Third Quarter Highlights:

Net income of $10.0 million and diluted earnings per share (EPS) of $0.29, compared to $8.0 million and $0.23 per share, respectively, for 3Q21
Core net income⁽¹⁾of $10.0 million and core diluted EPS⁽¹⁾of $0.29, compared to $8.0 million and $0.23 per share, respectively, for 3Q21
Loan production volume of $457.3 million in unpaid principal balance (UPB), an increase of 34.2% from 3Q21
Total loan portfolio UPB of $3.4 billion as of September 30, 2022, an increase of 51.1% from September 30, 2021
Nonaccrual loans as a percentage of Held for Investment (HFI) loans was 7.4% as of September 30, 2022, down from 12.7% as of September 30, 2021
Resolutions of nonperforming loans (NPL) and real estate owned (REO) totaled $45.2 million in UPB, realizing gains of $2.7 million or 105.9% of UPB resolved
Portfolio net interest margin (NIM) of 3.59%, compared to 4.97% in 3Q21
Completed one VCC securitization in 3Q22 totaling $308.4 million of securities issued
Liquidity⁽²⁾ of $96.0 million as of September 30, 2022
Book value per common share of $11.61 as of September 30, 2022

Velocity Financial, Inc. (NYSE:VEL) (Velocity or the Company) reported net income and core net income of $10.0 million for 3Q22, compared to net income and core net income of $8.0 million for 3Q21. Earnings and core earnings per diluted share were $0.29 for 3Q22, compared to $0.23 for 3Q21.

"Velocity delivered strong earnings in the third quarter, over 30% year-over-year production growth, further improvement in our loan portfolio's performance, and continued book value growth," said Chris Farrar, President and CEO. "In the third quarter, loan demand remained robust despite higher interest rates, underscoring the strong desire of our borrowers to own tangible assets. While market volatility and uncertainty have increased, we have a solid balance sheet and strong liquidity that will enable us to navigate this period and position the Company for future success."

Third Quarter Operating Results

KEY PERFORMANCE INDICATORS
($ in thousands)		3Q 2022			3Q 2021		$ Variance		% Variance
Pretax income	$	14,049		$	10,927		$	3,122	28.6	%
Net income	$	9,983		$	8,022		$	1,961	24.4	%
Diluted earnings per share	$	0.29		$	0.23		$	0.05	22.6	%
Core net income^(a)	$	9,983		$	8,022		$	1,961	24.4	%
Core diluted earnings per share^(a)	$	0.29		$	0.23		$	0.06	24.5	%
Pretax return on equity		15.26	%		18.23	%	n.a.		(16.3	)%
Core pretax return on equity^(a)		15.26	%		18.23	%	n.a.		(16.3	)%
Net interest margin - portfolio		3.59	%		4.97	%	n.a.		(27.8	)%
Net interest margin - total company		3.09	%		4.13	%	n.a.		(25.3	)%
Average common equity	$	368,270		$	239,790		$	128,479	53.6	%

^(a) Core income, core diluted earnings per share and core pretax return on equity are non-GAAP measures. Please see the reconciliation to GAAP net income at the end of this release.

Discussion of results:

Net income in 3Q22 was $10.0 million, compared to $8.0 million in 3Q21

‒ The year-over-year increase in net income was driven by higher net interest income from strong HFI portfolio growth, the realization of interest and fees from the resolution of nonperforming loans, and MSR valuation gains.

