UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to _____

Commission File Number: 001-39183

Velocity Financial, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	46-0659719
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2945 Townsgate Road, Suite 110 Westlake Village, California	91361
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (818) 532-3700

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	VEL	The New York Stock Exchange
Common stock, par value $0.01 per share	VEL	NYSE Texas, Inc.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☒
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of April 30, 2026, the registrant had 39,255,281 shares of common stock outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION
Item 1.	Consolidated Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Income	4
	Consolidated Statements of Comprehensive Income	5
	Consolidated Statements of Changes in Stockholders’ Equity	6
	Consolidated Statements of Cash Flows	7
	Notes to Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	59
Item 4.	Controls and Procedures	59
PART II.	OTHER INFORMATION
Item 1.	Legal Proceedings	60
Item 1A.	Risk Factors	60
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 3.	Defaults Upon Senior Securities	60
Item 4.	Mine Safety Disclosures	60
Item 5.	Other Information	60
Item 6.	Exhibits	62
SIGNATURES		64

i

PART I—FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements (Unaudited)

VELOCITY FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

	March 31, 2026			December 31, 2025
	(Unaudited)
ASSETS
Cash and cash equivalents	$	87,054		$	92,103
Restricted cash		24,996			157,134
Loans held for investment, at amortized cost (net of allowance for credit losses of $4,860 and $4,521 as of March 31, 2026 and December 31, 2025, respectively)		1,951,030			2,028,262
Loans held for investment, at fair value		5,154,508			4,729,869
Total loans, net		7,105,538			6,758,131
Accrued interest receivables		51,259			49,678
Receivables due from servicers		142,354			150,902
Other receivables		2,690			1,897
Real estate owned, net		131,849			118,289
Property and equipment, net		1,324			1,415
Deferred tax asset, net		18,462			22,709
Mortgage servicing rights, at fair value		12,645			12,963
Derivative assets		464			66
Goodwill		6,775			6,775
Other assets		6,033			9,451
Total assets	$	7,591,443		$	7,381,513
LIABILITIES
Accounts payable and accrued expenses	$	173,076		$	168,314
Secured financing, net		73,274			286,679
Unsecured senior notes, net		485,445			-
Securitized debt, at amortized cost		1,638,995			1,705,589
Securitized debt, at fair value		4,426,240			4,236,737
Warehouse and repurchase facilities, net		98,009			308,506
Total liabilities		6,895,039			6,705,825
Commitments and contingencies
EQUITY
Common stock ($0.01 par value, 100,000,000 shares authorized; 40,071,992 and 39,573,657 shares issued, 39,235,281 and 38,965,317 shares outstanding as of March 31, 2026 and December 31, 2025, respectively)		403			398
Additional paid-in capital		385,254			382,564
Retained earnings		324,742			302,379
Treasury stock, at cost (836,711 and 608,340 common shares as of March 31, 2026 and December 31, 2025, respectively)		(14,741	)		(10,204	)
Accumulated other comprehensive loss		(2,310	)		(2,602	)
Total Velocity Financial, Inc. stockholders' equity		693,348			672,535
Noncontrolling interest in subsidiary		3,056			3,153
Total equity		696,404			675,688
Total liabilities and equity	$	7,591,443		$	7,381,513

See accompanying Notes to Consolidated Financial Statements.

2

VELOCITY FINANCIAL, INC.

CONSOLIDATED BALANCE SHEETS (CONTINUED)

(In thousands)

The following table represents the assets and liabilities of consolidated variable interest entities:

	March 31, 2026		December 31, 2025
	(Unaudited)
ASSETS
Restricted cash	$	15,489	$	151,827
Loans held for investment, at amortized cost		1,947,390		2,023,030
Loans held for investment, at fair value		4,652,149		4,273,757
Accrued interest and other receivables		185,712		191,313
Real estate owned, net		115,316		114,485
Deferred tax asset		1,066		1,085
Other assets		3		5
Total assets	$	6,917,125	$	6,755,502
LIABILITIES
Accounts payable and accrued expenses	$	125,482	$	120,691
Securitized debt		6,065,235		5,942,326
Total liabilities	$	6,190,717	$	6,063,017

See accompanying Notes to Consolidated Financial Statements.

3

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2026			2025
Interest income	$	153,080		$	118,740
Interest expense — portfolio related		94,027			75,088
Net interest income — portfolio related		59,053			43,652
Interest expense — corporate debt		15,133			6,142
Net interest income		43,920			37,510
Provision for credit losses		1,661			1,872
Net interest income after provision for credit losses		42,259			35,638
Other operating income
Gain on disposition of loans		2,896			2,834
Unrealized gain on fair value loans		1,039			34,836
Unrealized gain (loss) on fair value securitized debt		26,254			(13,682	)
Unrealized loss on mortgage servicing rights		(337	)		(1,081	)
Origination fee income		7,970			8,679
Interest income on cash balance		1,405			1,339
Other income		3,730			521
Total other operating income		42,957			33,446
Operating expenses
Compensation and employee benefits		23,520			21,684
Origination expenses		1,163			838
Securitization expenses		5,285			4,043
Loan servicing		8,563			8,008
Professional fees		5,781			1,783
Rent and occupancy		340			275
Real estate owned, net		6,862			3,029
Other operating expenses		2,825			2,530
Total operating expenses		54,339			42,190
Income before income taxes		30,877			26,894
Income tax expense
Federal		6,494			5,850
State		2,084			2,396
Income tax expense		8,578			8,246
Net income		22,299			18,648
Net loss attributable to noncontrolling interest		(64	)		(239	)
Net income attributable to Velocity Financial, Inc.	$	22,363		$	18,887
Less undistributed earnings attributable to unvested restricted stock awards		312			233
Net earnings attributable to common stockholders	$	22,051		$	18,654
Earnings per common share
Basic	$	0.57		$	0.55
Diluted	$	0.57		$	0.51
Weighted average common shares outstanding
Basic		38,626			33,687
Diluted		39,174			36,811

See accompanying Notes to Consolidated Financial Statements.

4

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended March 31,
	2026			2025
Net income	$	22,299		$	18,648
Net loss attributable to noncontrolling interest		(64	)		(239	)
Net income attributable to Velocity Financial, Inc.	$	22,363		$	18,887
Other comprehensive income (loss), net of tax:
Net unrealized gain (loss) on cash flow hedges arising during the period		86			(1,056	)
Reclassification adjustments included in net income		206			62
Total other comprehensive income (loss), net of tax		292			(994	)
Total comprehensive income attributable to Velocity Financial, Inc.	$	22,655		$	17,893

See accompanying Notes to Consolidated Financial Statements.

