Good day, and welcome to the Velocity Financial, Inc. first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on your touch-tone phone. To withdraw your question, please press star, then two. Please note, this event is being recorded. I would now like to turn the conference over to Chris Oltmann, Treasurer. Please go ahead. Thanks, Danielle. Hello, everyone, and thank you for joining us today for the discussion of Velocity's first quarter 2024 results. Joining me today are Chris Farrar, Velocity's President and Chief Executive Officer, and Mark Szczepaniak, Velocity's Chief Financial Officer. Earlier this afternoon, we released our first quarter results, and you can find the press release and accompanying presentation we will refer to during this call on our investor relations website at www.velfinance.com. I'd like to remind everyone that today's call may include forward-looking statements which are uncertain and outside of the company's control, and actual results may differ materially. For a discussion of some of the risks and other factors that could affect results, please see the risk factors and other cautionary statements made in our communications with shareholders, including the risk factors disclosed in our filings with the Securities and Exchange Commission. Please also note that the content of this conference call contains time-sensitive information that is accurate only as of today, and we do not undertake any duty to update forward-looking statements. We may also refer to certain non-GAAP measures on this call. For reconciliations of these non-GAAP measures, you should refer to the earnings materials on our investor relations website. Finally, today's call is being recorded and will be available on the company's website later today. With that, I will now turn the call over to Chris Farrar. Thanks, Chris, and welcome everyone to our first quarter earnings call. I'd like to start out by thanking all my team members as we had a tremendous first quarter, as reflected in the results we released after the close. Origination volumes were almost 75% higher than the previous year and reflect strong demand in our niche, especially since the first quarter is typically lighter in terms of new volume. Our team continues to originate target assets in a disciplined way while controlling expenses to drive increased earnings and higher returns on equity. Markets are adjusting to the new interest rate realities, and we see healthy activity across the U.S. in our lending segment as we step in with favorable terms where banks have pulled back. The securitization market remains very supportive, as we saw spreads tighten more than the rise in base rates this year for improved execution of our second deal in April versus the January securitization. Moreover, participation was broad, with 27 different investors purchasing bonds, and the deal was many times oversubscribed. Our tremendous performance has produced a healthy investor base that believe in our program, and we've worked hard to earn their loyalty. In terms of our portfolio, we continue to execute well by resolving delinquent assets favorably, and our special servicing team's done a great job of driving positive results. We see plenty of fresh money available to purchase the real estate, securing our loans when priced appropriately, and values are holding up well. In terms of capital, we placed $75 million in new corporate debt in February to fuel our goal of increasing the portfolio to $5 billion in UPB by 2025. Importantly, as you saw in the press release, we have plenty of liquidity to meet those targets as we grow. Speaking of growth, we issued a company record $2 billion worth of LOIs in the month of April and received the most new applications we've had in over two years at just under $400 million in combined UPB. Obviously, our pipeline is strong and customers are responding, responding to our offering. The team is excited and engaged to persist in taking market share, and our strategy of retaining earnings, growing book value, and redeploying capital into high-returning assets will continue to drive earnings growth and shareholder value into the future. That concludes my prepared remarks, and we'll turn over to the presentation starting on page three. Obviously, you know, great results from an income perspective. The core EPS of $0.51 a share is an all-time high for the company, driven largely by the fair value gains from new originations and the net interest margin coming off the portfolio. The third bullet point there, you can see the NIM up nicely year-over-year, and all of those combine to drive higher pre-tax ROEs. We should present ROEs on a pre-tax basis as many of our comparable companies are not taxpayers. In terms of production and the loan portfolio, again, very strong production for the first quarter continued into April, as I mentioned, and the pipeline is very healthy. Portfolio is up nicely year-over-year. NPLs are manageable at just around 10%, and most importantly for that metric, we continue to see positive gains. From a financing and capital perspective, mentioned the January securitization and also completed the April securitization. Those markets are very, very strong right now. We've got plenty of liquidity and warehouse capacity, and as I