Core net income⁽¹⁾ was $10.0 million, an increase of 24.4% from $8.0 million in 3Q21
Portfolio NIMin 3Q22 was 3.59% compared to 4.97% from 3Q21, driven by a decrease in portfolio yield and higher portfolio debt costs
The GAAP pretax return on equity was 15.26% in 3Q22, compared to 18.23% in 3Q21

‒ Driven by a higher average equity balance in 3Q22

TOTAL LOAN PORTFOLIO
($ of UPB in millions)		3Q 2022			3Q 2021		$ Variance		% Variance
*Held for Investment*
Investor 1-4 Rental	$	1,777		$	1,150		$	627	55	%
Mixed Use		432			302			129	43	%
Multi-Family		297			203			94	46	%
Retail		304			197			107	54	%
Warehouse		228			151			77	51	%
All Other		379			268			111	41	%
Total	$	3,416		$	2,271		$	1,145	50.4	%
*Held for Sale*
Multi-Family	$	16.57		$	-		$	17	n.m.
Total Managed Loan Portfolio UPB	$	3,433		$	2,271		$	1,162	51.1	%
*Key loan portfolio metrics:*
Total loan count		8,476			6,430
Weighted average loan to value		68.7	%		67.2	%
Weighted average total portfolio yield		7.88	%		8.77	%
Weighted average portfolio debt cost		4.81	%		4.48	%

Discussion of results:

Velocity's total loan portfolio was $3.4 billion in UPB as of September 30, 2022, an increase of 51.1% from $2.3 billion in UPB as of September 30, 2021

‒ Driven by record loan production volume

‒ Payoff activity totaled $110.9 million in UPB in 3Q22, a decrease of 11.9% from $125.5 million in 3Q21

The weighted average portfolio loan-to-value ratio was 68.7% as of September 30, 2022, consistent with the 67.2% as of September 30, 2021, and the five-quarter trailing average of 67.9%
The weighted average total portfolio yield was 7.88% in 3Q22, a decrease of 89 bps from 3Q21, driven by record loan production volume earlier this year in a lower interest rate environment
Portfolio-related debt cost in 3Q22 was 4.81%, an increase of 33 bps from 3Q21 resulting from a higher interest rate environment

LOAN PRODUCTION VOLUMES
($ in millions)	3Q 2022	3Q 2021	$ Variance	% Variance
Investor 1-4 Rental	$ 278	$ 184	$ 94	50.9%
Traditional Commercial	133	131	2	1.7%
Short-term loans	46	25	21	82.2%
Total loan production	$ 457	$ 341	$ 117	34.2%

Discussion of results:

Loan production in 3Q22 totaled $457.3 million in UPB, a 34.2% increase from $340.7 million in UPB in 3Q21

‒ Resulting primarily from 50.9% growth of Investor 1-4 long-term loan production

The weighted average coupon (WAC) on 3Q22 HFI loan production was 8.89%, an increase of 114 bps from 2Q22 and 184 basis points from 3Q21
October 2022 originations totaled $105.0 million in UPB with a WAC of 9.8%

HFI PORTFOLIO CREDIT PERFORMANCE INDICATORS
($ in thousands)		3Q 2022			3Q 2021		$ Variance		% Variance
Nonperforming loans^(a)	$	253,341		$	288,436		$	(35,095)	(12.2	)%
Average Nonperforming Loans	$	249,297		$	288,778		$	(39,480)	(13.7	)%
Nonperforming loans % total HFI Loans		7.4	%		12.7	%	n.a.		(41.6	)%
Total Charge Offs	$	155		$	162		$	(7)	(4.3	)%
Charge-offs as a % of Avg. Nonperforming loans^(b)		0.25	%		0.22	%	n.a.		10.9	%
Loan Loss Reserve	$	5,330		$	4,028		$	1,302	32.3	%

^(a) Nonperforming/Nonaccrual loans include loans 90+ days past due, loans in foreclosure, bankruptcy and on nonaccrual.
^(b) Reflects the annualized quarter-to-date charge-offs to average nonperforming loans for the period.

Discussion of results:

Nonperforming loans (NPL) totaled $253.3 million in UPB as of September 30, 2022, or 7.4% of loans HFI, compared to $288.4 million and 12.7%, respectively, as of

September 30, 2021

Charge-offs in 3Q22 totaled $155.2 thousand compared to $162.1 thousand in 3Q21

‒ 3Q22 charge-offs were in-line with the trailing five-quarter average of $165.0 thousand per quarter

The loan loss reserve totaled $5.3 million as of September 30, 2022, a 32.3% increase from $4.0 million as of September 30, 2021, driven primarily by portfolio growth
Capitalized interest recovered on COVID forbearance loans totaled $4.1 million since the program's inception in April 2020, with a remaining balance of $6.9 million as of September 30, 2022. None of the capitalized interest has been forgiven.

