

 

UPB

 

 

%

 

Amortized Cost

 

 

%

 

 

($ in thousands)

Beginning balance

 

$

130,539

 

 

 

 

$

131,790

 

 

 

 

$

142,827

 

 

 

 

$

144,247

 

 

 

Foreclosures

 

 

(120

)

 

 

 

 

(120

)

 

 

 

 

(1,980

)

 

 

 

 

(1,996

)

 

 

Repayments

 

 

(1,076

)

 

 

 

 

(1,111

)

 

 

 

 

(11,504

)

 

 

 

 

(11,692

)

 

 

Ending balance

 

$

129,343

 

 

 

 

$

130,559

 

 

 

 

$

129,343

 

 

 

 

$

130,559

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing/Accruing

 

$

97,771

 

 

75.6%

 

$

98,691

 

 

75.6%

 

$

97,771

 

 

75.6%

 

$

98,691

 

 

75.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonperforming/Nonaccrual

 

$

31,572

 

 

24.4%

 

$

31,868

 

 

24.4%

 

$

31,572

 

 

24.4%

 

$

31,868

 

 

24.4%

 

 

 

 

Year Ended December 31, 2024

 

 

UPB

 

 

%

 

Amortized Cost

 

 

%

 

 

($ in thousands)

Beginning balance

 

$

174,571

 

 

 

 

$

176,515

 

 

 

Foreclosures

 

 

(5,292

)

 

 

 

 

(5,416

)

 

 

Repayments

 

 

(26,452

)

 

 

 

 

(26,852

)

 

 

Ending balance

 

$

142,827

 

 

 

 

$

144,247

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing/Accruing

 

$

102,769

 

 

72.0%

 

$

103,790

 

 

72.0%

 

 

 

 

 

 

 

 

 

 

Nonperforming/Nonaccrual

 

$

40,058

 

 

28.0%

 

$

40,457

 

 

28.0%

Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $414.4 million in UPB of loans, which includes capitalized interest of $16.3 million. As of September 30, 2025, $280.6 million in UPB of modified loans has been paid down, which includes $6.6 million of capitalized interest received.

Approximately 75.6% and 72.0% of the COVID forbearance loans in UPB were performing, and 24.4% and 28.0% were on nonaccrual status as of September 30, 2025 and December 31, 2024, respectively.

As of September 30, 2025 and December 31, 2024, the gross unpaid principal balances of loans held for investment pledged as collateral for the Company’s warehouse facilities and securitized debt issued were as follows:

 

 

September 30, 2025

 

 

December 31, 2024

 

 

 

(In thousands)

 

The 2013 repurchase agreement

 

$

158,669

 

 

$

133,577

 

The 2021/2024 repurchase agreements

 

 

139,782

 

 

 

148,676

 

The 2021 term repurchase agreement

 

 

39,352

 

 

 

74,324

 

The 2023 repurchase agreement

 

 

61,995

 

 

 

42,613

 

The 2024 bank credit agreement

 

 

33,436

 

 

 

23,330

 

Total pledged loans

 

$

433,234

 

 

$

422,520

 

 

 

 

 

 

 

2017-2 Trust

 

$

31,456

 

 

$

39,231

 

2018-1 Trust

 

 

24,509

 

 

 

28,564

 

2018-2 Trust

 

 

53,125

 

 

 

62,845

 

2019-1 Trust

 

 

61,184

 

 

 

71,521

 

2019-2 Trust

 

 

44,888

 

 

 

52,417

 

2019-3 Trust

 

 

43,353

 

 

 

52,177

 

2020-1 Trust

 

 

85,580

 

 

 

98,858

 

2021-1 Trust

 

 

143,331

 

 

 

162,750

 

2021-2 Trust

 

 

116,833

 

 

 

130,363

 

2021-3 Trust

 

 

122,492

 

 

 

136,891

 

2021-4 Trust

 

 

201,422

 

 

 

219,907

 

2022-1 Trust

 

 

204,536

 

 

 

222,909

 

2022-2 Trust

 

 

182,871

 

 

 

201,363

 

2022-MC1 Trust

 

 

—

 

 

 

58,133

 

2022-3 Trust

 

 

228,666

 

 

 

253,621

 

2022-4 Trust

 

 

225,441

 

 

 

254,668

 

2022-5 Trust

 

 

153,400

 

 

 

187,078

 

2023-1 Trust

 

 

154,982

 

 

 

180,941

 

2023-2 Trust

 

 

124,396

 

 

 

165,155

 

2023-3 Trust

 

 

158,810

 

 

 

200,943

 

2023-RTL1 Trust

 

 

—

 

 

 

85,530

 

2023-4 Trust

 

 

147,461

 

 

 

185,013

 

2024-1 Trust

 

 

146,038

 

 

 

188,638

 

2024-2 Trust

 

 

218,822

 

 

 

271,542

 

2024-3 Trust

 

 

172,420

 

 

 

198,640

 

2024-4 Trust

 

 

206,506

 

 

 

248,788

 

2024-5 Trust

 

 

262,032

 

 

 

293,881

 

2024-6 Trust

 

 

275,686

 

 

 

299,216

 

2025-1 Trust

 

 

336,439

 

 

 

—

 

2025-RTL1 Trust

 

 

118,498

 

 

 

—

 

2025-2 Trust

 

 

374,790

 

 

 

—

 

2025-MC1 Trust

 

 

96,786

 

 

 

—

 

2025-3 Trust

 

 

386,034

 

 

 

—

 

2025-P1 Trust

 

 

192,424

 

 

 

—

 

2025-4 Trust

 

 

467,759

 

 

 

—

 

Total

 

$

5,762,970

 

 

$

4,551,583

 

 

(a)
Nonaccrual Loans

The following tables present the amortized cost basis, or recorded investment, of the Company’s loans held for investment, excluding loans carried at fair value, that were nonperforming and on nonaccrual status as of September 30, 2025 and December 31, 2024.

 

 

September 30, 2025

 

 

 

Total
Nonaccrual

 

 

Nonaccrual with No Allowance for Credit Losses

 

 

Nonaccrual with Allowance for Credit Losses

 

 

Allowance for Loans Individually Evaluated

 

 

 

(In thousands)

 

Commercial - Purchase

 

$

29,995

 

 

$

29,239

 

 

$

756

 

 

$

79

 

Commercial - Refinance

 

 

86,132

 

 

 

80,186

 

 

 

5,946

 

 

 

1,578

 

Residential 1-4 Unit - Purchase

 

 

31,094

 

 

 

30,779

 

 

 

315

 

 

 

6

 

Residential 1-4 Unit - Refinance

 

 

99,419

 

 

 

93,782

 

 

 

5,637

 

 

 

327

 

Short Term 1-4 Unit - Purchase

 

 

1,562

 

 

 

1,562

 

 

 

—

 

 

 

—

 

Short Term 1-4 Unit - Refinance

 

 

14,373

 

 

 

14,235

 

 

 

138

 

 

 

46

 

Total

 

$

262,575

 

 

$

249,783

 

 

$

12,792

 

 

$

2,036

 

 

 

 

December 31, 2024

 

 

 

Total
Nonaccrual

 

 

Nonaccrual with No Allowance for Credit Losses

 

 

Nonaccrual with Allowance for Credit Losses

 

 

Allowance for Loans Individually Evaluated

 

 

 

(In thousands)

 

Commercial - Purchase

 

$

33,290

 

 

$

32,294

 

 

$

996

 

 

$

85

 

Commercial - Refinance

 

 

99,683

 

 

 

96,155

 

 

 

3,528

 

 

 

421

 

Residential 1-4 Unit - Purchase

 

 

29,573

 

 

 

29,573

 

 

 

—

 

 

 

—

 

Residential 1-4 Unit - Refinance

 

 

122,439

 

 

 

114,265

 

 

 

8,174

 

 

 

450

 

Short Term 1-4 Unit - Purchase

 

 

4,754

 

 

 

4,754

 

 

 

—

 

 

 

—

 

Short Term 1-4 Unit - Refinance

 

 

23,556

 

 

 

23,341

 

 

 

215

 

 

 

73

 

Total

 

$

313,295

 

 

$

300,382

 

 

$

12,913

 

 

$

1,029

 

The Company has made the accounting policy election not to measure an allowance for accrued interest receivables. The Company has also made the accounting policy election to write off accrued interest receivables by reversing interest income when loans are placed on nonaccrual status, or 90 days or more past due. Any future payments received for these loans will be recognized on a cash basis.

The following tables present the amortized cost basis in loans held for investment, excluding loans held for investment at fair value, as of September 30, 2025 and 2024, and the amount of accrued interest receivable written off by reversing interest income by portfolio segment of loans that have been placed on nonaccrual for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

Amortized Cost

 

 

Interest Reversal

 

 

Amortized Cost

 

 

Interest Reversal

 

 

 

(In thousands)

 

Commercial - Purchase

 

$

509,401

 

 

$

179

 

 

$

581,860

 

 

$

160

 

Commercial - Refinance

 

 

634,415

 

 

 

195

 

 

 

739,887

 

 

 

377

 

Residential 1-4 Unit - Purchase

 

 

369,413

 

 

 

150

 

 

 

445,893

 

 

 

156

 

Residential 1-4 Unit - Refinance

 

 

569,629

 

 

 

241

 

 

 

703,653

 

 

 

446

 

Short Term 1-4 Unit - Purchase

 

 

29,976

 

 

 

—

 

 

 

30,776

 

 

 

11

 

Short Term 1-4 Unit - Refinance

 

 

18,922

 

 

 

116

 

 

 

29,102

 

 

 

36

 

Total

 

$

2,131,756

 

 

$

881

 

 

$

2,531,171

 

 

$

1,186

 

 

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

Amortized Cost

 

 

Interest Reversal

 

 

Amortized Cost

 

 

Interest Reversal

 

 

 

(In thousands)

 

Commercial - Purchase

 

$

509,401

 

 

$

628

 

 

$

581,860

 

 

$

539

 

Commercial - Refinance

 

 

634,415

 

 

 

792

 

 

 

739,887

 

 

 

1,314

 

Residential 1-4 Unit - Purchase

 

 

369,413

 

 

 

348

 

 

 

445,893

 

 

 

638

 

Residential 1-4 Unit - Refinance

 

 

569,629

 

 

 

829

 

 

 

703,653

 

 

 

1,379

 

Short Term 1-4 Unit - Purchase

 

 

29,976

 

 

 

80

 

 

 

30,776

 

 

 

85

 

Short Term 1-4 Unit - Refinance

 

 

18,922

 

 

 

116

 

 

 

29,102

 

 

 

87

 

Total

 

$

2,131,756

 

 

$

2,793

 

 

$

2,531,171

 

 

$

4,042

 

The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $12.2 million and $9.8 million for the three months ended September 30, 2025 and 2024, respectively. The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $34.7 million and $25.5 million for the nine months ended September 30, 2025 and 2024, respectively. No accrued interest income was recognized on nonaccrual loans for the nine months ended September 30, 2025 and 2024. The average recorded investment of individually evaluated loans, computed using month-end balances, was $270.2 million and $323.4 million for the three months ended September 30, 2025 and 2024, respectively, and $286.6 million and $323.7 million for the nine months ended September 30, 2025 and 2024, respectively. There were no commitments to lend additional funds to debtors whose loans have been modified as of September 30, 2025 and 2024.