5

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

($ in thousands, except share data)

(Unaudited)

	Common Stock - Number of Shares								Stockholders' Equity
	Shares Issued		Treasury Shares			Shares Outstanding			Common Stock		Additional Paid-in Capital		Retained Earnings		Treasury Stock, at Cost			Accumulated Other Comprehensive Income (Loss), Net of Tax			Total Stockholders' Equity			Noncontrolling Interest			Total Equity
Balance – December 31, 2024		33,761,147		(215,562	)		33,545,585		$	339	$	322,954	$	197,325	$	(2,869	)	$	(805	)	$	516,944		$	3,271		$	520,215
Issuance of common stock		1,569,255		—			1,569,255			20		28,522		—		—			—			28,542			—			28,542
Shares surrendered for tax withholding on vested awards		—		(115,596	)		(115,596	)		—		—		—		(2,162	)		—			(2,162	)		—			(2,162	)
Restricted stock awarded and stock-based compensation expenses		385,503		—			385,503			—		1,970		—		—			—			1,970			—			1,970
Net income (loss)		—		—			—			—		—		18,887		—			—			18,887			(239	)		18,648
Other comprehensive loss		—		—			—			—		—		—		—			(994	)		(994	)		—			(994	)
Balance – March 31, 2025		35,715,905		(331,158	)		35,384,747		$	359	$	353,446	$	216,212	$	(5,031	)	$	(1,799	)	$	563,187		$	3,032		$	566,219
Balance – December 31, 2025		39,573,657		(608,340	)		38,965,317		$	398	$	382,564	$	302,379	$	(10,204	)	$	(2,602	)	$	672,535		$	3,153		$	675,688
Shares surrendered for tax withholding on vested awards		—		(228,371	)		(228,371	)		—		—		—		(4,537	)		—			(4,537	)		—			(4,537	)
Restricted stock awarded and stock-based compensation expenses		498,335		—			498,335			5		2,690		—		—			—			2,695			—			2,695
Distribution to non-controlling interest		—		—			—			—		—		—		—			—			—			(33	)		(33	)
Net income (loss)		—		—			—			—		—		22,363		—			—			22,363			(64	)		22,299
Other comprehensive income		—		—			—			—		—		—		—			292			292			—			292
Balance – March 31, 2026		40,071,992		(836,711	)		39,235,281			403	$	385,254	$	324,742	$	(14,741	)	$	(2,310	)	$	693,348		$	3,056		$	696,404

See accompanying Notes to Consolidated Financial Statements.

6

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Three Months Ended March 31,
	2026			2025
	(Unaudited)
Cash flows from operating activities:
Net income	$	22,299		$	18,648
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		133			138
Amortization of right-of-use assets		187			469
Provision for credit losses		1,661			1,872
Origination of loans held for sale		(2,226	)		(4,886	)
Proceeds from sales of loans held for sale		2,270			—
Net accretion of discount on purchased loans and deferred loan origination costs		809			954
(Reversal of) provision for uncollectible corporate and escrow advances receivable		(84	)		627
Gain on disposition of loans		(64	)		—
Real estate acquired through foreclosure in excess of recorded investment		(2,832	)		(2,834	)
Amortization of debt issuance discount and costs		4,037			2,894
Change in valuation of real estate owned		3,217			2,073
Change in valuation of fair value loans		(1,039	)		(34,836	)
Change in valuation of mortgage servicing rights		337			1,081
Change in valuation of fair value securitized debt		(26,254	)		13,682
Hedging activities		134			(1,552	)
Loss (gain) on sale of real estate owned		129			(300	)
Stock-based compensation		2,695			1,970
Deferred tax expense		4,079			2,963
Change in operating assets and liabilities:
Accrued interest and other receivables		(3,086	)		(5,004	)
Other assets		3,632			430
Accounts payable and accrued expenses		2,052			5,147
Net cash provided by operating activities		12,086			3,536
Cash flows from investing activities:
Purchase of loans held for investment		(70	)		—
Origination of loans held for investment		(637,146	)		(635,537	)
Payments of loans held for investment		266,873			228,322
Proceeds from sale of real estate owned		18,470			8,019
Capitalized improvement on real estate owned		(298	)		(19	)
Change in corporate and escrow advances receivable		(1,467	)		(1,859	)
Change in impounds and deposits		2,308			(259	)
Purchase of property and equipment		(42	)		(80	)
Net cash used in investing activities		(351,372	)		(401,413	)
Cash flows from financing activities:
Warehouse repurchase facilities advances		374,404			819,529
Warehouse repurchase facilities repayments		(585,489	)		(597,740	)
Proceeds from unsecured financing		500,000			—
Repayment of secured financing		(215,000	)		—
Proceeds of securitized debt		513,725			415,680
Repayment of securitized debt		(365,907	)		(262,319	)
Debt issuance costs		(15,064	)		(253	)
Deferred stock issuance costs		—			(24	)
Proceeds from issuance of common stock, net		—			28,797
Purchase of treasury stock		(4,537	)		(2,162	)
Distribution to non-controlling interest		(33	)		—
Net cash provided by financing activities		202,099			401,508
Net (decrease) increase in cash, cash equivalents, and restricted cash		(137,187	)		3,631
Cash, cash equivalents, and restricted cash at beginning of period		249,237			70,830
Cash, cash equivalents, and restricted cash at end of period	$	112,050		$	74,461

See accompanying Notes to Consolidated Financial Statements.

7

VELOCITY FINANCIAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

	Three Months Ended March 31,
	2026		2025
	(Unaudited)
Supplemental cash flow information:
Cash paid during the period for interest	$	100,415	$	78,344
Cash paid during the period for income taxes, net		699		771
Noncash transactions from investing and financing activities:
Transfer of loans held for investment to real estate owned		32,245		22,384
Transfer of accrued interest to loans held for investment		642		699
Recognition of new leases in exchange for lease obligations		403		814
Deferred stock issuance costs charged against additional paid-in capital		—		255

See accompanying Notes to Consolidated Financial Statements.

8

VELOCITY FINANCIAL, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements (Unaudited)

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 2026-P1 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 March 31, 2026.

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

The accompanying unaudited Consolidated Financial Statements as of and for the three months ended March 31, 2026 and 2025 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, 2025.

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. These estimates relate to the allowance for credit losses and fair value option accounting.

9

(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, 2025 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 2025 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 March 31, 2026 and December 31, 2025 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.

10

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.

Note 3 — Current Accounting Developments

Recently Issued Accounting Standards

Codification Improvements

In December 2025, the FASB issued ASU No. 2025-12 “Codification Improvements” to address suggestions received from stakeholders on the Accounting Standards Codification and to make other incremental improvements to U.S. GAAP. The update represents changes to the Codification that (1) clarify, (2) correct errors, or (3) make minor improvements. The amendments make the Codification easier to understand and apply. The guidance is effective for fiscal years beginning after December 15, 2026, including interim periods within those fiscal years. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

Interim Reporting

In December 2025, the FASB issued ASU No. 2025-11 “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”). ASU 2025-11 clarifies the applicability of interim reporting guidance, types of interim reporting, and the form and content of interim financial statements in accordance with United States generally accepted accounting principles (“GAAP”). ASU 2025-11 does not change the fundamental nature of interim reporting or modify the scope of current interim disclosure requirements, but clarifies and improves the navigability of existing interim reporting requirements. This guidance is effective for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. Upon adoption, ASU 2025-11 may be applied prospectively or retrospectively to any or all periods presented in the interim financial statements. The Company is currently evaluating the impact ASU 2025-11 will have on its consolidated financial statements and related disclosures.