mentioned, we issued those new notes to fuel our growth. Turning to page four, on the left-hand side is a reconciliation of our core adjustments related to stock transactions. And then on the right-hand side is a walk-up in book value as we continue to retain our earnings and grow the book value, as I mentioned. On the far right, we added two bars there to try to give folks a sense of the embedded gains in the amortized cost portfolio, and if they were to be brought into book value, you know, wanna make the point that we think there's significant unlocked value there. And as we move forward as a firm over time, and move the whole balance sheet to the fair value option, we think that there'll be a much higher book value for all shareholders. With that, I'll turn it over to Mark to start on page five. Thanks, Chris. Hi, everyone. Our first quarter of the year started out the year, as Chris mentioned, on a positive note, with strong loan originations and a healthy securitization market. On page five, loan production for the first quarter was almost $379 million in UPB. That's 7.5% increase from $352 million in Q4 of last year. And I think, as Chris mentioned, almost a 75% increase year-over-year. The strong production growth during Q1 was achieved with the new weighted average coupon on originations at 11.1% for the quarter. And the weighted average coupon on our originations has averaged 11% for the last five quarters. The growth in originations in Q1 was also at tighter credit levels, with the weighted average loan-to-value for the quarter at just under 64%. The strong Q1 production growth at the high weighted average coupon and the low LTV further demonstrates the continued borrower demand for our product. As a result of the strong growth in production, on page six shows a similar growth in Q1 for our overall loan portfolio. The total loan portfolio as of March 31st was almost $4.3 billion. That's a 5.1% increase from Q4 of last year and over a 19% increase year-over-year. The weighted average coupon on our total portfolio as of March 31st was 9.07%, 19 basis points higher than at the end of last year, and 92 basis points higher year-over-year. The portfolio weighted average loan-to-value ratio declined slightly to 67.6 as of March 31st, compared to 67.8 as of the end of the year last year, and 68.1 as of Q1 2023. So, again, generating strong production at high weighted average coupons with still low weighted average loan-to-value ratios. On page seven, as Chris mentioned, our Q1 NIM decreased 17 basis points from Q4 and increased 12 basis points year-over-year, as our portfolio yield remained relatively flat quarter-over-quarter, but increased year-over-year by 71 basis points, while our cost of funds increased 18 basis points quarter-over-quarter and 60 basis points year-over-year. The quarter-over-quarter slight decrease in NIM was mainly driven by the timing of NPL interest, which is recorded as it's received on a cash basis. While short-term fixed- or base financing rates increased during Q1, we continue to see an improvement in the overall securitization market, and the strong growth in originations, coupled with the healthy NIM, is reflected in our Q1 earnings. On page eight, our non-performing loan rate at the end of Q1 was 10.1%, compared to 9.7% for Q4 of last year and 8.7% for Q1 year-over-year. The ongoing strong collection efforts by our special servicing department has resulted in continued resolutions of our NPL loans at favorable gains. The table on page nine highlights this continued success of our NPL resolution efforts. In Q1, we resolved almost $55 million worth of UPB of NPL loans and REOs for a net gain of $1.3 million or 2.3%. We've averaged about a 2.5% gain on NPL resolutions over the last five quarters. Again, that's a gain over and above collecting all the contractual principal interest. Page 10 presents our CECL loan loss reserve and net loan charge-off and REO activity. The CECL reserve as of March 31st, was $5.3 million, or 19 basis points of our outstanding non-fair-value loans held-for-investment portfolio, and our CECL reserve is within our expected range of 15-20 basis points. The CECL loan loss reserve, as a reminder, does not include loans being carried at fair value. The table to the right of the page shows our net gain/loss from charge-offs and REO-related activities during the quarter. For Q1, we had a net loss on charge-offs and REO-related activities of $800,000, compared to a net loss of $300,000 for Q4 2023. Page 11 shows our durable funding and liquidity position at the end of Q1. Total liquidity as of March 31st was almost $79 million, comprised of about $35 million in cash and cash equivalents and another $44 million in available liquidity on unfinanced collateral. We did issue, as Chris mentioned, one securitization in Q1. In January, we issued the 2024-1 security, totaling just under $210 million of securities issued. Our available warehouse line capacity as of March 31st was $529 million, with a maximum line capacity of $885 million. In February, we entered into a $75 million five-year senior secured note at a fixed rate of 9.875% to support continued growth of the company. Subsequent to quarter end, in April, we completed our second securitization of the year, totaling $295 million