Walker & Dunlop 8K Third quarter 2024 Earnings Release | WD 7 Nov 24

Third quarter 2024 Earnings Release

Exhibit 99.1

Walker & Dunlop Reports Third Quarter 2024 Financial Results

36% Increase in Total Transaction Volume Drives 33% Increase in Diluted Earnings Per Share

THIRD QUARTER 2024 HIGHLIGHTS

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Total transaction volume of $11.6 billion, up 36% from Q3’23

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Total revenues of $292.3 million, up 9% from Q3’23

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Net income of $28.8 million and diluted earnings per share of $0.85, up 34% and 33%, respectively, from Q3’23

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Adjusted EBITDA⁽¹⁾of $78.9 million, up 7% from Q3’23

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Adjusted core EPS⁽²⁾ of $1.19, up 7% from Q3’23

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Servicing portfolio of $134.1 billion as of September 30, 2024, up 4% from September 30, 2023

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Declared quarterly dividend of $0.65 per share for the fourth quarter 2024

YEAR-TO-DATE 2024 HIGHLIGHTS

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Total transaction volume of $26.5 billion, up 12% from 2023

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Total revenues of $791.0 million, up 1% from 2023

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Net income of $63.3 million and diluted earnings per share of $1.87, down 16% and 17%, respectively, from 2023

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Adjusted EBITDA⁽¹⁾of $234.0 million, up 10% from 2023

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Adjusted core EPS⁽²⁾ of $3.60, up 11% from 2023

BETHESDA, MD – NOVEMBER 7, 2024 – Walker & Dunlop, Inc. (NYSE: WD) (the “Company,” or “Walker & Dunlop”) reported quarterly total transaction volume of $11.6 billion, up 36% from the third quarter of 2023, which drove total revenues of $292.3 million, up 9% year over year. Net income for the third quarter of 2024 was up 34% year over year to $28.8 million, while diluted earnings per share of $0.85 was up 33%. Adjusted EBITDA increased 7% to $78.9 million, reflecting the growth in transaction volumes year over year. Adjusted core EPS, which removes primarily non-cash revenues and expenses, was up 7% year over year to $1.19. The Company’s Board of Directors declared a dividend of $0.65 per share for the fourth quarter 2024.

“The commercial real estate market continues to improve, supported by strong fundamentals that are attracting capital to the market and driving an increase in acquisition and financing activity,” commented Walker & Dunlop Chairman and CEO Willy Walker. “As a result, nearly all of our key financial results improved in the third quarter, including a 33% year-over-year increase in diluted earnings per share to $0.85 driven by $11.6 billion of total transaction volume, up 36% year over year and 37% sequentially from Q2’24.”

“We carried the market’s momentum into the fourth quarter, and while rate movements and the presidential election have been headwinds, it is our belief that we are at the beginning of the next commercial real estate cycle where profits will be harvested, loans will be refinanced, and capital will be deployed – all generating demand for Walker & Dunlop’s capital and services,” continued Walker. “Our scaled servicing and asset management business will continue to generate strong recurring cash revenues as our Capital Markets business recovers and grows in the next cycle. Our continued investments in the people of Walker & Dunlop, our brand, and our technology position us extremely well to grow our financial results on the top and bottom line over the next several years.”

(1)

Adjusted EBITDA is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of adjusted EBITDA to net income, refer to the sections of this press release below titled “Non-GAAP Financial Measures,” “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP by Segment.”

(2)

Adjusted core EPS is a non-GAAP financial measure the Company presents to help investors better understand our operating performance. For a reconciliation of Adjusted core EPS to Diluted EPS, refer to the sections of this press release below titled “Non-GAAP Financial Measures” and “Adjusted Core EPS Reconciliation.”

Third quarter 2024 Earnings Release

CONSOLIDATED THIRD QUARTER 2024

OPERATING RESULTS


TRANSACTION VOLUMES
(in thousands)		Q3 2024		Q3 2023	$ Variance		% Variance
Fannie Mae	$	2,001,356	$	1,739,332	$	262,024	15	%
Freddie Mac		1,545,939		1,072,048		473,891	44
Ginnie Mae - HUD		272,054		86,557		185,497	214
Brokered ⁽¹⁾		4,028,208		3,149,457		878,751	28
Principal Lending and Investing ⁽²⁾		165,875		-		165,875	N/A
Debt financing volume	$	8,013,432	$	6,047,394	$	1,966,038	33	%
Property sales volume		3,602,675		2,508,073		1,094,602	44
Total transaction volume	$	11,616,107	$	8,555,467	$	3,060,640	36	%

(1)	Brokered transactions for life insurance companies, commercial banks, and other capital sources.

(2)	Includes debt financing volumes from our interim loan program, our interim loan joint venture, and Walker & Dunlop Investment Partners, Inc. (“WDIP”) separate accounts.

DISCUSSION OF QUARTERLY RESULTS:

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As interest rates stabilized during the third quarter of 2024, capital flows increased causing a surge in multifamily property sales this quarter. Consequently, our property sales volume increased dramatically to $3.6 billion, a 44% increase over the third quarter of 2023.

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The acceleration of multifamily property sales activity caused an increased need for debt financing, as many sales transactions rely on debt financing. Fannie Mae and Freddie Mac are the largest providers of capital to the multifamily sector, and we are the largest Fannie Mae lender and third largest Freddie Mac lender. Consequently, our lending volumes with the GSE’s grew to a combined $3.5 billion during the third quarter of 2024, an increase of 26% over the same quarter last year.

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The year-over-year increase in HUD financing volume solidified Walker & Dunlop as the 2^nd largest HUD lender for their fiscal year ended September 30, 2024, up from 5^th in 2023.

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The 28% increase in brokered volume was primarily the result of an expanding supply of capital from life insurance companies, banks, CMBS and other private capital providers, highlighted by a $1.2 billion refinancing of a marquee mixed-use property in the current quarter.


MANAGED PORTFOLIO
(dollars in thousands, unless otherwise noted)		Q3 2024		Q3 2023	$ Variance		% Variance
Fannie Mae	$	66,068,212	$	62,850,853	$	3,217,359	5	%
Freddie Mac		40,090,158		38,656,136		1,434,022	4
Ginnie Mae - HUD		10,727,323		10,320,520		406,803	4
Brokered		17,156,810		17,091,925		64,885	-
Principal Lending and Investing		38,043		40,000		(1,957)	(5)
Total Servicing Portfolio	$	134,080,546	$	128,959,434	$	5,121,112	4	%
Assets under management		18,210,452		17,334,877		875,575	5
Total Managed Portfolio	$	152,290,998	$	146,294,311	$	5,996,687	4	%
Custodial escrow account balance at period end (in billions)	$	3.1	$	2.8
Weighted-average servicing fee rate (basis points)		24.1		24.2
Weighted-average remaining servicing portfolio term (years)		7.7		8.4

Third quarter 2024 Earnings Release

DISCUSSION OF QUARTERLY RESULTS:

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Our servicing portfolio continues to expand as a result of additional Agency debt financing volumes over the past 12 months, partially offset by principal paydowns and loan payoffs.

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During the third quarter of 2024, we added $1.3 billion of net loans to our servicing portfolio, and over the past 12 months, we added $5.1 billion of net loans to our servicing portfolio, almost all of which were Agency loans.

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$11.4 billion of Agency loans in our servicing portfolio are scheduled to mature over the next two years. These loans, with a lower weighted-average servicing fee of 22.6 basis points, represent only 10% of the total Agency loans in our portfolio.

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The mortgage servicing rights (“MSRs”) associated with our servicing portfolio had a fair value of $1.4 billion as of both September 30, 2024 and 2023.