(b)
Allowance for Credit Losses

The following tables present the activity in the allowance for credit losses for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30, 2025

 

 

 

Commercial Purchase

 

 

Commercial Refinance

 

 

Residential
1-4 Unit
Purchase

 

 

Residential
1-4 Unit
Refinance

 

 

Short Term
1-4 Unit
Purchase

 

 

Short Term
1-4 Unit
Refinance

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance - July 1, 2025

 

$

679

 

 

$

2,085

 

 

$

787

 

 

$

1,258

 

 

$

27

 

 

$

46

 

 

$

4,882

 

Provision for (reversal of) credit losses

 

 

(129

)

 

 

3

 

 

 

(86

)

 

 

544

 

 

 

(18

)

 

 

67

 

 

 

381

 

Charge-offs

 

 

—

 

 

 

(49

)

 

 

(57

)

 

 

(520

)

 

 

—

 

 

 

(51

)

 

 

(677

)

Ending balance

 

$

550

 

 

$

2,039

 

 

$

644

 

 

$

1,282

 

 

$

9

 

 

$

62

 

 

$

4,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

79

 

 

$

1,578

 

 

$

6

 

 

$

327

 

 

$

—

 

 

$

46

 

 

$

2,036

 

Loans collectively evaluated

 

$

471

 

 

$

460

 

 

$

638

 

 

$

955

 

 

$

10

 

 

$

16

 

 

$

2,550

 

Amortized cost related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

29,995

 

 

$

86,132

 

 

$

31,094

 

 

$

99,419

 

 

$

1,562

 

 

$

14,373

 

 

$

262,575

 

Loans collectively evaluated

 

$

479,406

 

 

$

548,283

 

 

$

338,319

 

 

$

470,210

 

 

$

28,414

 

 

$

4,549

 

 

$

1,869,181

 

 

 

 

Three Months Ended September 30, 2024

 

 

 

Commercial Purchase

 

 

Commercial Refinance

 

 

Residential
1-4 Unit
Purchase

 

 

Residential
1-4 Unit
Refinance

 

 

Short Term
1-4 Unit
Purchase

 

 

Short Term
1-4 Unit
Refinance

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance - July 1, 2024

 

$

810

 

 

$

1,752

 

 

$

934

 

 

$

1,208

 

 

$

29

 

 

$

507

 

 

$

5,240

 

Provision for (reversal of) credit losses

 

 

(158

)

 

 

(181

)

 

 

15

 

 

 

251

 

 

 

47

 

 

 

(43

)

 

 

(69

)

Charge-offs

 

 

—

 

 

 

(32

)

 

 

(225

)

 

 

(10

)

 

 

(53

)

 

 

—

 

 

 

(320

)

Ending balance

 

$

652

 

 

$

1,539

 

 

$

724

 

 

$

1,449

 

 

$

23

 

 

$

464

 

 

$

4,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

100

 

 

$

547

 

 

$

4

 

 

$

679

 

 

$

—

 

 

$

460

 

 

$

1,790

 

Loans collectively evaluated

 

$

552

 

 

$

992

 

 

$

720

 

 

$

770

 

 

$

23

 

 

$

4

 

 

$

3,061

 

Amortized cost related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

30,872

 

 

$

101,933

 

 

$

30,576

 

 

$

126,114

 

 

$

4,038

 

 

$

24,115

 

 

$

317,648

 

Loans collectively evaluated

 

$

550,988

 

 

$

637,954

 

 

$

415,317

 

 

$

577,539

 

 

$

26,738

 

 

$

4,987

 

 

$

2,213,523

 

 

 

 

Nine Months Ended September 30, 2025

 

 

 

Commercial Purchase

 

 

Commercial Refinance

 

 

Residential
1-4 Unit
Purchase

 

 

Residential
1-4 Unit
Refinance

 

 

Short Term
1-4 Unit
Purchase

 

 

Short Term
1-4 Unit
Refinance

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance - January 1, 2025

 

$

662

 

 

$

1,399

 

 

$

746

 

 

$

1,281

 

 

$

12

 

 

$

74

 

 

$

4,174

 

Provision for (reversal of) credit losses

 

 

(9

)

 

 

880

 

 

 

131

 

 

 

1,208

 

 

 

4

 

 

 

1,637

 

 

 

3,851

 

Charge-offs

 

 

(103

)

 

 

(240

)

 

 

(233

)

 

 

(1,207

)

 

 

(7

)

 

 

(1,649

)

 

 

(3,439

)

Ending balance

 

$

550

 

 

$

2,039

 

 

$

644

 

 

$

1,282

 

 

$

9

 

 

$

62

 

 

$

4,586

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

79

 

 

$

1,578

 

 

$

6

 

 

$

327

 

 

$

—

 

 

$

46

 

 

$

2,036

 

Loans collectively evaluated

 

$

471

 

 

$

460

 

 

$

638

 

 

$

955

 

 

$

10

 

 

$

16

 

 

$

2,550

 

Amortized cost related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

29,995

 

 

$

86,132

 

 

$

31,094

 

 

$

99,419

 

 

$

1,562

 

 

$

14,373

 

 

$

262,575

 

Loans collectively evaluated

 

$

479,406

 

 

$

548,283

 

 

$

338,319

 

 

$

470,210

 

 

$

28,414

 

 

$

4,549

 

 

$

1,869,181

 

 

 

 

Nine Months Ended September 30, 2024

 

 

 

Commercial Purchase

 

 

Commercial Refinance

 

 

Residential
1-4 Unit
Purchase

 

 

Residential
1-4 Unit
Refinance

 

 

Short Term
1-4 Unit
Purchase

 

 

Short Term
1-4 Unit
Refinance

 

 

Total

 

 

 

(In thousands)

 

Allowance for credit losses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Beginning balance - January 1, 2024

 

$

935

 

 

$

1,805

 

 

$

585

 

 

$

1,256

 

 

$

23

 

 

$

165

 

 

$

4,769

 

Provision for (reversal of) credit losses

 

 

(283

)

 

 

(233

)

 

 

662

 

 

 

310

 

 

 

151

 

 

 

544

 

 

 

1,151

 

Charge-offs

 

 

—

 

 

 

(33

)

 

 

(523

)

 

 

(117

)

 

 

(151

)

 

 

(245

)

 

 

(1,069

)

Ending balance

 

$

652

 

 

$

1,539

 

 

$

724

 

 

$

1,449

 

 

$

23

 

 

$

464

 

 

$

4,851

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Allowance related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

100

 

 

$

547

 

 

$

4

 

 

$

679

 

 

$

—

 

 

$

460

 

 

$

1,790

 

Loans collectively evaluated

 

$

552

 

 

$

992

 

 

$

720

 

 

$

770

 

 

$

23

 

 

$

4

 

 

$

3,061

 

Amortized cost related to:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loans individually evaluated

 

$

30,872

 

 

$

101,933

 

 

$

30,576

 

 

$

126,114

 

 

$

4,038

 

 

$

24,115

 

 

$

317,648

 

Loans collectively evaluated

 

$

550,988

 

 

$

637,954

 

 

$

415,317

 

 

$

577,539

 

 

$

26,738

 

 

$

4,987

 

 

$

2,213,523

 
(c)
Credit Quality Indicator

A credit quality indicator is a statistic used by the Company to monitor and assess the credit quality of loans held for investment, excluding loans held for investment at fair value. The Company monitors its charge-offs rate in relation to its nonperforming loans as a credit quality indicator. The annualized charge-offs rates were 1.62% and 0.44% of average nonperforming loans at amortized cost for the nine months ended September 30, 2025 and 2024, respectively.

Other credit quality indicators include aging status and accrual status. Nonperforming loans are loans that are 90 or more days past due, in bankruptcy, in foreclosure, or not accruing interest. Past due status is based on the contractual terms of the loan. The following tables present the aging status of the amortized cost basis in the loans held for investment portfolio, which include $130.6 million and $144.2 million loans in the Company’s COVID-19 forbearance program, excluding loans held for investment at fair value, as of September 30, 2025 and December 31, 2024, respectively:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

September 30, 2025

 

30–59 Days
Past Due

 

 

60–89 Days
Past Due

 

 

90+ Days
Past Due(1)

 

 

Total
Past Due

 

 

Current

 

 

Total
Loans

 

 

 

(In thousands)

 

Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial - Purchase

 

$

197

 

 

$

642

 

 

$

29,156

 

 

$

29,995

 

 

$

—

 

 

$

29,995

 

Commercial - Refinance

 

 

2,864

 

 

 

1,788

 

 

 

81,357

 

 

 

86,009

 

 

 

123

 

 

 

86,132

 

Residential 1-4 Unit - Purchase

 

 

1,700

 

 

 

853

 

 

 

28,541

 

 

 

31,094

 

 

 

—

 

 

 

31,094

 

Residential 1-4 Unit - Refinance

 

 

1,990

 

 

 

2,428

 

 

 

95,001

 

 

 

99,419

 

 

 

—

 

 

 

99,419

 

Short Term 1-4 Unit - Purchase

 

 

—

 

 

 

—

 

 

 

1,562

 

 

 

1,562

 

 

 

—

 

 

 

1,562

 

Short Term 1-4 Unit - Refinance

 

 

—

 

 

 

—

 

 

 

14,373

 

 

 

14,373

 

 

 

—

 

 

 

14,373

 

Total loans individually evaluated

 

$

6,751

 

 

$

5,711

 

 

$

249,990

 

 

$

262,452

 

 

$

123

 

 

$

262,575

 

Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial - Purchase

 

$

16,021

 

 

$

10,035

 

 

$

—

 

 

$

26,056

 

 

$

453,350

 

 

$

479,406

 

Commercial - Refinance

 

 

30,842

 

 

 

10,622

 

 

 

—

 

 

 

41,464

 

 

 

506,819

 

 

 

548,283

 

Residential 1-4 Unit - Purchase

 

 

14,218

 

 

 

3,091

 

 

 

—

 

 

 

17,309

 

 

 

321,010

 

 

 

338,319

 

Residential 1-4 Unit - Refinance

 

 

25,588

 

 

 

13,240

 

 

 

—

 

 

 

38,828

 

 

 

431,382

 

 

 

470,210

 

Short Term 1-4 Unit - Purchase

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

28,414

 

 

 

28,414

 

Short Term 1-4 Unit - Refinance

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

4,549

 

 

 

4,549

 

Total loans collectively evaluated

 

$

86,669

 

 

$

36,988

 

 

$

—

 

 

$

123,657

 

 

$

1,745,524

 

 

$

1,869,181

 

Ending balance

 

$

93,420

 

 

$

42,699

 

 

$

249,990

 

 

$

386,109

 

 

$

1,745,647

 

 

$

2,131,756

 
(1)
Includes loans in bankruptcy and foreclosure less than 90 days past due.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

December 31, 2024

 

30–59 Days
Past Due

 

 

60–89 Days
Past Due

 

 

90+ Days
Past Due(1)

 

 

Total
Past Due

 

 

Current

 

 

Total
Loans

 

 

 

(In thousands)

 

Loans individually evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial - Purchase

 

$

387

 

 

$

555

 

 

$

32,348

 

 

$

33,290

 

 

$

—

 

 

$

33,290

 

Commercial - Refinance

 

 

3,903

 

 

 

3,326

 

 

 

92,454

 

 

 

99,683

 

 

 

—

 

 

 

99,683

 

Residential 1-4 Unit - Purchase

 

 

606

 

 

 

957

 

 

 

28,010

 

 

 

29,573

 

 

 

—

 

 

 

29,573

 

Residential 1-4 Unit - Refinance

 

 

4,784

 

 

 

708

 

 

 

116,947

 

 

 

122,439

 

 

 

—

 

 

 

122,439

 

Short Term 1-4 Unit - Purchase

 

 

—

 

 

 

—

 

 

 

4,754

 

 

 

4,754

 

 

 

—

 

 

 

4,754

 

Short Term 1-4 Unit - Refinance

 

 

—

 

 

 

203

 

 

 

23,353

 

 

 

23,556

 

 

 

—

 

 

 

23,556

 

Total loans individually evaluated

 

$

9,680

 

 

$

5,749

 

 

$

297,866

 

 

$

313,295

 

 

$

—

 

 

$

313,295

 

Loans collectively evaluated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial - Purchase

 

$

19,633

 

 

$

12,027

 

 

$

—

 

 

$

31,660

 

 

$

500,865

 

 

$

532,525

 

Commercial - Refinance

 

 

37,480

 

 

 

12,132

 

 

 

—

 

 

 

49,612

 

 

 

565,675

 

 

 

615,287

 

Residential 1-4 Unit - Purchase

 

 

16,040

 

 

 

7,479

 

 

 

—

 

 

 

23,519

 

 

 

367,015

 

 

 

390,534

 

Residential 1-4 Unit - Refinance

 

 

32,398

 

 

 

14,302

 

 

 

—

 

 

 

46,700

 

 

 

499,730

 

 

 

546,430

 

Short Term 1-4 Unit - Purchase

 

 

10,073

 

 

 

—

 

 

 

—

 

 

 

10,073

 

 

 

15,989

 

 

 

26,062

 

Short Term 1-4 Unit - Refinance

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

157

 

 

 

157

 

Total loans collectively evaluated

 

$

115,624

 

 

$

45,940

 

 

$

—

 

 

$

161,564

 

 

$

1,949,431

 

 

$

2,110,995

 

Ending balance

 

$

125,304

 

 

$

51,689

 

 

$

297,866

 

 

$

474,859

 

 

$

1,949,431

 

 

$

2,424,290

 
(1)
Includes loans in bankruptcy and foreclosure less than 90 days past due.

In addition to the aging status, the Company also evaluates credit quality by accrual status. The following tables present the amortized cost in loans held for investment, excluding loans held for investment at fair value, based on accrual status and by loan origination year as of September 30, 2025 and December 31, 2024.