NET REVENUES
($ in thousands)		3Q 2022			3Q 2021		$ Variance			% Variance
Interest income	$	63,419		$	46,923		$	16,496		35.2%
Interest expense - portfolio related		(34,561	)		(20,321	)		(14,240	)	70.1%
Net Interest Income - portfolio related		28,858			26,602			2,256		8.5%
Interest expense - corporate debt		(4,011	)		(4,488	)		477		(10.6)%
Net Interest Income	$	24,847		$	22,114		$	2,733		12.4%
Loan loss provision		(580	)		(228	)		(352	)	154.5%
Gain on disposition of loans		399			306			93		30.5%
Other operating income (expense)		2,111			33			2,078		n.m
Total Net Revenues	$	26,777		$	22,225		$	4,552		20.5%

Discussion of results:

Total net interest income, including corporate debt interest expense, increased by $2.7 million, or 12.4% from 3Q21

‒ Portfolio-related interest income increased 35.2% from 3Q21, resulting from strong portfolio growth driven by record production volumes

‒ Portfolio interest expense increased 70.1% from 3Q21, driven by higher costs on securitizations issued in 2022 as well as higher interest rates on warehouse financing

Other operating income growth in 3Q22 was driven by valuation gains in our mortgage servicing right (MSR) asset of $1.4 million, driven by higher interest rates

OPERATING EXPENSES
($ in thousands)		3Q 2022			3Q 2021	$ Variance			% Variance
Compensation and employee benefits	$	6,788		$	4,738	$	2,050		43.3	%
Rent and occupancy		445			447		(2	)	(0.4	)%
Loan servicing		3,314			2,014		1,300		64.6	%
Professional fees		664			736		(72	)	(9.8	)%
Real estate owned, net		(195	)		1,186		(1,381	)	(116.4	)%
Other expenses		1,711			2,177		(466	)	(21.4	)%
Total operating expenses	$	12,727		$	11,298	$	1,429		12.6	%

Discussion of results:

Operating expenses totaled $12.7 million in 3Q22, an increase of 12.6% from 3Q21

‒ Higher compensation and employee benefit expense resulted from increased commissions on higher loan volume and growth of the salesforce and loan operations staff

‒ Servicing expense growth was driven by the increase in securitizations outstanding from $1.6 billion as of September 30, 2021 to $2.7 billion as of September 30, 2022

‒ Real estate owned (REO), net in 3Q22 was revenue of $0.19 million compared to an expense of $1.9 million in 3Q21, primarily driven by realized gains on the disposition of REOs totaling $1.2 million in 3Q22

SECURITIZATIONS
($ in thousands)	Securities		Balance at				Balance at
Trusts	Issued		9/30/2022		W.A. Rate		9/30/2021		W.A. Rate
2014-1 Trust		161,076	$	-	-		$	18,910	8.12	%
2015-1 Trust		285,457		-	-			21,161	7.57	%
2016-1 Trust		319,809		24,356	8.10	%		40,354	8.25	%
2016-2 Trust		166,853		-	-			29,207	7.54	%
2017-1 Trust		211,910		-	-			50,258	6.34	%
2017-2 Trust		245,601		61,224	3.75	%		94,486	3.45	%
2018-1 Trust		176,816		46,795	3.99	%		72,219	4.02	%
2018-2 Trust		307,988		99,151	4.49	%		156,587	4.34	%
2019-1 Trust		235,580		97,620	4.12	%		146,086	4.08	%
2019-2 Trust		207,020		90,165	3.39	%		130,198	3.44	%
2019-3 Trust		154,419		75,366	3.22	%		105,570	3.26	%
2020-1 Trust		248,700		141,423	2.87	%		186,400	2.86	%
2020-2 Trust		96,352		63,060	4.62	%		88,695	4.51	%
2020-MC1 Trust		179,371		-	-			57,111	4.51	%
2021-1 Trust		251,301		206,026	1.74	%		245,423	1.72	%
2021-2 Trust		194,918		177,993	2.02	%		203,743	1.77	%
2021-3 Trust		204,205		190,073	2.45	%
2021-4 Trust		319,116		282,567	3.18	%
2022-1 Trust		273,594		260,454	3.93	%
2022-2 Trust		241,388		236,918	5.09	%
2022-MC1 Trust		84,967		60,872	6.88	%
2022-3 Trust		296,323		285,847	5.64	%
2022-4 Trust		308,357		306,365	6.24	%
	$	5,171,122	$	2,706,275	4.05	%	$	1,646,408	3.55	%