of securities issued. With that, I'd like to now turn the presentation back to Chris for an overview of Velocity's outlook on key business drivers. Chris? Thanks, Mark. Yeah, I think, as we look forward, the market seems healthy and values are holding up, as I mentioned. We think there's good employment levels, and the economy seems to be doing well. Capital perspective, as I mentioned, the securitization markets are a tailwind for us right now, and we're very fortunate to take advantage of that. And from an earnings perspective, obviously, we're seeing the benefits pick up there and expect to continue to grow our earnings going forward. So, all in all, very positive and very optimistic about the future. And that wraps up our prepared presentation. We'll open it up for calls or for questions, sorry. We will now begin the question-and-answer session. To ask a question, you may press star, then one on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then two. The first question comes from Stephen Laws, from Raymond James. Please go ahead. Hi, good afternoon. Congrats on a great start to the year. You know, Chris, wanted to touch on a few things with regards to your production. You know, April obviously started off where you're kind of on pace to meet or exceed Q2, but, you know, noticed the LTV on new originations continues to drop. So it seems like you're sacrificing volumes to improve credit while you're able to maintain the coupon. And, you know, just wanted you to touch on that and what you're seeing in the market, you know, and what that should do longer term. Should we eventually see, you know, trending down on non-performing loans, or is that part of this type product, and we'll eventually see larger gains on resolutions given you're attached to a more conservative level on collateral? Sure, Steven. Good, good questions. You know, I think we're—as we said before, we're seeing better opportunities at lower LTVs, so we're taking advantage of those. But we are very protective of our margins. We wanna deploy capital, you know, efficiently and make sure we earn the return. And to us, the way we look at it, you know, risk reward is very important. So we're not the kind of a firm that's gonna just do volume to do volume. We wanna do it at healthy margins. So that's really what's driving those decisions. I do think the delinquency is gonna largely just depend on, you know, the overall economy and how things go forward. I would expect with lower LTVs, you know, we'd continue to see very positive resolutions. And, you know, our sort of forecast for those resolutions remains the same. We still think we'll end up with positive outcomes there. So, yeah, we hope we like the credit dynamics that we're seeing and hope to continue to grow there. Great. And one follow-up question, you know, kind of looking at the mix of loan production. You know, the investor one-to-four residential, you know, kind of looking at the trailing four-quarter average, you know, 167, sort of right in line with what you've been doing. Commercial's grown, you know, materially. So, you know, is that filling a void? You know, why are you seeing a better opportunity there? And maybe that points a little more to the competitive landscape, but curious to get your thoughts on kind of a little bit of a shift or more opportunity you're seeing on the commercial side. Yeah, yeah, that's a good observation. I think that's an uptick as a result of the banks continuing to tighten and pull back. We're definitely seeing more demand there. We sort of set up our program on an agnostic basis, where we're happy to do either product, and we try to price accordingly. So we haven't made many changes there. It's mainly been a market shift, where I think they're just... Banks are being tougher, and so we're seeing more share. Great. Well, again, congrats on a great start to the year, and appreciate your comments this afternoon. Thank you. Appreciate it. Again, if you have a question, please press star one. The next question comes from Steve Delaney from Citizens JMP. Please go ahead. Sure. Hello, everyone. Great quarter. Nice to be on with you tonight. Chris, yes, the growth and the production, and this is spread, you know, all over the country. Can you just talk for a minute? I know you guys are, you know, out in the L.A. area, and you've got your headquarters there. But can you talk a bit about the regional management structure that you have around the country? And, you know, how it's, how are you using, how are you attacking individual targeted geographic markets? So just sort of your management structure underneath you or Jeff on the production side. Thanks. Sure. Sure. Hi, Steve. You know, we kind of split the country in two. We have two operation centers, if you will, one East Coast, one West Coast, just to handle the different time zones. And- Mm-hmm. Okay, makes sense. Yeah. And then, we have, you know, several different sales locations to, you know, reach our customers. But from a geography perspective, we try to target the larger MSAs, where properties are more liquid, and we tend to stay away from the rural and tertiary markets where we don't want to be, you know, sitting on an asset for a year or two trying to sell it in smaller- Right. -type settings. So those are the two