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Table of Contents

​

Graphic

​

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

​

FORM 10-Q

​

​

​

    (Mark One)

​

☒

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

For the quarterly period ended September 30, 2024

OR

​

​

☐

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

For the transition period from                      to

Commission File Number: 001-35000

​

Walker & Dunlop, Inc.

​

(Exact name of registrant as specified in its charter)

Maryland

 

80-0629925

(State or other jurisdiction of

 

(I.R.S. Employer Identification No.)

incorporation or organization)

 

 

7272 Wisconsin Avenue, Suite 1300

Bethesda, Maryland 20814

(301) 215-5500

(Address of principal executive offices)(Zip Code)(Registrant’s telephone number, including area code)

​

Not Applicable

(Former name, former address, and former fiscal year, if changed since last report)

​

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

​

​

​

​

​

​

Title of each class

​

Trading Symbol

​

Name of each exchange on which registered

Common Stock, $0.01 Par Value Per Share

​

WD

​

New York Stock Exchange

​

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

​

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

​

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

​

​

​

​

​

​

​

​

Large Accelerated Filer ☒ 

​

Smaller Reporting Company ☐

​

Accelerated Filer ☐

​

Emerging Growth Company ☐

​

Non-accelerated Filer ☐

 

​

​

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

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

​

As of October 28, 2024, there were 33,766,571 total shares of common stock outstanding.

​

​

Table of Contents

Walker & Dunlop, Inc.
Form 10-Q
INDEX

​

​

​

​

​

​

​

​

​

​

​

​

Page

​

​

​

​

PART I

 

FINANCIAL INFORMATION

3

 

 

 

​

Item 1.

 

Financial Statements

3

​

​

​

​

Item 2.

​

Management's Discussion and Analysis of Financial Condition and Results of Operations

30

​

​

​

​

Item 3.

​

Quantitative and Qualitative Disclosures About Market Risk

63

​

​

​

​

Item 4.

​

Controls and Procedures

64

​

​

​

​

PART II

​

OTHER INFORMATION

65

​

​

​

​

Item 1.

​

Legal Proceedings

65

​

​

​

​

Item 1A.

​

Risk Factors

65

​

​

​

​

Item 2.

​

Unregistered Sales of Equity Securities and Use of Proceeds

65

​

​

​

​

Item 3.

​

Defaults Upon Senior Securities

66

​

​

​

​

Item 4.

​

Mine Safety Disclosures

66

​

​

​

​

Item 5.

​

Other Information

66

​

​

​

​

Item 6.

​

Exhibits

67

​

​

​

​

​

​

Signatures

68

​

​

​

​

​

Table of Contents

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

​

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

​

Assets

​

​

​

​

​

 

Cash and cash equivalents

​

$

179,759

​

$

328,698

​

Restricted cash

​

 

39,827

​

 

21,422

​

Pledged securities, at fair value

​

 

203,945

​

 

184,081

​

Loans held for sale, at fair value

​

 

1,024,984

​

 

594,998

​

Mortgage servicing rights

​

 

836,896

​

 

907,415

​

Goodwill

​

​

901,710

​

​

901,710

​

Other intangible assets

​

 

170,713

​

 

181,975

​

Receivables, net

​

 

307,407

​

 

233,563

​

Committed investments in tax credit equity

​

​

333,713

​

​

154,028

​

Other assets

​

 

580,277

​

 

544,457

​

Total assets

​

$

4,579,231

​

$

4,052,347

​

​

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

​

Warehouse notes payable

​

$

1,019,850

​

$

596,178

​

Notes payable

​

 

769,376

​

 

773,358

​

Allowance for risk-sharing obligations

​

 

29,859

​

 

31,601

​

Commitments to fund investments in tax credit equity

​

​

289,250

​

​

140,259

​

Other liabilities

​

​

724,543

​

​

764,822

​

Total liabilities

​

$

2,832,878

​

$

2,306,218

​

​

​

​

​

​

​

​

​

Stockholders' Equity

​

​

​

​

​

​

​

Preferred stock (authorized 50,000 shares; none issued)

​

$

—

​

$

—

​

Common stock ($0.01 par value; authorized 200,000 shares; issued and outstanding 33,189 shares as of September 30, 2024 and 32,874 shares as of December 31, 2023)

​

 

332

​

 

329

​

Additional paid-in capital ("APIC")

​

 

412,570

​

 

425,488

​

Accumulated other comprehensive income (loss) ("AOCI")

​

​

1,466

​

​

(479)

​

Retained earnings

​

 

1,295,459

​

 

1,298,412

​

Total stockholders’ equity

​

$

1,709,827

​

$

1,723,750

​

Noncontrolling interests

​

 

36,526

​

 

22,379

​

Total equity

​

$

1,746,353

​

$

1,746,129

​

Commitments and contingencies (NOTES 2 and 9)

​

 

—

​

 

—

​

Total liabilities and equity

​

$

4,579,231

​

$

4,052,347

​

See accompanying notes to condensed consolidated financial statements.

​

3

Table of Contents

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Income and Comprehensive Income

(In thousands, except per share data)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

​

September 30, 

​

September 30, 

​

​

    

2024

    

2023

    

2024

    

2023

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

Loan origination and debt brokerage fees, net

​

$

73,546

​

$

56,149

​

$

182,620

​

$

168,201

​

Fair value of expected net cash flows from servicing, net

​

​

43,426

​

​

35,375

​

​

97,673

​

​

107,446

​

Servicing fees

​

 

82,222

​

 

79,200

​

 

242,683

​

​

232,027

​

Property sales broker fees

​

​

19,322

​

​

16,862

​

​

39,408

​

​

38,831

​

Investment management fees

​

​

11,744

​

​

13,362

​

​

40,086

​

​

44,844

​

Net warehouse interest income (expense)

​

 

(2,147)

​

 

(2,031)

​

 

(4,847)

​

​

(3,556)

​

Placement fees and other interest income

​

 

43,557

​

 

43,000

​

 

123,999

​

​

109,310

​

Other revenues

​

 

20,634

​

 

26,826

​

 

69,417

​

​

83,001

​

Total revenues

​

$

292,304

​

$

268,743

​

$

791,039

​

$

780,104

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

145,538

​

$

136,507

​

$

390,068

​

$

388,425

​

Amortization and depreciation

​

​

57,561

​

​

57,479

​

​

169,495

​

​

170,737

​

Provision (benefit) for credit losses

​

 

2,850

​

 

421

​

 

6,310

​

​

(11,088)

​

Interest expense on corporate debt

​

 

18,232

​

 

17,594

​

 

53,765

​

​

49,878

​

Goodwill impairment

​

​

—

​

​

14,000

​

​

—

​

​

14,000

​

Fair value adjustments to contingent consideration liabilities

​

​

(1,366)

​

​

(14,000)

​

​

(1,366)

​

​

(14,000)

​

Other operating expenses

​

 

31,984

​

 

28,529

​

 

93,386

​

​

83,322

​

Total expenses

​

$

254,799

​

$

240,530

​

$

711,658

​

$

681,274

​

Income from operations

​

$

37,505

​

$

28,213

​

$

79,381

​

$

98,830

​

Income tax expense

​

 

8,822

​

 

7,069

​

 

19,588

​

​

24,695

​

Net income before noncontrolling interests

​

$

28,683

​

$

21,144

​

$

59,793

​

$

74,135

​

Less: net income (loss) from noncontrolling interests

​

 

(119)

​

 

(314)

​

 

(3,538)

​

 

(1,623)

​

Walker & Dunlop net income

​

$

28,802

​

$

21,458

​

$

63,331

​

$

75,758

​

Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes

​

​

1,051

​

​

(399)

​

​

1,945

​

​

(296)

​

Walker & Dunlop comprehensive income

​

$

29,853

​

$

21,059

​

$

65,276

​

$

75,462

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic earnings per share (NOTE 10)

​

$

0.85

​

$

0.64

​

$

1.87

​

$

2.26

​

Diluted earnings per share (NOTE 10)

​

$

0.85

​

$

0.64

​

$

1.87

​

$

2.25

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Basic weighted-average shares outstanding

​

 

33,169

​

 

32,737

​

 

33,090

​

 

32,654

​

Diluted weighted-average shares outstanding

​

 

33,203

​

 

32,895

​

​

33,135

​

 

32,853

​

See accompanying notes to condensed consolidated financial statements.

