Exhibit 99.1

Picture 2

Walker & Dunlop Grows Total Transaction Volume 91% to Record $11.4 Billion

Generating Diluted Earnings Per Share of $1.49

 

FIRST QUARTER 2020 HIGHLIGHTS

·

Record total transaction volume of $11.4 billion, up 91% from Q1’19

·

Record total revenues of $234.2 million, up 25% from Q1’19

·

Net income of $47.8 million  and diluted earnings per share of $1.49, up 8% and 7%, respectively from Q1’19

·

Adjusted EBITDA1 of $64.1 million,  down 4% from Q1’19

·

Servicing portfolio of $94.8 billion at March 31, 2020, up 8% from March 31, 2019

·

Cash and cash equivalents of $205.3 million as of March 31, 2020

·

Declared dividend of $0.36 per share for the quarter

 

Bethesda, MD – May 6, 2020Walker & Dunlop, Inc. (NYSE: WD) (the “Company”) reported first quarter 2020 total revenues of  $234.2 million, a quarterly record and an increase of 25% over the first quarter of 2019. Net income for the first quarter of 2020 was $47.8  million, or $1.49 per diluted share, up 8% and 7%, respectively, from the first quarter of last year. During the quarter, the Company recorded a provision expense of $23.6 million related to the COVID-19 pandemic and its expected impacts on future losses in the servicing portfolio, resulting in a $0.54 reduction in diluted earnings per share. First quarter  total transaction volume grew 91% from the prior-year quarter to a record  $11.4 billion, including the largest transaction in Company history, with debt financing volume up 84% and property sales volume up 148%.

Willy Walker, Chairman and CEO commented, “The investments we have made over the past several years all came together in the first quarter of 2020 to produce outstanding financial results, including record total transaction volume of $11.4 billion, up 91% over the first quarter of last year, and diluted earnings per share of $1.49, up 7% over last year, even after accounting for a $0.54 per share charge related to our provision for potential future losses.”

Mr. Walker continued, “The COVID-19 pandemic has dramatically changed the underlying fundamentals of the U.S. economy, and since the crisis began to take hold in the U.S., we have been actively managing the risks to our business. While property sales activity has slowed significantly and many commercial real estate capital sources have pulled out of the market, Fannie Mae, Freddie Mac, and HUD remain very active, and we continue to benefit from a strong pipeline of transactions.  Just last week we closed the largest transaction in Walker & Dunlop’s history, a credit facility of over $2 billion on a portfolio of workforce housing properties in the Mid-Atlantic region. Walker & Dunlop is one of the very largest Agency lenders in the country, and our team has not skipped a beat in closing financings and guiding our clients through this challenging period. We feel very good about the credit risk in our portfolio – it is 100% multifamily properties, and almost all loans were low leverage with significant cash flow prior to the crisis. Vision 2020, our plan to build the premier commercial real estate finance company in the United States, is very much still intact, and we will continue to execute on that plan while meeting the needs of our clients over the coming months and quarters.”

 

 

 

 

 

 

 

1

 

Picture 6

First quarter 2020 Earnings Release

 

FIRST QUARTER 2020 OPERATING RESULTS

 

 

 

 

 

 

 

 

 

 

 

 

TRANSACTION VOLUMES

(dollars in thousands)

 

Q1 2020

 

 

Q1 2019

 

$ Variance

 

% Variance

Fannie Mae

$

4,171,491

 

$

1,982,810

 

$

2,188,681

 

110

%

Freddie Mac

 

997,796

 

 

1,573,634

 

 

(575,838)

 

(37)

 

Ginnie Mae - HUD

 

354,687

 

 

178,258

 

 

176,429

 

99

 

Brokered

 

3,993,885

 

 

1,434,129

 

 

2,559,756

 

178

 

Principal Lending and Investing2

 

107,950

 

 

75,862

 

 

32,088

 

42

 

Debt financing volume

$

9,625,809

 

$

5,244,693

 

$

4,381,116

 

84

%

Property sales volume

 

1,730,617

 

 

696,611

 

 

1,034,006

 

148

 

Total transaction volume

$

11,356,426

 

$

5,941,304

 

$

5,415,122

 

91

%

Discussion of Results:

·

During the first ten weeks of the first quarter of 2020, we saw high demand for debt financing and a very strong commercial real estate transaction market driven by strong macro conditions and low interest rates.  In mid-March, the spread of the COVID-19 pandemic materially changed the macroeconomic environment, and overall commercial real estate transaction volume slowed, particularly for debt brokerage and property sales transactions.  