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Assets under management as of September 30, 2024 consisted of $15.8 billion of low-income housing tax credit (“LIHTC”) funds, $1.5 billion of debt funds, and $1.0 billion of equity funds managed by Walker & Dunlop Investment Partners, Inc. The 5% increase in assets under management was due to increases in all three categories.


KEY PERFORMANCE METRICS
(in thousands, except per share amounts)		Q3 2024			Q3 2023		$ Variance		% Variance
Walker & Dunlop net income	$	28,802		$	21,458		$	7,344	34	%
Adjusted EBITDA		78,905			74,065			4,840	7
Diluted EPS	$	0.85		$	0.64		$	0.21	33	%
Adjusted core EPS	$	1.19		$	1.11		$	0.08	7	%
Operating margin		13	%		10	%
Return on equity		7			5
Key Expense Metrics (as a % of total revenues):
Personnel expenses		50	%		51	%
Other operating expenses		11			11

DISCUSSION OF QUARTERLY RESULTS:

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Net income and diluted EPS increased 34% and 33%, respectively, in the third quarter of 2024 compared to the same period in 2023, primarily driven by higher origination fees and non-cash MSR income from increased Agency debt financing volume year over year. The increase in net income also drove the increase in return on equity to 7% for the third quarter of 2024.

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The 7% increase in adjusted EBITDA was largely due to higher origination fees, servicing fees, and property sale broker fees, partially offset by decreases in investment management fees, and other revenues and increases in variable personnel expenses tied to higher transaction activity, and other operating expenses.

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Adjusted core EPS, which excludes, among other items, the impacts of non-cash MSR income and amortization, the provision for credit losses, and acquisition-related costs, such as amortization of intangible assets, rose to $1.19 from $1.11 in the third quarter of 2024. The increase was largely due to the same factors causing the increase in adjusted EBITDA.

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The operating margin increase in the third quarter of 2024 was largely due to the growth in total transaction volume that drove a 33% increase to our income from operations.

Third quarter 2024 Earnings Release


KEY CREDIT METRICS
(in thousands)		Q3 2024			Q3 2023		$ Variance		% Variance
At-risk servicing portfolio ⁽¹⁾	$	61,237,535		$	57,857,659		$	3,379,876	6	%
Maximum exposure to at-risk portfolio ⁽²⁾		12,454,158			11,750,068			704,090	6
Defaulted loans ⁽³⁾	$	59,645		$	—		$	N/A	N/A	%
Key credit metrics (as a % of the at-risk portfolio):
Defaulted loans		0.10	%		0.00	%
Allowance for risk-sharing		0.05			0.05
Key credit metrics (as a % of maximum exposure):
Allowance for risk-sharing		0.24	%		0.26	%

(1)

At-risk servicing portfolio is defined as the balance of Fannie Mae Delegated Underwriting and Servicing (“DUS”) loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio.

For example, a $15 million loan with 50% risk-sharing has the same potential risk exposure as a $7.5 million loan with full DUS risk sharing. Accordingly, if the $15 million loan with 50% risk-sharing were to default, we would view the overall loss as a percentage of the at-risk balance, or $7.5 million, to ensure comparability between all risk-sharing obligations. To date, substantially all of the risk-sharing obligations that we have settled have been from full risk-sharing loans.

(2)

Represents the maximum loss we would incur under our risk-sharing obligations if all of the loans we service, for which we retain some risk of loss, were to default and all of the collateral underlying these loans was determined to be without value at the time of settlement. The maximum exposure is not representative of the actual loss we would incur.

(3)

Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e., loans where we have assessed a probable loss). Other loans that are delinquent but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here.

DISCUSSION OF QUARTERLY RESULTS:

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Our at-risk servicing portfolio, which is comprised of loans subject to a defined risk-sharing formula, increased primarily due to the level of Fannie Mae loans added to the portfolio during the past 12 months. We take credit risk exclusively on loans backed by multifamily assets and have no credit exposure to losses in any other sector of the commercial real estate lending market.

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As of September 30, 2024, seven at-risk loans were in default with an aggregate unpaid principal balance (“UPB”) of $59.6 million compared to none as of September 30, 2023. The collateral-based reserves on defaulted loans were $6.5 million and zero as of September 30, 2024 and September 30, 2023, respectively. The approximately 3,000 remaining loans in the at-risk servicing portfolio continue to exhibit strong credit quality, with low levels of delinquencies and strong operating performance of the underlying properties in the portfolio.

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During the first quarter of 2024, we repurchased a Fannie Mae loan for $13.5 million in cash. We have an immaterial reserve for credit losses related to this loan. In 2023, we received repurchase requests from Freddie Mac related to two loans with UPBs of $11.4 million and $34.8 million, respectively. In the first quarter of 2024, we entered into forbearance and indemnification agreements with Freddie Mac that, among other things, delayed the repurchases of these loans and transferred the risk of loss for both loans from Freddie Mac to Walker & Dunlop. The forbearance and indemnification agreement for one of the loans was extended during the third quarter of 2024, and both now expire in March 2025. As of September 30, 2024, the aggregate UPB of repurchased and indemnified loans totaled $61.8 million, and we have recorded collateral based reserves of $8.4 million for those loans.

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During the third quarter of 2024, we recorded a provision for credit losses of $3.0 million, primarily related to an increase in the estimated losses associated with the portfolio of repurchased and indemnified assets described in the previous bullet point.

Third quarter 2024 Earnings Release

THIRD QUARTER 2024

FINANCIAL RESULTS BY SEGMENT

Interest expense on corporate debt is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s use of that corporate debt. Income tax expense is determined at a consolidated corporate level and allocated to each segment proportionally based on each segment’s income from operations, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity. The following details explain the changes in these expense items at a consolidated corporate level:

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Interest expense on corporate debt increased 4% from the third quarter of 2023, primarily due to an increase in interest expense on borrowings to support our LIHTC operations, which is included as a component of interest expense on corporate debt.

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Income tax expense increased $1.8 million, or 25%, from the third quarter of 2023, primarily as a result of the 33% increase in income from operations, partially offset by a decrease in the effective tax rate from 25% to 24% year over year. The decrease in the effective tax rate was primarily due to a $1.1 million tax adjustment to our international tax accruals due to a lower than estimated amount of taxes in our 2022 return, which was recently filed timely.


FINANCIAL RESULTS – CAPITAL MARKETS
(in thousands)		Q3 2024			Q3 2023			$ Variance	% Variance
Loan origination and debt brokerage fees, net ("origination fees")	$	72,723		$	56,149		$	16,574	30	%
Fair value of expected net cash flows from servicing, net ("MSR income")		43,426			35,375			8,051	23
Property sales broker fees		19,322			16,862			2,460	15
Net warehouse interest income (expense), loans held for sale ("LHFS")		(2,798)			(2,565)			(233)	(9)
Other revenues		11,039			11,875			(836)	(7)
Total revenues	$	143,712		$	117,696		$	26,016	22	%
Personnel	$	104,987		$	97,973		$	7,014	7	%
Amortization and depreciation		1,137			1,137			—	—
Interest expense on corporate debt		4,888			4,874			14	0
Goodwill impairment		—			14,000			(14,000)	(100)
Fair value adjustments to contingent consideration liabilities		(1,366)			(14,000)			12,634	90
Other operating expenses		5,137			4,193			944	23
Total expenses	$	114,783		$	108,177		$	6,606	6	%
Income (loss) from operations	$	28,929		$	9,519		$	19,410	204	%
Income tax expense (benefit)		7,073			2,386			4,687	196
Net income (loss) before noncontrolling interests	$	21,856		$	7,133		$	14,723	206	%
Less: net income (loss) from noncontrolling interests		26			83			(57)	(69)
Walker & Dunlop net income (loss)	$	21,830		$	7,050		$	14,780	210	%
Key revenue metrics (as a % of debt financing volume):
Origination fee rate ⁽¹⁾		0.93	%		0.93	%
MSR rate ⁽²⁾		0.55			0.58
Agency MSR rate ⁽³⁾		1.14			1.22
Key performance metrics:
Operating margin		20	%		8	%
Adjusted EBITDA	$	(4,601)		$	(15,704)		$	11,103	71	%

(1)	Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(2)	MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(3)	MSR income as a percentage of Agency debt financing volume.