Discussion of results:

Completed the VCC 2022-4 securitization totaling $308.7 million of securities issued in August, comprised of Investor 1-4 and Traditional Commercial long-term loans
The weighted average rate on Velocity's outstanding securitizations increased 50 bps from September 30, 2021, driven by higher rates on securitizations issued in 2022

RESOLUTION ACTIVITIES
LONG-TERM LOANS

RESOLUTION ACTIVITY	THIRD QUARTER 2022		THIRD QUARTER 2021
($ in thousands)	UPB $	Gain / (Loss) $	UPB $	Gain / (Loss) $
Paid in full	$ 16,175	$ 967	$ 13,353	$ 1,251
Paid current	11,410	182	7,722	79
REO sold (a)	3,171	250	4,680	31
Total resolutions	$ 30,756	$ 1,399	$ 25,755	$ 1,361

Resolutions as a % of nonperforming UPB		104.5%		105.3%

SHORT-TERM AND FORBEARANCE LOANS

RESOLUTION ACTIVITY	THIRD QUARTER 2022		THIRD QUARTER 2021
($ in thousands)	UPB $	Gain / (Loss) $	UPB $	Gain / (Loss) $
Paid in full	$ 8,691	$ 396	$ 8,960	$ 664
Paid current	2,075	-	25,141	29
REO sold	3,672	865	104	47
Total resolutions	$ 14,438	$ 1,261	$ 34,205	$ 740

Resolutions as a % of nonperforming UPB		108.7%		102.2%

Grand total resolutions	$ 45,194	$ 2,660	$ 59,960	$ 2,101

Grand total resolutions as a % of nonperforming UPB		105.9%		103.5%

^(a) There was an REO property held since January 2019 that was sold during the quarter ended September 30, 2021, with a total lifetime loss of $1.7 million, all of which was recognized in prior periods.

Discussion of results:

Total NPL and REO resolution activities in 3Q22 totaled $45.2 million in UPB and realized net gains of $2.7 million, or 105.9% of UPB resolved, compared to $60.0 million in UPB and net gains of $2.1 million, or 103.5% of UPB resolved in 3Q21

‒ Long-term loan and REO resolutions in 3Q22 totaled $30.8 million in UPB and realized gains of $1.4 million, compared to $25.8 million in UPB and realized gains of $1.4 million in 3Q21

‒ Short-term loan and REO resolutions in 3Q22 totaled $14.4 million in UPB and realized gains of $1.3 million, compared to $34.2 million in UPB and realized gains of $0.74 million in 3Q21

Velocity's executive management team will host a conference call and webcast to review 3Q22 financial results on November 3^rd, 2022, at 2:00 p.m. Pacific Time / 5:00 p.m. Eastern Time.

Webcast Information

The conference call will be webcast live in listen-only mode and can be accessed through the Events and Presentations section of the Velocity Financial Investor Relations website https://www.velfinance.com/events-and-presentations. To listen to the webcast, please go to Velocity's website at least 15 minutes before the call to register, download, and install any needed software. An audio replay of the call will also be available on Velocity's website following the completion of the conference call.

