Revenue growth is accelerating with total revenue reaching $178.8M in 2026Q2, up from $119.3M a year earlier, but net interest margin remains compressed at 0.6% and earnings quality is questionable given a 71.56% operating margin versus a 14.70% net margin, driven by a $91.1M provision reversal.
Velocity Financial, Inc. (VEL) annual income statement — 10-year revenue, gross profit & net income history
| Metric | TTM | Dec'25 | Dec'24 | Dec'23 | Dec'22 | Dec'21 | Dec'20 | Dec'19 | Dec'18 | Dec'17 | Dec'16 |
|---|
| Net Interest Income | 199.25M | 185.78M | 159.63M | 112.94M | 83.15M | 75.97M | 67.45M | 59.01M | 48.8M | 36.54M | 27.59M |
| NII Growth % | 60.69% | 16.39% | 41.33% | 35.84% | 9.44% | 12.64% | 14.3% | 20.91% | 33.57% | 32.42% | - |
| Net Interest Margin % | 2.5% | 2.52% | 2.89% | 2.56% | 2.22% | 2.7% | 3.21% | 2.66% | 2.81% | 2.66% | 2.44% |
| Interest Income | 616.34M | 550.83M | 406.84M | 315.97M | 240.34M | 181.97M | 167.32M | 157.53M | 124.72M | 97.83M | 78.42M |
| Interest Expense | 417.09M | 365.05M | 247.22M | 203.02M | 157.19M | 106M | 99.88M | 98.52M | 75.92M | 61.29M | 50.83M |
| Loan Loss Provision | -269.23M | -331.64M | 24.99M | -203.02M | 1.15M | -292K | 5.07M | 1.14M | 201K | 421K | 1.46M |
| Non-Interest Income | 84.95M | 163.62M | 75.93M | -184.25M | 8.04M | -658K | -1.48M | -4.75M | -3.2M | -2.9M | -2.95M |
| Non-Interest Income % | 29.89% | 46.83% | 32.24% | 258.39% | 8.81% | -0.87% | -2.25% | -8.75% | -7.02% | -8.62% | -11.96% |
| Total Net Revenue | 284.2M | 349.4M | 235.56M | -71.31M | 91.19M | 75.31M | 65.97M | 54.26M | 45.6M | 33.64M | 24.65M |
| Revenue Growth % | 24.72% | 48.33% | 430.35% | -178.2% | 21.07% | 14.17% | 21.57% | 19% | 35.56% | 36.49% | - |
| Non-Interest Expense | 57.61M | 169.75M | 114.17M | 54.87M | 45.48M | 35.81M | 37.77M | 27.73M | 26.15M | 19.23M | 16.39M |
| Efficiency Ratio | 20.27% | 48.58% | 48.47% | -76.95% | 49.88% | 47.55% | 57.25% | 51.1% | 57.35% | 57.16% | 66.52% |
| Operating Income | 495.82M | 511.29M | 96.39M | 76.85M | 44.55M | 39.79M | 23.13M | 25.4M | 19.25M | 13.99M | 6.8M |
| Operating Margin % | 174.46% | 146.33% | 40.92% | -107.77% | 48.86% | 52.84% | 35.06% | 46.81% | 42.21% | 41.59% | 27.58% |
| Operating Income Growth % | - | 430.43% | 25.43% | 72.49% | 11.96% | 72.05% | -8.93% | 31.94% | 37.6% | 105.81% | - |
| Pretax Income | 151.54M | 146.24M | 96.39M | 71.13M | 44.55M | 39.79M | 23.13M | 25.4M | 19.25M | 13.99M | 6.8M |
| Pretax Margin % | 53.32% | 41.85% | 40.92% | -99.75% | 48.86% | 52.84% | 35.06% | 46.81% | 42.21% | 41.59% | 27.58% |
| Income Tax | 43.34M | 41.26M | 27.93M | 18.83M | 12.03M | 10.57M | 5.35M | 8.11M | 11.62M | 0 | 0 |
| Effective Tax Rate % | 28.6% | 28.21% | 28.97% | 26.48% | 27.01% | 26.56% | 23.14% | 31.92% | 60.36% | 0% | 0% |
| Net Income | 107.7M | 105.05M | 68.42M | 52.27M | 32.21M | 29.22M | 17.78M | 17.29M | 7.63M | 13.99M | 6.8M |
| Net Margin % | 37.89% | 30.07% | 29.05% | -73.31% | 35.32% | 38.8% | 26.95% | 31.87% | 16.73% | 41.59% | 27.58% |
| Net Income Growth % | 33.29% | 53.55% | 30.89% | 62.28% | 10.22% | 64.39% | 2.8% | 126.6% | -45.45% | 105.81% | - |
| Net Income (Continuing) | 108.2M | 105.05M | 68.47M | 52.29M | 32.52M | 29.22M | 17.78M | 17.29M | 7.63M | 13.99M | 6.8M |
| EPS (Diluted) | 2.74 | 2.75 | 1.91 | 1.52 | 0.93 | 0.86 | -1.55 | 0.86 | 0.90 | 1.19 | 0.58 |
| EPS Growth % | 25.69% | 43.98% | 25.66% | 63.44% | 8.14% | 155.48% | -280.23% | -4.44% | -24.37% | 105.17% | - |
| EPS (Basic) | - | 2.81 | 2.07 | 1.60 | 0.99 | 0.90 | -1.55 | 0.86 | 0.65 | 1.19 | 0.58 |
| Diluted Shares Outstanding | 39.3M | 38.18M | 35.76M | 34.48M | 34.13M | 33.98M | 20.09M | 113.59M | 11.75M | 11.75M | 11.75M |
Quick answers to the most common questions about buying VEL stock.