·

Our first quarter volumes with Fannie Mae,  Freddie Mac and HUD reflected an active multifamily financing market due to strong demand for multifamily financing and a low interest rate environment.  The overall demand for our Agency loan products remained steady in the latter half of March despite the macroeconomic disruption caused by COVID-19. During the quarter, we originated the largest transaction in Company history, a Fannie Mae portfolio of over $2 billion, that contributed to record Fannie Mae volume.

·

Increased brokered volume in the first quarter of 2020 reflects the growth in our team of bankers, the strong market demand for all commercial real estate property types at the beginning of the year, and consistent execution by our team.

·

The increase in principal lending and investing volume, which includes interim loans, originations for JCR separate accounts, and joint venture bridge lending, was primarily due to a year-over-year increase in interim loans originated for our bridge lending joint venture. We did not originate any loans for our own balance sheet during the first quarter of 2020.

·

The growth in property sales volume was the result of the investments we have made to expand the number of property sales brokers on the platform, coupled with strong investor demand for multifamily assets during the first ten weeks of the quarter.

 

 

 

 

 

 

 

 

 

 

 

 

MANAGED PORTFOLIO

(dollars in thousands)

 

Q1 2020

 

 

Q1 2019

 

$ Variance

 

% Variance

Fannie Mae

$

41,166,040

 

$

36,835,756

 

$

4,330,284

 

12

%

Freddie Mac

 

32,191,699

 

 

31,367,939

 

 

823,760

 

 3

 

Ginnie Mae - HUD

 

9,750,696

 

 

9,986,488

 

 

(235,792)

 

(2)

 

Brokered

 

11,326,492

 

 

9,227,409

 

 

2,099,083

 

23

 

Principal Lending and Investing

 

387,314

 

 

274,090

 

 

113,224

 

41

 

Total servicing portfolio

$

94,822,241

 

$

87,691,682

 

$

7,130,559

 

 8

%

Assets under management

 

2,001,984

 

 

1,427,334

 

 

574,650

 

40

 

Total Managed Portfolio

$

96,824,225

 

$

89,119,016

 

$

7,705,209

 

 9

%

Weighted-average servicing fee rate (basis points)

 

23.3

 

 

24.0

 

 

 

 

 

 

Weighted-average remaining servicing portfolio term (years)

 

9.5

 

 

9.8

 

 

 

 

 

 

 

 

2

 

Picture 6

First quarter 2020 Earnings Release

 

Discussion of Results:

·

Our servicing portfolio has experienced steady growth over the past year due to our significant debt financing volumes and relatively few maturities and prepayments.

·

During the first quarter of 2020, we added $1.6 billion of net loans to our servicing portfolio, and over the past 12 months, we added $7.1 billion of net loans to our servicing portfolio, 72% of which were Fannie Mae and Freddie Mac loans.

·

Only $4.5 billion of Agency loans in our servicing portfolio, with a weighted-average servicing fee of 25.8 basis points, are scheduled to mature over the next two years. 

·

The decrease in the weighted-average servicing fee was due primarily to a lower weighted-average servicing fee on our new Fannie Mae debt financing volume than on the Fannie Mae loans that have matured or prepaid over the past year. However, this impact was slightly offset during the first quarter by an increase in the servicing fee margin on Fannie Mae debt financing volume.

·

We added net mortgage servicing rights (“MSRs”) of $3.7 million in the quarter and $44.5 million over the past 12 months. 

·

The MSRs associated with our servicing portfolio had a fair value of $868.4 million as of March 31, 2020, compared to $867.8 million as of March 31, 2019.

·

Assets under management (AUM) as of March 31, 2020 consisted of $1.2 billion of loans and funds managed by our registered investment adviser, JCR Capital Investment Corporation, and $0.8 billion of loans we manage for our interim lending joint venture and for an affiliate of Blackstone Mortgage Trust. The year-over-year increase in AUM is related to both JCR Capital’s fundraising activity over the past 12 months and growth in the interim lending joint venture.  