Conference Call Information

To participate by phone, please dial-in 15 minutes before the start time to allow for wait times to access the conference call. The live conference call will be accessible by dialing 1-833-316-0544 in the U.S. and Canada and 1-412-317-5725 for international callers. Callers should ask to join the Velocity Financial, Inc. conference call.

A replay of the call will be available through midnight on November 30, 2022, and can be accessed by dialing 1-877-344-7529 in the U.S. and 855-669-9658 in Canada or 1-412-317-0088 internationally. The passcode for the replay is #9848120. The replay will also be available on the Investor Relations section of the Company's website under "Events and Presentations."

About Velocity Financial, Inc.

Based in Westlake Village, California, Velocity is a vertically integrated real estate finance company that primarily originates and manages investor loans secured by 1-4-unit residential rental and small commercial properties. Velocity originates loans nationwide across an extensive network of independent mortgage brokers built and refined over 18 years.

Non-GAAP Financial Measures

To supplement our financial statements presented in accordance with United States generally accepted accounting principles (GAAP), the Company uses non-GAAP core net income and core diluted EPS, which are non-GAAP financial measures.

Non-GAAP core net income and non-GAAP core diluted EPS are non-GAAP financial measures that represent our net income (loss) and net income (loss) per diluted share, adjusted to eliminate the effect of certain costs incurred from activities that are not normal recurring operating expenses, such as COVID-stressed charges and recoveries of loan loss provision, nonrecurring debt amortization, the impact of operational measures taken to address the COVID-19 pandemic and workforce reduction costs, and costs associated with acquisitions. To calculate non-GAAP core diluted EPS, we use the weighted-average number of shares of common stock outstanding that is used to calculate net income per diluted share under GAAP.

We have included non-GAAP core net income and non-GAAP core diluted EPS because they are key measures used by our management to evaluate our operating performance, generate future operating plans, and make strategic decisions, including those relating to operating expenses and the allocation of internal resources. Accordingly, we believe that non-GAAP core net income and non-GAAP core diluted EPS provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors. In addition, they provide useful measures for period-to-period comparisons of our business, as they remove the effect of certain items that we expect to be nonrecurring.

These non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similarly titled measures presented by other companies.

For more information on Core Income, please refer to the section of this press release below titled "Adjusted Financial Metric Reconciliation to GAAP Net Income" at the end of this press release.

Forward-Looking Statements

Some of the statements contained in this press release may constitute forward-looking statements within the meaning of the federal securities laws. Forward-looking statements relate to anticipated results, expectations, projections, plans and strategies, anticipated events or trends, and similar expressions concerning matters that are not historical facts. In some cases, you can identify forward-looking statements by the use of forward-looking terminology such as "may," "will," "expects," "intends," "plans," "anticipates," "believes," "estimates," "predicts," "goal," "position," or "potential" or the negative of these words and phrases or similar words or phrases that are predictions of or indicate future events or trends and which do not relate solely to historical matters. You can also identify forward-looking statements by discussions of strategy, plans, or intentions.

The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions, and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement. While forward-looking statements reflect our good faith projections, assumptions, and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events, or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to, (1) the continued course and severity of the COVID-19 pandemic and its direct and indirect impacts, (2) general economic and real estate market conditions, including the risk of recession (3) regulatory and/or legislative changes, (4) our customers' continued interest in loans and doing business with us, (5) market conditions and investor interest in our future securitizations, and (6) the continued conflict in Ukraine and (7) changes in federal government fiscal and monetary policies.

Additional information relating to these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements can be found in the section titled ‘‘Risk Factors" in our Form 10-Q filed with the SEC on May 14, 2020, as well as other cautionary statements we make in our current and periodic filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.velfinance.com.