 

 

Term Loans Amortized Cost Basis by Origination Year

 

September 30, 2025:

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Total

 

 

 

(In thousands)

 

Commercial - Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

202,085

 

 

$

190,177

 

 

$

22,250

 

 

$

29,670

 

 

$

35,224

 

 

$

479,406

 

Nonperforming

 

 

10,520

 

 

 

11,195

 

 

 

3,435

 

 

 

3,477

 

 

 

1,368

 

 

 

29,995

 

Total Commercial - Purchase

 

$

212,605

 

 

$

201,372

 

 

$

25,685

 

 

$

33,147

 

 

$

36,592

 

 

$

509,401

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial - Refinance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

189,091

 

 

$

154,822

 

 

$

34,322

 

 

$

66,485

 

 

$

103,563

 

 

$

548,283

 

Nonperforming

 

 

25,144

 

 

 

16,673

 

 

 

3,600

 

 

 

15,311

 

 

 

25,404

 

 

 

86,132

 

Total Commercial - Refinance

 

$

214,235

 

 

$

171,495

 

 

$

37,922

 

 

$

81,796

 

 

$

128,967

 

 

$

634,415

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 Unit - Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

 

150,726

 

 

$

147,630

 

 

$

4,789

 

 

$

14,901

 

 

$

20,273

 

 

$

338,319

 

Nonperforming

 

 

12,374

 

 

 

10,569

 

 

 

1,394

 

 

 

1,052

 

 

 

5,705

 

 

 

31,094

 

Total Residential 1-4
   Unit - Purchase

 

$

163,100

 

 

$

158,199

 

 

$

6,183

 

 

$

15,953

 

 

$

25,978

 

 

$

369,413

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 Unit - Refinance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

193,038

 

 

$

177,253

 

 

$

14,534

 

 

$

40,118

 

 

$

45,267

 

 

$

470,210

 

Nonperforming

 

 

30,319

 

 

 

38,334

 

 

 

3,409

 

 

 

12,570

 

 

 

14,787

 

 

 

99,419

 

Total Residential 1-4
   Unit - Refinance

 

$

223,357

 

 

$

215,587

 

 

$

17,943

 

 

$

52,688

 

 

$

60,054

 

 

$

569,629

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term 1-4 Unit - Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

—

 

 

$

—

 

 

$

21,228

 

 

$

7,186

 

 

$

—

 

 

$

28,414

 

Nonperforming

 

 

979

 

 

 

—

 

 

 

583

 

 

 

—

 

 

 

—

 

 

 

1,562

 

Total Short Term 1-4
   Unit - Purchase

 

$

979

 

 

$

—

 

 

$

21,811

 

 

$

7,186

 

 

$

—

 

 

$

29,976

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term 1-4 Unit - Refinance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

4,549

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

4,549

 

Nonperforming

 

 

1,216

 

 

 

—

 

 

 

1,845

 

 

 

8,207

 

 

 

3,105

 

 

 

14,373

 

Total Short Term 1-4
   Unit - Refinance

 

$

5,765

 

 

$

—

 

 

$

1,845

 

 

$

8,207

 

 

$

3,105

 

 

$

18,922

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio

 

$

820,041

 

 

$

746,653

 

 

$

111,389

 

 

$

198,977

 

 

$

254,696

 

 

$

2,131,756

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs - quarter-ended September 30, 2025

 

$

597

 

 

$

63

 

 

$

17

 

 

$

—

 

 

$

—

 

 

$

677

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs - year-to-date September 30, 2025

 

$

2,799

 

 

$

329

 

 

$

45

 

 

$

75

 

 

$

191

 

 

$

3,439

 

 

 

 

 

Term Loans Amortized Cost Basis by Origination Year

 

December 31, 2024

 

2022

 

 

2021

 

 

2020

 

 

2019

 

 

Prior

 

 

Total

 

 

 

(In thousands)

 

Commercial - Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

223,564

 

 

$

210,742

 

 

$

24,253

 

 

$

33,505

 

 

$

40,461

 

 

$

532,525

 

Nonperforming

 

 

13,046

 

 

 

6,524

 

 

 

4,994

 

 

 

5,758

 

 

 

2,968

 

 

 

33,290

 

Total Commercial - Purchase

 

$

236,610

 

 

$

217,266

 

 

$

29,247

 

 

$

39,263

 

 

$

43,429

 

 

$

565,815

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Commercial - Refinance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

207,766

 

 

$

167,568

 

 

$

40,772

 

 

$

76,886

 

 

$

122,295

 

 

$

615,287

 

Nonperforming

 

 

26,624

 

 

 

19,172

 

 

 

4,305

 

 

 

18,708

 

 

 

30,874

 

 

 

99,683

 

Total Commercial - Refinance

 

$

234,390

 

 

$

186,740

 

 

$

45,077

 

 

$

95,594

 

 

$

153,169

 

 

$

714,970

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 Unit - Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

173,252

 

 

$

167,804

 

 

$

8,166

 

 

$

17,740

 

 

$

23,572

 

 

$

390,534

 

Nonperforming

 

 

9,724

 

 

 

12,384

 

 

 

1,704

 

 

 

657

 

 

 

5,104

 

 

 

29,573

 

Total Residential 1-4
   Unit - Purchase

 

$

182,976

 

 

$

180,188

 

 

$

9,870

 

 

$

18,397

 

 

$

28,676

 

 

$

420,107

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Residential 1-4 Unit - Refinance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

226,187

 

 

$

201,247

 

 

$

16,116

 

 

$

46,487

 

 

$

56,393

 

 

$

546,430

 

Nonperforming

 

 

46,873

 

 

 

34,974

 

 

 

7,560

 

 

 

15,176

 

 

 

17,856

 

 

 

122,439

 

Total Residential 1-4
   Unit - Refinance

 

$

273,060

 

 

$

236,221

 

 

$

23,676

 

 

$

61,663

 

 

$

74,249

 

 

$

668,869

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term 1-4 Unit - Purchase

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

2,044

 

 

$

—

 

 

$

17,985

 

 

$

6,033

 

 

$

—

 

 

$

26,062

 

Nonperforming

 

 

4,170

 

 

 

—

 

 

 

584

 

 

 

—

 

 

 

—

 

 

 

4,754

 

Total Short Term 1-4
   Unit - Purchase

 

$

6,214

 

 

$

—

 

 

$

18,569

 

 

$

6,033

 

 

$

—

 

 

$

30,816

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Short Term 1-4 Unit - Refinance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Payment performance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Performing

 

$

157

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

—

 

 

$

157

 

Nonperforming

 

 

8,293

 

 

 

—

 

 

 

2,186

 

 

 

9,042

 

 

 

4,035

 

 

 

23,556

 

Total Short Term 1-4
   Unit - Refinance

 

$

8,450

 

 

$

—

 

 

$

2,186

 

 

$

9,042

 

 

$

4,035

 

 

$

23,713

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total Portfolio

 

$

941,700

 

 

$

820,415

 

 

$

128,625

 

 

$

229,992

 

 

$

303,558

 

 

$

2,424,290

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs - quarter-ended December 31, 2024

 

$

111

 

 

$

184

 

 

$

—

 

 

$

265

 

 

$

139

 

 

$

699

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross charge-offs - year-ended December 31, 2024

 

$

1,132

 

 

$

219

 

 

$

—

 

 

$

265

 

 

$

152

 

 

$

1,768

 

 

Nonaccrual Loans - Loans Held for Investment at Fair Value

The following tables present the aggregate fair value of loans held for investment at fair value that are 90 days or more past due and/or in nonaccrual status, and the difference between the aggregate fair value and the aggregate unpaid principal balance as of September 30, 2025 and December 31, 2024 by loan segments:

 

 

Fair Value

 

 

Unpaid Principal Balance

 

 

Difference

 

 

 

Current–89 Days

 

 

90+ Days Past Due

 

 

 

 

 

Current–89 Days

 

 

90+ Days Past Due

 

 

 

 

 

90+ Days Past Due

 

September 30, 2025

 

Past Due

 

 

or Nonaccrual

 

 

Total

 

 

Past Due

 

 

or Nonaccrual

 

 

Total

 

 

or Nonaccrual

 

 

 

(In thousands)

 

Commercial - Purchase

 

$

840,108

 

 

$

31,815

 

 

$

871,923

 

 

$

774,279

 

 

$

37,771

 

 

$

812,050

 

 

$

(5,956

)

Commercial - Refinance

 

 

1,271,431

 

 

 

62,131

 

 

 

1,333,562

 

 

 

1,164,681

 

 

 

74,428

 

 

 

1,239,109

 

 

 

(12,297

)

Residential 1-4 Unit - Purchase

 

 

477,334

 

 

 

33,860

 

 

 

511,194

 

 

 

456,303

 

 

 

40,200

 

 

 

496,503

 

 

 

(6,340

)

Residential 1-4 Unit - Refinance

 

 

1,320,197

 

 

 

149,338

 

 

 

1,469,535

 

 

 

1,249,718

 

 

 

177,693

 

 

 

1,427,411

 

 

 

(28,355

)

Short Term 1-4 Unit - Purchase

 

 

74,743

 

 

 

8,106

 

 

 

82,849

 

 

 

74,076

 

 

 

9,767

 

 

 

83,843

 

 

 

(1,661

)

Short Term 1-4 Unit - Refinance

 

 

89,932

 

 

 

12,322

 

 

 

102,254

 

 

 

87,996

 

 

 

14,817

 

 

 

102,813

 

 

 

(2,495

)

Ending balance

 

$

4,073,745

 

 

$

297,572

 

 

$

4,371,317

 

 

$

3,807,053

 

 

$

354,676

 

 

$

4,161,729

 

 

$

(57,104

)

 

 

 

Fair Value

 

 

Unpaid Principal Balance

 

 

Difference

 

 

 

Current–89 Days

 

 

90+ Days Past Due

 

 

 

 

 

Current–89 Days

 

 

90+ Days Past Due

 

 

 

 

 

90+ Days Past Due

 

December 31, 2024

 

Past Due

 

 

or Nonaccrual

 

 

Total

 

 

Past Due

 

 

or Nonaccrual

 

 

Total

 

 

or Nonaccrual

 

 

 

(In thousands)

 

Commercial - Purchase

 

$

505,244

 

 

$

15,636

 

 

$

520,880

 

 

$

466,526

 

 

$

18,586

 

 

$

485,112

 

 

$

(2,950

)

Commercial - Refinance

 

 

672,504

 

 

 

24,129

 

 

 

696,633

 

 

 

620,332

 

 

 

29,195

 

 

 

649,527

 

 

 

(5,066

)

Residential 1-4 Unit - Purchase

 

 

381,660

 

 

 

28,352

 

 

 

410,012

 

 

 

366,431

 

 

 

34,457

 

 

 

400,888

 

 

 

(6,105

)

Residential 1-4 Unit - Refinance

 

 

862,971

 

 

 

103,985

 

 

 

966,956

 

 

 

819,633

 

 

 

126,340

 

 

 

945,973

 

 

 

(22,355

)

Short Term 1-4 Unit - Purchase

 

 

78,863

 

 

 

3,981

 

 

 

82,844

 

 

 

78,207

 

 

 

4,854

 

 

 

83,061

 

 

 

(873

)

Short Term 1-4 Unit - Refinance

 

 

76,277

 

 

 

13,349

 

 

 

89,626

 

 

 

74,620

 

 

 

16,036

 

 

 

90,656

 

 

 

(2,687

)

Ending balance

 

$

2,577,519

 

 

$

189,432

 

 

$

2,766,951

 

 

$

2,425,749

 

 

$

229,468

 

 

$

2,655,217

 

 

$

(40,036

)
v3.25.3
Receivables Due from Servicers
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
Receivables Due from Servicers

Note 7 — Receivables Due From Servicers

The following tables summarize receivables due from servicers as of September 30, 2025 and December 31, 2024:

 

 

 

September 30, 2025

 

 

 

 

Securitized Debt

 

 

Warehouse and Repurchase Facilities and Other

 

 

Total

 

 

 

 

(In thousands)

 

Loan principal payments due from servicers

$

67,271

 

 

$

497

 

 

$

67,768

 

Other loan servicing receivables

 

22,501

 

 

 

2,136

 

 

 

24,637

 

Loan servicing receivables

 

89,772

 

 

 

2,633

 

 

 

92,405

 

Corporate and escrow advances receivable

 

39,013

 

 

 

343

 

 

 

39,356

 

Total receivables due from servicers

$

128,785

 

 

$

2,976

 

 

$

131,761

 

 

 

 

 

December 31, 2024

 

 

 

 

Securitized Debt

 

 

Warehouse and Repurchase Facilities and Other

 

 

Total

 

 

 

 

(In thousands)

 

Loan principal payments due from servicers

$

61,907

 

 

$

1,695

 

 

$

63,602

 

Other loan servicing receivables

 

17,246

 

 

 

5,404

 

 

 

22,650

 

Loan servicing receivables

 

79,153

 

 

 

7,099

 

 

 

86,252

 

Corporate and escrow advances receivable

 

33,387

 

 

 

3,855

 

 

 

37,242

 

Total receivables due from servicers

$

112,540

 

 

$

10,954

 

 

$

123,494

 
v3.25.3
Real Estate Owned, Net
 9 Months Ended
Sep. 30, 2025
Real Estate Owned, Disclosure of Detailed Components [Abstract]  
Real Estate Owned, Net

Note 8 — Real Estate Owned, Net

As of September 30, 2025, the carrying value of real estate owned was $113.7 million, of which all were pledged as collateral for the Company's securitized debt. As of December 31, 2024, the carrying value of real estate owned was $68.0 million, of which

$10.2 million were pledged as collateral under a warehouse repurchase agreement and $57.8 million were pledged as collateral for the Company's securitized debt.
v3.25.3
Mortgage Servicing Rights
 9 Months Ended
Sep. 30, 2025
Transfers and Servicing [Abstract]  
Mortgage Servicing Rights

Note 9 — Mortgage Servicing Rights

Mortgage loans sold with servicing retained are related to the Century business and not included in the Consolidated Balance Sheets. The unpaid principal balance of mortgage loans serviced for others amounted to $826.6 million and $804.1 million as of September 30, 2025 and 2024, respectively. The Company has elected to record its mortgage servicing rights using the fair value measurement method. Fair value adjustments recorded at the end of the current period reflect valuation changes from the prior period-end. Significant assumptions used in determining the fair value of servicing rights as of September 30, 2025 and 2024 include: (1) weighted average discount rate of 8.0%, and (2) weighted average conditional prepayment rate of 5.6% and 5.1%, respectively.