·

For most of the loans we service under the Fannie Mae DUS program and for loans under Ginnie Mae’s program, should a borrower fail to make debt service payments, we are obligated to advance the principal and interest and guaranty fees, and we will be reimbursed by either Fannie Mae or Ginnie Mae. At the end of April, the first month principal and interest payments were due following the onset of COVID-19 in the U.S., we had $1.6 million of outstanding advances under our Fannie Mae and HUD servicing agreements. We are not obligated to make advances for any of the other loan types that we service.  

·

On May 5, 2020, we received a commitment from one of our warehouse lending banks to create a $100.0 million sublimit to our Agency warehouse line that would be used to fund our advances of principal and interest payments related to our Fannie Mae portfolio. The facility would provide 90% of the principal and interest advance payment and will be collateralized by Fannie Mae’s commitment to repay the advance. Completion of the facility is subject to final documentation, consent of the majority of holders of our term loan, and approval from Fannie Mae.

 

3

 

Picture 6

First quarter 2020 Earnings Release

 

 

 

 

 

 

 

 

 

 

 

 

 

REVENUES

(dollars in thousands)

 

Q1 2020

 

 

Q1 2019

 

$ Variance

 

% Variance

Loan origination and debt brokerage fees, net

$

76,373

 

$

57,797

 

$

18,576

 

32

%

Fair value of expected net cash flows from servicing, net

 

68,000

 

 

40,938

 

 

27,062

 

66

 

Servicing fees

 

55,434

 

 

52,199

 

 

3,235

 

 6

 

Net warehouse interest income, LHFS

 

1,492

 

 

29

 

 

1,463

 

5,045

 

Net warehouse interest income, LHFI

 

4,003

 

 

6,992

 

 

(2,989)

 

(43)

 

Escrow earnings and other interest income

 

10,743

 

 

14,068

 

 

(3,325)

 

(24)

 

Property sales broker fees

 

9,612

 

 

4,541

 

 

5,071

 

112

 

Other revenues

 

8,500

 

 

10,873

 

 

(2,373)

 

(22)

 

Total revenues

$

234,157

 

$

187,437

 

$

46,720

 

25

%

Key revenue metrics (as a percentage of debt financing volume):

 

 

 

 

 

 

 

 

 

 

 

Origination related fees3

 

0.79

%

 

1.11

%

 

 

 

 

 

Gains attributable to MSRs3

 

0.71

 

 

0.79

 

 

 

 

 

 

Gains attributable to MSRs - Agency loans4

 

1.23

 

 

1.10

 

 

 

 

 

 

Discussion of Results:

·

The increase in loan origination and debt brokerage fees was primarily the result of the 84%  increase in overall debt financing volume.

·

A substantial increase in Fannie Mae debt financing volume, including a $2 billion portfolio, led to the increase in the fair value of expected net cash flows from servicing, net.

·

The $7.1 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 the decline in the servicing portfolio’s weighted-average servicing fee.

·

The increase in net warehouse interest income from loans held for sale (“LHFS”) was due to a higher net interest margin year over year partially offset by a decrease in the average balance of LHFS outstanding.

·

The decrease in net warehouse interest income from loans held for investment (“LHFI”) was primarily due to a  lower spread earned on the LHFI outstanding,  as a larger percentage of our LHFI outstanding in 2019 was funded fully with corporate cash.

·

Escrow earnings and other interest income decreased due to a year-over-year decrease in short-term interest rates, upon which our earnings rates are based, partially offset by an increase in the average escrow balance.

·

The increase in property sales broker fees was primarily the result of the large increase in property sales volume year over year.

4

 

Picture 6

First quarter 2020 Earnings Release

 

 

 

 

 

 

 

 

 

 

 

 

 

EXPENSES

(dollars in thousands)

 

Q1 2020

 

 

Q1 2019

 

$ Variance

 

% Variance

Personnel

$

89,525

 

$

71,631

 

$

17,894

 

25

%

Amortization and depreciation

 

39,762

 

 

37,903

 

 

1,859

 

 5

 

Provision (benefit) for credit losses

 

23,643

 

 

2,675

 

 

20,968

 

784

 

Interest expense on corporate debt

 

2,860

 

 

3,652

 

 

(792)

 

(22)

 

Other operating expenses

 

18,090

 

 

15,492

 

 

2,598

 

17

 

Total expenses

$

173,880

 

$

131,353

 

$

42,527

 

32

%

Key expense metrics (as a percentage of total revenues):

 

 

 

 

 

 

 

 

 

 

 

Personnel expenses

 

38

%

 

38

%

 

 

 

 

 

Other operating expenses

 

 8

 

 

 8

 

 

 

 

 

 

Discussion of Results:

·

The growth in personnel expenses was largely the result of a 14% increase in average headcount and associated salaries and benefits, as we continued to scale our business through strategic acquisitions and organic hiring, and an  increase in commissions expense driven by a significant increase in total transaction volume.