Derivatives and Hedging

In November 2025, the FASB issued ASU 2025-09, Derivatives and Hedging (Topic 815), Hedge Accounting Improvements, which aligns financial reporting with the economics of some of an entity's risk management activities by updating similar risk assessment for cash flow hedges, hedging interest payments on choose-your-rate debt, cash flow hedges of nonfinancial forecasted transactions, net written options as hedging instruments, and foreign currency-denominated debt designated as a hedging instrument and a hedged item. The amendments in ASU 2025-09 are effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods and applied on a prospective basis. The adoption of this standard is not expected to have a significant impact on the Company’s consolidated financial statements.

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.

11

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 $79.2 million and $85.5 million as of March 31, 2026 and 2025, 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 three months ended March 31, 2026 and 2025:

	March 31,
	2026		2025
	(In thousands)
Cash and cash equivalents	$	87,054	$	51,676
Restricted cash		24,996		22,785
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	112,050	$	74,461

Note 5 — Loans Held for Sale at Fair Value

There were no loans held for sale at fair value as of March 31, 2026 and December 31, 2025.

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 March 31, 2026 and December 31, 2025:

	March 31, 2026
	Loans Held for Investment, at Amortized Cost			Loans Held for Investment, at Fair Value			Total Loans Held for Investment
	(In thousands)
Unpaid principal balance	$	1,937,474		$	4,899,070		$	6,836,544
Valuation adjustments on performing FVO loans		—			307,626			307,626
Valuation adjustments on nonperforming FVO loans		—			(52,188	)		(52,188	)
Deferred loan origination costs, net		18,416			—			18,416
		1,955,890			5,154,508			7,110,398
Allowance for credit losses		(4,860	)		—			(4,860	)
Total loans held for investment	$	1,951,030		$	5,154,508		$	7,105,538

	December 31, 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	$	2,013,514		$	4,477,824		$	6,491,338
Valuation adjustments on performing FVO loans		—			300,344			300,344
Valuation adjustments on nonperforming FVO loans		—			(48,299	)		(48,299	)
Deferred loan origination costs, net		19,269			—			19,269
		2,032,783			4,729,869			6,762,652
Allowance for credit losses		(4,521	)		—			(4,521	)
Total loans held for investment	$	2,028,262		$	4,729,869		$	6,758,131

12

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 months ended March 31, 2026 and the year ended December 31, 2025:

	Three Months Ended March 31, 2026
	UPB			%	Amortized Cost			%
	($ in thousands)
Beginning balance	$	126,142			$	127,328
Repayments		(5,218	)			(5,294	)
Ending balance	$	120,924			$	122,034
Performing/Accruing	$	93,631		77.4%	$	94,464		77.4%
Nonperforming/Nonaccrual	$	27,293		22.6%	$	27,570		22.6%

	Year Ended December 31, 2025
	UPB			%	Amortized Cost			%
	($ in thousands)
Beginning balance	$	142,827			$	144,247
Foreclosures		(1,980	)			(1,996	)
Repayments		(14,705	)			(14,923	)
Ending balance	$	126,142			$	127,328
Performing/Accruing	$	96,577		76.6%	$	97,461		76.5%
Nonperforming/Nonaccrual	$	29,565		23.4%	$	29,867		23.5%

Since April 1, 2020, the inception of the COVID-19 forbearance program, the Company has modified $415.4 million in UPB of loans, which includes capitalized interest of $17.3 million. As of March 31, 2026, $289.7 million in UPB of modified loans has been paid down, which includes $6.8 million of capitalized interest received. The Company has not forgiven any capitalized interest.

Approximately 77.4% and 76.6% of the COVID forbearance loans in UPB were performing, and 22.6% and 23.4% were on nonaccrual status as of March 31, 2026 and December 31, 2025, respectively.

13

As of March 31, 2026 and December 31, 2025, 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:

	March 31, 2026		December 31, 2025
	(In thousands)
The 2013 repurchase agreement	$	—	$	165,484
The 2021/2024 repurchase agreements		—		134,901
The 2021 term repurchase agreement		—		23,478
The 2023 repurchase agreement		91,052		50,611
The 2024 bank credit agreement		59,821		36,479
Total pledged loans	$	150,873	$	410,953
2017-2 Trust	$	27,219	$	29,111
2018-1 Trust		20,216		21,618
2018-2 Trust		48,405		49,759
2019-1 Trust		52,186		58,324
2019-2 Trust		40,727		42,618
2019-3 Trust		39,719		41,166
2020-1 Trust		80,691		83,154
2021-1 Trust		131,618		135,627
2021-2 Trust		106,452		112,332
2021-3 Trust		113,650		119,070
2021-4 Trust		185,812		190,186
2022-1 Trust		193,620		198,203
2022-2 Trust		174,205		178,346
2022-3 Trust		202,845		206,020
2022-4 Trust		213,868		221,652
2022-5 Trust		136,472		146,126
2023-1 Trust		132,456		141,805
2023-2 Trust		90,800		94,269
2023-3 Trust		114,094		124,129
2023-4 Trust		103,392		118,953
2024-1 Trust		132,804		140,464
2024-2 Trust		172,930		183,376
2024-3 Trust		138,287		145,659
2024-4 Trust		168,827		175,820
2024-5 Trust		226,145		246,456
2024-6 Trust		253,670		268,354
2025-1 Trust		306,618		321,431
2025-RTL1 Trust		121,225		117,733
2025-2 Trust		361,470		369,814
2025-MC1 Trust		79,760		86,083
2025-3 Trust		365,048		377,229
2025-P1 Trust		182,698		190,012
2025-4 Trust		452,161		459,557
2025-P2 Trust		203,302		210,368
2025-5 Trust		439,029		445,822
2026-1 Trust		353,065		—
2026-P1 Trust		189,769		—
Total	$	6,355,255	$	6,050,646

14

(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 March 31, 2026 and December 31, 2025.

	March 31, 2026
	Total Nonaccrual		Nonaccrual with No Allowance for Credit Losses		Nonaccrual with Allowance for Credit Losses		Allowance for Loans Individually Evaluated
	(In thousands)
Commercial - Purchase	$	35,132	$	34,476	$	656	$	76
Commercial - Refinance		72,179		68,280		3,899		475
Residential 1-4 Unit - Purchase		25,036		24,469		567		14
Residential 1-4 Unit - Refinance		90,871		84,381		6,490		542
Short Term 1-4 Unit - Purchase		1,180		1,180		—		—
Short Term 1-4 Unit - Refinance		16,815		16,815		—		—
Total	$	241,213	$	229,601	$	11,612	$	1,107

	December 31, 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	$	30,429	$	29,773	$	656	$	76
Commercial - Refinance		74,398		71,043		3,355		402
Residential 1-4 Unit - Purchase		27,383		27,068		315		6
Residential 1-4 Unit - Refinance		90,666		83,143		7,523		535
Short Term 1-4 Unit - Purchase		1,180		1,180		—		—
Short Term 1-4 Unit - Refinance		13,336		13,336		—		—
Total	$	237,392	$	225,543	$	11,849	$	1,019

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 March 31, 2026 and 2025, 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 months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026				2025
	Amortized Cost		Interest Reversal		Amortized Cost		Interest Reversal
	(In thousands)
Commercial - Purchase	$	474,257	$	249	$	548,796	$	264
Commercial - Refinance		584,152		304		687,917		278
Residential 1-4 Unit - Purchase		339,677		60		400,778		141
Residential 1-4 Unit - Refinance		509,086		330		636,983		275
Short Term 1-4 Unit - Purchase		31,903		—		30,602		80
Short Term 1-4 Unit - Refinance		16,815		112		21,950		—
Total	$	1,955,890	$	1,055	$	2,327,026	$	1,038

The cash basis interest income recognized on nonaccrual loans, including loans held for investment at fair value, was $9.6 million and $8.5 million for the three months ended March 31, 2026 and 2025, respectively. No accrued interest income was recognized on nonaccrual loans for the three months ended March 31, 2026 and 2025. The average recorded investment of individually evaluated loans, computed using month-end balances, was $243.1 million and $300.6 million for the three months ended March 31, 2026 and 2025. There were no commitments to lend additional funds to debtors experiencing financial difficulty whose loans have been modified as of March 31, 2026 and 2025.