​

4

Table of Contents

Walker & Dunlop, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(In thousands, except per share data)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three and nine months ended September 30, 2024

​

​

​

​

​

Stockholders' Equity

​

​

​

​

​

​

​

​

​

Common Stock

​

​

​

​

​

Retained

​

Noncontrolling

​

Total

​

​

  

Shares

  

Amount

  

APIC

  

AOCI

  

Earnings

  

Interests

  

Equity

 

Balance as of December 31, 2023

​

32,874

​

$

329

​

$

425,488

​

$

(479)

​

$

1,298,412

​

$

22,379

​

$

1,746,129

​

Walker & Dunlop net income

​

—

​

​

—

​

​

—

​

​

—

​

​

11,866

​

​

—

​

​

11,866

​

Net income (loss) from noncontrolling interests

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,051)

​

​

(1,051)

​

Other comprehensive income (loss), net of tax

​

—

​

​

—

​

​

—

​

​

(13)

​

​

—

​

​

—

​

​

(13)

​

Stock-based compensation - equity classified

​

—

​

​

—

​

​

5,842

​

​

—

​

​

—

​

​

—

​

​

5,842

​

Issuance of common stock in connection with equity compensation plans

​

322

​

​

3

​

​

5,642

​

​

—

​

​

—

​

​

—

​

​

5,645

​

Repurchase and retirement of common stock

​

(101)

​

​

(1)

​

​

(9,788)

​

​

—

​

​

—

​

​

—

​

​

(9,789)

​

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(500)

​

​

(500)

​

Cash dividends paid ($0.65 per common share)

​

—

​

​

—

​

​

—

​

​

—

​

​

(21,965)

​

​

—

​

​

(21,965)

​

Other activity

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(256)

​

​

(256)

​

Balance as of March 31, 2024

​

33,095

​

$

331

​

$

427,184

​

$

(492)

​

$

1,288,313

​

$

20,572

​

$

1,735,908

​

Walker & Dunlop net income

​

—

​

​

—

​

​

—

​

​

—

​

​

22,663

​

​

—

​

​

22,663

​

Net income (loss) from noncontrolling interests

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,368)

​

​

(2,368)

​

Other comprehensive income (loss), net of tax

​

—

​

​

—

​

​

—

​

​

907

​

​

—

​

​

—

​

​

907

​

Stock-based compensation - equity classified

​

—

​

​

—

​

​

6,608

​

​

—

​

​

—

​

​

—

​

​

6,608

​

Issuance of common stock in connection with equity compensation plans

​

50

​

​

—

​

​

169

​

​

—

​

​

—

​

​

—

​

​

169

​

Repurchase and retirement of common stock

​

(8)

​

​

—

​

​

(809)

​

​

—

​

​

—

​

​

—

​

​

(809)

​

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(36)

​

​

(36)

​

Purchase of noncontrolling interests

​

—

​

​

—

​

​

(25,726)

​

​

—

​

​

—

​

​

18,726

​

​

(7,000)

​

Cash dividends paid ($0.65 per common share)

​

—

​

​

—

​

​

—

​

​

—

​

​

(22,248)

​

​

—

​

​

(22,248)

​

Balance as of June 30, 2024

​

33,137

​

$

331

​

$

407,426

​

$

415

​

$

1,288,728

​

$

36,894

​

$

1,733,794

​

Walker & Dunlop net income

​

—

​

​

—

​

​

—

​

​

—

​

​

28,802

​

​

—

​

​

28,802

​

Net income (loss) from noncontrolling interests

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(119)

​

​

(119)

​

Other comprehensive income (loss), net of tax

​

—

​

​

—

​

​

—

​

​

1,051

​

​

—

​

​

—

​

​

1,051

​

Stock-based compensation - equity classified

​

—

​

​

—

​

​

6,276

​

​

—

​

​

—

​

​

—

​

​

6,276

​

Issuance of common stock in connection with equity compensation plans

​

65

​

​

1

​

​

282

​

​

—

​

​

—

​

​

—

​

​

283

​

Repurchase and retirement of common stock

​

(13)

​

​

—

​

​

(1,414)

​

​

—

​

​

—

​

​

—

​

​

(1,414)

​

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(249)

​

​

(249)

​

Cash dividends paid ($0.65 per common share)

​

—

​

​

—

​

​

—

​

​

—

​

​

(22,071)

​

​

—

​

​

(22,071)

​

Balance as of September 30, 2024

​

33,189

​

$

332

​

$

412,570

​

$

1,466

​

$

1,295,459

​

$

36,526

​

$

1,746,353

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

5

Table of Contents

Walker & Dunlop, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity (CONTINUED)

(In thousands, except per share data)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three and nine months ended September 30, 2023

​

​

​

​

​

Stockholders' Equity

​

​

​

​

​

​

​

​

​

Common Stock

​

​

​

​

​

Retained

​

Noncontrolling

​

Total

​

​

  

Shares

  

Amount

  

APIC

  

AOCI

  

Earnings

  

Interests

  

Equity

​

Balance as of December 31, 2022

​

32,396

​

$

323

​

$

412,636

​

$

(1,568)

​

$

1,278,035

​

$

27,403

​

$

1,716,829

​

Walker & Dunlop net income

​

—

​

​

—

​

​

—

​

​

—

​

​

26,665

​

​

—

​

​

26,665

​

Net income (loss) from noncontrolling interests

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

805

​

​

805

​

Other comprehensive income (loss), net of tax

​

—

​

​

—

​

​

—

​

​

(53)

​

​

—

​

​

—

​

​

(53)

​

Stock-based compensation - equity classified

​

—

​

​

—

​

​

6,664

​

​

—

​

​

—

​

​

—

​

​

6,664

​

Issuance of common stock in connection with equity compensation plans

​

468

​

​

5

​

​

3,397

​

​

—

​

​

—

​

​

—

​

​

3,402

​

Repurchase and retirement of common stock

​

(185)

​

​

(1)

​

​

(17,394)

​

​

—

​

​

—

​

​

—

​

​

(17,395)

​

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(600)

​

​

(600)

​

Cash dividends paid ($0.63 per common share)

​

—

​

​

—

​

​

—

​

​

—

​

​

(21,221)

​

​

—

​

​

(21,221)

​

Other activity

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,360)

​

​

2,360

​

​

—

​

Balance as of March 31, 2023

​

32,679

​

$

327

​

$

405,303

​

$

(1,621)

​

$

1,281,119

​

$

29,968

​

$

1,715,096

​

Walker & Dunlop net income

​

—

​

​

—

​

​

—

​

​

—

​

​

27,635

​

​

—

​

​

27,635

​

Net income (loss) from noncontrolling interests

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(2,114)

​

​

(2,114)

​

Other comprehensive income (loss), net of tax

​

—

​

​

—

​

​

—

​

​

156

​

​

—

​

​

—

​

​

156

​

Stock-based compensation - equity classified

​

—

​

​

—

​

​

7,541

​

​

—

​

​

—

​

​

—

​

​

7,541

​

Issuance of common stock in connection with equity compensation plans

​

33

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

Repurchase and retirement of common stock

​

(9)

​

​

—

​

​

(662)

​

​

—

​

​

—

​

​

—

​

​

(662)

​

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(1,735)

​

​

(1,735)

​

Cash dividends paid ($0.63 per common share)

​

—

​

​

—

​

​

—

​

​

—

​

​

(21,180)

​

​

—

​

​

(21,180)

​

Other activity

​

—

​

​

—

​

​

—

​

​

—

​

​

(240)

​

​

—

​

​

(240)

​

Balance as of June 30, 2023

​

32,703

​

$

327

​

$

412,182

​

$

(1,465)

​

$

1,287,334

​

$

26,119

​

$

1,724,497

​

Walker & Dunlop net income

​

—

​

​

—

​

​

—

​

​

—

​

​

21,458

​

​

—

​

​

21,458

​

Net income (loss) from noncontrolling interests

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(314)

​

​

(314)

​

Other comprehensive income (loss), net of tax

​

—

​

​

—

​

​

—

​

​

(399)

​

​

—

​

​

—

​

​

(399)

​

Stock-based compensation - equity classified

​

—

​

​

—

​

​

7,015

​

​

—

​

​

—

​

​

—

​

​

7,015

​

Issuance of common stock in connection with equity compensation plans

​

86

​

​

1

​

​

1,736

​

​

—

​

​

—

​

​

—

​

​

1,737

​

Repurchase and retirement of common stock

​

(10)

​

​

—

​

​

(871)

​

​

—

​

​

—

​

​

—

​

​

(871)

​

Distributions to noncontrolling interest holders

​

—

​

​

—

​

​

—

​

​

—

​

​

—

​

​

(993)

​

​

(993)

​

Cash dividends paid ($0.63 per common share)

​

—

​

​

—

​

​

—

​

​

—

​

​

(21,139)

​

​

—

​

​

(21,139)

​

Balance as of September 30, 2023

​

32,779

​

$

328

​

$

420,062

​

$

(1,864)

​

$

1,287,653

​

$

24,812

​

$

1,730,991

​

​

See accompanying notes to condensed consolidated financial statements.

​

​

​

​

6

Table of Contents

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

​

​

​

​

​

​

​

​

​

​

For the nine months ended September 30, 

​

    

2024

    

2023

Cash flows from operating activities

​

​

​

​

​

​

Net income before noncontrolling interests

​

$

59,793

​

$

74,135

Adjustments to reconcile net income to net cash provided by (used in) operating activities:

​

​

​

​

​

​

Gains attributable to the fair value of future servicing rights, net of guaranty obligation

​

 

(97,673)

​

 

(107,446)

Change in the fair value of premiums and origination fees

​

 

(1,857)

​

 

6,634

Amortization and depreciation

​

 

169,495

​

 

170,737

Provision (benefit) for credit losses

​

 

6,310

​

 

(11,088)

Originations of loans held for sale

​

​

(6,807,180)

​

​

(8,402,185)

Proceeds from transfers of loans held for sale

​

​

6,365,406

​

​

8,023,294

Other operating activities, net

​

​

(95,752)

​

​

(86,493)

Net cash provided by (used in) operating activities

​

$

(401,458)

​

$

(332,412)

​

​

​

​

​

​

​

Cash flows from investing activities

​

​

​

​

​

​

Capital expenditures

​

$

(9,025)

​

$

(13,880)

Purchases of equity-method investments

​

​

(14,503)

​

​

(15,062)

Purchases of pledged available-for-sale ("AFS") securities

​

​

(20,900)