·

Amortization and depreciation increased primarily due to the growth in the average balance of MSRs outstanding year over year.

·

The substantial increase in provision for credit losses was primarily related to the macroeconomic deterioration that resulted from the COVID-19 pandemic and its potential impacts on expected future losses in our at risk servicing portfolio. During the quarter, the Company adopted the current expected credit loss (CECL) accounting standard.

·

The increase in other operating expenses stemmed primarily from increased office costs due to an increase in our average headcount year over year.

 

 

 

 

 

 

 

 

 

 

 

 

KEY PERFORMANCE METRICS

(dollars in thousands, except per share amounts)

 

Q1 2020

 

 

Q1 2019

 

$ Variance

 

% Variance

Walker & Dunlop net income

$

47,829

 

$

44,218

 

$

3,611

 

 8

%

Adjusted EBITDA

 

64,129

 

 

66,684

 

 

(2,555)

 

(4)

 

Diluted EPS

$

1.49

 

$

1.39

 

$

0.10

 

 7

%

Operating margin

 

26

%

 

30

%

 

 

 

 

 

Return on equity

 

19

 

 

20

 

 

 

 

 

 

Discussion of Results:

·

The increase in net income was the result of  a 7% increase in income from operations,  inclusive of the aforementioned 784% increase in provision for credit losses.  

·

The decrease in adjusted EBITDA was primarily driven by the increases in personnel and other operating expenses and decreases in net warehouse interest income and escrow earnings, partially offset by increases in loan origination fees and servicing fees.

5

 

Picture 6

First quarter 2020 Earnings Release

 

 

 

 

 

 

 

 

 

 

 

 

 

KEY CREDIT METRICS

(dollars in thousands)

 

Q1 2020

 

 

Q1 2019

 

$ Variance

 

% Variance

At risk servicing portfolio5

$

37,864,262

 

$

33,438,052

 

$

4,426,210

 

13

%

Maximum exposure to at risk portfolio6

 

7,729,120

 

 

6,985,874

 

 

743,246

 

11

 

Defaulted loans

$

48,481

 

$

20,981

 

$

27,500

 

131

%

Key credit metrics (as a percentage of the at risk portfolio):

 

 

 

 

 

 

 

 

 

 

 

Defaulted loans

 

0.13

%

 

0.06

%

 

 

 

 

 

Allowance for risk-sharing

 

0.17

 

 

0.02

 

 

 

 

 

 

Key credit metrics (as a percentage of maximum exposure):

 

 

 

 

 

 

 

 

 

 

 

Allowance for risk-sharing

 

0.83

%

 

0.10

%

 

 

 

 

 

 

Discussion of Results:

 

·

Our at risk servicing portfolio, which is comprised of loans subject to a defined risk-sharing formula, increased due to the significant level of Fannie Mae volume during the past 12 months. There were two defaulted loans in our at risk servicing portfolio as of March 31, 2020 which defaulted and were provisioned for during the first and fourth quarters of 2019. Both properties have been foreclosed on and final settlement of any losses will occur in the future upon disposition of the assets by Fannie Mae.

·

Pursuant to the Coronavirus Aid, Relief, and Economic Security (CARES) Act, Fannie Mae instituted a mortgage forbearance program in April in response to the COVID-19 crisis. Under the terms of the forbearance program, borrowers impacted by COVID-19 can request that debt service payments be deferred for a period of up to three months, after which the deferred payments must be repaid over a 12-month period. As of April 30, 2020, we had granted COVID-19-related forbearance on 5  loans in our at risk servicing portfolio with an aggregate outstanding unpaid principal balance of  $91.9 million.  

·

The allowance for risk-sharing as a percentage of the at risk portfolio increased substantially due to the $31.6 million increase to the allowance stemming from the adoption of CECL on January 1, 2020 and the  $22.5 million provision for risk sharing obligations in the first quarter of 2020 based on our forecast of an increase in short term future losses as a result of the COVID-19 crisis.