Third quarter 2024 Earnings Release

CAPITAL MARKETS – DISCUSSION OF QUARTERLY RESULTS:

The Capital Markets segment includes our Agency lending, debt brokerage, property sales, appraisal and valuation services, investment banking, and housing market research businesses.

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Origination fees increased in the third quarter of 2024 primarily because of the increase in debt financing volume. MSR income increased primarily due to 32% growth in Agency financing volume that was partially offset by a decline in the Agency MSR rate, largely driven by a decrease in FNMA loans as a percentage of Agency debt financing volume during the quarter.

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Property sales broker fees increased year over year as a result of the 44% increase in property sales volumes, partially offset by a decrease in the fee margin.

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Personnel expense increased in the third quarter of 2024 primarily due to an increase in commission expenses related to higher origination fees and property sales broker fees, and an increase in subjective bonus expense tied to overall company performance.

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During the third quarter of 2024, the fair value adjustments made to contingent consideration liabilities were associated with a much smaller acquisition than those made in the prior year, leading to the change year over year. Additionally, the fair value adjustments made in the third quarter of 2024 did not trigger a goodwill impairment consideration event, while the adjustments in the third quarter of 2023 did, resulting in the decrease in goodwill impairment year over year.

Third quarter 2024 Earnings Release


FINANCIAL RESULTS – SERVICING & ASSET MANAGEMENT
(in thousands)		Q3 2024			Q3 2023			$ Variance	% Variance
Origination fees	$	823		$	—		$	823	N/A	%
Servicing fees		82,222			79,200			3,022	4
Investment management fees		11,744			13,362			(1,618)	(12)
Net warehouse interest income, loans held for investment ("LHFI")		651			534			117	22
Placement fees and other interest income		40,299			39,475			824	2
Other revenues		9,145			15,569			(6,424)	(41)
Total revenues	$	144,884		$	148,140		$	(3,256)	(2)	%
Personnel	$	20,951		$	17,139		$	3,812	22	%
Amortization and depreciation		54,668			54,375			293	1
Provision (benefit) for credit losses		2,850			421			2,429	577
Interest expense on corporate debt		11,711			11,096			615	6
Other operating expenses		6,611			5,039			1,572	31
Total expenses	$	96,791		$	88,070		$	8,721	10	%
Income (loss) from operations	$	48,093		$	60,070		$	(11,977)	(20)	%
Income tax expense (benefit)		10,756			15,040			(4,284)	(28)
Net income (loss) before noncontrolling interests	$	37,337		$	45,030		$	(7,693)	(17)	%
Less: net income (loss) from noncontrolling interests		(145)			(397)			252	63
Walker & Dunlop net income (loss)	$	37,482		$	45,427		$	(7,945)	(17)	%
Key performance metrics:
Operating margin		33	%		41	%
Adjusted EBITDA	$	117,455		$	124,849		$	(7,394)	(6)	%

SERVICING & ASSET MANAGEMENT – DISCUSSION OF QUARTERLY RESULTS:

The Servicing & Asset Management segment includes loan servicing, principal lending and investing, management of third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate, and real estate-related investment banking and advisory services.

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The $5.1 billion net increase in the servicing portfolio over the past 12 months was the principal driver of the growth in servicing fees year over year, partially offset by a slight decrease in the weighted-average servicing fee year over year.

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Investment management fees decreased primarily due to a decline in the accrual for investment management fees from our LIHTC funds resulting from lower anticipated revenues for the year.

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Other revenues primarily decreased as a result of lower syndication and other revenues related to a 78% decline in gross equity raised year over year, as the closing of one of our LIHTC funds was delayed in the third quarter of 2024.

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Personnel expense increased primarily due to increased salaries and benefits resulting from an 8% increase in average segment headcount year over year combined with an increase in variable compensation costs.

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The provision for credit losses in 2024 was primarily attributable to the $3.0 million increase in the fair value of the forbearance and indemnification agreements with Freddie Mac, as noted above in our Key Credit Metrics, with no comparable activity in the prior year.

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Other operating expenses increased primarily as a result of costs associated with operating properties controlled through loan repurchase or indemnification, with no comparable activity in the prior year.

Third quarter 2024 Earnings Release


FINANCIAL RESULTS – CORPORATE
(in thousands)		Q3 2024		Q3 2023		$ Variance	% Variance
Other interest income	$	3,258	$	3,525	$	(267)	(8)	%
Other revenues		450		(618)		1,068	173
Total revenues	$	3,708	$	2,907	$	801	28	%
Personnel	$	19,600	$	21,395	$	(1,795)	(8)	%
Amortization and depreciation		1,756		1,967		(211)	(11)
Interest expense on corporate debt		1,633		1,624		9	1
Other operating expenses		20,236		19,297		939	5
Total expenses	$	43,225	$	44,283	$	(1,058)	(2)	%
Income (loss) from operations	$	(39,517)	$	(41,376)	$	1,859	4	%
Income tax expense (benefit)		(9,007)		(10,357)		1,350	13
Walker & Dunlop net income (loss)	$	(30,510)	$	(31,019)	$	509	2	%
Key performance metric:
Adjusted EBITDA	$	(33,949)	$	(35,080)	$	1,131	3	%

CORPORATE – DISCUSSION OF QUARTERLY RESULTS:

The Corporate segment consists of corporate-level activities including accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups (“support functions”). The Company does not allocate costs from these support functions to its other segments in presenting segment operating results.

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Other revenues, which primarily consist of gains and losses on equity-method investments, shifted from a loss in the third quarter of 2023 to a gain in the third quarter of 2024.

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The decrease in personnel expense was primarily driven by a decrease in subjective bonus expenses tied to company performance, principally for our executive officers. This decrease was partially offset by an increase in salaries and benefits from a 2% higher average segment headcount year over year.

Third quarter 2024 Earnings Release

YEAR-TO-DATE 2024

CONSOLIDATED OPERATING RESULTS

●

Interest expense on corporate debt increased $3.9 million, or 8%, from 2023, primarily as a result of an increase in interest rates on our term loan year over year, as our term loan carries a floating interest rate. Additionally, interest expense on borrowings to support our LIHTC operations, which is also included as a component of interest expense on corporate debt, increased year over year as the amount of borrowings increased.

●

Income tax expense decreased $5.1 million, or 21%, from 2023, primarily as a result of the 20% decrease in income from operations and the aforementioned decrease in international tax accruals.


OPERATING RESULTS AND KEY PERFORMANCE METRICS
(in thousands)		YTD Q3 2024			YTD Q3 2023		$ Variance		% Variance
Debt financing volume	$	20,158,458		$	17,781,027		$	2,377,431	13	%
Property sales volume		6,300,609			5,907,138			393,471	7
Total transaction volume	$	26,459,067		$	23,688,165		$	2,770,902	12	%
Total revenues		791,039			780,104			10,935	1
Total expenses		711,658			681,274			30,384	4
Walker & Dunlop net income	$	63,331		$	75,758		$	(12,427)	(16)	%
Adjusted EBITDA		233,972			212,541			21,431	10
Diluted EPS	$	1.87		$	2.25		$	(0.38)	(17)	%
Adjusted core EPS	$	3.60		$	3.25		$	0.35	11	%
Operating margin		10	%		13	%
Return on equity		5			6

DISCUSSION OF YEAR-TO-DATE RESULTS:

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The 12% increase in total transaction volume was primarily driven by the 27% increase in brokered debt financing volume and 7% increase in property sales financing volume, partially offset by a 17% decline in Fannie Mae debt financing volume.