​

​

—

Proceeds from prepayment and sale of pledged AFS securities

​

​

7,153

​

​

9,274

Originations and repurchase of loans held for investment

​

​

(25,619)

​

​

(366)

Principal collected on loans held for investment

​

 

17,659

​

 

161,167

Other investing activities, net

​

​

8,092

​

​

5,436

Net cash provided by (used in) investing activities

​

$

(37,143)

​

$

146,569

​

​

​

​

​

​

​

Cash flows from financing activities

​

​

​

​

​

​

Borrowings (repayments) of warehouse notes payable, net

​

$

452,497

​

$

387,109

Repayments of interim warehouse notes payable

​

 

(13,884)

​

 

(119,835)

Repayments of notes payable

​

 

(6,013)

​

 

(120,046)

Borrowings of notes payable

​

​

—

​

​

196,000

Repurchase of common stock

​

 

(12,012)

​

 

(18,928)

Purchase of noncontrolling interests

​

​

(5,000)

​

​

—

Cash dividends paid

​

​

(66,284)

​

​

(63,540)

Payment of contingent consideration

​

​

(34,317)

​

​

(26,090)

Other financing activities, net

​

​

(1,149)

​

​

(6,463)

Net cash provided by (used in) financing activities

​

$

313,838

​

$

228,207

​

​

​

​

​

​

​

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents (NOTE 2)

​

$

(124,763)

​

$

42,364

Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period

​

 

391,403

​

 

258,283

Total of cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period

​

$

266,640

​

$

300,647

​

​

​

​

​

​

​

Supplemental Disclosure of Cash Flow Information:

​

​

​

​

​

​

Cash paid to third parties for interest

​

$

73,123

​

$

86,663

Cash paid for income taxes

​

​

29,076

​

​

26,656

See accompanying notes to condensed consolidated financial statements.

​

​

7

Table of Contents

NOTE 1—ORGANIZATION AND BASIS OF PRESENTATION

These financial statements represent the condensed consolidated financial position and results of operations of Walker & Dunlop, Inc. and its subsidiaries. Unless the context otherwise requires, references to “Walker & Dunlop” and the “Company” mean the Walker & Dunlop consolidated companies. The statements have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they may not include certain financial statement disclosures and other information required for annual financial statements. The accompanying condensed consolidated financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Form 10-K”). In the opinion of management, all adjustments considered necessary for a fair presentation of the results for the Company in the interim periods presented have been included. Results of operations for the three and nine months ended September 30, 2024 are not necessarily indicative of the results that may be expected for the year ending December 31, 2024 or thereafter.  

Walker & Dunlop, Inc. is a holding company and conducts the majority of its operations through Walker & Dunlop, LLC, the operating company. Walker & Dunlop is one of the leading commercial real estate services and finance companies in the United States. The Company originates, sells, and services a range of commercial real estate debt and equity financing products, provides multifamily property sales brokerage and valuation services, engages in commercial real estate investment management activities with a particular focus on the affordable housing sector through low-income housing tax credit (“LIHTC”) syndication, provides housing market research, and delivers real estate-related investment banking and advisory services.

Through its Agency lending products, the Company originates and sells loans pursuant to the programs of the Federal National Mortgage Association (“Fannie Mae”), the Federal Home Loan Mortgage Corporation (“Freddie Mac” and, together with Fannie Mae, the “GSEs”), the Government National Mortgage Association (“Ginnie Mae”), and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”). Through its debt brokerage products, the Company brokers, and, in some cases, services, loans for various life insurance companies, commercial banks, commercial mortgage-backed securities issuers, and other institutional investors.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Subsequent Events—The Company has evaluated the effects of all events that have occurred subsequent to September 30, 2024 and before the date of this filing. The Company has made certain disclosures in the notes to the condensed consolidated financial statements of events that have occurred subsequent to September 30, 2024. There have been no other material subsequent events that would require recognition in the condensed consolidated financial statements.

Use of Estimates—The preparation of condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses, including the allowance for risk-sharing obligations, initial and recurring fair value assessments of capitalized mortgage servicing rights, the initial fair value assessment of  goodwill, the periodic assessment of impairment of goodwill, initial fair value estimate of other intangible assets, and the initial and recurring fair value assessments of contingent consideration liabilities. Actual results may vary from these estimates.

Provision (Benefit) for Credit Losses—The Company records the income statement impact of the changes in the allowance for loan losses, the allowance for risk-sharing obligations, and other credit losses within Provision (benefit) for credit losses in the Condensed Consolidated Statements of Income. NOTE 4 contains additional discussion related to the allowance for risk-sharing obligations. The Company has credit risk exclusively on loans secured by multifamily real estate, with no exposure to any other sector of commercial real estate, including office, retail, industrial and hospitality.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended 

​

For the nine months ended 

​

​

​

September 30, 

​

September 30, 

​

Components of Provision (Benefit) for Credit Losses (in thousands)

    

2024

    

2023

    

2024

    

2023

 

Provision (benefit) for loan losses

​

$

—

​

$

(134)

​

$

(16)

​

$

4

​

Provision (benefit) for risk-sharing obligations

​

 

(150)

​

 

555

​

 

(1,274)

​

 

(11,092)

​

Provision (benefit) for other credit losses

​

 

3,000

​

 

—

​

 

7,600

​

 

—

​

Provision (benefit) for credit losses

​

$

2,850

​

$

421

​

$

6,310

​

$

(11,088)

​

8

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Agency Loan Repurchases—The Company is obligated to repurchase loans that are originated for the GSEs or HUD (collectively, the “Agencies”) programs if certain representations and warranties that it provides in connection with the sale of the loans through these programs are or may have been breached. When the Company repurchases a loan from the Agencies, the loan is included as a component of Other assets on the Condensed Consolidated Balance Sheets and any related credit loss is included within Provision (benefit) for credit losses in the Condensed Consolidated Statements of Income.

Fannie Mae—During the first quarter of 2024, the Company repurchased a $17.9 million Fannie Mae loan, which consisted of a $4.4 million advance previously made to Fannie Mae in 2023 and a $13.5 million cash payment during the three months ended March 31, 2024. As of September 30, 2024, the Company had an immaterial allowance for credit loss related to this loan, as the Company expects to liquidate the underlying collateral for an amount slightly less than the Company’s cost basis in the loan. During the fourth quarter of 2024, the Company received repurchase demand letters from Fannie Mae for two additional loans with a total unpaid principal balance (“UPB”) of $25.6 million. The Company previously recorded collateral-based reserves for these two loans prior to receiving the repurchase demand letters that as of September 30, 2024, totaled $2.0 million.

Freddie Mac—The Company received repurchase requests from Freddie Mac related to two loans with UPBs of $11.4 million (“First loan”) and $34.8 million (“Second loan”). In March 2024, the Company entered into a forbearance and indemnification agreement with Freddie Mac that among other things delayed the repurchase of these loans for six and 12 months for the First and Second loans, respectively, and transferred the risk of loss for both loans from Freddie Mac to the Company. During the third quarter of 2024, the Company received a six-month extension related to the First loan. The fair value of the indemnification related to the First loan is de minimis due to the excess of fair value of the underlying collateral compared to the carrying value of the loan. With respect to the Second loan, as of September 30, 2024, the Company’s best estimate of the fair value of the indemnification was $7.6 million, which is included within Other liabilities on the Condensed Consolidated Balance Sheets, with a corresponding amount included in Provision (benefit) for credit losses in the Condensed Consolidated Statements of Income for the nine months ended September 30, 2024.

Loans Held for Investment (“LHFI”), net—LHFI consist predominately of multifamily interim loans originated by the Company for properties that currently do not qualify for permanent Agency financing (“Interim Loan Program” or “ILP”). These loans have terms of up to three years and are all adjustable-rate, interest-only, multifamily loans with similar risk characteristics and no geographic concentration. The Company also has an immaterial amount of LHFI associated with the repurchased loan as discussed above. The loans are carried at their unpaid principal balances, adjusted for net unamortized loan fees and costs, and net of any allowance for loan losses. LHFI are included as a component of Other assets in the Condensed Consolidated Financial Statements.

As of September 30, 2024 and December 31, 2023, the balance of the Interim Loan Program portfolio consisted of a small number of loans with a balance of $38.0 million and $40.1 million, respectively, including an immaterial amount of net unamortized deferred fees and costs and allowance for loan losses. There were no ILP loans delinquent and in non-accrual status as of both September 30, 2024 and December 31, 2023. The amortized cost basis of loans that were current was $38.0 million and $40.1 million as of September 30, 2024 and December 31, 2023, respectively. As of September 30, 2024, ILP loans were originated in 2019 and 2024.

Statement of Cash Flows—For presentation in the Condensed Consolidated Statements of Cash Flows, the Company considers pledged cash and cash equivalents (as detailed in NOTE 9) to be restricted cash and restricted cash equivalents. The following table presents a reconciliation of the total cash, cash equivalents, restricted cash, and restricted cash equivalents as presented in the Condensed Consolidated Statements of Cash Flows to the related captions in the Condensed Consolidated Balance Sheets as of September 30, 2024 and 2023, and December 31, 2023 and 2022.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 

​

December 31,

​

(in thousands)

2024

    

2023

    

2023

    

2022

 

Cash and cash equivalents

$

179,759

​

$

236,321

​

$

328,698

​

$

225,949

​

Restricted cash

​

39,827

​

​

17,768

​

​

21,422

​

​

17,676

​

Pledged cash and cash equivalents (NOTE 9)

 

47,054

​

 

46,558

​

 

41,283

​

 

14,658

​

Total cash, cash equivalents, restricted cash, and restricted cash equivalents

$

266,640

​

$

300,647

​

$

391,403

​

$

258,283

​

​

Income Taxes—The Company records the realizable excess tax benefits from stock-based compensation as a reduction to income tax expense. The realizable excess tax benefits were $0.7 million for both the three months ended September 30, 2024 and 2023 and $1.7 million and $2.2 million for the nine months ended September 30, 2024 and 2023, respectively.