15

(b)Allowance for Credit Losses

The following tables present the activity in the allowance for credit losses for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31, 2026
	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, 2026	$	345		$	1,858		$	771		$	1,540		$	7	$	—		$	4,521
Provision for (reversal of) credit losses		(45	)		1,373			90			160			5		78			1,661
Charge-offs		—			(928	)		(113	)		(203	)		—		(78	)		(1,322	)
Ending balance	$	300		$	2,303		$	748		$	1,497		$	12	$	—		$	4,860
Allowance related to:
Loans individually evaluated	$	76		$	475		$	14		$	542		$	—	$	—		$	1,107
Loans collectively evaluated	$	224		$	1,828		$	734		$	955		$	12	$	—		$	3,753
Amortized cost related to:
Loans individually evaluated	$	35,132		$	72,179		$	25,036		$	90,871		$	1,180	$	16,815		$	241,213
Loans collectively evaluated	$	439,125		$	511,973		$	314,641		$	418,215		$	30,723	$	—		$	1,714,677

	Three Months Ended March 31, 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		(7	)		848			271			640			33			87			1,872
Charge-offs		—			(118	)		(177	)		(624	)		(7	)		(103	)		(1,029	)
Ending balance	$	655		$	2,129		$	840		$	1,297		$	38		$	58		$	5,017
Allowance related to:
Loans individually evaluated	$	85		$	1,105		$	—		$	193		$	—		$	46		$	1,429
Loans collectively evaluated	$	570		$	1,024		$	840		$	1,104		$	38		$	13		$	3,589
Amortized cost related to:
Loans individually evaluated	$	33,954		$	96,686		$	29,358		$	115,903		$	2,595		$	17,465		$	295,961
Loans collectively evaluated	$	514,842		$	591,231		$	371,420		$	521,080		$	28,007		$	4,485		$	2,031,065

(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 2.20% and 1.38% of average nonperforming loans at amortized cost for the three months ended March 31, 2026 and 2025, respectively.

16

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 $122.0 million and $127.3 million loans in the Company’s COVID-19 forbearance program, excluding loans held for investment at fair value, as of March 31, 2026 and December 31, 2025, respectively:

March 31, 2026	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	$	434	$	1,770	$	32,928	$	35,132	$	—	$	35,132
Commercial - Refinance		4,023		1,530		66,511		72,064		115		72,179
Residential 1-4 Unit - Purchase		2,833		678		21,525		25,036		—		25,036
Residential 1-4 Unit - Refinance		1,776		4,978		84,117		90,871		—		90,871
Short Term 1-4 Unit - Purchase		—		—		1,180		1,180		—		1,180
Short Term 1-4 Unit - Refinance		—		—		16,815		16,815		—		16,815
Total loans individually evaluated	$	9,066	$	8,956	$	223,076	$	241,098	$	115	$	241,213
Loans collectively evaluated
Commercial - Purchase	$	19,955	$	5,714	$	—	$	25,669	$	413,456	$	439,125
Commercial - Refinance		28,064		10,343		—		38,407		473,566		511,973
Residential 1-4 Unit - Purchase		10,175		3,025		—		13,200		301,441		314,641
Residential 1-4 Unit - Refinance		19,751		12,663		—		32,414		385,801		418,215
Short Term 1-4 Unit - Purchase		—		—		—		—		30,723		30,723
Short Term 1-4 Unit - Refinance		—		—		—		—		—		—
Total loans collectively evaluated	$	77,945	$	31,745	$	—	$	109,690	$	1,604,987	$	1,714,677
Ending balance	$	87,011	$	40,701	$	223,076	$	350,788	$	1,605,102	$	1,955,890

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

December 31, 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	$	2,499	$	27,733	$	30,429	$	—	$	30,429
Commercial - Refinance		4,403		3,817		66,178		74,398		—		74,398
Residential 1-4 Unit - Purchase		2,621		688		24,074		27,383		—		27,383
Residential 1-4 Unit - Refinance		4,169		2,376		84,121		90,666		—		90,666
Short Term 1-4 Unit - Purchase		—		—		1,180		1,180		—		1,180
Short Term 1-4 Unit - Refinance		—		—		13,336		13,336		—		13,336
Total loans individually evaluated	$	11,390	$	9,380	$	216,622	$	237,392	$	—	$	237,392
Loans collectively evaluated
Commercial - Purchase	$	17,461	$	10,059	$	—	$	27,520	$	431,786	$	459,306
Commercial - Refinance		29,871		12,111		—		41,982		492,895		534,877
Residential 1-4 Unit - Purchase		8,996		4,474		—		13,470		311,365		324,835
Residential 1-4 Unit - Refinance		26,912		17,494		—		44,406		397,821		442,227
Short Term 1-4 Unit - Purchase		—		—		—		—		29,598		29,598
Short Term 1-4 Unit - Refinance		—		4,548		—		4,548		—		4,548
Total loans collectively evaluated	$	83,240	$	48,686	$	—	$	131,926	$	1,663,465	$	1,795,391
Ending balance	$	94,630	$	58,066	$	216,622	$	369,318	$	1,663,465	$	2,032,783

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

17

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 March 31, 2026 and December 31, 2025.