The following table presents the Company's mortgage servicing rights activity during the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Balance at the beginning of period

 

$

12,940

 

 

$

12,229

 

 

$

13,712

 

 

$

8,578

 

Mortgage servicing rights acquired

 

 

—

 

 

 

1,180

 

 

 

—

 

 

 

4,760

 

Additions

 

 

—

 

 

 

—

 

 

 

451

 

 

 

—

 

Fair value adjustments

 

 

(343

)

 

 

(993

)

 

 

(1,566

)

 

 

(922

)

Balance at the end of period

 

$

12,597

 

 

$

12,416

 

 

$

12,597

 

 

$

12,416

 
v3.25.3
Goodwill
 9 Months Ended
Sep. 30, 2025
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill

Note 10 — Goodwill

The following table presents the activity for goodwill as of September 30, 2025 and December 31, 2024:

 

 

September 30, 2025

 

 

December 31, 2024

 

 

 

(In thousands)

 

Balance at the beginning of period

 

$

6,775

 

 

$

6,775

 

Balance at the end of period

 

$

6,775

 

 

$

6,775

 
v3.25.3
Securitized Debt at Amortized Cost and Securitized Debt at Fair Value
 9 Months Ended
Sep. 30, 2025
Transfers and Servicing [Abstract]  
Securitized Debt at Amortized Cost and Securitized Debt at Fair Value

Note 11 — Securitized Debt at Amortized Cost and Securitized Debt at Fair Value

As of September 30, 2025, the Company is the sole beneficial interest holder of 33 Trusts, which are variable interest entities included in the consolidated financial statements. The securitization transactions are accounted for as secured borrowings under U.S. GAAP. The securities are subject to redemption by the Company when the stated principal balance is less than a certain percentage, ranging from 10% to 30% of the original stated principal balance of loans at issuance. As a result, the actual maturity dates of the securities issued could be earlier than their respective stated maturity dates, ranging from July 2028 through September 2055.

The following tables summarize securitized debt at amortized cost and securitized debt at fair value as of September 30, 2025 and December 31, 2024:

Securitized Debt, at Amortized Cost

 

September 30, 2025

 

 

December 31, 2024

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

1,813,334

 

 

$

2,049,790

 

Deferred issuance costs and discounts

 

 

(30,184

)

 

 

(30,734

)

Total securitized debt, at amortized cost

 

$

1,783,150

 

 

$

2,019,056

 

 

 

Securitized Debt, at Fair Value

 

September 30, 2025

 

 

December 31, 2024

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

3,739,705

 

 

$

2,219,218

 

Adjustment at issuance to recognize fair value (1)

 

 

(26,608

)

 

 

(18,231

)

Fair value at issuance

 

 

3,713,097

 

 

 

2,200,987

 

Valuation adjustment subsequent to issuance (2)

 

 

37,675

 

 

 

6,421

 

Fair value adjustment related to refinance of securitization trust

 

 

(1,883

)

 

 

—

 

Total securitized debt at fair value

 

$

3,748,889

 

 

$

2,207,408

 
(1)
Balance sheet adjustment to recognize fair value at issuance. This valuation adjustment is not recognized in net income.
(2)
Valuation adjustment recognized in net income. No valuation change is due to instrument specific credit risk as the Company’s (issuer) credit risk has not changed.

The following table presents the difference between the aggregate fair value and the aggregate unpaid principal balance of securitized debt at fair value as of September 30, 2025 and December 31, 2024:

 

 

Fair Value

 

 

Unpaid Principal Balance

 

 

Difference

 

 

 

(In thousands)

 

September 30, 2025

 

$

3,748,889

 

 

$

3,739,705

 

 

$

9,184

 

December 31, 2024

 

 

2,207,408

 

 

 

2,219,218

 

 

 

(11,810

)

The following table presents the effective interest rate of securitized debt at amortized cost and securitized debt at fair value for the nine months ended September 30, 2025 and 2024:

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

($ in thousands)

 

Interest expense

 

$

220,788

 

 

$

159,122

 

Average outstanding unpaid principal balance

 

 

4,829,808

 

 

 

3,668,377

 

Effective interest rate (1)

 

 

6.10

%

 

 

5.78

%
(1)
Effective interest rate represents annualized interest expense divided by average gross outstanding balance, which includes average rates of 5.96% and 5.53%, and debt issuance cost amortization of 0.14% and 0.25% for the nine months ended September 30, 2025 and 2024, respectively.
v3.25.3
Other Debt
 9 Months Ended
Sep. 30, 2025
Debt Disclosure [Abstract]  
Other Debt

Note 12 — Other Debt

Secured financings and warehouse facilities are utilized to finance the origination and purchase of commercial real estate mortgage loans. Warehouse facilities are designated to fund mortgage loans that are purchased and originated within specified underwriting guidelines. Most of these lines of credit fund less than 100% of the principal balance of the mortgage loans originated and purchased, requiring the use of working capital to fund the remaining portion.

(a)
Secured Financing, Net (“Corporate Debt”)

On March 15, 2022, the Company entered into a five-year $215.0 million syndicated corporate debt agreement, the (“the 2022 Term Loan”). The 2022 Term Loan bears interest at a fixed rate of 7.125% and matures on March 15, 2027. Interest on the 2022 Term Loan is paid every six months. As of September 30, 2025 and December 31, 2024, the balance of the 2022 Term Loan was $215.0 million.

On February 5, 2024, the Company entered into a five-year $75.0 million syndicated corporate debt agreement, the (“the 2024 Term Loan”). The 2024 Term Loan bears interest at 9.875% and matures on February 15, 2029. Interest on the 2024 Term Loan is paid every six months. As of September 30, 2025 and December 31, 2024, the balance of the 2024 Term Loan was $75.0 million.

The total balance of the 2022 Term Loan and the 2024 Term Loan (“Corporate Debt”) in the Consolidated Balance Sheets is net of debt issuance costs and discount of $3.8 million and $5.2 million as of September 30, 2025 and December 31, 2024, respectively. The Corporate Debt is secured by substantially all assets of the Company not otherwise pledged under a securitized debt or warehouse facility and contains certain reporting and financial covenants. Should the Company fail to adhere to those covenants, the lenders have the right to demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of September 30, 2025, the Company was in compliance with all covenants.

(b)
Warehouse Repurchase and Revolving Loan Facilities, Net

On January 4, 2011, Century entered into a Master Participation and Facility Agreement with a bank (“the September 2022 Term Repurchase Agreement”). The Facility Agreement has a current extended maturity date of July 31, 2026, and is a short-term borrowing facility, collateralized by performing loans, with a maximum capacity of $60.0 million, and bears interest at one-month SOFR plus 1.60% with a 0.25% floor.

On May 17, 2013, the Company entered into a Repurchase Agreement (“the 2013 Repurchase Agreement”) with a warehouse lender. The 2013 Repurchase Agreement is a modified mark-to-market agreement and has a current maturity date of September 23, 2026, and is a short-term borrowing facility, collateralized by a pool of performing loans, with a maximum capacity of $400.0 million, and bears interest at SOFR plus 2.75%. All borrower payments on loans financed under the warehouse repurchase facility are first used to pay interest on the facility.

On January 29, 2021, the Company entered into a non-mark-to-market Repurchase Agreement (“the 2021 Repurchase Agreement”) with a warehouse lender. The 2021 Repurchase Agreement has a current extended maturity date of May 20, 2026, and is a short-term borrowing facility, collateralized by a pool of loans. On July 25, 2024, the Company entered into a mark-to-market Repurchase Agreement (“the 2024 Repurchase Agreement”) with the same warehouse lender. The 2024 Repurchase Agreement also has a maturity date of May 20, 2026, and is a short-term borrowing facility, collateralized by a pool of loans. The maximum capacity under both agreements is $200.0 million individually and in the aggregate. The 2024 Repurchase Agreement includes a $75.0 million sublimit for nonperforming loans. Borrowings under these two facilities bear interest at SOFR plus 3.00% during the availability period and 4.00% during the amortization period. All borrower payments on loans financed under the warehouse repurchase facilities are first used to pay interest on the facilities.

On April 16, 2021, the Company entered into a non-mark-to-market Term Repurchase Agreement (“the 2021 Term Repurchase Agreement”) with a warehouse lender. The 2021 Term Repurchase Agreement has a maturity date of April 14, 2028, with an extended borrowing period through April 14, 2027. During the borrowing period, the Company can take loan advances from time to time, subject to availability. Each loan advance bears interest at SOFR plus 2.95%. The maximum capacity under this facility is $100.0 million.

On December 27, 2023, the Company entered into a loan facility agreement (“the 2023 Repurchase Agreement”) with a bank. The 2023 Repurchase Agreement has a maturity date of December 27, 2026. During the borrowing period, the Company can take loan advances from time to time subject to availability. Each loan advance bears interest at SOFR plus 3.00%. The maximum loan amount under this facility is $125.0 million.

On November 7, 2024, the Company entered into a non-mark-to-market secured revolving loan facility agreement (“the 2024 Bank Credit Agreement”) with a bank. The 2024 Bank Credit Agreement has a current maturity date of May 7, 2027. Each loan advance bears interest at SOFR plus 3.50%, with a floor of 2.00%. The maximum loan amount under this facility is $50.0 million.

Certain loans are pledged as collateral under the warehouse repurchase facilities and the revolving loan facility, which contain covenants. Should the Company fail to adhere to those covenants or otherwise default under the facilities, the lenders have the right to terminate the facilities and demand immediate repayment that may require the Company to sell the collateral at less than the carrying amounts. As of September 30, 2025 and December 31, 2024, the Company was in compliance with all covenants.

The following table summarizes the maximum borrowing capacity, current gross balances outstanding, and effective interest rates of the Company’s warehouse facilities and loan agreements as of September 30, 2025 and December 31, 2024:

 

 

 

 

 

 

September 30, 2025

 

 

 

December 31, 2024

 

 

 

 

Contract Date

 

Maturity Date

 

Period End
Balance (1)

 

 

Maximum
Borrowing
Capacity

 

 

Effective Interest Rate

 

 

 

Period End
Balance (1)

 

 

Maximum
Borrowing
Capacity

 

 

Effective Interest Rate

 

 

 

 

 

 

 

 

($ in thousands)

The September 2022 term repurchase agreement

 

01/04/11

 

07/31/26

 

$

2,071

 

 

$

60,000

 

 

 

6.0

 

%

 

$

—

 

 

$

60,000

 

 

 

6.5

 

%

The 2013 repurchase agreement

 

05/17/13

 

09/23/26

 

 

126,935

 

 

 

400,000

 

 

 

7.8

 

 

 

 

106,675

 

 

 

300,000

 

 

 

9.0

 

 

The 2021/2024 repurchase agreements

 

1/29/2021
7/25/2024

 

05/20/26

 

 

106,457

 

 

 

200,000

 

 

 

8.0

 

 

 

 

126,815

 

 

 

200,000

 

 

 

9.0

 

 

The 2021 term repurchase agreement

 

04/16/21

 

04/14/28

 

 

28,448

 

 

 

100,000

 

 

 

7.7

 

 

 

 

52,408

 

 

 

100,000

 

 

 

8.5

 

 

The 2023 repurchase agreement

 

12/27/23

 

12/27/26

 

 

43,200

 

 

 

125,000

 

 

 

8.4

 

 

 

 

44,900

 

 

 

75,000

 

 

 

9.7

 

 

The 2024 bank credit agreement

 

11/07/24

 

05/07/27

 

 

27,585

 

 

 

50,000

 

 

 

8.8

 

 

 

 

19,248

 

 

 

50,000

 

 

 

9.2

 

 

Total

 

 

 

 

 

$

334,696

 

 

$

935,000

 

 

 

 

 

 

$

350,046

 

 

$

785,000

 

 

 

 

 
(1)
Warehouse repurchase facilities amounts on the Consolidated Balance Sheets are net of debt issuance costs, amounting to $2.3 million and $2.0 million as of September 30, 2025 and December 31, 2024, respectively.

The following table provides an overview of the activity and effective interest rates of the Company’s warehouse facilities and loan agreements for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

($ in thousands)

 

Average outstanding balance

 

$

404,509

 

 

$

311,560

 

 

$

417,247

 

 

$

280,716

 

Highest outstanding balance at any month-end

 

 

570,059

 

 

 

435,700

 

 

 

571,834

 

 

 

435,700

 

Effective interest rate (1)

 

 

8.18

%

 

 

9.12

%

 

 

8.00

%

 

 

9.32

%

 

(1)
Effective interest rate represents annualized interest expense divided by average gross outstanding balance. The rate includes average rate of 7.69% and 8.71%, and debt issuance cost amortization of 0.49% and 0.41%, for the three months ended September 30, 2025 and 2024, respectively, and includes average rate of 7.54% and 8.76%, and debt issuance cost amortization of 0.46% and 0.56%, for the nine months ended September 30, 2025 and 2024, respectively.