9

Table of Contents

Net Warehouse Interest Income (Expense)—The Company presents warehouse interest income net of warehouse interest expense. Warehouse interest income is the interest earned from loans held for sale and loans held for investment. Generally, a substantial portion of the Company’s loans is financed with matched borrowings under one of its warehouse facilities. The remaining portion of loans not funded with matched borrowings is financed with the Company’s own cash. Occasionally, the Company also fully funds a small number of loans held for sale or loans held for investment with its own cash. Warehouse interest expense is incurred on borrowings used to fund loans solely while they are held for sale or for investment. Warehouse interest income and expense are earned or incurred on loans held for sale after a loan is closed and before a loan is sold. Warehouse interest income and expense are earned or incurred on loans held for investment after a loan is closed and before a loan is repaid. Included in Net warehouse interest income (expense) for the three and nine months ended September 30, 2024 and 2023 are the following components:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended 

​

For the nine months ended 

(in thousands)

​

September 30, 

​

September 30, 

Components of Net Warehouse Interest Income (Expense)

    

2024

    

2023

    

2024

    

2023

Warehouse interest income

​

$

10,648

​

$

11,912

​

$

24,784

​

$

34,015

Warehouse interest expense

​

 

(12,795)

​

 

(13,943)

​

 

(29,631)

​

 

(37,571)

Net warehouse interest income (expense)

​

$

(2,147)

​

$

(2,031)

​

$

(4,847)

​

$

(3,556)

​

Co-broker Fees—Third-party co-broker fees are netted against Loan origination and debt brokerage fees, net in the Condensed Consolidated Statements of Income and were $2.0 million and $2.5 million for the three months ended September 30, 2024 and 2023, respectively, and $6.6 million and $9.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Contracts with Customers—A majority of the Company’s revenues are derived from the following sources, all of which are excluded from the accounting provisions applicable to contracts with customers: (i) financial instruments, (ii) transfers and servicing, (iii) derivative transactions, and (iv) investments in debt securities/equity-method investments. The remaining portion of revenues is derived from contracts with customers.

Other than LIHTC asset management fees as described in the 2023 Form 10-K and presented as Investment management fees in the Condensed Consolidated Statements of Income, the Company’s contracts with customers generally do not require judgment or material estimates that affect the determination of the transaction price (including the assessment of variable consideration), the allocation of the transaction price to performance obligations, and the determination of the timing of the satisfaction of performance obligations. Additionally, the earnings process for the majority of the Company’s contracts with customers is not complicated and is generally completed in a short period of time. The following table presents information about the Company’s contracts with customers for the three and nine months ended September 30, 2024 and 2023:  

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended 

​

For the nine months ended 

​

​

(in thousands)

​

September 30, 

​

September 30, 

​

​

Description

    

2024

    

2023

    

2024

    

2023

 

Statement of income line item

Certain loan origination fees

​

$

21,310

​

$

16,259

​

$

64,718

​

$

50,982

​

Loan origination and debt brokerage fees, net

Property sales broker fees

​

​

19,322

​

​

16,862

​

​

39,408

​

​

38,831

​

Property sales broker fees

Investment management fees

​

​

11,744

​

​

13,362

​

​

40,086

​

​

44,844

​

Investment management fees

Application fees, appraisal revenues, subscription revenues, syndication fees, and other revenues

​

 

12,014

​

 

15,138

​

 

41,008

​

 

56,602

​

Other revenues

Total revenues derived from contracts with customers

​

$

64,390

​

$

61,621

​

$

185,220

​

$

191,259

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Litigation—In the ordinary course of business, the Company may be party to various claims and litigation, none of which the Company believes is material. The Company cannot predict the outcome of any pending litigation and may be subject to consequences that could include

10

Table of Contents

fines, penalties, and other costs, and the Company’s reputation and business may be impacted. The Company believes that any liability that could be imposed on the Company in connection with the disposition of any pending lawsuits would not have a material adverse effect on its business, results of operations, liquidity, or financial condition.

Recently Adopted and Recently Announced Accounting Pronouncements—The Company is currently evaluating Accounting Standards Updates (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures and 2023-09, Improvements to Income Tax Disclosures. The annual disclosures required by ASU 2023-07 are effective for the Company’s Annual Report on Form 10-K for the year ending December 31, 2024. The interim disclosures required by ASU 2023-07 are effective in 2025. The disclosures for ASU 2023-09 are effective for the Company’s Annual Report on Form 10-K for the year ending December 31, 2025. The Company believes these ASUs will not materially impact the Company’s consolidated financial statements or disclosures. There were no other recently announced but not yet effective accounting pronouncements issued that have the potential to impact the Company’s condensed consolidated financial statements. The Company did not adopt any new accounting policies during the second quarter of 2024.

Reclassifications—The Company has made immaterial reclassifications to prior-year balances to conform to current-year presentation.

​

NOTE 3—MORTGAGE SERVICING RIGHTS

The fair value of the mortgage servicing rights (“MSRs”) was $1.4 billion as of both September 30, 2024 and December 31, 2023. The Company uses a discounted static cash flow valuation approach, and the key economic assumption is the discount rate. For example, see the following sensitivities related to the discount rate:

The impact of a 100-basis point increase in the discount rate as of September 30, 2024 would be a decrease in the fair value of $43.1 million to the MSRs outstanding as of September 30, 2024.

The impact of a 200-basis point increase in the discount rate as of September 30, 2024 would be a decrease in the fair value of $83.2 million to the MSRs outstanding as of September 30, 2024.

These sensitivities are hypothetical and should be used with caution. These estimates do not include interplay among assumptions and are estimated as a portfolio rather than individual assets.

Activity related to MSRs for the three and nine months ended September 30, 2024 and 2023 follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

 

​

​

September 30, 

​

September 30, 

 

Roll Forward of MSRs (in thousands)

    

2024

    

2023

    

2024

    

2023

 

Beginning balance

​

$

850,831

​

$

932,131

​

$

907,415

​

$

975,226

​

Additions, following the sale of loan

​

 

39,806

​

 

42,495

​

 

87,388

​

 

104,644

​

Amortization

​

 

(50,871)

​

 

(50,276)

​

 

(151,897)

​

 

(149,185)

​

Pre-payments and write-offs

​

 

(2,870)

​

 

(2,604)

​

 

(6,010)

​

 

(8,939)

​

Ending balance

​

$

836,896

​

$

921,746

​

$

836,896

​

$

921,746

​

​

The following table summarizes the gross value, accumulated amortization, and net carrying value of the Company’s MSRs as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

Components of MSRs (in thousands)

​

September 30, 2024

​

December 31, 2023

Gross value

​

$

1,771,026

​

$

1,733,844

Accumulated amortization

​

 

(934,130)

​

 

(826,429)

Net carrying value

​

$

836,896

​

$

907,415

​

11

Table of Contents

The expected amortization of MSRs shown in the Condensed Consolidated Balance Sheet as of September 30, 2024 is shown in the table below. Actual amortization may vary from these estimates.

​

​

​

​

​

​

  

Expected

(in thousands)

​

  Amortization  

Three Months Ending December 31, 

​

​

​

2024

​

$

49,924

Year Ending December 31, 

​

​

​

2025

​

$

184,542

2026

​

 

159,434

2027

​

 

137,779

2028

​

 

108,028

2029

​

 

80,845

Thereafter

​

​

116,344

Total

​

$

836,896

​

​

​

​

NOTE 4—ALLOWANCE FOR RISK-SHARING OBLIGATIONS

When a loan is sold under the Fannie Mae Delegated Underwriting and Servicing (“DUS”) program, the Company typically agrees to guarantee a portion of the ultimate loss incurred on the loan should the borrower fail to perform. The compensation for this risk is a component of the servicing fee on the loan. The guaranty is in force while the loan is outstanding. The Company does not provide a guaranty for any other loan product it sells or brokers. Substantially all loans sold under the Fannie Mae DUS program contain modified or full risk-sharing guaranties that are based on the credit performance of the loan. The Company records an estimate of the contingent loss reserve for Current Expected Credit Losses (“CECL”), for all loans in its Fannie Mae at-risk servicing portfolio. Most loans are collectively evaluated while a small portion is individually evaluated. For loans that are individually evaluated, a reserve for estimated credit losses is recorded when it is probable that a risk-sharing loan will foreclose or has foreclosed and it is expected to result in a loss for the Company (“collateral-based reserves”), and a reserve for estimated credit losses is recorded for all other risk-sharing loans which are collectively evaluated (“CECL allowance”). The combined loss reserve is presented as Allowance for risk-sharing obligations on the Condensed Consolidated Balance Sheets.

