Conflicting Signals: Analyzing Growth Expectations and Capital Strategy from 2025 Q1 Earnings Call

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Loan Origination Growth:
- Velocity Financial reported $640 million in new loans originated in Q1 2025, a 69% increase from the previous year.
- This growth was driven by a strong demand for both commercial and residential loans, with a recent tilt towards commercial loans.

Revenue and Profitability Increase:
- The company's net revenue increased by 27%, and core pretax earnings rose by 17% in Q1 2025 compared to the previous year.
- The increase was attributed to strong production growth while maintaining credit standards and spreads.

Capital Market Activity:
- Velocity Financial completed four successful debt transactions, including three new securitizations, in Q1 2025.
- The company issued new shares through its ATM program and saw strong investor demand, reflecting healthy market participation.

Non-Performing Loan (NPL) Stabilization:
- The NPL rate remained relatively stable at 10.8%, with a consistent portfolio yield.
- This stability was achieved through favorable gain resolutions, effective in-house special servicing efforts, and positive macroeconomic forecasts.

Cash and Liquidity Position:
- Velocity Financial ended Q1 2025 with $75.6 million in total liquidity, including $51.7 million in cash and cash equivalents.
- The company's strong liquidity position is supported by successful securitization transactions and capital market activity.