The following table provides a summary of interest expense that includes interest, amortization of discount, and deal cost amortization of the Company’s warehouse facilities, securitizations and other financing for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Warehouse and repurchase facilities

 

$

8,277

 

 

$

7,105

 

 

$

25,037

 

 

$

19,612

 

Securitized debt

 

 

80,622

 

 

 

56,766

 

 

 

220,788

 

 

 

159,122

 

Interest expense — portfolio related

 

 

88,899

 

 

 

63,871

 

 

 

245,825

 

 

 

178,734

 

Interest expense — corporate debt

 

 

6,144

 

 

 

6,143

 

 

 

18,429

 

 

 

17,677

 

Total interest expense

 

$

95,043

 

 

$

70,014

 

 

$

264,254

 

 

$

196,411

 
v3.25.3
Commitments and Contingencies
 9 Months Ended
Sep. 30, 2025
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies

Note 13 — Commitments and Contingencies

(a)
Repurchase Liability

When the Company sells loans, it is required to make normal and customary representations and warranties about the loans to the purchaser. The loan sale agreements generally require the Company to repurchase loans if the Company breaches a representation or warranty given to the loan purchaser. In addition, the Company may be required to repurchase loans as a result of borrower fraud or if a payment default occurs on a loan shortly after its sale.

The Company records a repurchase liability relating to representations and warranties and early payment defaults. The method used to estimate the liability for repurchase is a function of the representations and warranties given and considers a combination of factors, including, but not limited to, estimated future defaults and loan repurchase rates and the potential severity of loss in the event of defaults. The Company establishes a liability at the time loans are sold and continually updates the estimated repurchase liability. The level of the repurchase liability for representations and warranties and early payment default requires considerable management judgment.

The Company regularly evaluates the adequacy of repurchase reserves based on trends in repurchase, actual loss experience, estimated future loss exposure and other relevant factors including economic conditions. As of September 30, 2025 and December 31, 2024, the balance of repurchase liability was $144 thousand, and is included in “Accounts payable and accrued expenses” on the Consolidated Balance Sheets.

(b)
Legal Proceedings

The Company is a party to various legal proceedings in the normal course of business. The Company, after consultation with legal counsel, believes the disposition of all pending litigation will not have a material effect on the Company’s consolidated financial condition or results of operations as of September 30, 2025.

(c)
Employee Retention Credit

Under the provisions of the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) signed into law on March 27, 2020 and the subsequent extension of the CARES Act, the Company, with the guidance from a third-party specialist, determined it was eligible for a refundable employee retention credit (“ERC”) subject to certain criteria.

The Company applied for ERC for the first three quarters’ wages paid in calendar year 2021. During the second quarter of 2023, the Company received approximately $4.2 million of ERC. Due to the subjectivity of the credit, the Company elected to account for the ERC as a gain analogizing to ASC 450-30, Gain Contingencies. Accordingly, the $4.2 million ERC, net of the third-party specialist fees of $0.6 million, are deferred until the uncertainty surrounding them is resolved. The net amount is included in “Accounts payable and accrued expenses” on the Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024.

(d)
Commitments

Century originated a $25.9 million government-back construction loan in September 2025. The funded portion of the construction loan is presented as “Loans held for sale, at fair value" in the Consolidated Balance Sheets. The unfunded portion of the construction loan totaled $23.8 million as of September 30, 2025.

v3.25.3
Stock-Based Compensation
 9 Months Ended
Sep. 30, 2025
Share-Based Payment Arrangement [Abstract]  
Stock-Based Compensation

Note 14 — Stock-Based Compensation

The Company’s Amended and Restated 2020 Omnibus Incentive Plan, or “the 2020 Plan,” authorizes grants of stock‑based compensation instruments including but not limited to non-qualified stock options, restricted stock awards (“RSAs”) and performance stock unit awards (“PSUs”) to certain employees and non-employee directors of the Company, to purchase or issue up to 4,520,000 shares of the Company's common stock.

Expenses related to the stock-based compensation instruments and Employee Stock Purchase Plan (“ESPP”) are included in “Compensation and employee benefits” and “Other operating expenses” on the Consolidated Statements of Income.

Below are summaries of the recognized and unrecognized stock-based compensation expense by instrument for the periods indicated:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Recognized compensation expense:

 

 

 

 

 

 

 

 

 

 

 

 

Options

 

$

71

 

 

$

70

 

 

$

331

 

 

$

74

 

RSAs

 

 

1,001

 

 

 

603

 

 

 

2,509

 

 

 

1,776

 

PSUs

 

 

959

 

 

 

768

 

 

 

2,814

 

 

 

2,072

 

ESPP

 

 

123

 

 

 

133

 

 

 

499

 

 

 

588

 

Total recognized compensation expense

 

$

2,154

 

 

$

1,574

 

 

$

6,153

 

 

$

4,510

 

 

 

 

September 30, 2025

 

 

 

(In thousands)

 

Unrecognized compensation expense:

 

 

 

Options

 

$

125

 

RSAs

 

 

6,691

 

PSUs

 

 

4,151

 

ESPP

 

 

102

 

Total unrecognized compensation expense

 

$

11,069

 

Weighted average period expected to be recognized (in years)

 

 

 

Options

 

 

2.0

 

RSAs

 

 

2.2

 

Stock Options

Stock option awards provide for the option to purchase the Company's common stock. From the date of the grant, the stock options generally vest ratably over a service period of three years and are exercisable for a period up to ten years.

The Company uses the Black-Scholes option pricing model to value stock options in determining the stock-based compensation expense. Compensation expense is recognized over the three-year vesting period using the straight-line method. Forfeitures are recognized as they occur. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the date of grant. The expected dividend yield is zero as the Company does not expect to pay dividends in the foreseeable future. Expected volatility is based on historical volatilities of the Company’s common stock.

The Company modified 283,790 stock options granted to employees in August 2024 into 74,746 RSAs in July 2025. The exchange ratio is based on the original grant-date fair value of the stock options. This change is deemed to be a Type I modification under ASC 718, Compensation - Stock Compensation and did not result in any additional compensation expense to be recognized by the Company.

 

The table below summarizes stock option activity for the nine months ended September 30, 2025 and 2024:

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

($ in thousands, except per share amounts)

 

Number of shares:

 

 

 

 

 

 

Options outstanding at beginning of period

 

 

1,065,772

 

 

 

752,964

 

Granted

 

 

4,740

 

 

 

83,359

 

Modified

 

 

(283,790

)

 

 

—

 

Options outstanding at end of period

 

 

786,722

 

 

 

836,323

 

Options exercisable at end of period

 

 

759,115

 

 

 

749,321

 

Options expected to vest (1)

 

 

27,607

 

 

 

87,002

 

Weighted average exercise price per share:

 

 

 

 

 

 

Options outstanding at beginning of period

 

$

14.46

 

 

$

12.88

 

Granted

 

 

17.50

 

 

 

18.23

 

Modified

 

 

18.23

 

 

 

—

 

Options outstanding at end of period

 

$

13.12

 

 

$

13.41

 

Options exercisable at end of period

 

 

12.94

 

 

 

12.88

 

Options expected to vest (1)

 

 

18.11

 

 

 

17.95

 

Aggregate intrinsic value (2):

 

 

 

 

 

 

Options outstanding at end of period

 

$

4,041

 

 

$

5,183

 

Options exercisable at end of period

 

 

4,025

 

 

 

5,039

 

Options expected to vest (1)

 

 

16

 

 

 

144

 

Weighted average remaining contractual life (in years):

 

 

 

 

 

 

Options outstanding at end of period

 

 

4.5

 

 

 

5.8

 

Options exercisable at end of period

 

 

4.4

 

 

 

5.3

 

Options expected to vest (1)

 

 

9.0

 

 

 

9.8

 
(1)
The number of options expected to vest reflects no expected forfeiture.
(2)
The aggregate intrinsic value represents the amount by which the fair value of underlying stock exceeds the “in-the-money” option exercise price.

RSAs

The fair value of RSAs is determined based on the fair market value of the Company's common shares on the grant date. The estimated fair value of RSA awards is generally amortized as an expense over the three-year requisite service period. The Company has elected to recognize forfeitures as they occur rather than estimating service-based forfeitures over the requisite service period.

The table below summarizes RSA activity for the nine months ended September 30, 2025 and 2024:

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

Employee

 

 

Non-Employee Director

 

 

Total

 

 

Employee

 

 

Non-Employee Director

 

 

Total

 

Number of shares:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unvested at beginning of period

 

 

355,505

 

 

 

47,430

 

 

 

402,935

 

 

 

409,137

 

 

 

61,276

 

 

 

470,413

 

Granted

 

 

329,495

 

 

 

17,292

 

 

 

346,787

 

 

 

195,164

 

 

 

15,939

 

 

 

211,103

 

Vested

 

 

(190,522

)

 

 

(26,261

)

 

 

(216,783

)

 

 

(248,796

)

 

 

(29,785

)

 

 

(278,581

)

Unvested at end of period

 

 

494,478

 

 

 

38,461

 

 

 

532,939

 

 

 

355,505

 

 

 

47,430

 

 

 

402,935

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average grant date fair value per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unvested at beginning of period

 

$

13.52

 

 

$

12.03

 

 

$

13.35

 

 

$

9.39

 

 

$

9.31

 

 

$

9.38

 

Granted

 

 

18.78

 

 

 

16.48

 

 

 

18.66

 

 

 

15.93

 

 

 

17.88

 

 

 

16.08

 

Vested

 

 

13.73

 

 

 

10.85

 

 

 

13.38

 

 

 

8.61

 

 

 

9.57

 

 

 

8.71

 

Unvested at end of period

 

$

16.95

 

 

$

14.83

 

 

$

16.79

 

 

$

13.52

 

 

$

12.03

 

 

$

13.35

 

 

PSUs

In February 2022, the Company began granting PSUs to certain employees, including named executive officers under the 2020 Plan. PSUs are linked to the average core net income annual growth over the three-year period from the year of grant. Settlement of vested PSUs will be made on the date that the Compensation Committee certifies the average core net income annual growth for the three-year period. PSUs are subject to forfeiture until predetermined performance conditions have been achieved. The number of shares issued at the end of any performance period could range between 0% and 200% of the original target award amount. Compensation expense related to PSUs is based on the fair value of the underlying stock on the award date and is recognized over the vesting period using an estimate of the probability of achieving the performance target. Adjustments to compensation expense are made each year based on changes in estimate of the number of PSUs that are probable of vesting.

The table below summarizes PSU activity for the nine months ended September 30, 2025 and 2024:

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

Number of Shares

 

 

Weighted Average Grant Date Fair Value Per Share

 

 

Number of Shares

 

 

Weighted Average Grant Date Fair Value Per Share

 

Outstanding at beginning of period, unvested

 

 

517,131

 

 

$

12.83

 

 

 

256,387

 

 

$

11.05

 

Granted (1)

 

 

155,165

 

 

 

18.82

 

 

 

157,994

 

 

 

15.86

 

Performance adjustment

 

 

153,637

 

 

 

10.00

 

 

 

102,750

 

 

 

12.63

 

Vested

 

 

(205,500

)

 

 

12.63

 

 

 

—

 

 

 

—

 

Outstanding at end of period, unvested

 

 

620,433

 

 

$

13.69

 

 

 

517,131

 

 

$

12.83

 
(1)
The number of PSUs are presented at 100% of the specified target shares.

ESPP

In July 2022, the Company initiated an ESPP which allows permitted eligible employees to purchase shares of the Company's common stock through payroll deductions of up to 15% of their eligible compensation, subject to certain limitations. The purchase price of the shares under the ESPP equals 85% of the lower of the fair market value of the Company's common stock on either the first or last day of each offering period. Compensation expense for the ESPP is calculated as of the beginning of the offering period as the fair value of the employees’ purchase rights utilizing the Black-Scholes option valuation model and is recognized as a compensation expense over the offering period.

Treasury Stock

Treasury stock represents shares surrendered to the Company to satisfy tax withholding obligations in connection with the vesting or exercise of stock-based awards and shares surrendered to the Company to satisfy the warrant price in connection with warrants exercised. During the three months ended September 30, 2025, shares withheld were 9,600 at an average price of $18.74. No shares were withheld for the three months ended September 30, 2024.
v3.25.3
Earnings Per Share
 9 Months Ended
Sep. 30, 2025
Earnings Per Share [Abstract]  
Earnings Per Share

Note 15 — Earnings Per Share

The two-class method is used in the calculation of basic and diluted earnings per share. Under the two-class method, earnings available to common shareholders for the period are allocated between common shareholders and participating securities according to dividends declared (or accumulated) and participation rights in undistributed earnings. Basic earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if stock options or other contracts to issue common stock were exercised or converted into common stock and resulted in the issuance of common stock that shared in earnings.