Activity related to the allowance for risk-sharing obligations for the three and nine months ended September 30, 2024 and 2023 follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

 

​

​

September 30, 

​

September 30, 

 

Roll Forward of Allowance for Risk-Sharing Obligations (in thousands)

    

2024

    

2023

    

2024

    

2023

 

Beginning balance

​

$

30,477

​

$

32,410

​

$

31,601

​

$

44,057

​

Provision (benefit) for risk-sharing obligations

​

 

(150)

​

 

555

​

 

(1,274)

​

 

(11,092)

​

Write-offs

​

 

(468)

​

 

(2,008)

​

 

(468)

​

 

(2,008)

​

Ending balance

​

$

29,859

​

$

30,957

​

$

29,859

​

$

30,957

​

​

​

The Company assesses several qualitative and quantitative factors to calculate the CECL allowance each quarter including the current and expected unemployment rate, macroeconomic conditions, and the multifamily market. The key inputs for the CECL allowance are the historic loss rate, the forecast-period loss rate, the reversion-period loss rate, and the UPB of the at-risk servicing portfolio. A summary of the key inputs of the CECL allowance as of the end of each of the quarters presented and the provision (benefit) impact during each quarter for the nine months ended September 30, 2024 and 2023 follows.

​

​

​

​

​

​

​

​

​

​

​

​

2024

CECL Allowance Calculation Inputs, Details, and Provision Impact

Q1

​

Q2

​

Q3

​

Total

Forecast-period loss rate (in basis points)

​

2.3

​

2.3

​

2.1

​

N/A

Reversion-period loss rate (in basis points)

​

1.3

​

1.3

​

1.2

​

N/A

Historical loss rate (in basis points)

​

0.3

​

0.3

​

0.3

​

N/A

At-risk Fannie Mae servicing portfolio UPB (in billions)

$

59.2

$

59.5

$

60.6

​

N/A

CECL allowance (in millions)

$

25.0

$

24.9

$

23.4

​

N/A

Provision (benefit) for CECL allowance (in millions)

$

(1.5)

$

(0.1)

$

(1.5)

$

(3.1)

12

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

2023

CECL Allowance Calculation Inputs, Details, and Provision Impact

Q1

​

Q2

​

Q3

​

Total

Forecast-period loss rate (in basis points)

​

2.3

​

2.3

​

2.3

​

N/A

Reversion-period loss rate (in basis points)

​

1.5

​

1.5

​

1.5

​

N/A

Historical loss rate (in basis points)

​

0.6

​

0.6

​

0.6

​

N/A

At-risk Fannie Mae servicing portfolio UPB (in billions)

$

54.5

$

55.7

$

57.4

​

N/A

CECL allowance (in millions)

$

28.7

$

28.9

$

31.0

​

N/A

Provision (benefit) for CECL allowance (in millions)

$

(11.0)

$

0.2

$

0.5

$

(10.3)

​

During the first quarters of both 2024 and 2023, the Company updated its 10-year look-back period, resulting in loss data from the earliest year being replaced with the loss data for the most recently completed year. The look-back period updates resulted in the historical loss rate factors decreasing and the benefit for CECL allowance, as noted in the table above. The Company also slightly increased its forecast-period and reversion-period loss rates during the three months ended March 31, 2023 to incorporate uncertain macroeconomic conditions. For the three months ended March 31, 2024, the ratio of the forecast-period loss rate to the historical loss rate increased, resulting in a much lower benefit for CECL allowance.

During the third quarter of 2024, the Company updated its forecast-period loss rate from 2.3 basis points to 2.1 basis points, leading to the benefit for CECL allowance shown above. During the third quarter of 2023, the provision for CECL allowance shown above was primarily the result of an increased at-risk UPB.

The weighted average remaining life of the at-risk Fannie Mae servicing portfolio as of September 30, 2024 was 5.8 years compared to 6.4 years as of December 31, 2023.

As of September 30, 2024, the Company had seven loans with aggregate collateral-based reserves of $6.5 million compared to three loans with aggregate collateral-based reserves of $2.8 million as of December 31, 2023.

As of September 30, 2024 and 2023, the maximum quantifiable contingent liability associated with the Company’s guaranties for the at-risk loans serviced under the Fannie Mae DUS agreement was $12.5 billion and $11.8 billion, respectively. This maximum quantifiable contingent liability relates to the at-risk loans serviced for Fannie Mae at the specific point in time indicated. The maximum quantifiable contingent liability is not representative of the actual loss the Company would incur. The Company would be liable for this amount only if all of the loans it services for Fannie Mae, for which the Company retains some risk of loss, were to default and all of the collateral underlying these loans were determined to be without value at the time of settlement.

NOTE 5—SERVICING

The total unpaid principal balance of loans the Company was servicing for various institutional investors was $134.1 billion as of September 30, 2024 compared to $130.5 billion as of December 31, 2023.

As of September 30, 2024 and December 31, 2023, custodial deposit accounts (“escrow deposits”) relating to loans serviced by the Company totaled $3.1 billion and $2.7 billion, respectively. These amounts are not included in the Condensed Consolidated Balance Sheets as such amounts are not Company assets; however, the Company is entitled to placement fees on these escrow deposits, presented within Placement fees and other interest income in the Condensed Consolidated Statements of Income. Certain cash deposits exceed the Federal Deposit Insurance Corporation insurance limits; however, the Company believes it has mitigated this risk by holding uninsured deposits at large national banks.

NOTE 6—DEBT

Warehouse Facilities

​

As of September 30, 2024, to provide financing to borrowers under the Agencies’ programs, the Company had committed and uncommitted warehouse lines of credit in the amount of $3.8 billion with certain national banks and a $1.5 billion uncommitted facility with Fannie Mae (collectively, the “Agency Warehouse Facilities”). In support of these Agency Warehouse Facilities, the Company has pledged

13

Table of Contents

substantially all of its loans held for sale under the Company’s approved programs. The Company’s ability to originate mortgage loans for sale depends upon its ability to secure and maintain these types of short-term financings on acceptable terms.

Additionally, the Company has arranged for warehouse lines of credit with certain national banks to assist in funding loans held for investment under the Interim Loan Program (“Interim Warehouse Facilities”). The Company has pledged the majority of its loans held for investment against these Interim Warehouse Facilities. The Company’s ability to originate and hold loans held for investment depends upon market conditions and its ability to secure and maintain these types of short-term financings on acceptable terms. As of September 30, 2024, the Interim Warehouse Facilities had $119.8 million of total facility capacity with an outstanding balance of $11.7 million. The interest rate on the Interim Warehouse Facilities ranged from SOFR (defined below) plus 250 to 311 basis points.

​

The interest rate for all the Company’s warehouse facilities and debt is based on an Adjusted Term Secured Overnight Financing Rate (“SOFR”).  The maximum amount and outstanding borrowings under Agency Warehouse Facilities as of September 30, 2024 follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

​

(in thousands)

    

Committed

    

Uncommitted

​

Total Facility

​

Outstanding

    

    

Facility

​

Amount

​

Amount

​

Capacity

​

Balance

​

Interest rate(1)

Agency Warehouse Facility #1

​

$

325,000

​

​

250,000

​

​

575,000

​

$

161,956

 

SOFR plus 1.30%

Agency Warehouse Facility #2

​

 

700,000

​

​

300,000

​

​

1,000,000

​

 

215,752

​

SOFR plus 1.30%

Agency Warehouse Facility #3

​

 

425,000

​

​

425,000

​

​

850,000

​

 

214,877

 

SOFR plus 1.30%

Agency Warehouse Facility #4

​

​

150,000

​

​

225,000

​

​

375,000

​

​

89,593

​

SOFR plus 1.30% to 1.35%

Agency Warehouse Facility #5

​

​

50,000

​

​

950,000

​

​

1,000,000

​

​

269,375

​

SOFR plus 1.45%

Total National Bank Agency Warehouse Facilities

​

$

1,650,000

​

​

2,150,000

​

​

3,800,000

​

$

951,553

​

​

Fannie Mae repurchase agreement, uncommitted line and open maturity

​

 

—

​

​

1,500,000

​

​

1,500,000

​

 

56,981

 

​

Total Agency Warehouse Facilities

​

$

1,650,000

​

​

3,650,000

​

​

5,300,000

​

$

1,008,534

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(1)Interest rate presented does not include the effect of any applicable interest rate floors.

​

During 2024, the following amendments to the Company’s Agency Warehouse Facilities were executed in the normal course of business to support the Company’s business. No other material modifications have been made to the Agency Warehouse Facilities during the year.

The maturity date of Agency Warehouse Facility #1 was extended to August 27, 2025.

The maturity date of Agency Warehouse Facility #2 was extended to April 11, 2025.

The committed borrowing capacity of Agency Warehouse Facility #3 was decreased from $600.0 million to $425.0 million, and the uncommitted borrowing capacity was increased from $265.0 million to $425.0 million. The maturity date was also extended to May 15, 2025, and the interest rate was decreased from SOFR plus 135 basis points to SOFR plus 130 basis points.

The committed borrowing capacity of Agency Warehouse Facility #4 was decreased from $200.0 million to $150.0 million. The maturity date was also extended to June 22, 2025.

The committed borrowing capacity of Agency Warehouse Facility #5 was increased to $50.0 million, and the uncommitted borrowing capacity was decreased from $1.0 billion to $950.0 million. The maturity date was also extended to September 11, 2025.

Note Payable

​

The Company has a senior secured credit agreement (the “Credit Agreement”) that provides for a $600.0 million initial term loan. Additionally, in January 2023 the Company entered into a lender joinder agreement and amendment to the Credit Agreement that provided for additional borrowing with a principal amount of $200.0 million, modified the ratio thresholds related to mandatory prepayments, and included a provision that allows additional types of indebtedness.