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The 16% decrease in Walker & Dunlop net income was primarily as a result of a 20% decrease in income from operations driven by: (i) a 9% decline in non-cash MSR income from lower Fannie Mae debt financing volume, (ii) a 16% decrease in other revenues, (iii) a net provision for credit losses in 2024 compared to a net benefit in 2023, and (iv) a 12% increase in other operating expenses. These factors driving income from operations down were partially offset by a (i) 9% increase in origination fees due to the increase in debt financing volume, partially offset by a decrease in Agency debt financing volume as a percentage of overall debt financing volume; (ii) 5% growth in servicing fees, and (iii) a 13% increase in placement fees and other interest income primarily due to elevated earnings rates on deposits tied to short-term interest rates.

●

The decrease in other revenues was primarily attributable to (i) a decrease in investment banking revenues year over year, as we closed the largest investment banking transaction in our history in 2023 with no similar transaction in the current year, (ii) a decline in syndication and other revenues related to a decline in gross equity raised year over year as the closing of one of our LIHTC funds was delayed in the third quarter of 2024, and (iii) the write-off of debt premium related to the payoff of fixed-rate debt in 2023 with no comparable activity in 2024.

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The provision for credit losses in 2024 was primarily related to a $7.6 million provision for other credit losses related to repurchased and indemnified loans discussed above in our Key Credit Metrics, with no comparable activity in 2023. The net benefit for credit losses in 2023 related primarily an annual update of our historical loss rate.

Third quarter 2024 Earnings Release

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The increase in other operating expenses was primarily related to increases in expenses associated with multi-year software and data contracts that are used throughout our business, and miscellaneous expenses, including the costs associated with operating properties noted above.

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Adjusted EBITDA increased 10% primarily due to increased origination fees, servicing fees, and placement fees and other interest income and a decrease in net write-offs, partially offset by decreases in investment management fees and other revenues and increases in personnel and other operating expenses.

●

Diluted EPS decreased 17% year over year, compared to an 11% increase in our adjusted core EPS year over year. The main drivers of the difference between diluted EPS and adjusted core EPS relate to a decrease in non-cash MSR income and an increase to non-cash provision for credit loss expenses, which are removed from adjusted core EPS. Diluted EPS incorporates the impact of those items, while adjusted core EPS excludes those items and reflects the year-over-year growth of our recurring revenue streams. Additionally, net write-offs, a cash-related reduction for adjusted core EPS decreased, resulting in increased adjusted core EPS. This cash-related reduction for adjusted core EPS is not included in diluted EPS.

●

Operating margin decreased primarily due to changes in our non-cash activity, including: (i) a decline of MSR income due to lower Fannie Mae debt financing volume, (ii) a change from a large benefit for credit losses in 2023 to a provision for credit losses in 2024, and (iii) other changes as noted above describing the decrease in income from operations.

Third quarter 2024 Earnings Release

YEAR-TO-DATE 2024

FINANCIAL RESULTS BY SEGMENT


FINANCIAL RESULTS – CAPITAL MARKETS
(in thousands)		YTD Q3 2024			YTD Q3 2023			$ Variance	% Variance
Origination fees	$	180,264		$	167,679		$	12,585	8	%
MSR income		97,673			107,446			(9,773)	(9)
Property sales broker fees		39,408			38,831			577	1
Net warehouse interest income (expense), LHFS		(6,322)			(7,006)			684	10
Other revenues		32,756			40,735			(7,979)	(20)
Total revenues	$	343,779		$	347,685		$	(3,906)	(1)	%
Personnel	$	276,655		$	281,502		$	(4,847)	(2)	%
Amortization and depreciation		3,412			3,412			—	—
Interest expense on corporate debt		15,038			13,870			1,168	8
Goodwill impairment		—			14,000			(14,000)	(100)
Fair value adjustments to contingent consideration liabilities		(1,366)			(14,000)			12,634	90
Other operating expenses		14,831			15,037			(206)	(1)
Total expenses	$	308,570		$	313,821		$	(5,251)	(2)	%
Income (loss) from operations	$	35,209		$	33,864		$	1,345	4	%
Income tax expense (benefit)		8,689			8,462			227	3
Net income (loss) before noncontrolling interests	$	26,520		$	25,402		$	1,118	4	%
Less: net income (loss) from noncontrolling interests		353			1,741			(1,388)	(80)
Walker & Dunlop net income (loss)	$	26,167		$	23,661		$	2,506	11	%
Key revenue metrics (as a % of debt financing volume):
Origination fee rate		0.91	%		0.94	%
MSR rate		0.49			0.60
Agency MSR rate		1.14			1.20
Key performance metrics:
Operating margin		10	%		10	%
Adjusted EBITDA	$	(32,431)		$	(44,725)		$	12,294	27	%

CAPITAL MARKETS – DISCUSSION OF YEAR-TO-DATE RESULTS:

●

The increase in origination fees was largely driven by a 13% increase in debt financing volume year over year, partially offset by a slight decline in our origination fee rate due to the shift in the mix of our debt financing volume towards brokered debt financing volume.

●

The decreases in our MSR income and Agency MSR rate were primarily attributable to a decline in Fannie Mae debt financing volume in 2024. Fannie Mae volume as a percentage of total debt financing volume decreased from 30% to 22% year over year. Fannie Mae loans produce higher MSR income compared to our other product types, due to their higher weighted average servicing fees.

Third quarter 2024 Earnings Release

●

The decrease in other revenues was primarily related to the closing of the largest investment banking deal in the Company’s history, a $7.5 million transaction, which closed in the first quarter of 2023, with no comparable transaction in 2024.

●

Personnel expense decreased year over year primarily as a result of a 7% lower average segment headcount, partially offset by increased commission costs related to higher origination fees in 2024.

●

During 2024, the fair value adjustments made to contingent consideration liabilities were associated with a much smaller acquisition than those made in the prior year, leading to the change year over year. Additionally, the fair value adjustments made in 2024 did not trigger a goodwill impairment consideration event, while the adjustments in 2023 did, resulting in the decrease in goodwill impairment year over year.


FINANCIAL RESULTS – SERVICING & ASSET MANAGEMENT
(in thousands)		YTD Q3 2024			YTD Q3 2023			$ Variance	% Variance
Origination fees	$	2,356		$	522		$	1,834	351	%
Servicing fees		242,683			232,027			10,656	5
Investment management fees		40,086			44,844			(4,758)	(11)
Net warehouse interest income, LHFI		1,475			3,450			(1,975)	(57)
Placement fees and other interest income		113,072			100,636			12,436	12
Other revenues		34,679			42,697			(8,018)	(19)
Total revenues	$	434,351		$	424,176		$	10,175	2	%
Personnel	$	59,083		$	53,669		$	5,414	10	%
Amortization and depreciation		160,912			161,935			(1,023)	(1)
Provision (benefit) for credit losses		6,310			(11,088)			17,398	157
Interest expense on corporate debt		33,848			31,385			2,463	8
Other operating expenses		18,462			16,465			1,997	12
Total expenses	$	278,615		$	252,366		$	26,249	10	%
Income (loss) from operations	$	155,736		$	171,810		$	(16,074)	(9)	%
Income tax expense (benefit)		38,430			42,931			(4,501)	(10)
Net income (loss) before noncontrolling interests	$	117,306		$	128,879		$	(11,573)	(9)	%
Less: net income (loss) from noncontrolling interests		(3,891)			(3,364)			(527)	(16)
Walker & Dunlop net income (loss)	$	121,197		$	132,243		$	(11,046)	(8)	%
Key performance metrics:
Operating margin		36	%		41	%
Adjusted EBITDA	$	361,614		$	346,283		$	15,331	4	%

SERVICING & ASSET MANAGEMENT – DISCUSSION OF YEAR-TO-DATE RESULTS:

●

Investment management fees decreased primarily due to a decline in the accrual for investment management fees from our LIHTC funds due to lower anticipated revenues for the year.