The following table presents the basic and diluted earnings per share calculations for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands, except per share data)

 

Basic EPS:

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Velocity Financial, Inc.

 

$

25,373

 

 

$

15,803

 

 

$

70,257

 

 

$

47,832

 

Less: undistributed earnings attributable to unvested restricted stock awards

 

 

352

 

 

 

191

 

 

 

871

 

 

 

580

 

Net earnings attributable to common stockholders

 

$

25,021

 

 

$

15,612

 

 

$

69,386

 

 

$

47,252

 

Weighted average common shares outstanding

 

 

38,073

 

 

 

32,711

 

 

 

36,335

 

 

 

32,613

 

Basic earnings per common share

 

$

0.66

 

 

$

0.48

 

 

$

1.91

 

 

$

1.45

 

Diluted EPS:

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to Velocity Financial, Inc.

 

$

25,373

 

 

$

15,803

 

 

$

70,257

 

 

$

47,832

 

Weighted average common shares outstanding

 

 

38,073

 

 

 

32,711

 

 

 

36,335

 

 

 

32,613

 

Add dilutive effects for warrants

 

 

—

 

 

 

2,435

 

 

 

811

 

 

 

2,391

 

Add dilutive effects for stock options

 

 

221

 

 

 

238

 

 

 

219

 

 

 

199

 

Add dilutive effects of unvested restricted stock awards

 

 

138

 

 

 

185

 

 

 

120

 

 

 

163

 

Add dilutive effects of unvested performance-based stock units

 

 

368

 

 

 

323

 

 

 

331

 

 

 

278

 

Add dilutive effects of employee stock purchase plan

 

 

—

 

 

 

3

 

 

 

1

 

 

 

1

 

Weighted average diluted common shares outstanding

 

 

38,800

 

 

 

35,895

 

 

 

37,817

 

 

 

35,645

 

Diluted earnings per common share

 

$

0.65

 

 

$

0.44

 

 

$

1.86

 

 

$

1.34

 

The following table sets forth the number of shares excluded from the computation of diluted earnings per share, as their inclusion would have been anti-dilutive:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025(1)

 

 

2024

 

 

2025(1)

 

 

2024(1)

 

Stock options

 

 

317,581

 

 

 

83,359

 

 

 

314,421

 

 

 

27,853

 

Unvested restricted stock awards

 

 

—

 

 

 

5,485

 

 

 

65,765

 

 

 

70,368

 

Employee stock purchase plan

 

 

—

 

 

 

—

 

 

 

—

 

 

 

35,846

 

Share equivalents excluded from EPS

 

 

317,581

 

 

 

88,844

 

 

 

380,186

 

 

 

134,067

 
(1)
Weighted average.
v3.25.3
Warrants and Related Party Transactions
 9 Months Ended
Sep. 30, 2025
Warrants and Related Party Transactions [Abstract]  
Warrants and Related Party Transactions

Note 16 — Warrants and Related Party Transactions

On April 7, 2020, the Company issued and sold in a private placement 45,000 newly issued shares of Series A Convertible Preferred Stock, par value $0.01 per share (the “Preferred”), at a price per share of $1,000, plus warrants (the “Warrants”) to purchase an aggregate of 3,013,125 shares of the Company’s common stock to funds affiliated with TruArc Partners (“TruArc”), formerly Snow Phipps, and a fund affiliated with Pacific Investment Management Company LLC (“TOBI”). TruArc and TOBI are considered affiliates and, therefore, are related parties to the Company. The awards were treated as equity awards at the date of issuance.

On October 8, 2021, the Company exercised its option to convert all of its 45,000 outstanding shares of Series A Convertible Preferred Stock into 11,688,310 shares of its common stock.

In April 2025, three funds affiliated with a related party of the Company completed the exercise of their Warrants to purchase an aggregate 1,339,166 shares of the Company's common stock, resulting in the Company issuing net shares of 1,080,338 common stock after the withholding and transfer of an aggregate of 258,828 shares of common stock into the Company’s treasury account. In May 2025, a related party of the Company completed the exercise of their Warrants to purchase an aggregate 1,673,958 shares of the Company's common stock. Net proceeds from warrants exercised amounted to $10.9 million. As of June 30, 2025, all warrants were exercised by the Company's related parties.

In the ordinary course of business, the Company sells held for sale loans, and issues securitized debt to various financial institutions and investors through a market bidding process. As a result of this process, the Company may sell held for sale loans and/or issue securitized debt to an affiliate.

The following table presents the related party transactions completed for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Loans sold to affiliates

 

$

—

 

 

$

—

 

 

$

—

 

 

$

28,726

 

Securitized debt issued to affiliates

 

 

6,650

 

 

 

—

 

 

 

93,980

 

 

 

—

 
v3.25.3
Derivative Instruments
 9 Months Ended
Sep. 30, 2025
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Instruments

Note 17 — Derivative Instruments

In September 2023, the Company began utilizing derivative instruments designated as cash flow hedges to manage the exposure to interest rate volatility related to its forecasted issuances of fixed-rate debt through its securitization process. The derivative instruments include forward starting interest rate swaps or interest rate payer and receiver swaptions. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark SOFR between the time the fixed rate mortgages are originated and the fixed rate debt is issued. As of September 30, 2025, the maximum length of time over which the Company was hedging its exposure to variability in future cash flows for forecasted transactions did not exceed four years.

The gains or losses on derivative instruments that are designated and qualify as cash flow hedges are reported as a component of AOCI. Beginning in the period in which the forecasted debt is issued and the related derivative instruments are terminated, the accumulated gains or losses associated with the terminated derivatives are then reclassified into interest expense as a yield adjustment over the term of the related debt. For the quarters ended September 30, 2025 and 2024, $192 thousand of after-tax net loss, and $92 thousand of after-tax net gain, respectively, on terminated derivative instruments were reclassified from AOCI to interest expense. For the nine months ended September 30, 2025 and 2024, $459 thousand of after-tax net loss and $83 thousand of after-tax net gain, respectively, on terminated derivative instruments were reclassified from AOCI to interest expense. As of September 30, 2025 and 2024, the Company had $2.9 million and $2.7 million of after-tax net unrealized loss, respectively, associated with cash flow hedging instruments recorded in AOCI. As of September 30, 2025, the Company expects to reclassify an estimated $0.7 million of after-tax net unrealized loss on derivative instruments designated as cash flow hedges from AOCI into earnings over the next 12 months.

The following tables present the fair value of the Company’s derivative financial instruments on a gross basis, as well as its classification on the Company’s Consolidated Balance Sheets as of September 30, 2025 and December 31, 2024:

 

 

 

 

September 30, 2025

 

Derivatives designated as hedging instruments:

 

Balance Sheet Location

 

Notional Amount

 

 

Fair Value (1)

 

Cash flow hedges:

 

 

 

(In thousands)

 

Interest rate payer and receiver swaptions

 

Derivative asset

 

$

226,000

 

 

$

18

 

 

 

 

 

 

December 31, 2024

 

Derivatives designated as hedging instruments:

 

Balance Sheet Location

 

Notional Amount

 

 

Fair Value (1)

 

Cash flow hedges:

 

 

 

(In thousands)

 

Forward starting payer interest rate swaps

 

Derivative liability

 

$

—

 

 

$

—

 
(1)
Fair value reported is exclusive of collateral held and pledged, related to derivative exposure between the Company and its derivative counterparty. As of September 30, 2025, collateral pledged to its derivative counterparty was $0.6 million. As of December 31, 2024, no collateral was pledged to its derivative counterparty. These amounts were included in “Other receivables” on the Consolidated Balance Sheets.

The counterparty to the financial derivatives that the Company enters into is a major institution. The Company is exposed to credit-related losses in the event of non-performance by the counterparty. This credit risk is generally limited to the unrealized gains in such contracts, less collateral held, should the counterparty fail to perform as contracted.
v3.25.3
Accumulated Other Comprehensive Income (Loss)
 9 Months Ended
Sep. 30, 2025
Equity [Abstract]  
Accumulated Other Comprehensive Income (Loss)

Note 18 — Accumulated Other Comprehensive Income (Loss)

The following table presents the changes in the components of accumulated other comprehensive income (loss) balances for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Beginning balance

 

$

(3,207

)

 

$

1,598

 

 

$

(805

)

 

$

(1,210

)

Net unrealized gain (loss) on cash flow hedges arising during the period, net of tax

 

 

98

 

 

 

(4,161

)

 

 

(2,571

)

 

 

(1,362

)

Reclassification adjustments included in net income

 

 

192

 

 

 

(92

)

 

 

459

 

 

 

(83

)

Ending balance

 

$

(2,917

)

 

$

(2,655

)

 

$

(2,917

)

 

$

(2,655

)

The following tables present the components of other comprehensive income (loss) and the related tax effect for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

Before-Tax

 

 

Tax Effect

 

 

Net-of-Tax

 

 

Before-Tax

 

 

Tax Effect

 

 

Net-of-Tax

 

 

 

(In thousands)

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps/swaptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized gain (loss) arising during the period

 

$

140

 

 

$

42

 

 

$

98

 

 

$

(5,731

)

 

$

(1,570

)

 

$

(4,161

)

Reclassification adjustments included in net income

 

 

269

 

 

 

77

 

 

 

192

 

 

 

(126

)

 

 

(34

)

 

 

(92

)

Other comprehensive income (loss)

 

$

409

 

 

$

119

 

 

$

290

 

 

$

(5,857

)

 

$

(1,604

)

 

$

(4,253

)

 

 

 

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

 

Before-Tax

 

 

Tax Effect

 

 

Net-of-Tax

 

 

Before-Tax

 

 

Tax Effect

 

 

Net-of-Tax

 

 

 

(In thousands)

 

Cash flow hedges:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest rate swaps/swaptions:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net unrealized loss arising during the period

 

$

(3,613

)

 

$

(1,042

)

 

$

(2,571

)

 

$

(1,889

)

 

$

(527

)

 

$

(1,362

)

Reclassification adjustments included in net income

 

 

645

 

 

 

186

 

 

 

459

 

 

 

(114

)

 

 

(31

)

 

 

(83

)

Other comprehensive loss

 

$

(2,968

)

 

$

(856

)

 

$

(2,112

)

 

$

(2,003

)

 

$

(558

)

 

$

(1,445

)
v3.25.3
Fair Value Measurements
 9 Months Ended
Sep. 30, 2025
Fair Value Disclosures [Abstract]  
Fair Value Measurements

Note 19 — Fair Value Measurements

Fair Value Determination

ASC Topic 820, “Fair Value Measurement,” defines fair value, establishes a framework for measuring fair value including a three-level valuation hierarchy, and requires disclosures about fair value measurements. Fair value is defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date reflecting assumptions that a market participant would use when pricing an asset or liability. The hierarchy uses three levels of inputs to measure the fair value of assets and liabilities as follows:

o
Level 1 - Valuation is based on quoted prices for identical instruments traded in active markets.
o
Level 2 - Valuation is based on quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable and can be corroborated by market data.
o
Level 3 - Valuation is based on significant unobservable inputs for determining the fair value of assets or liabilities. These significant unobservable inputs reflect assumptions that market participants may use in pricing the assets or liabilities.

Transfers to/from Levels 1, 2 and 3 are recognized at the beginning of the reporting period in which a change in valuation technique or methodology occurs. Given the nature of some of the Company’s assets and liabilities, clearly determinable

market-based valuation inputs are often not available; therefore, these assets and liabilities are valued using internal estimates. As subjectivity exists with respect to the valuation estimates used, the fair values disclosed may not equal prices that can ultimately be realized if the assets are sold or the liabilities are settled with third parties.

Below is a description of the valuation methods for the assets and liabilities recorded at fair value on either a recurring or nonrecurring basis and for estimating fair value of financial instruments not recorded at fair value for disclosure purposes. While management believes the valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the measurement date.

Cash, Cash Equivalents and Restricted Cash

Cash and restricted cash are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities and interest rates that approximate market, a Level 1 measurement.

Loans Held for Investment, at Amortized Cost and Loans Held for Investment, at Fair Value

The Company uses a third-party loan valuation specialist to estimate the fair value of its nonperforming mortgage loans, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s nonperforming mortgage loans are interest rates, market yield requirements, the probability of default, loss given default, voluntary prepayment speed and loss timing. The Company uses a third-party loan valuation model to estimate the fair value of its performing mortgage loans, a Level 3 measurement. The significant unobservable inputs used in the fair value measurement of the Company’s performing mortgage loans are discount rate, constant prepayment rate, constant default rate, and loss severity rate. Significant changes in any of those inputs in isolation could result in a significant change to the mortgage loans’ fair value measurement.

Collateral Dependent or Loans Individually Evaluated

Nonaccrual loans held for investment and carried at amortized cost are evaluated individually and are adjusted to the fair value of the collateral when the fair value of the collateral is below the carrying value of the loan. To the extent such a loan is collateral dependent, the Company determines the allowance for credit losses based on the estimated fair value of the underlying collateral. The fair value of each loan’s collateral is generally based on appraisals or broker price opinions obtained, less estimated costs to sell, a Level 3 measurement.