things that drive our portfolio strategy. And you know, we've been. If you look at the portfolio, we're pretty highly concentrated in the coasts and then along kind of the Texas, you know, area as well. So that's helpful. And your contact with the borrowers, I assume you use the internet. Are you also working, coordinating, working through local market mortgage brokers? Yes, that's our primary source of business. They- I thought it would be. Yeah. Yeah. We call them lead generators. And so they- Okay. -they basically bring us the transaction, and we take over from there. And that's primarily how we market and educate folks. Well, we cover United Wholesale. It's working pretty well for them. Yeah. in terms of a relationship. That's right. Not surprised that you're using that. Can you share with us, have you been growing these broker relationships? Can you comment on how many you have and over the like, last year or two, is that increasing? Yes. Your number of touch points? Yeah, we are growing our number of approved brokers. We're also adding sales folks. So by adding sales folks, they tend to bring relationships with them or you know, prior existing- Sure -contacts. So, yeah, you know, we have a little over 2,000 approved brokers, and we're adding to that list, you know, quarterly. Very helpful. Thank you very much. Okay. Thank you, Steve. This concludes our -- Oh, I'm sorry, there's another question. The next question comes from Eric Hagen from BTIG. Please go ahead. Hey, thanks. Hope you're well. Thanks for sneaking me in. On the REO sales, can you share how, you know, any trends on what has sort of led to successfully exiting those assets at a gain, and how quickly you might be able to work through the remainder of the REO pipeline? Yeah, sure. Hi, Eric. You know, we try to price our REOs, you know, where they'll move fairly quickly. We are pretty disciplined there and try to avoid kind of the perception of a kind of distressed lender bank kind of blowout. So oftentimes we will put a little TLC into our REOs to get them ready for market. So I think we probably take a little longer than most folks to sell REOs, but it shows up in the recovery rates, and you can see in the actual final resolutions, we typically sell them for a little better or right where we had them marked. So our team's pretty good at trying to figure out, you know, where that property will transact. And fortunately, we see a lot of buyers show up at either foreclosure sales or after the fact once we get the property on the market. So I would say, you know, it's going to take us time to work through those REOs, and I think that, you know, we still have new ones coming on. So I would say we'll stay at this level probably for the rest of the year, kind of on a net basis, as new ones come on and old ones come off. Yep. Yep, that's helpful. Thank you. Okay, so looking at the liquidity- Hey, Eric. Eric- Yeah. Sorry, Eric, this is Mark. I think one other thing just to note is that, you know, over 95% of our non-performing loans are resolved by either paying off or paying current. You know, less than 5% ever even make it to foreclosure or the REO process. Yep. No, that's definitely helpful. Thanks for fleshing that out. You know, looking at the liquidity position, it's around $80 million. How comfortable do you feel there? Any kind of minimum level of liquidity you feel like you have to run with that, with your leverage at this level? And then are there any opportunities to call and maybe re-lever any of the securitized debt that you have in the stack? Thank you. Sure, absolutely. So yeah, from a liquidity perspective, we feel very good there. You know, by retaining our earnings, that's also additional fuel and capital as we go forward. So we just continue to recycle that capital. So we've got very strong visibility for well into next year from that perspective. And then in terms of call opportunities, we do have two securitizations out there that one of them is a, was sort of done on all of our delinquent assets from prior call deals. There's a significant amount of equity locked up there that will roll off sometime next year. And then there's one other transaction that we have an opportunity to pull some capital out of as it ultimately pays off or call it away. You know, combined, that's in excess of probably $75 million. The rest of the transactions are structured as pro rata paydowns. So we did that intentionally because we own this risk. And so it kind of works nicely that we're really not incented to call those deals away, because our cost of funds are staying very stable. Whereas in a sequential structure, those cost of funds tend to spike near the end of their lives. They stay very stable for us. So by and large, most of the deals we probably won't call or collapse until till near the very end because of that stable fixed rate financing. That's great. Thank you guys so much. Appreciate it. Welcome. Thank you, Eric. Thanks, Eric. This concludes our question and answer session. I would like to turn the conference back over to Chris Farrar for closing remarks. Thanks again for everybody on the call, taking the time to hear our story, and we look forward to catching up with everyone again next quarter. The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.