●

Placement fees and other interest income increased largely as a result of higher placement fees earned on deposits due to higher short-term interest rates. Additionally, the average escrow balance increased in 2024.

●

The decrease in other revenues was primarily related to a decline in syndication and other revenues related to a decline in gross equity raised year over year as the closing of one of our LIHTC funds was delayed in the third quarter of 2024.

●

Personnel expense increased primarily due to increased salaries and benefits due to a 5% increase in average segment headcount year over year.

Third quarter 2024 Earnings Release

●

The provision for credit losses in 2024 was primarily related to a $7.6 million provision for credit losses related to repurchased and indemnified loans, as noted in our Key Credit Metrics, with no comparable activity in 2023. The benefit for credit losses in 2023 related primarily to the update of our historical loss rate.


FINANCIAL RESULTS – CORPORATE
(in thousands)		YTD Q3 2024		YTD Q3 2023		$ Variance	% Variance
Other interest income	$	10,927	$	8,674	$	2,253	26	%
Other revenues		1,982		(431)		2,413	560
Total revenues	$	12,909	$	8,243	$	4,666	57	%
Personnel	$	54,330	$	53,254	$	1,076	2	%
Amortization and depreciation		5,171		5,390		(219)	(4)
Interest expense on corporate debt		4,879		4,623		256	6
Other operating expenses		60,093		51,820		8,273	16
Total expenses	$	124,473	$	115,087	$	9,386	8	%
Income (loss) from operations	$	(111,564)	$	(106,844)	$	(4,720)	(4)	%
Income tax expense (benefit)		(27,531)		(26,698)		(833)	(3)
Walker & Dunlop net income (loss)	$	(84,033)	$	(80,146)	$	(3,887)	(5)	%
Key performance metric:
Adjusted EBITDA	$	(95,211)	$	(89,017)	$	(6,194)	(7)	%

CORPORATE – DISCUSSION OF YEAR-TO-DATE RESULTS:

●

Total revenues increased as a result of higher interest income earned on our corporate and fund cash balances and an increase in income from equity-method investments.

●

The increase in other operating expenses was primarily the result of increased travel and entertainment, software, and miscellaneous expenses year over year.

CAPITAL SOURCES AND USES

On November 6, 2024, the Company’s Board of Directors declared a dividend of $0.65 per share for the fourth quarter of 2024. The dividend will be paid on December 6, 2024, to all holders of record of the Company’s restricted and unrestricted common stock as of November 22, 2024.

In May 2024, the Company entered into a second amendment to the existing credit agreement that, among other things, decreased the interest rate of the incremental $200 million borrowing by 0.75% per annum, to Term SOFR plus 2.25% per annum, and combined the incremental term loan with the initial term loan to create a single fungible $800 million senior secured term loan.

On February 14, 2024, our Board of Directors authorized the repurchase of up to $75.0 million of the Company’s outstanding common stock over a 12-month period ending February 23, 2025 (the “2024 Share Repurchase Program”). We have not repurchased any shares of common stock under the 2024 Share Repurchase Program.

Any purchases made pursuant to the 2024 Share Repurchase Program will be made in the open market or in privately negotiated transactions, from time to time, as permitted by federal securities laws and other legal requirements. The timing, manner, price and amount of any repurchases will be determined by the Company in its discretion and will be subject to economic and market conditions, stock price, applicable legal requirements and other factors. The repurchase program may be suspended or discontinued at any time.

Third quarter 2024 Earnings Release

CONFERENCE CALL INFORMATION

Listeners can access the Company’s quarterly conference call for more information regarding our financial results via the dial-in number and webcast link below. Presentation materials related to the conference call will be posted to the Investor Relations section of the Company’s website prior to the call. An audio replay will also be available on the Investor Relations section of the Company’s website, along with the presentation materials.


Earnings Call:	Thursday, November 7, 2024 at 8:30am EST
Phone:	(888) 256-1007 from within the United States; (773) 305-6853 from outside the United States
Confirmation Code:	1186507
Webcast Link:	https://event.webcasts.com/viewer/event.jsp?ei=1655311&tp_key=70e4b5c240

ABOUT WALKER & DUNLOP

Walker & Dunlop (NYSE: WD) is one of the largest commercial real estate finance and advisory services firms in the United States. Our ideas and capital create communities where people live, work, shop, and play. The diversity of our people, breadth of our brand and technological capabilities make us one of the most insightful and client-focused firms in the commercial real estate industry.

NON-GAAP FINANCIAL MEASURES

To supplement our financial statements presented in accordance with United States generally accepted accounting principles (“GAAP”), the Company uses adjusted EBITDA, adjusted core net income, and adjusted core EPS, which are non-GAAP financial measures. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. When analyzing our operating performance, readers should use adjusted EBITDA, adjusted core net income, and adjusted core EPS in addition to, and not as an alternative for, net income and diluted EPS.

Adjusted core net income and adjusted core EPS represent net income adjusted for amortization and depreciation, provision (benefit) for credit losses, net write-offs, the fair value of expected net cash flows from servicing, net, the income statement impact from periodic revaluation and accretion associated with contingent consideration liabilities related to acquired companies, and other one-time adjustments, such as goodwill impairment. Adjusted EBITDA represents net income before income taxes, interest expense on our corporate debt, and amortization and depreciation, adjusted for provision (benefit) for credit losses, net write-offs, stock-based compensation expense, the fair value of expected net cash flows from servicing, net, the write-off of the unamortized balance of premium associated with the repayment of a portion of our corporate debt, goodwill impairment, and contingent consideration liability fair value adjustments when the fair value adjustment is a triggering event for a goodwill impairment assessment. Furthermore, adjusted EBITDA is not intended to be a measure of free cash flow for our management’s discretionary use, as it does not reflect certain cash requirements such as tax and debt service payments. The amounts shown for adjusted EBITDA may also differ from the amounts calculated under similarly titled definitions in our debt instruments, which are further adjusted to reflect certain other cash and non-cash charges that are used to determine compliance with financial covenants. Because not all companies use identical calculations, our presentation of adjusted EBITDA, adjusted core net income and adjusted core EPS may not be comparable to similarly titled measures of other companies.

We use adjusted EBITDA, adjusted core net income, and adjusted core EPS to evaluate the operating performance of our business, for comparison with forecasts and strategic plans and for benchmarking performance externally against competitors. We believe that these non-GAAP measures, when read in conjunction with the Company’s GAAP financial information, provide useful information to investors by offering:

●

the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;

●

the ability to better identify trends in the Company’s underlying business and perform related trend analyses; and

●

a better understanding of how management plans and measures the Company’s underlying business.

Third quarter 2024 Earnings Release

We believe that these non-GAAP financial measures have limitations in that they do not reflect all of the amounts associated with the Company’s results of operations as determined in accordance with GAAP and that these non-GAAP financial measures should only be used to evaluate the Company’s results of operations in conjunction with the Company’s GAAP financial information. For more information on adjusted EBITDA, adjusted core net income, and adjusted core EPS, refer to the section of this press release below titled “Adjusted Financial Measure Reconciliation to GAAP” and “Adjusted Financial Measure Reconciliation to GAAP By Segment.”

FORWARD-LOOKING STATEMENTS

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

The forward-looking statements contained in this press release reflect our current views about future events and are subject to numerous known and unknown risks, uncertainties, assumptions and changes in circumstances that may cause actual results to differ significantly from those expressed or contemplated in any forward-looking statement.