​

During the second quarter of 2024, the Company entered into a second amendment, that, among other things, decreased the interest rate of the additional borrowing from Adjusted Term SOFR plus 3.00% to Adjusted Term SOFR plus 2.25%, combined the additional term loan

14

Table of Contents

with the initial term loan to create a single fungible senior secured borrowing (the “Term Debt”), and incorporated other immaterial changes, such as a de minimis update to the quarterly principal payment.

​

As of September 30, 2024, the Term Debt had an outstanding principal balance of $780.5 million that matures on December 16, 2028.

​

The warehouse notes payable and notes payable are subject to various financial covenants. The Company is in compliance with all of these financial covenants as of September 30, 2024.

​

​

​

NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS

​

Goodwill

The Company’s reportable segments are Capital Markets (“CM”), Servicing & Asset Management (“SAM”), and Corporate. A summary of the Company’s goodwill by reportable segments for the nine months ended September 30, 2024 and 2023 follows:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

September 30, 

(in thousands)

    

2024

    

2023

Roll Forward of Gross Goodwill

​

CM

​

SAM

​

Consolidated(1)

​

CM

​

SAM

​

Consolidated(1)

Beginning balance

​

$

524,189

​

​

439,521

​

$

963,710

​

$

520,191

​

$

439,521

​

$

959,712

Additions from acquisitions

​

 

—

​

​

—

​

​

—

​

 

—

​

 

—

​

 

—

Measurement-period and other adjustments

​

​

—

​

​

—

​

​

—

​

​

3,998

​

​

—

​

​

3,998

Ending gross goodwill balance

​

$

524,189

​

$

439,521

​

$

963,710

​

$

524,189

​

$

439,521

​

$

963,710

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Roll Forward of Accumulated Goodwill Impairment

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Beginning balance

​

$

62,000

​

​

—

​

$

62,000

​

$

—

​

$

—

​

$

—

Impairment

​

​

—

​

​

—

​

​

—

​

​

14,000

​

​

—

​

​

14,000

Ending accumulated goodwill impairment

​

$

62,000

​

$

—

​

$

62,000

​

$

14,000

​

$

—

​

$

14,000

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Goodwill

​

$

462,189

​

$

439,521

​

$

901,710

​

$

510,189

​

$

439,521

​

$

949,710

(1)As of September 30, 2024 and 2023 and December 31, 2023 and 2022, no goodwill was allocated to the Corporate reportable segment.

​

Other Intangible Assets

​

Activity related to other intangible assets for the nine months ended September 30, 2024 and 2023 follows:

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

September 30, 

Roll Forward of Other Intangible Assets (in thousands)

    

2024

    

2023

Beginning balance

​

$

181,975

​

$

198,643

Additions from acquisitions

​

 

—

​

 

—

Amortization

​

 

(11,262)

​

 

(12,716)

Ending balance

​

$

170,713

​

$

185,927

​

The following table summarizes the gross value, accumulated amortization, and net carrying value of the Company’s other intangible assets as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

Components of Other Intangible Assets (in thousands)

​

September 30, 2024

​

December 31, 2023

Gross value

​

$

220,682

​

$

220,682

Accumulated amortization

​

 

(49,969)

​

 

(38,707)

Net carrying value

​

$

170,713

​

$

181,975

​

15

Table of Contents

The expected amortization of other intangible assets shown in the Condensed Consolidated Balance Sheet as of September 30, 2024 is shown in the table below. Actual amortization may vary from these estimates.

​

​

​

​

​

​

  

Expected

(in thousands)

​

  Amortization  

Three Months Ending December 31, 

​

​

​

2024

​

$

4,101

Year Ending December 31, 

​

​

​

2025

​

$

16,404

2026

​

 

16,404

2027

​

 

16,404

2028

​

 

16,404

2029

​

 

16,340

Thereafter

​

​

84,656

Total

​

$

170,713

​

Contingent Consideration Liabilities

​

A summary of the Company’s contingent consideration liabilities, which are included in Other liabilities in the Condensed Consolidated Balance Sheets, for the nine months ended September 30, 2024 and 2023 follows:

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

(in thousands)

​

September 30, 

​

Roll Forward of Contingent Consideration Liabilities

    

2024

    

2023

​

Beginning balance

​

$

113,546

​

$

200,346

​

Additions

​

​

—

​

​

—

​

Accretion

​

​

1,496

​

​

927

​

Fair value adjustments

​

​

(1,366)

​

​

(14,000)

​

Payments

​

​

(34,317)

​

​

(26,090)

​

Ending balance

​

$

79,359

​

$

161,183

​

​

The contingent consideration liabilities presented in the table above relate to (i) acquisitions of debt brokerage and investment sales brokerage companies and (ii) other acquisitions completed over the past several years. The contingent consideration for each of the acquisitions may be earned over various lengths of time after each acquisition, with a maximum earnout period of five years, provided certain revenue targets and other metrics have been met. The last of the earnout periods related to the contingent consideration ends in the third quarter of 2027. In each case, the Company estimated the initial fair value of the contingent consideration using a Monte Carlo simulation.

​

​

NOTE 8—FAIR VALUE MEASUREMENTS

The Company uses valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach to measure assets and liabilities that are measured at fair value. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:

●Level 1—Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

16

Table of Contents

●Level 2—Financial assets and liabilities whose values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from, or corroborated by, market data by correlation or other means.
●Level 3—Financial assets and liabilities whose values are based on inputs that are both unobservable and significant to the overall valuation.

The Company's MSRs are measured at fair value at inception, and thereafter on a nonrecurring basis, and are carried at the lower of amortized cost or fair value. That is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement when there is evidence of impairment and for disclosure purposes (NOTE 3). The Company's MSRs do not trade in an active, open market with readily observable prices. While sales of multifamily MSRs do occur on occasion, precise terms and conditions vary with each transaction and are not readily available. Accordingly, the estimated fair value of the Company’s MSRs was developed using discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, estimated placement fee revenue from escrow deposits, and other economic factors. The Company periodically reassesses and adjusts, when necessary, the underlying inputs and assumptions used in the model to reflect observable market conditions and assumptions that a market participant would consider in valuing MSR assets.

A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below.

​

●Derivative Instruments—The derivative positions consist of interest rate lock commitments with borrowers and forward sale agreements to the Agencies. The fair value of these instruments is estimated using a discounted cash flow model developed based on changes in the applicable U.S. Treasury rate and other observable market data. The value was determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company, and is classified within Level 3 of the valuation hierarchy.
●Loans Held for Sale—All loans held for sale presented in the Condensed Consolidated Balance Sheets are reported at fair value. The Company determines the fair value of the loans held for sale using discounted cash flow models that incorporate quoted observable inputs from market participants, such as changes in the U.S. Treasury rate. Therefore, the Company classifies these loans held for sale as Level 2.
●Pledged Securities—Investments in money market funds are valued using quoted market prices from recent trades. Therefore, the Company classifies this portion of pledged securities as Level 1. The Company determines the fair value of its AFS Agency MBS using third-party broker estimates of fair value. Consequently, the Company classifies this portion of pledged securities as Level 2. Additional details on Pledged Securities are included in NOTE 9.
●Contingent Consideration Liabilities—Contingent consideration liabilities from acquisitions are initially recognized at fair value at acquisition and subsequently remeasured using a Monte Carlo simulation that uses updated management forecasts and current valuation assumptions and discount rates. The Company determines the fair value of each contingent consideration liability based on probability of achievement, which incorporates management estimates. As a result, the Company classifies these liabilities as Level 3. Additional details on Contingent consideration liabilities are included in NOTE 7.

​

17

Table of Contents

The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of September 30, 2024 and December 31, 2023, segregated by the level of the valuation inputs within the fair value hierarchy used to measure fair value:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Balance as of

 

(in thousands)

​

Level 1

​

Level 2

​

Level 3

​

Period End

 

September 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans held for sale

​

$

—

​

$

1,024,984

​

$

—

​

$

1,024,984

​

Pledged securities

​

 

47,054

​

 

156,891

​

 

—

​

 

203,945

​

Derivative assets

​

 

—

​

 

—

​

 

33,699

​

 

33,699

​

Total

​

$

47,054

​

$

1,181,875

​

$

33,699

​

$

1,262,628

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

Derivative liabilities

​

$

—

​

$

—

​

$

4,026

​

$

4,026

​

Contingent consideration liabilities

​

​

—

​

​

—

​

​

79,359

​

​

79,359

​

Total

​

$

—

​

$

—

​

$

83,385

​

$

83,385

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

Loans held for sale

​

$

—

​

$

594,998

​

$

—

​

$

594,998

​

Pledged securities

​

 

41,283

​

 

142,798

​

 

—

​

 

184,081

​

Derivative assets

​

 

—

​

 

—

​

 

31,451

​

 

31,451

​

Total

​

$

41,283

​

$

737,796

​

$

31,451

​

$

810,530

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

​

​

​

​

​

​

​

Derivative liabilities

​

$

—

​

$

—

​

$

28,247

​

$

28,247

​

Contingent consideration liabilities

​

​

—

​

​

—

​

​

113,546

​

​

113,546

​

Total

​

$

—

​

$

—

​

$

141,793

​

$

141,793

​

​

There were no transfers between any of the levels within the fair value hierarchy during the nine months ended September 30, 2024 and 2023.