·

The on-balance sheet interim loan portfolio, which is comprised of loans for which the Company has full risk of loss, was $387.3 million at March 31, 2020, compared to $274.1 million at March 31, 2019. There was one defaulted loan in our interim loan portfolio at March 31, 2020, which defaulted and was provisioned for during the first quarter of 2019. All other loans in the on-balance sheet interim loan portfolio are current and performing as of March 31, 2020.  The Company recorded an additional provision expense of $1.1 million for our on-balance sheet interim loan portfolio based on the increase in the near-term loss forecast stemming from the COVID-19 crisis. The interim loan joint venture holds $731.4 million of loans as of March 31, 2020, for which the Company indirectly shares in a small portion of the risk of loss. All loans in the interim loan joint venture are current and performing as of March 31, 2020. 

DIVIDENDS AND SHARE REPURCHASES

Based upon our first quarter 2020 financial performance, strong cash position, and projected future liquidity needs, on May 5, 2020, our Board of Directors declared a dividend of $0.36 per share for the second quarter of 2020. The dividend will be paid June 5, 2020 to all holders of record of our restricted and unrestricted common stock as of May 20, 2020.

 

During the first quarter of 2020, the Company’s Board of Directors approved a new stock repurchase program that permits the repurchase of up to $50.0 million of the Company’s common stock over a 12-month period beginning on February 11, 2020. During the first quarter of 2020, the Company repurchased 0.2 million shares of its common stock under the share repurchase program at a weighted average price of $63.58 per share and immediately retired the shares, reducing stockholders’ equity by $10.2 million. As of March 31, 2020, the Company had $39.8 million of authorized share repurchase capacity remaining under the 2020 share repurchase

6

 

Picture 6

First quarter 2020 Earnings Release

 

program. The first quarter share repurchases were made prior to the escalation of the COVID-19 crisis and future purchases are unlikely until the impacts of the crisis on the economy and the Company’s liquidity are better understood

Any future purchases made pursuant to the 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.


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” and “Adjusted Financial Metric Reconciliation to GAAP.”

2  Includes debt financing volumes from our interim loan platform, our interim loan joint venture, and JCR separate accounts.

3  Excludes the income and debt financing volume from Principal Lending and Investing.

4  The fair value of the expected net cash flows associated with the servicing of the loan, net of any guaranty obligations retained, as a percentage of Agency volume.

5  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.

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. 

6  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.

Conference Call Information

The Company will host a conference call to discuss its quarterly results on Wednesday, May 6, 2020 at 8:30 a.m. Eastern time. Listeners can access the webcast via the link:  https://walkerdunlop.zoom.us/webinar/register/WN_c3hs7keESvKlooPmRbzrKQ or by dialing +1 408 901 0584, Webinar ID 927 4787 6710, Password 976334. 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.


About Walker & Dunlop

Walker & Dunlop (NYSE: WD), headquartered in Bethesda, Maryland, is one of the largest commercial real estate finance companies in the United States. The Company provides a comprehensive range of capital solutions for all commercial real estate asset classes, as well as investment sales brokerage services to owners of multifamily properties. Walker & Dunlop is included on the S&P SmallCap 600 Index and was ranked as one of FORTUNE Magazine’s Fastest Growing Companies in 2014, 2017, and 2018. Walker & Dunlop’s 850+ professionals in 40 offices across the nation have an unyielding commitment to client satisfaction.


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, a non-GAAP financial measure. The presentation of adjusted EBITDA 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 in addition to, and not as an alternative for, net income. Adjusted EBITDA represents net income before income taxes, interest expense on our term loan facility, and amortization and depreciation, adjusted for provision (benefit) for credit losses net of write-offs, stock-based incentive compensation charges, and non-cash revenues such as the fair value of expected net cash flows from servicing, net. Because not all companies use identical calculations, our presentation of adjusted EBITDA may not be comparable to similarly titled measures of other companies. 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.

7

 

Picture 6

First quarter 2020 Earnings Release

 

We use adjusted EBITDA 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 this non-GAAP measure, when read in conjunction with the Company's GAAP financials, provides 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.

