Earnings Per Share

3 Months Ended

Mar. 31, 2026

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.