While forward-looking statements reflect our good faith projections, assumptions and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to: (1) general economic conditions and multifamily and commercial real estate market conditions, (2) changes in interest rates, (3) regulatory and/or legislative changes to Freddie Mac, Fannie Mae or HUD, (4) our ability to retain and attract loan originators and other professionals, (5) success of our various investments funded with corporate capital, and (6) changes in federal government fiscal and monetary policies, including any constraints or cuts in federal funds allocated to HUD for loan originations.

For a further discussion of these and other factors that could cause future results to differ materially from those expressed or contemplated in any forward-looking statements, see the section titled “Risk Factors” in our most recent Annual Report on Form 10-K and any updates or supplements in subsequent Quarterly Reports on Form 10-Q and our other filings with the SEC. Such filings are available publicly on our Investor Relations web page at www.walkerdunlop.com.

CONTACT US

Headquarters:

7272 Wisconsin Avenue, Suite 1300

Bethesda, Maryland 20814

Phone 301.215.5500

info@walkeranddunlop.com

Investors:

Kelsey Duffey

Senior Vice President, Investor Relations

Phone 301.202.3207

investorrelations@walkeranddunlop.com

Media:

Carol McNerney

Chief Marketing Officer

Phone 301.215.5515

info@walkeranddunlop.com

Third quarter 2024 Earnings Release

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Unaudited


	September 30,		June 30,		March 31,		December 31,		September 30,
	2024		2024		2024		2023		2023
(in thousands)
Assets
Cash and cash equivalents	$	179,759	$	208,095	$	216,532	$	328,698	$	236,321
Restricted cash		39,827		35,460		21,071		21,422		17,768
Pledged securities, at fair value		203,945		197,936		190,679		184,081		177,509
Loans held for sale, at fair value		1,024,984		814,883		497,933		594,998		758,926
Mortgage servicing rights		836,896		850,831		881,834		907,415		921,746
Goodwill		901,710		901,710		901,710		901,710		949,710
Other intangible assets		170,713		174,467		178,221		181,975		185,927
Receivables, net		307,407		272,827		250,406		233,563		265,234
Committed investments in tax credit equity		333,713		151,674		122,332		154,028		212,296
Other assets		580,277		567,515		565,194		544,457		552,414
Total assets	$	4,579,231	$	4,175,398	$	3,825,912	$	4,052,347	$	4,277,851

Liabilities
Warehouse notes payable	$	1,019,850	$	810,114	$	521,977	$	596,178	$	790,742
Notes payable		769,376		770,707		772,037		773,358		774,677
Allowance for risk-sharing obligations		29,859		30,477		30,124		31,601		30,957
Commitments to fund investments in tax credit equity		289,250		134,493		114,206		140,259		196,250
Other liabilities		724,543		695,813		651,660		764,822		754,234
Total liabilities	$	2,832,878	$	2,441,604	$	2,090,004	$	2,306,218	$	2,546,860

Stockholders' Equity
Common stock	$	332	$	331	$	331	$	329	$	328
Additional paid-in capital		412,570		407,426		427,184		425,488		420,062
Accumulated other comprehensive income (loss)		1,466		415		(492)		(479)		(1,864)
Retained earnings		1,295,459		1,288,728		1,288,313		1,298,412		1,287,653
Total stockholders’ equity	$	1,709,827	$	1,696,900	$	1,715,336	$	1,723,750	$	1,706,179
Noncontrolling interests		36,526		36,894		20,572		22,379		24,812
Total equity	$	1,746,353	$	1,733,794	$	1,735,908	$	1,746,129	$	1,730,991
Commitments and contingencies		—		—		—		—		—
Total liabilities and stockholders' equity	$	4,579,231	$	4,175,398	$	3,825,912	$	4,052,347	$	4,277,851

Third quarter 2024 Earnings Release

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

Unaudited


	Quarterly Trends										Nine months ended
											September 30,
(in thousands, except per share amounts)	Q3 2024		Q2 2024		Q1 2024		Q4 2023		Q3 2023		2024		2023
Revenues
Origination fees	$	73,546	$	65,334	$	43,740	$	66,208	$	56,149	$	182,620	$	168,201
MSR income		43,426		33,349		20,898		34,471		35,375		97,673		107,446
Servicing fees		82,222		80,418		80,043		79,887		79,200		242,683		232,027
Property sales broker fees		19,322		11,265		8,821		15,135		16,862		39,408		38,831
Investment management fees		11,744		14,822		13,520		537		13,362		40,086		44,844
Net warehouse interest income (expense)		(2,147)		(1,584)		(1,116)		(2,077)		(2,031)		(4,847)		(3,556)
Placement fees and other interest income		43,557		41,040		39,402		45,210		43,000		123,999		109,310
Other revenues		20,634		26,032		22,751		34,965		26,826		69,417		83,001
Total revenues	$	292,304	$	270,676	$	228,059	$	274,336	$	268,743	$	791,039	$	780,104

Expenses
Personnel	$	145,538	$	133,067	$	111,463	$	125,865	$	136,507	$	390,068	$	388,425
Amortization and depreciation		57,561		56,043		55,891		56,015		57,479		169,495		170,737
Provision (benefit) for credit losses		2,850		2,936		524		636		421		6,310		(11,088)
Interest expense on corporate debt		18,232		17,874		17,659		18,598		17,594		53,765		49,878
Goodwill impairment		—		—		—		48,000		14,000		—		14,000
Fair value adjustments to contingent consideration liabilities		(1,366)		—		—		(48,500)		(14,000)		(1,366)		(14,000)
Other operating expenses		31,984		32,559		28,843		34,355		28,529		93,386		83,322
Total expenses	$	254,799	$	242,479	$	214,380	$	234,969	$	240,530	$	711,658	$	681,274
Income from operations	$	37,505	$	28,197	$	13,679	$	39,367	$	28,213	$	79,381	$	98,830
Income tax expense		8,822		7,902		2,864		10,331		7,069		19,588		24,695
Net income before noncontrolling interests	$	28,683	$	20,295	$	10,815	$	29,036	$	21,144	$	59,793	$	74,135
Less: net income (loss) from noncontrolling interests		(119)		(2,368)		(1,051)		(2,563)		(314)		(3,538)		(1,623)
Walker & Dunlop net income	$	28,802	$	22,663	$	11,866	$	31,599	$	21,458	$	63,331	$	75,758
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes		1,051		907		(13)		1,385		(399)		1,945		(296)
Walker & Dunlop comprehensive income	$	29,853	$	23,570	$	11,853	$	32,984	$	21,059	$	65,276	$	75,462

Effective Tax Rate		24%		28%		21%		26%		25%		25%		25%

Basic earnings per share	$	0.85	$	0.67	$	0.35	$	0.94	$	0.64	$	1.87	$	2.26
Diluted earnings per share		0.85		0.67		0.35		0.93		0.64		1.87		2.25
Cash dividends paid per common share		0.65		0.65		0.65		0.63		0.63		1.95		1.89

Basic weighted-average shares outstanding		33,169		33,121		32,978		32,825		32,737		33,090		32,654
Diluted weighted-average shares outstanding		33,203		33,154		33,048		32,941		32,895		33,135		32,853