Velocity Financial, Inc. Consolidated Statements of Financial Condition

	Quarter Ended
	9/30/2022		6/30/2022		3/31/2022		12/31/2021		9/30/2021
	Unaudited		Unaudited		Unaudited		Unaudited		Unaudited
(In thousands)
Assets
Cash and cash equivalents	$	26,372	$	46,250	$	36,629	$	35,965	$	35,497
Restricted cash		14,533		9,217		10,837		11,639		9,586
Loans held for sale, net		-		-		77,503		87,908		-
Loans held for sale, at fair value		16,569		-		-		-		-
Loans held for investment, at fair value		926		1,351		1,352		1,359		1,360
Loans held for investment		3,445,563		3,118,799		2,828,302		2,527,564		2,295,697
Total loans, net		3,463,058		3,120,149		2,907,156		2,616,831		2,297,056
Accrued interest receivables		18,333		15,820		14,169		13,159		11,974
Receivables due from servicers		66,992		75,688		78,278		74,330		57,058
Other receivables		1,962		1,320		4,527		1,812		870
Real estate owned, net		13,188		19,218		16,177		17,557		17,905
Property and equipment, net		3,495		3,632		3,690		3,830		3,348
Deferred tax asset		4,337		15,195		16,477		16,604		17,026
Mortgage Servicing Rights, at fair value		9,868		8,438		7,661		7,152		-
Goodwill		6,775		6,775		6,775		6,775		-
Other assets		18,453		11,036		7,345		6,824		6,843
Total Assets	$	3,647,366	$	3,332,738	$	3,109,721	$	2,812,478	$	2,457,163

Liabilities and members' equity
Accounts payable and accrued expenses	$	75,150	$	78,384	$	92,768	$	92,195	$	79,360
Secured financing, net		209,537		209,227		208,956		162,845		163,449
Securitizations, net		2,651,895		2,477,226		2,035,374		1,911,879		1,623,674
Warehouse & repurchase facilities		340,050		208,390		424,692		301,069		258,491
Total Liabilities		3,276,632		2,973,227		2,761,790		2,467,988		2,124,974

Mezzanine Equity
Series A Convertible preferred stock				-		-		-		90,000
Stockholders' Equity
Stockholders' equity		366,810		355,895		344,441		341,109		242,190
Noncontrolling interest in subsidiary		3,924		3,617		3,491		3,381		-
Total equity		370,734		359,512		347,932		344,490		242,190
Total Liabilities and members' equity	$	3,647,366	$	3,332,739	$	3,109,722	$	2,812,478	$	2,457,164


Book value per share	$	11.61	$	11.26	$	10.90	$	10.84	$	12.05

Shares outstanding		31,922		31,922		31,913		31,787		20,098

Velocity Financial, Inc. Consolidated Statements of Income (Quarterly)

	Quarter Ended
($ in thousands)	9/30/2022			6/30/2022			3/31/2022			12/31/2021		9/30/2021
Revenues
Interest income	$	63,419		$	59,243		$	52,049		$	49,360	$	46,923
Interest expense - portfolio related		34,561			28,752			23,556			23,666		20,321
Net interest income - portfolio related		28,858			30,491			28,493			25,694		26,602
Interest expense - corporate debt		4,011			4,182			17,140			4,462		4,488
Net interest income		24,847			26,309			11,353			21,232		22,114
Provision for loan losses		580			279			730			377		228
Net interest income after provision for loan losses		24,267			26,030			10,623			20,855		21,886
Other operating income
Gain on disposition of loans		399			1,776			4,540			2,357		306
Unrealized gain/(loss) on fair value loans		453			6			11			11		0
Other income (expense)		1,657			1,257			1,097			249		33
Other operating income (expense)		2,509			3,039			5,648			2,617		339
Total net revenues		26,776			29,070			16,271			23,472		22,225