	Term Loans Amortized Cost Basis by Origination Year
March 31, 2026:	2022		2021		2020		2019		Prior		Total
	(In thousands)
Commercial - Purchase
Payment performance
Performing	$	185,110	$	178,266	$	22,237	$	25,896	$	27,616	$	439,125
Nonperforming		14,085		12,238		2,474		4,167		2,168		35,132
Total Commercial - Purchase	$	199,195	$	190,504	$	24,711	$	30,063	$	29,784	$	474,257
Commercial - Refinance
Payment performance
Performing		176,934	$	148,603	$	29,969	$	62,006	$	94,461	$	511,973
Nonperforming		18,928		13,588		4,740		14,258		20,665		72,179
Total Commercial - Refinance	$	195,862	$	162,191	$	34,709	$	76,264	$	115,126	$	584,152
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	140,452	$	137,354	$	4,809	$	13,770	$	18,256	$	314,641
Nonperforming		8,270		11,262		391		788		4,325		25,036
Total Residential 1-4    Unit - Purchase	$	148,722	$	148,616	$	5,200	$	14,558	$	22,581	$	339,677
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	169,546	$	158,776	$	12,838	$	36,399	$	40,656	$	418,215
Nonperforming		31,199		33,160		1,627		11,412		13,473		90,871
Total Residential 1-4    Unit - Refinance	$	200,745	$	191,936	$	14,465	$	47,811	$	54,129	$	509,086
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	—	$	—	$	22,672	$	8,051	$	—	$	30,723
Nonperforming		597		—		583		—		—		1,180
Total Short Term 1-4    Unit - Purchase	$	597	$	—	$	23,255	$	8,051	$	—	$	31,903
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	—	$	—	$	—	$	—	$	—	$	—
Nonperforming		5,456		—		1,522		8,251		1,586		16,815
Total Short Term 1-4    Unit - Refinance	$	5,456	$	—	$	1,522	$	8,251	$	1,586	$	16,815
Total Portfolio	$	750,577	$	693,247	$	103,862	$	184,998	$	223,206	$	1,955,890
Gross charge-offs - quarter-ended March 31, 2026	$	554	$	364	$	—	$	110	$	294	$	1,322
Gross charge-offs - year-to-date March 31, 2026	$	554	$	364	$	—	$	110	$	294	$	1,322

18

	Term Loans Amortized Cost Basis by Origination Year
December 31, 2025	2022		2021		2020		2019		Prior		Total
	(In thousands)
Commercial - Purchase
Payment performance
Performing	$	195,654	$	183,471	$	22,409	$	26,427	$	31,345	$	459,306
Nonperforming		9,992		12,081		2,981		3,819		1,556		30,429
Total Commercial - Purchase	$	205,646	$	195,552	$	25,390	$	30,246	$	32,901	$	489,735
Commercial - Refinance
Payment performance
Performing	$	184,326	$	152,510	$	32,023	$	64,788	$	101,230	$	534,877
Nonperforming		18,536		14,907		4,308		14,815		21,832		74,398
Total Commercial - Refinance	$	202,862	$	167,417	$	36,331	$	79,603	$	123,062	$	609,275
Residential 1-4 Unit - Purchase
Payment performance
Performing	$	144,277	$	142,870	$	4,718	$	13,852	$	19,118	$	324,835
Nonperforming		10,318		10,958		1,390		788		3,929		27,383
Total Residential 1-4    Unit - Purchase	$	154,595	$	153,828	$	6,108	$	14,640	$	23,047	$	352,218
Residential 1-4 Unit - Refinance
Payment performance
Performing	$	182,214	$	165,344	$	13,247	$	38,741	$	42,681	$	442,227
Nonperforming		27,281		34,311		3,178		11,342		14,554		90,666
Total Residential 1-4    Unit - Refinance	$	209,495	$	199,655	$	16,425	$	50,083	$	57,235	$	532,893
Short Term 1-4 Unit - Purchase
Payment performance
Performing	$	—	$	—	$	21,904	$	7,694	$	—	$	29,598
Nonperforming		597		—		583		—		—		1,180
Total Short Term 1-4    Unit - Purchase	$	597	$	—	$	22,487	$	7,694	$	—	$	30,778
Short Term 1-4 Unit - Refinance
Payment performance
Performing	$	4,548	$	—	$	—	$	—	$	—	$	4,548
Nonperforming		916		—		1,844		8,230		2,346		13,336
Total Short Term 1-4    Unit - Refinance	$	5,464	$	—	$	1,844	$	8,230	$	2,346	$	17,884
Total Portfolio	$	778,659	$	716,452	$	108,585	$	190,496	$	238,591	$	2,032,783
Gross charge-offs - quarter-ended December 31, 2025	$	1,321	$	422	$	—	$	—	$	276	$	2,019
Gross charge-offs - year-ended December 31, 2025	$	4,120	$	751	$	45	$	75	$	467	$	5,458

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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 March 31, 2026 and December 31, 2025 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
March 31, 2026	Past Due		or Nonaccrual		Total		Past Due		or Nonaccrual		Total		or Nonaccrual
	(In thousands)
Commercial - Purchase	$	1,015,768	$	26,626	$	1,042,394	$	937,206	$	31,932	$	969,138	$	(5,306	)
Commercial - Refinance		1,636,186		99,747		1,735,933		1,503,225		111,951		1,615,176		(12,204	)
Residential 1-4 Unit - Purchase		505,396		39,792		545,188		484,156		44,940		529,096		(5,148	)
Residential 1-4 Unit - Refinance		1,468,002		198,982		1,666,984		1,395,278		223,739		1,619,017		(24,757	)
Short Term 1-4 Unit - Purchase		50,033		14,921		64,954		49,474		16,956		66,430		(2,035	)
Short Term 1-4 Unit - Refinance		77,520		21,535		99,055		75,941		24,272		100,213		(2,737	)
Ending balance	$	4,752,905	$	401,603	$	5,154,508	$	4,445,280	$	453,790	$	4,899,070	$	(52,187	)

	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, 2025	Past Due		or Nonaccrual		Total		Past Due		or Nonaccrual		Total		or Nonaccrual
	(In thousands)
Commercial - Purchase	$	917,607	$	34,903	$	952,510	$	841,434	$	41,485	$	882,919	$	(6,582	)
Commercial - Refinance		1,449,157		60,074		1,509,231		1,325,078		70,790		1,395,868		(10,716	)
Residential 1-4 Unit - Purchase		509,464		31,108		540,572		486,499		36,781		523,280		(5,673	)
Residential 1-4 Unit - Refinance		1,431,311		121,826		1,553,137		1,356,593		143,147		1,499,740		(21,321	)
Short Term 1-4 Unit - Purchase		64,004		11,206		75,210		63,552		13,009		76,561		(1,803	)
Short Term 1-4 Unit - Refinance		86,446		12,763		99,209		84,488		14,968		99,456		(2,205	)
Ending balance	$	4,457,989	$	271,880	$	4,729,869	$	4,157,644	$	320,180	$	4,477,824	$	(48,300	)

Note 7 — Receivables Due From Servicers

The following tables summarize receivables due from servicers as of March 31, 2026 and December 31, 2025:

	March 31, 2026
	Securitized Debt		Warehouse and Repurchase Facilities and Other		Total
	(In thousands)
Loan principal payments due from servicers	$	71,980	$	1,834	$	73,814
Other loan servicing receivables		24,481		3,542		28,023
Loan servicing receivables		96,461		5,376		101,837
Corporate and escrow advances receivable		39,710		807		40,517
Total receivables due from servicers	$	136,171	$	6,183	$	142,354

	December 31, 2025
	Securitized Debt		Warehouse and Repurchase Facilities and Other		Total
	(In thousands)
Loan principal payments due from servicers	$	75,922	$	4,221	$	80,143
Other loan servicing receivables		28,972		2,822		31,794
Loan servicing receivables		104,894		7,043		111,937
Corporate and escrow advances receivable		38,027		938		38,965
Total receivables due from servicers	$	142,921	$	7,981	$	150,902

20

Note 8 — Real Estate Owned, Net

As of March 31, 2026, the carrying value of real estate owned was $131.8 million, of which $115.3 million were pledged as collateral for the Company's securitized debt. As of December 31, 2025, the carrying value of real estate owned was $118.3 million, of which $114.5 million were pledged as collateral for the Company's securitized debt.