Derivative instruments (Level 3) are outstanding for short periods of time (generally less than 60 days). A roll forward of derivative instruments is presented below for the three and nine months ended September 30, 2024 and 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

(in thousands)

​

September 30, 

​

September 30, 

​

Derivative Assets and Liabilities, net

    

2024

    

2023

    

2024

    

2023

 

Beginning balance

​

$

21,272

​

$

20,241

​

$

3,204

​

$

15,560

​

Settlements

​

 

(108,571)

​

 

(80,213)

​

 

(253,824)

​

 

(259,655)

​

Realized gains (losses) recorded in earnings(1)

​

 

87,299

​

 

59,972

​

 

250,620

​

 

244,095

​

Unrealized gains (losses) recorded in earnings(1)

​

 

29,673

​

 

31,552

​

 

29,673

​

 

31,552

​

Ending balance

​

$

29,673

​

$

31,552

​

$

29,673

​

$

31,552

​

(1)Realized and unrealized gains (losses) from derivatives are recognized in Loan origination and debt brokerage fees, net and Fair value of expected net cash flows from servicing, net in the Condensed Consolidated Statements of Income.

​

​

18

Table of Contents

The following table presents information about significant unobservable inputs used in the recurring measurement of the fair value of the Company’s Level 3 assets and liabilities as of September 30, 2024:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Quantitative Information about Level 3 Fair Value Measurements

(in thousands)

    

Fair Value

    

Valuation Technique

    

Unobservable Input (1)

    

Input Range (1)

 

Weighted Average (2)

Derivative assets

​

$

33,699

 

Discounted cash flow

 

Counterparty credit risk

 

—

​

—

Derivative liabilities

​

$

4,026

 

Discounted cash flow

 

Counterparty credit risk

 

—

​

—

Contingent consideration liabilities

​

$

79,359

​

Monte Carlo Simulation

​

Probability of earnout achievement

​

0% - 100%

​

47%

(1)Significant changes in this input may lead to significant changes in the fair value measurements.
(2)Contingent consideration weighted based on maximum gross earnout amount.

The carrying amounts and the fair values of the Company's financial instruments as of September 30, 2024 and December 31, 2023 are presented below:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

September 30, 2024

​

December 31, 2023

 

​

    

Carrying

    

Fair

    

Carrying

    

Fair

 

(in thousands)

​

Amount

​

Value

​

Amount

​

Value

 

Financial Assets:

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash and cash equivalents

​

$

179,759

​

$

179,759

​

$

328,698

​

$

328,698

​

Restricted cash

​

 

39,827

​

 

39,827

​

 

21,422

​

 

21,422

​

Pledged securities

​

 

203,945

​

 

203,945

​

 

184,081

​

 

184,081

​

Loans held for sale

​

 

1,024,984

​

 

1,024,984

​

 

594,998

​

 

594,998

​

Loans held for investment, net(1)

​

 

52,767

​

 

52,767

​

 

40,056

​

 

40,139

​

Derivative assets(1)

​

 

33,699

​

 

33,699

​

 

31,451

​

 

31,451

​

Total financial assets

​

$

1,534,981

​

$

1,534,981

​

$

1,200,706

​

$

1,200,789

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Financial Liabilities:

​

​

​

​

​

​

​

​

​

​

​

​

​

Derivative liabilities(2)

​

$

4,026

​

$

4,026

​

$

28,247

​

$

28,247

​

Contingent consideration liabilities(2)

​

​

79,359

​

​

79,359

​

​

113,546

​

​

113,546

​

Warehouse notes payable

​

 

1,019,850

​

 

1,020,236

​

 

596,178

​

 

596,428

​

Notes payable

​

 

769,376

​

 

780,487

​

 

773,358

​

 

786,500

​

Total financial liabilities

​

$

1,872,611

​

$

1,884,108

​

$

1,511,329

​

$

1,524,721

​

(1)Included as a component of Other Assets on the Condensed Consolidated Balance Sheets.
(2)Included as a component of Other Liabilities on the Condensed Consolidated Balance Sheets.

​

The following methods and assumptions were used for recurring fair value measurements as of September 30, 2024 and December 31, 2023.

Cash and Cash Equivalents and Restricted Cash—The carrying amounts approximate fair value because of the short maturity of these instruments (Level 1).

Pledged Securities—Consist of cash, highly liquid investments in money market accounts invested in government securities, and investments in Agency debt securities. The investments of the money market funds typically have maturities of 90 days or less and are valued using quoted market prices from recent trades. The fair value of the Agency debt securities incorporates the third-party broker estimates of fair value.

Loans Held for Sale—Consist of originated loans that are generally transferred or sold within 60 days from the date that a mortgage loan is funded and are valued using discounted cash flow models that incorporate observable prices from market participants.

19

Table of Contents

Contingent Consideration Liabilities—Consists of the estimated fair values of expected future earnout payments related to acquisitions completed primarily in 2021 and 2022. The earnout liabilities are valued using a Monte Carlo simulation analysis. The fair value of the contingent consideration liabilities incorporates unobservable inputs, such as the probability of earnout achievement, volatility rates, and discount rate, to determine the expected earnout cash flows. The probability of the earnout achievement is based on management’s estimate of the expected future performance and other financial metrics of each of the acquired entities, which are subject to significant uncertainty.

Derivative Instruments—Consists of interest rate lock commitments and forward sale agreements. These instruments are valued using discounted cash flow models developed based on changes in the U.S. Treasury rate and other observable market data. The value is determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company.

Fair Value of Derivative Instruments and Loans Held for Sale—In the normal course of business, the Company enters into contractual commitments to originate and sell multifamily mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by the Company. All mortgagors are evaluated for creditworthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to an investor.

To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into a sale commitment with the investor simultaneously with the rate lock commitment with the borrower. The sale contract with the investor locks in an interest rate and price for the sale of the loan. The terms of the contract with the investor and the rate lock with the borrower are matched in substantially all respects, with the objective of eliminating interest rate risk to the extent practical. Sale commitments with the investors have an expiration date that is longer than the Company’s related commitments to the borrower to allow for, among other things, the closing of the loan and processing of paperwork to deliver the loan into the sale commitment.

Both the rate lock commitments to borrowers and the forward sale contracts to buyers are undesignated derivatives and, accordingly, are marked to fair value through Loan origination and debt brokerage fees, net in the Condensed Consolidated Statements of Income. The fair value of the Company's rate lock commitments to borrowers and loans held for sale and the related input levels includes, as applicable:

●the estimated gain of the expected loan sale to the investor (Level 2);
●the expected net cash flows associated with servicing the loan, net of any guaranty obligations retained (Level 2);
●the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and
●the nonperformance risk of both the counterparty and the Company (Level 3; derivative instruments only).

The estimated gain considers the origination fees the Company expects to collect upon loan closing (derivative instruments only) and premiums the Company expects to receive upon sale of the loan (Level 2). The fair value of the expected net cash flows associated with servicing the loan is calculated pursuant to the valuation techniques applicable to the fair value of future servicing, net at loan sale (Level 2).

To calculate the effects of interest rate movements, the Company uses applicable published U.S. Treasury prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount (Level 2).

The fair value of the Company's forward sales contracts to investors considers the effects of interest rate movements between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value.

The fair value of the Company’s interest rate lock commitments and forward sales contracts is adjusted to reflect the risk that the agreement will not be fulfilled. The Company’s exposure to nonperformance in interest rate lock commitments and forward sale contracts is represented by the contractual amount of those instruments. Given the credit quality of the Company’s counterparties and the short duration of interest rate lock commitments and forward sale contracts, the risk of nonperformance by the Company’s counterparties has historically been minimal (Level 3).

20

Table of Contents

The following table presents the components of fair value and other relevant information associated with the Company’s derivative instruments and loans held for sale as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Fair Value Adjustment Components

​

Balance Sheet Location

 

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

​

​

    

Fair Value

 

​

​

Notional or

​

Estimated

​

​

​

​

Total

​

​

​

​

​

​

​

Adjustment

 

​

​

Principal

​

Gain

​

Interest Rate

​

Fair Value 

​

Derivative

​

Derivative

​

to Loans 

 

(in thousands)

​

Amount

​

on Sale

​

Movement

​

Adjustment

​

Assets

​

Liabilities

​

Held for Sale

 

September 30, 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Rate lock commitments

​

$

755,874

​

​

31,219

​

​

(3,865)

​

​

27,354

​

​

27,354

​

​

—

​

​

—

​

Forward sale contracts

​

 

1,769,986

​

​

—

​

​

2,319

​

​

2,319

​

​

6,345

​

​

(4,026)

​

​

—

​

Loans held for sale

​

 

1,014,112

​

​

9,326

​

​

1,546

​

​

10,872

​

​

—

​

​

—

​

​

10,872

​

Total

​

​

​

​

$

40,545

​

$

—

​

$

40,545

​

$

33,699

​

$

(4,026)

​

$

10,872

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2023

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Rate lock commitments

​

$

463,626

​

$

15,908

​

$

11,492

​

$

27,400

​

$

27,400

​

$

—

​

$

—

​

Forward sale contracts

​

 

1,035,964

​

 

—

​

 

(24,196)

​

 

(24,196)

​

 

4,051

​

​

(28,247)

​

 

—

​

Loans held for sale

​

 

572,338

​

 

9,956

​

 

12,704

​

 

22,660

​

 

—

​

 

—

​

 

22,660

​

Total

​

​

​

​

$

25,864

​

$

—

​

$

25,864

​

$

31,451

​

$

(28,247)

​

$

22,660

​

​

​

​

NOTE 9—FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES

​

Fannie Mae DUS Related Commitments—Commitments for the origination and subsequent sale and delivery of loans to Fannie Mae represent those mortgage loan transactions where the borrower has locked an interest rate and scheduled closing, and the Company has entered into a mandatory delivery commitment to sell the loan to Fannie Mae. As discussed in NOTE 8, the Company accounts for these commitments as derivatives recorded at fair value.