Operating expenses
Compensation and employee benefits		6,788			6,553			5,323			4,720		4,738
Rent and occupancy		445			426			442			429		447
Loan servicing		3,314			3,290			2,450			2,480		2,014
Professional fees		664			1,062			1,362			1,716		736
Real estate owned, net		(195	)		(251	)		(175	)		417		1,186
Other operating expenses		1,711			3,199			2,848			2,333		2,177
Total operating expenses		12,727			14,279			12,250			12,095		11,298
Income before income taxes		14,049			14,790			4,021			11,377		10,927
Income tax expense		3,759			4,019			790			3,024		2,905
Net income		10,290			10,771			3,231			8,353		8,022
Net income attributable to noncontrolling interest		307			126			110			-		-
Net income attributable to Velocity Financial, Inc.		9,983			10,645			3,121			8,353		8,022
Less undistributed earnings attributable to participating securities		152			164			48			362		3,030
Net earnings attributable to common stockholders	$	9,831		$	10,481		$	3,073		$	7,991	$	4,992

Basic earnings (loss) per share	$	0.31		$	0.33		$	0.10		$	0.26	$	0.25

Diluted earnings (loss) per common share	$	0.29		$	0.31		$	0.09		$	0.24	$	0.23

Basic weighted average common shares outstanding		31,922			31,917			31,892			30,897		20,090

Diluted weighted average common shares outstanding		34,199			34,057			34,204			34,257		34,212

Velocity Financial, Inc. Net Interest Margin ‒ Portfolio Related and Total Company (Unaudited)

	Quarter Ended September 30, 2022						Quarter Ended September 30, 2021
			Interest		Average				Interest		Average
	Average		Income /		Yield /		Average		Income /		Yield /
*($ in thousands)*	Balance		Expense		Rate⁽¹⁾		Balance		Expense		Rate⁽¹⁾
Loan portfolio:
Loans held for sale	$	176					$	2,284
Loans held for investment		3,217,264						2,137,505
Total loans	$	3,217,440	$	63,419	7.88	%	$	2,139,789	$	46,923	8.77	%

Debt:
Warehouse and repurchase facilities	$	226,660		3,798	6.70	%	$	182,383		2,365	5.19	%
Securitizations		2,644,489		30,763	4.65	%		1,633,059		17,956	4.40	%
Total debt - portfolio related		2,871,149		34,561	4.81	%		1,815,442		20,321	4.48	%
Corporate debt		215,000		4,011	7.46	%		172,934		4,488	10.38	%
Total debt	$	3,086,149	$	38,572	5.00	%	$	1,988,376	$	24,809	4.99	%

Net interest spread - portfolio related⁽²⁾					3.07	%					4.29	%
Net interest margin - portfolio related					3.59	%					4.97	%

Net interest spread - total company⁽³⁾					2.88	%					3.78	%
Net interest margin - total company					3.09	%					4.13	%

⁽¹⁾ Annualized.
⁽²⁾ Net interest spread — portfolio related is the difference between the rate earned on our loan portfolio and the interest rates paid on our portfolio-related debt.
⁽³⁾ Net interest spread — total company is the difference between the rate earned on our loan portfolio and the interest rates paid on our total debt.

Velocity Financial, Inc. Adjusted Financial Metric Reconciliation to GAAP Net Income (Unaudited)

Core Income
	Quarter Ended
($ in thousands)	9/30/2022		6/30/2022		3/31/2022		12/31/2021		9/30/2021

Net Income	$	9,983	$	10,645	$	3,121	$	8,353	$	8,022
Deal cost write-off - collapsed securitizations		-		-		-	$	1,104		-
One-time Century Health & Housing Capital deal costs		-		-		-	$	624		-
Corporate debt refinancing costs		-		-	$	9,286		-		-
Core Income	$	9,983	$	10,645	$	12,407	$	10,081	$	8,022

Diluted weighted average common shares outstanding		34,199		34,057		34,204		34,257		34,212
Core diluted earnings per share	$	0.29	$	0.31	$	0.36	$	0.29	$	0.23

View source version on businesswire.com: https://www.businesswire.com/news/home/20221103006097/en/

Velocity Financial, Inc. Reports Third Quarter 2022 Results