Note 9 — Mortgage Servicing Rights

Mortgage loans sold with servicing retained are not included in the Consolidated Balance Sheets. 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.

The following table presents the Company's mortgage servicing rights, unpaid principal balance of GNMA loans serviced for GNMA by Century and loans serviced for BPC MC Trust, a related party (see Note 16 — Related Party Transactions), and significant assumptions used in determining the fair value of servicing rights as of March 31, 2026, December 31, 2025, and March 31, 2025:

	Mortgage Servicing Rights		UPB Serviced		Weighted Average Discount Rate			Weighted Average Conditional Prepayment Rate
	($ in thousands)
March 31, 2026
GNMA loans	$	12,485	$	795,352		8.0	%		5.6	%
BPC MC Trust loans		160		118,221		15.0			38.1
Total	$	12,645	$	913,573		8.9			9.8
December 31, 2025
GNMA loans	$	12,748	$	820,070		8.0			5.6
BPC MC Trust loans		215		128,047		15.0			36.5
Total	$	12,963	$	948,117		8.9			9.7
March 31, 2025
GNMA loans	$	12,631	$	798,729		8.0			5.2

The following table presents the Company's mortgage servicing rights activity for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026			2025
	(In thousands)
Balance at the beginning of period	$	12,963		$	13,712
Additions		19			—
Fair value adjustments		(337	)		(1,081	)
Balance at the end of period	$	12,645		$	12,631

Note 10 — Goodwill

The following table presents the activity for goodwill as of March 31, 2026 and December 31, 2025:

	March 31, 2026		December 31, 2025
	(In thousands)
Balance at the beginning of period	$	6,775	$	6,775
Balance at the end of period	$	6,775	$	6,775

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

As of March 31, 2026, the Company is the sole beneficial interest holder of 37 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 March 2030 through March 2056.

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The following tables summarize securitized debt at amortized cost and securitized debt at fair value as of March 31, 2026 and December 31, 2025:

Securitized Debt, at Amortized Cost	March 31, 2026			December 31, 2025
	(In thousands)
Unpaid principal balance	$	1,666,410		$	1,734,350
Deferred issuance costs and discounts		(27,415	)		(28,761	)
Total securitized debt, at amortized cost	$	1,638,995		$	1,705,589

Securitized Debt, at Fair Value	March 31, 2026			December 31, 2025
	(In thousands)
Unpaid principal balance	$	4,445,580		$	4,229,767
Adjustment at issuance to recognize fair value (1)		(28,078	)		(28,022	)
Fair value at issuance		4,417,502			4,201,745
Valuation adjustment subsequent to issuance (2)		8,738			36,875
Fair value adjustment related to refinance of securitization trust		—			(1,883	)
Total securitized debt at fair value	$	4,426,240		$	4,236,737

(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 March 31, 2026 and December 31, 2025:

	Fair Value		Unpaid Principal Balance		Difference
	(In thousands)
March 31, 2026	$	4,426,240	$	4,445,580	$	(19,340	)
December 31, 2025		4,236,737		4,229,767		6,970

The following table presents the effective interest rate of securitized debt at amortized cost and securitized debt at fair value for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026			2025
	($ in thousands)
Interest expense	$	90,304		$	66,583
Average outstanding unpaid principal balance		6,003,318			4,387,277
Effective interest rate (1)		6.02	%		6.07	%

(1)Effective interest rate represents annualized interest expense divided by average gross outstanding balance, which includes average rates of 5.93% and 5.89%, and debt issuance cost amortization of 0.09% and 0.18% for the three months ended March 31, 2026 and 2025, respectively.

Note 12 — Other Debt

Secured and unsecured 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 bore interest at a fixed rate of 7.125% and was to mature on March 15, 2027. Interest on the 2022 Term Loan was paid every six months. As of March 31, 2026 and December 31, 2025, the balance of the 2022 Term Loan was zero and $215.0 million, respectively. The 2022 Term Loan was paid off on January 30, 2026 with proceeds from the issuance and sale of $500.0 million 2026 Term Notes.

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 March 31, 2026 and December 31, 2025, the balance of the 2024 Term Loan was $75.0 million.

22

The total balance of the 2022 Term Loan and the 2024 Term Loan in the Consolidated Balance Sheets is net of debt issuance costs and discount of $1.7 million and $3.3 million as of March 31, 2026 and December 31, 2025, respectively. The secured financing 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 March 31, 2026, the Company was in compliance with all covenants.

(b)Unsecured Senior Notes, Net (Corporate Debt)

On January 30, 2026, Velocity Commercial Capital, LLC (“VCC”) completed the issuance and sale of $500.0 million aggregate principal amount of 9.375% Unsecured Senior Notes due 2031 (the “2026 Term Notes”). The 2026 Term Notes were sold at an offering price equal to 100% of the principal thereof and bear interest at a rate of 9.375% per annum. Interest on the 2026 Term Notes is payable semi-annually in arrears on February 15 and August 15 of each year, beginning on August 15, 2026 and will mature on February 15, 2031. The 2026 Term Notes are guaranteed by the Company on a senior unsecured basis, with no conditions to the guarantee and no additional risks on a consolidated basis as VCC is the Company's primary operating company. After deducting fees and expenses, the net proceeds from the issuance and sale of the 2026 Term Notes were approximately $484.9 million. The 2026 Term Notes were sold in an offering exempt from the registration requirements of the Securities Act of 1933. The balance of the 2026 Term Notes in the Consolidated Balance Sheets is net of debt issuance costs of $14.6 million as of March 31, 2026.

(c) 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 March 31, 2026 and December 31, 2025, the Company was in compliance with all covenants.

23

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 March 31, 2026 and December 31, 2025:

			March 31, 2026							December 31, 2025
	Contract Date	Current 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	$	—	$	60,000		—	%	$	—	$	60,000		6.0	%
The 2013 repurchase agreement	05/17/13	09/23/26		—		400,000		7.6			132,100		400,000		7.6
The 2021/2024 repurchase agreements	1/29/2021 7/25/2024	05/20/26		—		200,000		8.2			105,712		200,000		7.9
The 2021 term repurchase agreement	04/16/21	04/14/28		—		100,000		7.9			18,132		100,000		7.7
The 2023 repurchase agreement	12/27/23	12/27/26		50,000		125,000		11.0	(2)		24,400		125,000		8.8
The 2024 bank credit agreement	11/07/24	05/07/27		49,354		50,000		7.9			30,095		50,000		8.7
Total			$	99,354	$	935,000				$	310,439	$	935,000

(1)Warehouse repurchase facilities amounts on the Consolidated Balance Sheets are net of debt issuance costs, amounting to $1.3 million and $1.9 million as of March 31, 2026 and December 31, 2025, respectively.

(2)The higher effective interest rate for the 2023 repurchase agreement reflects the lower average outstanding balance during the quarter, which resulted from the paydown of the warehouse line using proceeds from the Company's unsecured debt issuance.