Loans Held for Sale, at Fair Value

The Company elected to account for certain loans originated with the intent to sell at fair value using FASB ASC Topic 825, Financial Instruments (ASC 825). The FVO loans held for sale are measured based on a discounted cash flow model, or on the fair value of securities backed by similar mortgage loans, adjusted for certain factors to approximate the fair value, including the value attributable to mortgage servicing and credit risk, and current commitments to purchase loans, a Level 2 measurement. Management identified all loans to be accounted for at estimated fair value at the instrument level. Changes in fair value are reflected in income as they occur.

Real Estate Owned, Net (“REO”)

Real estate owned, net is initially recorded at the property’s estimated fair value, based on appraisals or broker price opinions obtained, less estimated costs to sell at acquisition date, a Level 3 measurement. From time to time, nonrecurring fair value adjustments are made to real estate owned, net based on the current updated appraised value of the property, or management’s judgment and estimation of value based on recent market trends or negotiated sales prices with potential buyers.

Mortgage Servicing Rights

The Company determined the fair values based on a third-party valuation specialist using a model that calculates the present value of estimated future net servicing income, a Level 3 measurement.

Derivative Instruments

Derivative financial instruments are measured at fair value using readily observable market inputs and the overall fair value measurement is classified as Level 2.

Secured Financing, Net (“Corporate Debt”)

The Company determined the fair values estimate of the secured financing using the estimated cash flows discounted at an appropriate market rate, a Level 3 measurement.

Warehouse Repurchase Facilities, Net

Warehouse repurchase facilities are recorded at historical cost. The carrying amount is a reasonable estimate of fair value as these instruments have short-term maturities of one-year or less and interest rates that approximate market plus a spread, a Level 2 measurement.

Securitized Debt, at Amortized Cost and Securitized Debt, at Fair Value

The Company obtains the fair value estimates at instrument level from a third-party broker dealer based on trader input on benchmark securities. The fair values take into consideration input factors such as bond structure and collateral characteristics, and performance and pricing factors such as yield, spread, average life, prepayment speeds, default rate, and severity. The fair values are considered a Level 2 measurement. Significant changes in any of the input factors in isolation could result in a significant change to securitized debt’s fair value measurement.

Accrued Interest Receivable and Accrued Interest Payable

The carrying amounts of accrued interest receivable and accrued interest payable approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

The Company does not have any off-balance sheet financial instruments.

Receivables Due From Servicers

The carrying amounts of receivables due from servicers approximate fair value due to the short-term nature of these instruments, a Level 1 measurement.

Fair Value Disclosures

The following tables present information on assets and liabilities measured and recorded at fair value as of September 30, 2025 and December 31, 2024, by level, in the fair value hierarchy:

 

 

Fair Value Measurements Using

 

 

Total at

 

September 30, 2025

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Fair Value

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Nonrecurring fair value measurements:

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated loans requiring specific allowance, net

 

$

—

 

 

$

—

 

 

$

10,756

 

 

$

10,756

 

Real estate owned, net

 

 

—

 

 

 

—

 

 

 

113,700

 

 

 

113,700

 

Total nonrecurring fair value measurements

 

 

—

 

 

 

—

 

 

 

124,456

 

 

 

124,456

 

Recurring fair value measurements:

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for sale, at fair value

 

 

—

 

 

 

2,590

 

 

 

—

 

 

 

2,590

 

Loans held for investment, at fair value

 

 

—

 

 

 

—

 

 

 

4,371,317

 

 

 

4,371,317

 

Mortgage servicing rights

 

 

—

 

 

 

—

 

 

 

12,597

 

 

 

12,597

 

Derivative assets

 

 

—

 

 

 

18

 

 

 

—

 

 

 

18

 

Total recurring fair value measurements

 

 

—

 

 

 

2,608

 

 

 

4,383,914

 

 

 

4,386,522

 

Total assets

 

$

—

 

 

$

2,608

 

 

$

4,508,370

 

 

$

4,510,978

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements:

 

 

 

 

 

 

 

 

 

 

 

 

Securitized debt, at fair value

 

$

—

 

 

$

3,748,889

 

 

$

—

 

 

$

3,748,889

 

Total recurring fair value measurements

 

 

—

 

 

 

3,748,889

 

 

 

—

 

 

 

3,748,889

 

Total liabilities

 

$

—

 

 

$

3,748,889

 

 

$

—

 

 

$

3,748,889

 

 

 

 

 

Fair Value Measurements Using

 

 

Total at

 

December 31, 2024

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Fair Value

 

 

 

(In thousands)

 

Assets:

 

 

 

 

 

 

 

 

 

 

 

 

Nonrecurring fair value measurements:

 

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated loans requiring specific allowance, net

 

$

—

 

 

$

—

 

 

$

11,884

 

 

$

11,884

 

Real estate owned, net

 

 

—

 

 

 

—

 

 

 

68,000

 

 

 

68,000

 

Total nonrecurring fair value measurements

 

 

—

 

 

 

—

 

 

 

79,884

 

 

 

79,884

 

Recurring fair value measurements:

 

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment, at fair value

 

 

—

 

 

 

—

 

 

 

2,766,951

 

 

 

2,766,951

 

Mortgage servicing rights

 

 

—

 

 

 

—

 

 

 

13,712

 

 

 

13,712

 

Total recurring fair value measurements

 

 

—

 

 

 

—

 

 

 

2,780,663

 

 

 

2,780,663

 

Total assets

 

$

—

 

 

$

—

 

 

$

2,860,547

 

 

$

2,860,547

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

Recurring fair value measurements:

 

 

 

 

 

 

 

 

 

 

 

 

Securitized debt, at fair value

 

$

—

 

 

$

2,207,408

 

 

$

—

 

 

$

2,207,408

 

Total recurring fair value measurements

 

 

—

 

 

 

2,207,408

 

 

 

—

 

 

 

2,207,408

 

Total liabilities

 

$

—

 

 

$

2,207,408

 

 

$

—

 

 

$

2,207,408

 

The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three and nine months ended September 30, 2025 and 2024:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

Gain (Loss) on Assets Measured on a Nonrecurring Basis

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Real estate owned, net

 

$

(6,307

)

 

$

(1,642

)

 

$

(10,530

)

 

$

(3,903

)

Individually evaluated loans requiring specific allowance, net

 

 

(566

)

 

 

(176

)

 

 

(1,007

)

 

 

(816

)

Total net loss

 

$

(6,873

)

 

$

(1,818

)

 

$

(11,537

)

 

$

(4,719

)

The following tables present the primary valuation techniques and unobservable inputs related to Level 3 assets that are recorded on a recurring and nonrecurring basis as of September 30, 2025 and December 31, 2024:

 

 

September 30, 2025

Asset Category

 

Fair Value

 

 

Primary
Valuation
Technique

 

Unobservable
Input

 

Range

 

Weighted
Average (1)

 

 

($ in thousands)

Nonrecurring:

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   loans requiring specific
   allowance, net

 

$

10,756

 

 

Market comparables

 

Selling costs

 

8.0%

 

8.0%

Real estate owned, net

 

 

113,700

 

 

Market comparables

 

Selling costs

 

8.0%

 

8.0%

 

 

 

 

 

 

 

 

 

 

 

 

Recurring:

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment,
   at fair value

 

$

4,371,317

 

 

Discounted cash flow

 

Discount rate

 

7.8%

 

7.8%

 

 

 

 

 

 

Prepayment rate

 

0.0% to 65.0%

 

11.4%

 

 

 

 

 

 

Default rate

 

0.4% to 6.0%

 

1.4%

 

 

 

 

 

 

Loss severity rate

 

0.0% to 8.9%

 

0.9%

Mortgage servicing rights

 

 

12,597

 

 

Discounted cash flow

 

Discount rate

 

8.0%

 

8.0%

 

 

 

 

 

 

Prepayment rate

 

2.2% to 12.0%

 

5.6%
(1)
Individually evaluated loans requiring specific allowance, net is weighted by collateral value; real estate owned, net is weighted by selling price; loans held for investment at fair value and mortgage servicing rights are weighted by UPB.

 

 

December 31, 2024

Asset Category

 

Fair Value

 

 

Primary
Valuation
Technique

 

Unobservable
Input

 

Range

 

Weighted
Average (1)

 

 

($ in thousands)

Nonrecurring:

 

 

 

 

 

 

 

 

 

 

 

Individually evaluated
   loans requiring specific
   allowance, net

 

$

11,884

 

 

Market comparables

 

Selling costs

 

8.0%

 

8.0%

Real estate owned, net

 

 

68,000

 

 

Market comparables

 

Selling costs

 

8.0%

 

8.0%

 

 

 

 

 

 

 

 

 

 

 

 

Recurring:

 

 

 

 

 

 

 

 

 

 

 

Loans held for investment,
   at fair value

 

$

2,766,951

 

 

Discounted cash flow

 

Discount rate

 

8.4%

 

8.4%

 

 

 

 

 

 

Prepayment rate

 

0.0% to 30.0%

 

9.0%

 

 

 

 

 

 

Default rate

 

0.1% to 2.8%

 

1.0%

 

 

 

 

 

 

Loss severity rate

 

0.0% to 10.5%

 

1.0%

Mortgage servicing rights

 

 

13,712

 

 

Discounted cash flow

 

Discount rate

 

8.0%

 

8.0%

 

 

 

 

 

 

Prepayment rate

 

2.2% to 11.7%

 

5.1%
(1)
Individually evaluated loans requiring specific allowance, net is weighted by collateral value; real estate owned, net is weighted by selling price; loans held for investment at fair value and mortgage servicing rights are weighted by UPB.

The following is a roll-forward of loans held for investment that are measured and recorded at estimated fair value on a recurring basis for the periods indicated:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Beginning balance

 

$

3,826,505

 

 

$

1,971,683

 

 

$

2,766,951

 

 

$

1,306,072

 

Originations

 

 

713,017

 

 

 

456,328

 

 

 

2,033,018

 

 

 

1,257,225

 

Loans liquidated

 

 

(155,963

)

 

 

(93,065

)

 

 

(437,624

)

 

 

(232,615

)

Acquisition

 

 

—

 

 

 

1,500

 

 

 

—

 

 

 

16,490

 

REO transfer

 

 

(23,186

)

 

 

(4,227

)

 

 

(42,526

)

 

 

(6,448

)

Principal paydowns

 

 

(19,519

)

 

 

(12,784

)

 

 

(43,707

)

 

 

(26,586

)

Unrealized gain included in net income

 

 

30,463

 

 

 

35,246

 

 

 

95,205

 

 

 

72,003

 

Loans transferred to held for sale

 

 

—

 

 

 

(936

)

 

 

—

 

 

 

(32,515

)

Loans repurchased

 

 

—

 

 

 

973

 

 

 

—

 

 

 

1,092

 

Ending balance

 

$

4,371,317

 

 

$

2,354,718

 

 

$

4,371,317

 

 

$

2,354,718

 

The following is a roll-forward of loans held for sale that are measured and recorded at estimated fair value on a recurring basis for the periods indicated:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Beginning balance

 

$

—

 

 

$

—

 

 

$

—

 

 

$

17,590

 

Originations

 

 

2,071

 

 

 

18,947

 

 

 

47,879

 

 

 

18,947

 

Loans liquidated

 

 

—

 

 

 

(936

)

 

 

(46,953

)

 

 

(49,366

)

Principal paydowns

 

 

—

 

 

 

—

 

 

 

—

 

 

 

(31

)

Unrealized gain included in net income

 

 

519

 

 

 

—

 

 

 

519

 

 

 

—

 

Realized gain (loss) included in net income

 

 

—

 

 

 

284

 

 

 

1,145

 

 

 

(424

)

Loans transferred from held for investment

 

 

—

 

 

 

936

 

 

 

—

 

 

 

32,515

 

Ending balance

 

$

2,590

 

 

$

19,231

 

 

$

2,590

 

 

$

19,231

 

 

The following is a roll-forward of securitized debt measured and recorded at estimated fair value on a recurring basis for the periods indicated:

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2025

 

 

2024

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Beginning balance

 

$

3,232,769

 

 

$

1,509,952

 

 

$

2,207,408

 

 

$

877,417

 

Additions

 

 

666,237

 

 

 

286,966

 

 

 

2,022,738

 

 

 

1,005,044

 

Paydowns and payoffs

 

 

(160,105

)

 

 

(72,645

)

 

 

(512,511

)

 

 

(165,150

)

Total loss included in net income

 

 

9,988

 

 

 

24,995

 

 

 

31,254

 

 

 

31,957

 

Ending balance

 

$

3,748,889

 

 

$

1,749,268

 

 

$

3,748,889

 

 

$

1,749,268

 

The Company estimates the fair value of certain financial instruments on a quarterly basis. These instruments are recorded at fair value using a valuation allowance only if they are individually evaluated. As described above, these adjustments to fair value usually result from the application of lower of cost or fair value accounting or write-downs of individual assets. As of September 30, 2025 and December 31, 2024, financial assets and liabilities measured at fair value include loans held for investment at fair value, loans held for sale at fair value, mortgage servicing rights, derivative instruments, and securitized debt at fair value. Financial assets measured at the lower of cost or estimated fair value include certain individually evaluated loans held for investment and REOs, which are measured using unobservable inputs, including appraisals and broker price opinions on the values of the underlying collateral. Individually evaluated loans requiring an allowance were carried at approximately $10.8 million and $11.9 million as of September 30, 2025 and December 31, 2024, respectively, net of specific allowance for credit losses of approximately $2.0 million and $1.0 million, respectively.