Third quarter 2024 Earnings Release

SUPPLEMENTAL OPERATING DATA

Unaudited


	Quarterly Trends															Nine months ended
																September 30,
(in thousands, except per share data and unless otherwise noted)	Q3 2024			Q2 2024			Q1 2024			Q4 2023			Q3 2023			2024			2023
Transaction Volume:
Components of Debt Financing Volume
Fannie Mae	$	2,001,356		$	1,510,804		$	903,368		$	1,692,405		$	1,739,332		$	4,415,528		$	5,328,992
Freddie Mac		1,545,939			1,153,190			974,926			1,308,263			1,072,048			3,674,055			3,260,672
Ginnie Mae - HUD		272,054			185,898			14,140			316,960			86,557			472,092			361,929
Brokered ⁽¹⁾		4,028,208			3,852,851			3,319,074			2,885,454			3,149,457			11,200,133			8,829,434
Principal Lending and Investing ⁽²⁾		165,875			214,975			15,800			218,750			—			396,650			—
Total Debt Financing Volume	$	8,013,432		$	6,917,718		$	5,227,308		$	6,421,832		$	6,047,394		$	20,158,458		$	17,781,027
Property Sales Volume		3,602,675			1,530,783			1,167,151			2,877,399			2,508,073			6,300,609			5,907,138
Total Transaction Volume	$	11,616,107		$	8,448,501		$	6,394,459		$	9,299,231		$	8,555,467		$	26,459,067		$	23,688,165

Key Performance Metrics:
Operating margin		13	%		10	%		6	%		14	%		10	%		10	%		13	%
Return on equity		7			5			3			7			5			5			6
Walker & Dunlop net income	$	28,802		$	22,663		$	11,866		$	31,599		$	21,458		$	63,331		$	75,758
Adjusted EBITDA ⁽³⁾		78,905			80,931			74,136			87,582			74,065			233,972			212,541
Diluted EPS		0.85			0.67			0.35			0.93			0.64			1.87			2.25
Adjusted core EPS ⁽⁴⁾		1.19			1.23			1.19			1.42			1.11			3.60			3.25

Key Expense Metrics (as a percentage of total revenues):
Personnel expenses		50	%		49	%		49	%		46	%		51	%		49	%		50	%
Other operating expenses		11			12			13			13			11			12			11
Key Revenue Metrics (as a percentage of debt financing volume):
Origination fee rate ⁽⁵⁾		0.93	%		0.95	%		0.84	%		1.05	%		0.93	%		0.91	%		0.94	%
MSR rate ⁽⁶⁾		0.55			0.50			0.40			0.56			0.58			0.49			0.60
Agency MSR rate ⁽⁷⁾		1.14			1.17			1.10			1.04			1.22			1.14			1.20

Other Data:
Market capitalization at period end	$	3,834,715		$	3,311,629		$	3,406,853		$	3,719,589		$	2,433,494
Closing share price at period end	$	113.59		$	98.20		$	101.06		$	111.01		$	74.24
Average headcount		1,356			1,321			1,323			1,341			1,344

Components of Servicing Portfolio (end of period):
Fannie Mae	$	66,068,212		$	64,954,426		$	64,349,886		$	63,699,106		$	62,850,853
Freddie Mac		40,090,158			39,938,411			39,665,386			39,330,545			38,656,136
Ginnie Mae - HUD		10,727,323			10,619,764			10,595,841			10,460,884			10,320,520
Brokered ⁽⁸⁾		17,156,810			17,239,417			17,312,513			16,940,850			17,091,925
Principal Lending and Investing ⁽⁹⁾		38,043			25,893			40,139			40,139			40,000
Total Servicing Portfolio	$	134,080,546		$	132,777,911		$	131,963,765		$	130,471,524		$	128,959,434
Assets under management ⁽¹⁰⁾		18,210,452			17,566,666			17,465,398			17,321,452			17,334,877
Total Managed Portfolio	$	152,290,998		$	150,344,577		$	149,429,163		$	147,792,976		$	146,294,311

Key Servicing Portfolio Metrics (end of period):
Custodial escrow deposit balance (in billions)	$	3.1		$	2.7		$	2.3		$	2.7		$	2.8
Weighted-average servicing fee rate (basis points)		24.1			24.1			24.0			24.1			24.2
Weighted-average remaining servicing portfolio term (years)		7.7			7.9			8.0			8.2			8.4

(1)	Brokered transactions for life insurance companies, commercial banks, and other capital sources.

(2)	Includes debt financing volumes from our interim lending platform, our interim lending joint venture, and WDIP separate accounts.

(3)	This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section above titled “Non-GAAP Financial Measures.”

(4)	This is a non-GAAP financial measure. For more information on adjusted core EPS, refer to the section above titled “Non-GAAP Financial Measures.”

(5)	Origination fees as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(6)	MSR income as a percentage of debt financing volume. Excludes the income and debt financing volume from Principal Lending and Investing.

(7)	MSR income as a percentage of Agency debt financing volume.

(8)	Brokered loans serviced primarily for life insurance companies.

(9)	Consists of interim loans not managed for our interim loan joint venture.

(10)	Walker & Dunlop Affordable Equity assets under management, commercial real estate loans and funds managed by WDIP, and interim loans serviced for our interim loan joint venture.

Third quarter 2024 Earnings Release

KEY CREDIT METRICS

Unaudited


	September 30,			June 30,			March 31,			December 31,			September 30,
(dollars in thousands)	2024			2024			2024			2023			2023
Risk-sharing servicing portfolio:
Fannie Mae Full Risk	$	57,032,839		$	55,915,670		$	55,236,618		$	54,583,555		$	53,549,966
Fannie Mae Modified Risk		9,035,373			9,038,756			9,113,268			9,115,551			9,295,368
Freddie Mac Modified Risk		69,400			69,510			69,510			23,415			23,415
Total risk-sharing servicing portfolio	$	66,137,612		$	65,023,936		$	64,419,396		$	63,722,521		$	62,868,749

Non-risk-sharing servicing portfolio:
Fannie Mae No Risk	$	—		$	—		$	—		$	—		$	5,519
Freddie Mac No Risk		40,020,758			39,868,901			39,595,876			39,307,130			38,632,721
GNMA - HUD No Risk		10,727,323			10,619,764			10,595,841			10,460,884			10,320,520
Brokered		17,156,810			17,239,417			17,312,513			16,940,850			17,091,925
Total non-risk-sharing servicing portfolio	$	67,904,891		$	67,728,082		$	67,504,230		$	66,708,864		$	66,050,685
Total loans serviced for others	$	134,042,503		$	132,752,018		$	131,923,626		$	130,431,385		$	128,919,434
Interim loans (full risk) servicing portfolio		38,043			25,893			40,139			40,139			40,000
Total servicing portfolio unpaid principal balance	$	134,080,546		$	132,777,911		$	131,963,765		$	130,471,524		$	128,959,434

Interim Loan Joint Venture Managed Loans ⁽¹⁾	$	424,774		$	570,299		$	711,541		$	710,041		$	736,320

At-risk servicing portfolio ⁽²⁾	$	61,237,535		$	60,122,274		$	59,498,851		$	58,801,055		$	57,857,659
Maximum exposure to at-risk portfolio ⁽³⁾		12,454,158			12,222,290			12,088,698			11,949,041			11,750,068
Defaulted loans⁽⁴⁾		59,645			48,560			63,264			27,214			—

Defaulted loans as a percentage of the at-risk portfolio		0.10	%		0.08	%		0.11	%		0.05	%		0.00	%
Allowance for risk-sharing as a percentage of the at-risk portfolio		0.05			0.05			0.05			0.05			0.05
Allowance for risk-sharing as a percentage of maximum exposure		0.24			0.25			0.25			0.26			0.26

(1)

This balance consists entirely of interim loan joint venture managed loans. We indirectly share in a portion of the risk of loss associated with interim loan joint venture managed loans through our 15% equity ownership in the joint venture. We had no exposure to risk of loss for the loans serviced directly for our interim loan joint venture partner. The balance of this line is included as a component of assets under management in the Supplemental Operating Data table.