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 months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026			2025
	($ in thousands)
Average outstanding balance	$	176,760		$	433,790
Highest outstanding balance at any month-end		201,390			571,834
Effective interest rate (1)		8.43	%		7.84	%

(1)Effective interest rate represents annualized interest expense divided by average gross outstanding balance. The rate includes average rate of 7.10% and 7.45%, and debt issuance cost amortization of 1.33% and 0.39%, for the three months ended March 31, 2026 and 2025, respectively. The 1.33% debt cost amortization rate for the three months ended March 31, 2026, reflects the lower average outstanding balance during the quarter, which resulted from the paydown of warehouse lines with proceeds from the Company's unsecured debt issuance.

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 months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026		2025
	(In thousands)
Warehouse and repurchase facilities	$	3,723	$	8,505
Securitized debt		90,304		66,583
Interest expense — portfolio related		94,027		75,088
Interest expense — Corporate - Secured debt		6,681		6,142
Interest expense — Corporate - Unsecured debt		8,452		—
Total interest expense	$	109,160	$	81,230

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.

24

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 March 31, 2026 and December 31, 2025, 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 March 31, 2026.

(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, were deferred until the uncertainty surrounding them is resolved. As of March 31, 2026, the IRS statute of limitations for the ERC refunds received related to the first and second quarters of 2021 have expired, as such, the Company recognized $2.4 million of ERC as other income during the quarter ended March 31, 2026. The Company continues to defer the third quarter 2021 net ERC refund of $1.3 million until the special six-year IRS statute of limitations expires in 2028. The deferred net ERC refunds of $1.3 million and $4.2 million is included in “Accounts payable and accrued expenses” on the Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025, respectively.

(d)Commitments

Century originated a $25.9 million government-backed construction loan in September 2025. The funded advances (draws) on the construction loan were sold after funding. The unfunded portion of the construction loan totaled $19.8 million as of March 31, 2026.

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 March 31,
	2026		2025
	(In thousands)
Recognized compensation expense:
Options	$	16	$	129
RSAs		1,109		747
PSUs		1,292		907
ESPP		278		187
Total recognized compensation expense	$	2,695	$	1,970

25

	March 31, 2026
	(In thousands)
Unrecognized compensation expense:
Options	$	92
RSAs		8,321
PSUs		7,734
ESPP		281
Total unrecognized compensation expense	$	16,428
Weighted average period expected to be recognized (in years)
Options		1.6
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 table below summarizes stock option activity for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026		2025
	($ in thousands, except per share amounts)
Number of shares:
Options outstanding at beginning of period		786,722		1,065,772
Granted		—		—
Exercised		—		—
Modified		—		—
Forfeited		—		—
Options outstanding at end of period		786,722		1,065,772
Options exercisable at end of period		760,838		749,344
Options expected to vest (1)		25,884		316,428
Weighted average exercise price per share:
Options outstanding at beginning of period	$	13.12	$	14.46
Granted		—		—
Exercised		—		—
Modified		—		—
Forfeited		—		—
Options outstanding at end of period	$	13.12	$	14.46
Options exercisable at end of period		12.96		12.88
Options expected to vest (1)		17.95		18.19
Aggregate intrinsic value (2):
Options outstanding at end of period	$	3,874	$	4,538
Options exercisable at end of period		3,860		4,365
Options expected to vest (1)		14		173
Weighted average remaining contractual life (in years):
Options outstanding at end of period		4.0		6.2
Options exercisable at end of period		3.9		4.8
Options expected to vest (1)		8.5		9.4

(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.

26

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 three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026								2025
	Employee			Non-Employee Director		Total			Employee			Non-Employee Director		Total
Number of shares:
Unvested at beginning of period		494,478			38,461		532,939			355,505			47,430		402,935
Granted		191,061			—		191,061			180,003			—		180,003
Vested		(185,445	)		—		(185,445	)		(163,779	)		—		(163,779	)
Forfeited		—			—		—			—			—		—
Unvested at end of period		500,094			38,461		538,555			371,729			47,430		419,159
Weighted average grant date fair value per share:
Unvested at beginning of period	$	16.95		$	14.83	$	16.79		$	13.52		$	12.03	$	13.34
Granted		19.60			—		19.60			18.82			—		18.82
Vested		14.89			—		14.89			12.92			—		12.92
Forfeited		—			—		—			—			—		—
Unvested at end of period	$	18.73		$	14.83	$	18.44		$	16.35		$	12.03	$	15.86

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 three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026					2025
	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		620,433		$	13.70		517,131		$	12.83
Granted (1)		169,766					155,165			18.82
Performance adjustment		157,994					153,637			10.00
Vested		(307,274	)				(205,500	)		12.63
Forfeited		—					—			—
Outstanding at end of period, unvested		640,919		$	13.26		620,433		$	13.69

(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.

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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. During the three months ended March 31, 2026 and 2025, shares withheld were 228,371 and 115,596, at an average price of $20.00 and $18.70 per share, respectively.

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 months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026		2025
	(In thousands, except per share data)
Basic EPS:
Net income attributable to Velocity Financial, Inc.	$	22,363	$	18,887
Less: undistributed earnings attributable to unvested restricted stock awards		312		233
Net earnings attributable to common stockholders	$	22,051	$	18,654
Weighted average common shares outstanding		38,626		33,687
Basic earnings per common share	$	0.57	$	0.55
Diluted EPS:
Net income attributable to Velocity Financial, Inc.	$	22,363	$	18,887
Weighted average common shares outstanding		38,626		33,687
Add dilutive effects for warrants		—		2,434
Add dilutive effects for stock options		240		237
Add dilutive effects of unvested restricted stock awards		108		128
Add dilutive effects of unvested performance-based stock units		192		322
Add dilutive effects of employee stock purchase plan		8		3
Weighted average diluted common shares outstanding		39,174		36,811
Diluted earnings per common share	$	0.57	$	0.51

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 March 31,
	2026(1)		2025
	(In thousands)
Stock options		34		313
Unvested restricted stock awards		191		180
Unvested performance-based stock units		170		—
Share equivalents excluded from EPS		395		493

(1)Weighted average.

Note 16 — Related Party Transactions

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.

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On December 29, 2025, the Company entered into a Master Flow Mortgage Loan Purchase Agreement (“MLPA”) with BPC MC Trust (a Beach Point Capital affiliate) to sell $128.9 million of nonperforming loans. Beach Point Capital is a related party of the Company. The sale was servicing retained whereby the Company sold whole loans, but retained the servicing rights to the loans. The MLPA contained standard loan level and corporate representations and warranties from the Company as the seller under the agreement. The Company entered into a Servicing Agreement to service and special service the loans for a fee. In addition to the servicing fee, the Company is entitled to a disposition fee of the unpaid principal balance of all loans that are paid off or resolved through an REO sale. This fee is not due on loans that are paid current. The Company also entered into a Servicing Fee Incentive Side Letter with the BPC MC Trust that provides further incentives to the Company based on meeting certain future Internal Rate of Return (“IRR”) hurdles.