For fiscal year 2025, Velocity Financial, Inc. (VEL) reported total revenue of $349.4M. This represents a 1317.7% increase compared to $24.6M in 2016.
Velocity Financial, Inc. (VEL) is profitable, generating $105.1M in net income for the fiscal year ending 2025 with a net profit margin of 14.7%.
Velocity Financial, Inc. (VEL) reported an operating income of $511.3M, resulting in an operating profit margin of 71.6%. This margin reflects the operational efficiency of the business before interest and taxes.
Velocity Financial, Inc. (VEL) generated $681.0M in gross profit for the year, representing a gross profit margin of 95.3%. This demonstrates the company's core pricing power and production efficiency.
Key Metrics
Top Statement Risk
High leverage and funding costs
Metrics are mathematically derived from official filings.
NII Growth Driven by Portfolio Expansion
Net interest income rose 2.3% sequentially to $50.2M in 2026Q2, per company filings, reflecting continued portfolio growth despite a flat NIM of 0.6%.
The modest sequential increase in NII suggests that loan volume growth is offsetting stable asset yields and funding costs. However, the deceleration from prior quarters' double-digit growth rates indicates that the pace of portfolio expansion may be normalizing. Investors should monitor whether NII can sustain growth if the rate environment remains unchanged.
NIM Compression Persists at Low Levels
Net interest margin remained at 0.6% in 2026Q2, down from 1.0% in 2024Q2, as reported in financial statements, indicating persistent spread pressure.
The sustained low NIM reflects a challenging funding environment where the cost of warehouse and securitized debt is consuming a significant portion of asset yields. This compression appears structural rather than cyclical, given the consistent sub-1% levels over the past year. The bank's ability to improve NIM will depend on its capacity to reprice assets faster than liabilities, which may be limited in a competitive lending niche.
Efficiency Ratio Signals Operating Leverage
Efficiency ratio improved to 2.1% in 2026Q2 from 25.6% a year earlier, based on reported figures, reflecting strong revenue growth outpacing expense increases.
The dramatic improvement in the efficiency ratio indicates that the bank is scaling its fixed cost base effectively, with revenue growth of 47.99% YoY far exceeding expense growth. However, the extremely low ratio may be flattered by the accounting treatment of provision reversals, which boost operating income. Excluding these reversals, the underlying efficiency appears more moderate, suggesting that the reported ratio may overstate operational efficiency.
Provision Reversals Boost Earnings Volatility
Provision expense was a negative $91.1M in 2026Q2, per company data, indicating a significant release of reserves that inflated operating income.
The large negative provisions in recent quarters suggest that credit quality is improving or that prior reserves were overly conservative. This pattern introduces substantial earnings volatility, as future quarters may not see similar reversals, potentially leading to sharp declines in reported profitability. Investors should distinguish between core earnings and the impact of these non-cash adjustments to assess sustainable profitability.
Fee Income Shows Cyclicality
Non-interest income fell to $16.4M in 2026Q2 from $28.9M in 2025Q2, as reported in financial statements, representing 9.2% of total revenue.
The decline in fee income highlights its dependence on origination volumes, which are inherently cyclical and tied to real estate investment activity. The low fee percentage relative to total revenue suggests that the bank relies primarily on interest income, making it sensitive to rate movements. The volatility in fee income warrants monitoring, as a sustained downturn in investor activity could pressure overall revenue.
Earnings Quality Questioned by Fair Value Gains
The 14.70% net margin versus 71.56% operating margin, per reported data, suggests significant non-cash adjustments or interest costs that may obscure true profitability.
The wide gap between operating and net margins indicates that a substantial portion of reported earnings is consumed by interest expenses or fair value losses, which may not reflect cash-generating operations. The Q2 2026 EPS miss of $0.64 versus $0.70 estimate suggests that street expectations were not aligned with actual profitability, possibly due to higher funding costs or credit provisioning. Investors should scrutinize the sustainability of earnings given the reliance on fair value accounting and the high leverage ratio of 9.68x, which amplifies sensitivity to market conditions.