(2)

At-risk servicing portfolio is defined as the balance of Fannie Mae DUS loans subject to the risk-sharing formula described below, as well as a small number of Freddie Mac loans on which we share in the risk of loss. Use of the at-risk portfolio provides for comparability of the full risk-sharing and modified risk-sharing loans because the provision and allowance for risk-sharing obligations are based on the at-risk balances of the associated loans. Accordingly, we have presented the key statistics as a percentage of the at-risk portfolio.

(3)

(4)

Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which we have recorded a collateral-based reserve (i.e. loans where we have assessed a probable loss). Other loans that are delinquent but not foreclosed or that are not probable of foreclosure are not included here. Additionally, loans that have foreclosed or are probable of foreclosure but are not expected to result in a loss to us are not included here.

Third quarter 2024 Earnings Release

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP

Unaudited


	Quarterly Trends										Nine months ended
											September 30,
(in thousands)	Q3 2024		Q2 2024		Q1 2024		Q4 2023		Q3 2023		2024		2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income	$	28,802	$	22,663	$	11,866	$	31,599	$	21,458	$	63,331	$	75,758
Income tax expense		8,822		7,902		2,864		10,331		7,069		19,588		24,695
Interest expense on corporate debt		18,232		17,874		17,659		18,598		17,594		53,765		49,878
Amortization and depreciation		57,561		56,043		55,891		56,015		57,479		169,495		170,737
Provision (benefit) for credit losses		2,850		2,936		524		636		421		6,310		(11,088)
Net write-offs⁽¹⁾		(468)		—		—		—		(2,008)		(468)		(8,041)
Stock-based compensation expense		6,532		6,862		6,230		5,374		7,427		19,624		22,468
MSR income		(43,426)		(33,349)		(20,898)		(34,471)		(35,375)		(97,673)		(107,446)
Write-off of unamortized premium from corporate debt repayment		—		—		—		—		—		—		(4,420)
Goodwill impairment, net of contingent consideration liability fair value adjustments⁽²⁾		—		—		—		(500)		—		—		—
Adjusted EBITDA	$	78,905	$	80,931	$	74,136	$	87,582	$	74,065	$	233,972	$	212,541

(1)	The net write-offs for the nine months ended September 30, 2023 includes the $6.0 million write-off of a collateral-based reserve related to a loan held for investment during the second quarter of 2023.

(2)

For the three and nine months ended September 30, 2023, includes goodwill impairment of $14.0 million and contingent consideration liability fair value adjustment of $14.0 million. For the three and nine months ended September 30, 2024, there was no goodwill impairment or contingent consideration liability fair value adjustments that resulted in a triggering event for a goodwill impairment assessment.

Third quarter 2024 Earnings Release

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP BY SEGMENT

Unaudited



	Capital Markets
	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss)	$	21,830	$	7,050	$	26,167	$	23,661
Income tax expense (benefit)		7,073		2,386		8,689		8,462
Interest expense on corporate debt		4,888		4,874		15,038		13,870
Amortization and depreciation		1,137		1,137		3,412		3,412
Stock-based compensation expense		3,897		4,224		11,936		13,316
MSR income		(43,426)		(35,375)		(97,673)		(107,446)
Goodwill impairment, net of contingent consideration liability fair value adjustments⁽¹⁾		—		—		—		—
Adjusted EBITDA	$	(4,601)	$	(15,704)	$	(32,431)	$	(44,725)

	Servicing & Asset Management
	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss)	$	37,482	$	45,427	$	121,197	$	132,243
Income tax expense (benefit)		10,756		15,040		38,430		42,931
Interest expense on corporate debt		11,711		11,096		33,848		31,385
Amortization and depreciation		54,668		54,375		160,912		161,935
Provision (benefit) for credit losses		2,850		421		6,310		(11,088)
Net write-offs⁽²⁾		(468)		(2,008)		(468)		(8,041)
Stock-based compensation expense		456		498		1,385		1,338
Write-off of unamortized premium from corporate debt repayment		—		—		—		(4,420)
Adjusted EBITDA	$	117,455	$	124,849	$	361,614	$	346,283

	Corporate
	Three months ended September 30,					Nine months ended September 30,
(in thousands)	2024		2023		2024		2023
Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA
Walker & Dunlop Net Income (Loss)	$	(30,510)	$	(31,019)	$	(84,033)	$	(80,146)
Income tax expense (benefit)		(9,007)		(10,357)		(27,531)		(26,698)
Interest expense on corporate debt		1,633		1,624		4,879		4,623
Amortization and depreciation		1,756		1,967		5,171		5,390
Stock-based compensation expense		2,179		2,705		6,303		7,814
Adjusted EBITDA	$	(33,949)	$	(35,080)	$	(95,211)	$	(89,017)

(1)

For the three and nine months ended September 30, 2023, includes goodwill impairment of $14.0 million and contingent consideration liability fair value adjustment of $14.0 million. For the three and nine months ended September 30, 2024, there was no goodwill impairment or contingent consideration liability fair value adjustment that resulted in a triggering event for a goodwill impairment assessment.

(2)	The net write-offs for the nine months ended September 30, 2023 includes the $6.0 million write-off of a collateral-based reserve related to a loan held for investment during the second quarter of 2023.

Third quarter 2024 Earnings Release

ADJUSTED CORE EPS RECONCILIATION

Unaudited


	Quarterly Trends										Nine months ended
											September 30,
(in thousands)	Q3 2024		Q2 2024		Q1 2024		Q4 2023		Q3 2023		2024		2023
Reconciliation of Walker & Dunlop Net Income to Adjusted Core Net Income
Walker & Dunlop Net Income	$	28,802	$	22,663	$	11,866	$	31,599	$	21,458	$	63,331	$	75,758
Provision (benefit) for credit losses		2,850		2,936		524		636		421		6,310		(11,088)
Net write-offs⁽¹⁾		(468)		—		—		—		(2,008)		(468)		(8,041)
Amortization and depreciation		57,561		56,043		55,891		56,015		57,479		169,495		170,737
MSR income		(43,426)		(33,349)		(20,898)		(34,471)		(35,375)		(97,673)		(107,446)
Goodwill impairment		—		—		—		48,000		14,000		—		14,000
Contingent consideration accretion and fair value adjustments		(1,204)		822		512		(47,637)		(13,426)		130		(13,073)
Income tax expense adjustment⁽²⁾		(3,602)		(7,413)		(7,543)		(5,916)		(5,285)		(19,196)		(11,267)
Adjusted Core Net Income	$	40,513	$	41,702	$	40,352	$	48,226	$	37,264	$	121,929	$	109,580

Reconciliation of Diluted EPS to Adjusted core EPS
Walker & Dunlop Net Income	$	28,802	$	22,663	$	11,866	$	31,599	$	21,458	$	63,331	$	75,758
Diluted weighted-average shares outstanding		33,203		33,154		33,048		32,941		32,895		33,135		32,853
Diluted EPS	$	0.85	$	0.67	$	0.35	$	0.93	$	0.64	$	1.87	$	2.25

Adjusted Core Net Income	$	40,513	$	41,702	$	40,352	$	48,226	$	37,264	$	121,929	$	109,580
Diluted weighted-average shares outstanding		33,203		33,154		33,048		32,941		32,895		33,135		32,853
Adjusted Core EPS	$	1.19	$	1.23	$	1.19	$	1.42	$	1.11	$	3.60	$	3.25

(1)

The net write-offs for the nine months ended September 30, 2023 includes the $6.0 million write-off of a collateral-based reserve related to a loan held for investment during the second quarter of 2023.

(2)

Income tax impact of the above adjustments to adjusted core net income. Uses quarterly or annual effective tax rate as disclosed in the Condensed Consolidated Statements of Income and Comprehensive Income in this “press release.”

Walker & Dunlop (WD) 8-KThird quarter 2024 Earnings Release