We believe that adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with the Company's results of operations as determined in accordance with GAAP and that adjusted EBITDA should only be used to evaluate the Company's results of operations in conjunction with net income. For more information on adjusted EBITDA, refer to the section of this press release below titled “Adjusted Financial Metric Reconciliation to GAAP.”

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) the impact of the COVID-19 pandemic on the Company’s business, results of operations, and financial condition, including due to its principal and interest advance obligations on Fannie Mae and Ginnie Mae loans it services, and the domestic economy, (2) general economic conditions and multifamily and commercial real estate market conditions, (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, and (5) 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 our most-recent Quarterly Report 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.

Contacts:

 

 

Investors:

Media:

Kelsey Duffey

Susan Weber

Vice President, Investor Relations

Chief Marketing Officer

Phone 301.202.3207

Phone 301.215.5515

investorrelations@walkeranddunlop.com

info@walkeranddunlop.com

 

Phone  301.215.5500

7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814

 

 

8

 

Picture 6

First quarter 2020 Earnings Release

 

Picture 3

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

March 31, 

    

December 31,

    

September 30,

    

June 30,

    

March 31, 

 

2020

 

2019

 

2019

 

2019

 

2019

(in thousands)

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

205,309

 

$

120,685

 

$

65,641

 

$

74,184

 

$

109,862

Restricted cash

 

30,745

 

 

8,677

 

 

9,138

 

 

15,454

 

 

17,561

Pledged securities, at fair value

 

121,495

 

 

121,767

 

 

120,302

 

 

119,289

 

 

117,566

Loans held for sale, at fair value

 

1,186,577

 

 

787,035

 

 

1,259,075

 

 

1,302,938

 

 

1,226,380

Loans held for investment, net

 

454,213

 

 

543,542

 

 

454,430

 

 

432,593

 

 

471,561

Mortgage servicing rights

 

722,486

 

 

718,799

 

 

697,350

 

 

688,027

 

 

677,946

Goodwill and other intangible assets

 

247,257

 

 

182,959

 

 

183,122

 

 

183,286

 

 

183,449

Derivative assets

 

158,233

 

 

15,568

 

 

25,554

 

 

22,420

 

 

27,605

Receivables, net

 

52,185

 

 

52,146

 

 

56,149

 

 

51,982

 

 

52,643

Other assets

 

133,475

 

 

124,021

 

 

110,240

 

 

104,044

 

 

84,320

Total assets

$

3,311,975

 

$

2,675,199

 

$

2,981,001

 

$

2,994,217

 

$

2,968,893

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Warehouse notes payable

$

1,305,846

 

$

906,128

 

$

1,263,036

 

$

1,313,955

 

$

1,335,461

Note payable

 

293,371

 

 

293,964

 

 

294,255

 

 

294,840

 

 

295,425

Guaranty obligation, net

 

55,758

 

 

54,695

 

 

52,656

 

 

51,414

 

 

49,376

Allowance for risk-sharing obligations

 

64,110

 

 

11,471

 

 

7,256

 

 

7,964

 

 

6,682

Derivative liabilities

 

172,623

 

 

36

 

 

17,726

 

 

35,122

 

 

29,891

Performance deposits from borrowers

 

29,575

 

 

7,996

 

 

8,711

 

 

14,737

 

 

17,471

Other liabilities

 

347,377

 

 

358,624

 

 

335,119

 

 

311,950

 

 

306,515

Total liabilities

$

2,268,660

 

$

1,632,914

 

$

1,978,759

 

$

2,029,982

 

$

2,040,821

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Preferred shares

$

 —

 

$

 —

 

$

 —

 

$

 —

 

$

 —

Common stock

 

303

 

 

300

 

 

300

 

 

300

 

 

300

Additional paid-in capital

 

236,007

 

 

237,877

 

 

231,297

 

 

227,621

 

 

223,742

Accumulated other comprehensive income (loss)

 

(1,181)

 

 

737

 

 

1,015

 

 

892

 

 

226

Retained earnings

 

801,139

 

 

796,775

 

 

763,195

 

 

730,562

 

 

698,894

Total stockholders’ equity

$

1,036,268

 

$

1,035,689

 

$

995,807

 

$

959,375

 

$

923,162

Noncontrolling interests

 

7,047

 

 

6,596

 

 

6,435

 

 

4,860

 

 

4,910

Total equity

$

1,043,315

 