The Company recognized $19.3 million gain from the sale of nonperforming loans to BPC MC Trust on December 29, 2025. The Company also recognized mortgage servicing rights of $0.2 million as of December 31, 2025. The mortgage servicing right is approximately $0.2 million as of March 31, 2026, which is included in “Mortgage servicing rights, at fair value” on the Consolidated Balance Sheets.” See Note 9— Mortgage Servicing Rights.

The following table presents the related party transactions completed during the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026		2025
	(In thousands)
Securitized debt issued to related parties (1)	$	6,750	$	—

(1)The 2026-1 Loan Trust included $6.75 million of securitized debt issued to related parties. The 2026-1 Loan Trust was a broadly marketed securitization through the Company’s normal securitization process.

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 March 31, 2026, 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 March 31, 2026 and 2025, $206 thousand and $62 thousand, respectively, of after-tax net losses on terminated derivative instruments were reclassified from AOCI to interest expense. As of March 31, 2026 and 2025, the Company had $2.3 million and $1.8 million of after-tax net unrealized loss, respectively, associated with cash flow hedging instruments recorded in AOCI. As of March 31, 2026, the Company expects to reclassify an estimated $0.9 $0.9 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 March 31, 2026 and December 31, 2025:

		March 31, 2026
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	$	197,000	$	464

		December 31, 2025
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	$	215,000	$	66

(1)Fair value reported is exclusive of collateral held and pledged, related to derivative exposure between the Company and its derivative counterparty. As of March 31, 2026, no collateral was pledged to its derivative counterparty. As of December 31, 2025, $0.1 million 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.

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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 months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026			2025
	(In thousands)
Beginning balance	$	(2,602	)	$	(805	)
Net unrealized gain (loss) on cash flow hedges arising during the period, net of tax		86			(1,056	)
Reclassification adjustments included in net income		206			62
Ending balance	$	(2,310	)	$	(1,799	)

The following tables present the components of other comprehensive income (loss) and the related tax effect for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
	2026							2025
	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	$	172	$	(86	)	$	86	$	(1,488	)	$	432		$	(1,056	)
Reclassification adjustments included in net income		290		(84	)		206		88			(26	)		62
Other comprehensive income (loss)	$	462	$	(170	)	$	292	$	(1,400	)	$	406		$	(994	)

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:

oLevel 1 - Valuation is based on quoted prices for identical instruments traded in active markets.

oLevel 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.

oLevel 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.

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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 and Unsecured Financing, Net (“Corporate Debt”)

The Company determined the fair values estimate of the secured and unsecured 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.

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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 March 31, 2026 and December 31, 2025, by level, in the fair value hierarchy:

	Fair Value Measurements Using						Total at
March 31, 2026	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets:
Nonrecurring fair value measurements:
Individually evaluated loans requiring specific allowance, net	$	—	$	—	$	10,505	$	10,505
Real estate owned, net		—		—		131,849		131,849
Total nonrecurring fair value measurements		—		—		142,354		142,354
Recurring fair value measurements:
Loans held for investment, at fair value		—		—		5,154,508		5,154,508
Mortgage servicing rights		—		—		12,645		12,645
Derivative assets		—		464		—		464
Total recurring fair value measurements		—		464		5,167,153		5,167,617
Total assets	$	—	$	464	$	5,309,507	$	5,309,971
Liabilities:
Recurring fair value measurements:
Securitized debt, at fair value	$	—	$	4,426,240	$	—	$	4,426,240
Total recurring fair value measurements		—		4,426,240		—		4,426,240
Total liabilities	$	—	$	4,426,240	$	—	$	4,426,240

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	Fair Value Measurements Using						Total at
December 31, 2025	Level 1		Level 2		Level 3		Fair Value
	(In thousands)
Assets:
Nonrecurring fair value measurements:
Individually evaluated loans requiring specific allowance, net	$	—	$	—	$	10,830	$	10,830
Real estate owned, net		—		—		118,289		118,289
Total nonrecurring fair value measurements		—		—		129,119		129,119
Recurring fair value measurements:
Loans held for investment, at fair value		—		—		4,729,869		4,729,869
Mortgage servicing rights		—		—		12,963		12,963
Derivative assets		—		66		—		66
Total recurring fair value measurements		—		66		4,742,832		4,742,898
Total assets	$	—	$	66	$	4,871,951	$	4,872,017
Liabilities:
Recurring fair value measurements:
Securitized debt, at fair value	$	—	$	4,236,737	$	—	$	4,236,737
Total recurring fair value measurements		—		4,236,737		—		4,236,737
Total liabilities	$	—	$	4,236,737	$	—	$	4,236,737

The following table presents gains and losses recognized on assets measured on a nonrecurring basis for the three months ended March 31, 2026 and 2025:

	Three Months Ended March 31,
Gain (Loss) on Assets Measured on a Nonrecurring Basis	2026			2025
	(In thousands)
Real estate owned, net	$	(3,217	)	$	(2,073	)
Individually evaluated loans requiring specific allowance, net		(88	)		(400	)
Total net loss	$	(3,305	)	$	(2,473	)

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 March 31, 2026 and December 31, 2025:

	March 31, 2026
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Input	Range	Weighted Average (1)
	($ in thousands)
Nonrecurring:
Individually evaluated    loans requiring specific    allowance, net	$	10,505	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		131,849	Market comparables	Selling costs	8.0%	8.0%
Recurring:
Loans held for investment,    at fair value	$	5,154,508	Discounted cash flow	Discount rate	7.6%	7.6%
				Prepayment rate	0.0% to 65.0%	12.8%
				Default rate	0.5% to 6.0%	1.4%
				Loss severity rate	0.0% to 20.6%	9.1%
Mortgage servicing rights - GNMA loans		12,485	Discounted cash flow	Discount rate	8.0% to 12.0%	8.0%
				Prepayment rate	2.2% to 12.1%	5.6%
Mortgage servicing rights - BPC MC Trust loans		160	Discounted cash flow	Discount rate	15.0%	15.0%
				Prepayment rate	3.9% to 63.9%	38.1%

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(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, 2025
Asset Category	Fair Value		Primary Valuation Technique	Unobservable Input	Range	Weighted Average (1)
	($ in thousands)
Nonrecurring:
Individually evaluated    loans requiring specific    allowance, net	$	10,830	Market comparables	Selling costs	8.0%	8.0%
Real estate owned, net		118,289	Market comparables	Selling costs	8.0%	8.0%
Recurring:
Loans held for investment,    at fair value	$	4,729,869	Discounted cash flow	Discount rate	7.6%	7.6%
				Prepayment rate	0.0% to 65.0%	12.0%
				Default rate	0.4% to 6.0%	1.0%
				Loss severity rate	0.0% to 8.7%	1.0%
Mortgage servicing rights - GNMA loans		12,748	Discounted cash flow	Discount rate	8.0%	8.0%
				Prepayment rate	2.2% to 12.0%	5.6%
Mortgage servicing rights - BPC MC Trust loans		215	Discounted cash flow	Discount rate	15.0%	15.0%
				Prepayment rate	4.9% to 54.1%	36.5%

(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 March 31,
	2026		2025
	(In thousands)
Beginning balance	$	4,729,869	$	2,766,951
Originations		637,146