A financial instrument is cash, evidence of an ownership interest in an entity, or a contract that creates a contractual obligation or right to deliver or receive cash or another financial instrument from a second entity on potentially favorable terms. The methods and assumptions used in estimating the fair values of the Company’s financial instruments are described above.

The following tables present carrying amounts and estimated fair values of certain financial instruments as of the dates indicated:

 

 

September 30, 2025

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

Asset Category

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Fair Value

 

 

 

(In thousands)

 

Assets:

 

 

 

Cash

 

$

98,964

 

 

$

98,964

 

 

$

—

 

 

$

—

 

 

$

98,964

 

Restricted cash

 

 

18,846

 

 

 

18,846

 

 

 

—

 

 

 

—

 

 

 

18,846

 

Loans held for sale, at fair value

 

 

2,590

 

 

 

—

 

 

 

2,590

 

 

 

—

 

 

 

2,590

 

Loans held for investment, at amortized cost

 

 

2,127,170

 

 

 

—

 

 

 

—

 

 

 

2,061,812

 

 

 

2,061,812

 

Loans held for investment, at fair value

 

 

4,371,317

 

 

 

—

 

 

 

—

 

 

 

4,371,317

 

 

 

4,371,317

 

Accrued interest receivables

 

 

46,553

 

 

 

46,553

 

 

 

—

 

 

 

—

 

 

 

46,553

 

Mortgage servicing rights

 

 

12,597

 

 

 

—

 

 

 

—

 

 

 

12,597

 

 

 

12,597

 

Derivative assets

 

 

18

 

 

 

—

 

 

 

18

 

 

 

—

 

 

 

18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured financing, net

 

$

286,218

 

 

$

—

 

 

$

—

 

 

$

289,650

 

 

$

289,650

 

Warehouse and repurchase facilities, net

 

 

332,386

 

 

 

—

 

 

 

332,386

 

 

 

—

 

 

 

332,386

 

Securitized debt, at amortized cost

 

 

1,783,150

 

 

 

—

 

 

 

1,653,645

 

 

 

—

 

 

 

1,653,645

 

Securitized debt, at fair value

 

 

3,748,889

 

 

 

—

 

 

 

3,748,889

 

 

 

—

 

 

 

3,748,889

 

Accrued interest payable

 

 

32,914

 

 

 

32,914

 

 

 

—

 

 

 

—

 

 

 

32,914

 

 

 

 

 

December 31, 2024

 

 

 

Carrying

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

Asset Category

 

Value

 

 

Level 1

 

 

Level 2

 

 

Level 3

 

 

Fair Value

 

 

 

(In thousands)

 

Assets:

 

 

 

Cash

 

$

49,901

 

 

$

49,901

 

 

$

—

 

 

$

—

 

 

$

49,901

 

Restricted cash

 

 

20,929

 

 

 

20,929

 

 

 

—

 

 

 

—

 

 

 

20,929

 

Loans held for investment, at amortized cost

 

 

2,420,116

 

 

 

—

 

 

 

—

 

 

 

2,321,141

 

 

 

2,321,141

 

Loans held for investment, at fair value

 

 

2,766,951

 

 

 

—

 

 

 

—

 

 

 

2,766,951

 

 

 

2,766,951

 

Accrued interest receivable

 

 

35,235

 

 

 

35,235

 

 

 

—

 

 

 

—

 

 

 

35,235

 

Mortgage servicing rights

 

 

13,712

 

 

 

—

 

 

 

—

 

 

 

13,712

 

 

 

13,712

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secured financing, net

 

$

284,833

 

 

$

—

 

 

$

—

 

 

$

287,970

 

 

$

287,970

 

Warehouse repurchase facilities, net

 

 

348,082

 

 

 

—

 

 

 

348,082

 

 

 

—

 

 

 

348,082

 

Securitized debt, at amortized cost

 

 

2,019,056

 

 

 

—

 

 

 

1,820,945

 

 

 

—

 

 

 

1,820,945

 

Securitized debt, at fair value

 

 

2,207,408

 

 

 

—

 

 

 

2,207,408

 

 

 

—

 

 

 

2,207,408

 

Accrued interest payable

 

 

28,028

 

 

 

28,028

 

 

 

—

 

 

 

—

 

 

 

28,028

 
v3.25.3
Segment Information
 9 Months Ended
Sep. 30, 2025
Segment Reporting [Abstract]  
Segment Information

Note 20 — Segment Information

The Company operates as a single reportable segment, conducting its business activities within the United States. The Company's chief operating decision maker (“CODM”) is its Chief Executive Officer, who reviews financial information presented on a consolidated basis.

The CODM regularly reviews net income as presented on the Company’s Consolidated Statements of Income for purposes of assessing performance and making decisions about resource allocation. Items regularly reviewed by the CODM include those line items reported on the Company’s Consolidated Statements of Income, the most significant of which include net interest income, unrealized gain (loss) on fair value loans, unrealized gain (loss) on fair value securitized debt, origination fee income, and compensation and benefits. See Consolidated Statements of Income.
v3.25.3
Subsequent Events
 9 Months Ended
Sep. 30, 2025
Subsequent Events [Abstract]  
Subsequent Events

Note 21 — Subsequent Events

The Company has evaluated events that have occurred subsequent to September 30, 2025 through the issuance of the accompanying consolidated financial statements and has concluded there are no other subsequent events that would require recognition or disclosure in the accompanying consolidated financial statements.

v3.25.3
Basis of Presentation and Summary of Significant Accounting Policies (Policies)
 9 Months Ended
Sep. 30, 2025
Accounting Policies [Abstract]  
Use of Estimates
(a)
Use of Estimates

The preparation of financial statements in conformity with U.S. Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of consolidated income and expenses during the reporting period.

Significant Accounting Policies
(b)
Significant Accounting Policies

The Company’s significant accounting policies are described in Note 2 — Basis of Presentation and Summary of Significant Accounting Policies, of its audited consolidated financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2024 as filed with the Securities and Exchange Commission (“SEC”).

There have been no material changes to the Company’s significant accounting policies as described in its 2024 Annual Report.

Principles of Consolidation
(c)
Principles of Consolidation

The principles of consolidation require management to determine and reassess the requirement to consolidate VIEs each reporting period, and therefore, the determination may change based on new facts and circumstances pertaining to each VIE. This could result in a material impact to the Company’s consolidated financial statements in subsequent reporting periods.

The Company consolidates the assets, liabilities, and remainder interests of the Trusts as management determined that VCC is the primary beneficiary of these entities. The Company’s ongoing asset management responsibilities provide the Company with the power to direct the activities that most significantly impact the VIE’s economic performance, and the remainder interests provide the Company with the right to receive benefits and the obligation to absorb losses, limited to its investment in the remainder interest of the Trusts.

The consolidated financial statements as of September 30, 2025 and December 31, 2024 include only those assets, liabilities, and results of operations related to the business of the Company, its subsidiaries, and VIEs.
Fair Value Option Accounting
(d)
Fair Value Option Accounting

The Company elected to apply fair value option (“FVO”) accounting to mortgage loans originated effective October 1, 2022. The fair value option loans are presented as a separate line item in the Consolidated Balance Sheets. Interest income on FVO loans is recorded on an accrual basis in the Consolidated Statements of Income under the heading “Interest income.” Changes in the fair value of the loans are recorded as “Unrealized gain (loss) on fair value of loans” in the Consolidated Statements of Income. The Company does not record a current expected credit loss (“CECL”) reserve on fair value option loans.

The Company elected to apply FVO accounting to securitized debt issued effective January 1, 2023 when the underlying collateral is also carried at fair value. The FVO securitized debt is presented as a separate line item in the Consolidated Balance Sheets. The Company reflects interest expense on the FVO securitized debt as “Interest expense – portfolio related” and presents the other fair value changes of the FVO securitized debt separately as “Unrealized gain (loss) on fair value securitized debt” in the Consolidated Statements of Income.
Derivative Instruments and Hedge Accounting
(e)
Derivative Instruments and Hedge Accounting

The Company issues fixed rate debt at regular intervals during the year through the securitization of its fixed rate mortgage assets. The Company is subject to interest rate risk on its forecasted debt issuances as these fixed rate debt issuances are priced at then-current market rates. The Company’s risk management objective is to hedge the risk of variability in its interest payment cash flows attributable to changes in the benchmark Secured Overnight Financing Rate (“SOFR”) between the time the fixed rate mortgages are originated and the fixed rate debt is issued. To accomplish this hedging strategy, the Company may from time to time enter into derivative instruments such as forward starting payer interest rate swaps or interest rate payer and receiver swaptions designated as cash flow hedges that are designed to be highly correlated to the underlying terms of the forecasted debt instruments. To qualify for hedge accounting, the Company formally documents its hedging relationships at inception, including the identification of the hedging instruments and the hedged items, as well as its risk management objectives and strategies for undertaking the hedge transaction at the time the derivative contract is executed. The Company also formally assesses effectiveness both at the hedge's inception and on an ongoing basis.

The Company's policy is to present all derivative balances on a gross basis, without regard to counterparty master netting agreements or similar arrangements. The fair value of the derivative instruments is recorded as a separate line item on the Consolidated Balance Sheets as an asset or liability with the related gains or losses reported as a component of Accumulated Other Comprehensive Income (“AOCI”). Beginning in the period in which the forecasted debt issuance occurs and the related derivative instruments are terminated, the gains or losses accumulated in AOCI are then reclassified into interest expense as a yield adjustment over the term of the related debt. If the Company determines it is not probable that the forecasted transaction will occur, gains and losses are reclassified immediately to earnings. The related cash flows are recognized on the cash flows from operating activities section on the Consolidated Statements of Cash Flows. The Company uses hedge accounting based on the exposure being hedged as cash flow hedges in operations.

Other Comprehensive Income
(f)
Other Comprehensive Income

Other comprehensive income (“OCI”) is reported in the Consolidated Statements of Comprehensive Income. OCI is comprised of net income and the effective portion of changes in the fair value of derivatives designated and that qualify as cash flow hedges, net of tax, less amounts reclassified into earnings.

Accumulated other comprehensive income represents the cumulative balance of OCI, net of tax, as of the end of the reporting period and relates to unrealized gains or losses on cash flow hedges, net of tax.
v3.25.3
Cash, Cash Equivalents, and Restricted Cash (Tables)
 9 Months Ended
Sep. 30, 2025
Cash and Cash Equivalents [Abstract]  
Schedule of Reconciliation of Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the Company’s Consolidated Balance Sheets to the total of the same such amounts shown in the Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024:

 

 

 

September 30,

 

 

 

2025

 

 

2024

 

 

 

(In thousands)

 

Cash and cash equivalents

 

$

98,964

 

 

$

44,094

 

Restricted cash

 

 

18,846

 

 

 

23,167

 

Total cash, cash equivalents, and restricted cash shown in the statement of cash flows

 

$

117,810

 

 

$

67,261

 
v3.25.3
Loans Held for Sale at Fair Value (Tables)
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
Summary of Loans Held for Sale and at Fair Value

The following table summarizes loans held for sale at fair value as of September 30, 2025 and December 31, 2024:

 

 

September 30, 2025

 

 

December 31, 2024

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

2,071

 

 

$

—

 

Valuation adjustments on FVO loans held for sale

 

 

519

 

 

 

—

 

Ending balance

 

$

2,590

 

 

$

—

 
v3.25.3
Loans Held for Investment at Amortized Cost and Loans Held for Investment at Fair Value (Tables)
 9 Months Ended
Sep. 30, 2025
Receivables [Abstract]  
Summary of Loans Held for Investment

The following tables summarize loans held for investment as of September 30, 2025 and December 31, 2024:

 

 

September 30, 2025

 

 

 

Loans Held for Investment, at Amortized Cost

 

 

Loans Held for Investment, at Fair Value

 

 

Total Loans Held for Investment

 

 

 

(In thousands)

 

Unpaid principal balance

 

$

2,111,569

 

 

$

4,161,729

 

 

$

6,273,298

 

Valuation adjustments on FVO loans

 

 

—

 

 

 

209,588

 

 

 

209,588

 

Deferred loan origination costs

 

 

20,187

 

 

 

—

 

 

 

20,187

 

 

 

2,131,756

 

 

 

4,371,317

 

 

 

6,503,073

 

Allowance for credit losses

 

 

(4,586

)

 

 

—

 

 

 

(4,586

)

Total loans held for investment

 

$

2,127,170