$

1,042,285

 

$

1,002,242

 

$

964,235

 

$

928,072

Commitments and contingencies

 

 —

 

 

 —

 

 

 —

 

 

 —

 

 

 —

Total liabilities and equity

$

3,311,975

 

$

2,675,199

 

$

2,981,001

 

$

2,994,217

 

$

2,968,893

9

 

Picture 6

First quarter 2020 Earnings Release

 

Picture 1

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Trends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in thousands, except per share amounts)

Q1 2020

 

Q4 2019

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loan origination and debt brokerage fees, net

$

76,373

 

$

69,921

 

$

65,144

 

$

65,610

 

$

57,797

 

Fair value of expected net cash flows from servicing, net

 

68,000

 

 

47,771

 

 

50,785

 

 

41,271

 

 

40,938

 

Servicing fees

 

55,434

 

 

55,126

 

 

54,219

 

 

53,006

 

 

52,199

 

Net warehouse interest income

 

5,495

 

 

6,095

 

 

6,172

 

 

6,411

 

 

7,021

 

Escrow earnings and other interest income

 

10,743

 

 

12,988

 

 

15,163

 

 

14,616

 

 

14,068

 

Other revenues

 

18,112

 

 

25,289

 

 

20,784

 

 

19,411

 

 

15,414

 

Total revenues

$

234,157

 

$

217,190

 

$

212,267

 

$

200,325

 

$

187,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Personnel

$

89,525

 

$

97,082

 

$

93,057

 

$

84,398

 

$

71,631

 

Amortization and depreciation

 

39,762

 

 

39,552

 

 

37,636

 

 

37,381

 

 

37,903

 

Provision for credit losses

 

23,643

 

 

4,409

 

 

(772)

 

 

961

 

 

2,675

 

Interest expense on corporate debt

 

2,860

 

 

3,292

 

 

3,638

 

 

3,777

 

 

3,652

 

Other operating expenses

 

18,090

 

 

14,881

 

 

19,393

 

 

16,830

 

 

15,492

 

Total expenses

$

173,880

 

$

159,216

 

$

152,952

 

$

143,347

 

$

131,353

 

Income from operations

$

60,277

 

$

57,974

 

$

59,315

 

$

56,978

 

$

56,084

 

Income tax expense

 

12,672

 

 

15,019

 

 

15,246

 

 

14,832

 

 

12,024

 

Net income before noncontrolling interests

$

47,605

 

$

42,955

 

$

44,069

 

$

42,146

 

$

44,060

 

Less: net income (loss) from noncontrolling interests

 

(224)

 

 

39

 

 

26

 

 

(50)

 

 

(158)

 

Walker & Dunlop net income

$

47,829

 

$

42,916

 

$

44,043

 

$

42,196

 

$

44,218

 

Other comprehensive income (loss), net of tax:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net change in unrealized gains and losses on pledged available-for-sale securities

 

(1,917)

 

 

(278)

 

 

123

 

 

666

 

 

301

 

Walker & Dunlop comprehensive income

$

45,912

 

$

42,638

 

$

44,166

 

$

42,862

 

$

44,519

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

$

1.53

 

$

1.38

 

$

1.42

 

$

1.36

 

$

1.44

 

Diluted earnings per share

 

1.49

 

 

1.34

 

 

1.39

 

 

1.33

 

 

1.39

 

Cash dividends declared per common share

 

0.36

 

 

0.30

 

 

0.30

 

 

0.30

 

 

0.30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

 

30,226

 

 

29,996

 

 

29,987

 

 

29,985

 

 

29,680

 

Diluted weighted average shares outstanding

 

31,160

 

 

30,976

 

 

30,782

 

 

30,744

 

 

30,684

 

 

 

10

 

Picture 6

First quarter 2020 Earnings Release

 

Picture 4

SUPPLEMENTAL OPERATING DATA

Unaudited

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarterly Trends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(dollars in thousands, except per share data)

Q1 2020

 

Q4 2019

 

Q3 2019

 

Q2 2019

 

Q1 2019

 

Transaction Volume:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Components of Debt Financing Volume

 

 

 

 

 

 

 

 

 

 

Fannie Mae

$

4,171,491

 

$

1,692,839

 

$

2,012,291

 

$

2,357,560

 

$

1,982,810

 

Freddie Mac

 

997,796