​

The Company is generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program. The Company is required to secure these obligations by assigning restricted cash balances and securities to Fannie Mae, which are classified as Pledged securities, at fair value on the Condensed Consolidated Balance Sheets. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires restricted liquidity for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Pledged securities held in the form of money market funds holding U.S. Treasuries are discounted 5%, and Agency mortgage-backed securities (“Agency MBS”) are discounted 4% for purposes of calculating compliance with the restricted liquidity requirements. As seen below, the Company held the majority of its pledged securities in Agency MBS as of September 30, 2024. The majority of the loans for which the Company has risk sharing are Tier 2 loans.

The Company is in compliance with the September 30, 2024 collateral requirements as outlined above. As of September 30, 2024, reserve requirements for the DUS loan portfolio will require the Company to fund $71.1 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within the at-risk portfolio. Fannie Mae has reassessed the DUS Capital Standards in the past and may make changes to these standards in the future. The Company generates sufficient cash flow from its operations to meet these capital standards and does not expect any future changes to have a material impact on its future operations; however, any future increases to collateral requirements may adversely impact the Company’s available cash.

Fannie Mae has established benchmark standards for capital adequacy and reserves the right to terminate the Company's servicing authority for all or some of the portfolio if, at any time, it determines that the Company's financial condition is not adequate to support its obligations under the DUS agreement. The Company is required to maintain acceptable net worth, as defined in the agreement, and the Company satisfied the requirements as of September 30, 2024. The net worth requirement is derived primarily from unpaid principal balances on Fannie Mae loans and the level of risk sharing. As of September 30, 2024, the net worth requirement was $318.6 million, and the Company's net worth, as defined in the requirements, was $936.7 million, as measured at the Company’s wholly-owned operating subsidiary, Walker & Dunlop, LLC. As of September 30, 2024, the Company was required to maintain at least $63.4 million of liquid assets to meet operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, and Ginnie Mae, and the Company had operational liquidity, as defined in the requirements, of $155.7 million as of September 30, 2024, as measured at the Company’s wholly-owned operating subsidiary, Walker & Dunlop, LLC.

21

Table of Contents

Pledged Securities, at Fair Value—Pledged securities, at fair value consisted of the following balances as of September 30, 2024 and 2023, and December 31, 2023 and 2022:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(in thousands)

September 30, 

​

December 31,

​

Pledged Securities

2024

    

2023

    

2023

    

2022

 

Restricted cash

$

10,708

​

$

10,523

​

$

2,727

​

$

5,788

​

Money market funds

​

36,346

​

​

36,035

​

​

38,556

​

​

8,870

​

Total pledged cash and cash equivalents

$

47,054

​

$

46,558

​

$

41,283

​

$

14,658

​

Agency MBS

 

156,891

​

​

130,951

​

 

142,798

​

 

142,624

​

Total pledged securities, at fair value

$

203,945

​

$

177,509

​

$

184,081

​

$

157,282

​

​

The information in the preceding table is presented to reconcile beginning and ending cash, cash equivalents, restricted cash, and restricted cash equivalents in the Condensed Consolidated Statements of Cash Flows as more fully discussed in NOTE 2.

The Company’s investments included within Pledged securities, at fair value consist primarily of money market funds and Agency debt securities. The investments in Agency debt securities consist of multifamily Agency MBS and are all accounted for as AFS securities. A detailed discussion of the Company’s accounting policies regarding the allowance for credit losses for AFS securities is included in NOTE 2 of the Company’s 2023 Form 10-K. The following table provides additional information related to the Agency MBS as of September 30, 2024 and December 31, 2023:

​

​

​

​

​

​

​

​

Fair Value and Amortized Cost of Agency MBS (in thousands)

September 30, 2024

    

December 31, 2023

    

Fair value

$

156,891

​

$

142,798

​

Amortized cost

​

155,504

​

​

143,862

​

Total gains for securities with net gains in AOCI

​

2,557

​

​

1,036

​

Total losses for securities with net losses in AOCI

 

(1,170)

​

 

(2,100)

​

Fair value of securities with unrealized losses

 

97,834

​

 

103,003

​

​

Pledged securities with a fair value of $77.7 million, an amortized cost of $78.8 million, and a net unrealized loss of $1.1 million have been in a continuous unrealized loss position for more than 12 months. All securities that have been in a continuous loss position are Agency debt securities that carry a guarantee of the contractual payments.

The following table provides contractual maturity information related to Agency MBS. The money market funds invest in short-term Federal Government and Agency debt securities and have no stated maturity date.

​

​

​

​

​

​

​

​

(in thousands)

September 30, 2024

​

Detail of Agency MBS Maturities

Fair Value

    

Amortized Cost

    

Within one year

$

228

​

$

228

​

After one year through five years

​

70,035

​

​

69,994

​

After five years through ten years

​

69,219

​

​

68,332

​

After ten years

 

17,409

​

​

16,950

​

Total

$

156,891

​

$

155,504

​

​

​

​

​

​

​

​

​

​

​

NOTE 10—EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY

Earnings per share (“EPS”) is calculated under the two-class method. The two-class method allocates all earnings (distributed and undistributed) to each class of common stock and participating securities based on their respective rights to receive dividends. The Company grants share-based awards to various employees and nonemployee directors under the Company’s 2024 Equity Incentive Plan, which was approved by stockholders on May 2, 2024 and constitutes an amendment and restatement of the Company’s 2020 Equity Incentive Plan, that entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities.

22

Table of Contents

The following table presents the calculation of basic and diluted EPS for the three and nine months ended September 30, 2024 and 2023 under the two-class method. Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the treasury-stock method.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended September 30, 

​

For the nine months ended September 30, 

 

EPS Calculations (in thousands, except per share amounts)

2024

​

2023

​

2024

​

2023

 

Calculation of basic EPS

​

​

​

​

​

​

​

​

​

​

​

​

Walker & Dunlop net income

$

28,802

​

$

21,458

​

$

63,331

​

$

75,758

​

Less: dividends and undistributed earnings allocated to participating securities

 

626

​

 

534

​

 

1,449

​

 

1,942

​

Net income applicable to common stockholders

$

28,176

​

$

20,924

​

$

61,882

​

$

73,816

​

Weighted-average basic shares outstanding

​

33,169

​

​

32,737

​

​

33,090

​

​

32,654

​

Basic EPS

$

0.85

​

$

0.64

​

$

1.87

​

$

2.26

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Calculation of diluted EPS

​

​

​

​

​

​

​

​

​

​

​

​

Net income applicable to common stockholders

$

28,176

​

$

20,924

​

$

61,882

​

$

73,816

​

Add: reallocation of dividends and undistributed earnings based on assumed conversion

​

—

​

​

—

​

​

—

​

​

2

​

Net income allocated to common stockholders

$

28,176

​

$

20,924

​

$

61,882

​

$

73,818

​

Weighted-average basic shares outstanding

​

33,169

​

​

32,737

​

​

33,090

​

​

32,654

​

Add: weighted-average diluted non-participating securities

​

34

​

​

158

​

​

45

​

​

199

​

Weighted-average diluted shares outstanding

​

33,203

​

​

32,895

​

​

33,135

​

​

32,853

​

Diluted EPS

$

0.85

​

$

0.64

​

$

1.87

​

$

2.25

​

​

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury-stock method includes the unrecognized compensation costs associated with the awards. For the three and nine months ended September 30, 2024, 78 thousand average restricted shares and 81 thousand average restricted shares, respectively, were excluded from the computation of diluted EPS under the treasury-stock method. For the three and nine months ended September 30, 2023, 169 thousand average restricted shares and 343 thousand average restricted shares, respectively, were excluded from the computation. These average restricted shares were excluded from the computation of diluted EPS under the treasury method because the effect would have been anti-dilutive (the exercise price of the options, or the grant date market price of the restricted shares was greater than the average market price of the Company’s shares of common stock during the periods presented).

In February 2024, the Company’s Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million of the Company’s common stock over a 12-month period beginning on February 23, 2024. During the first nine months of 2024, the Company did not repurchase any shares of its common stock under the share repurchase program. As of September 30, 2024, the Company had $75.0 million of authorized share repurchase capacity remaining under the 2024 share repurchase program.

During each of the first three quarters of 2024, the Company paid a dividend of $0.65 per share. 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.

The Company awarded $4.4 million and $3.0 million of stock to settle compensation liabilities, a non-cash transaction, for the nine months ended September 30, 2024 and 2023, respectively.

The Company’s note payable contains direct restrictions on the amount of dividends the Company may pay, and the warehouse debt facilities and agreements with the Agencies contain minimum equity, liquidity, and other capital requirements that indirectly restrict the amount of dividends the Company may pay. The Company does not believe that these restrictions currently limit the amount of dividends the Company can pay for the foreseeable future.

During the second quarter of 2024, the Company purchased a noncontrolling interest for cash consideration of $7.0 million, of which $4.0 million was paid at the time of closing, with an additional $1.0 million to be paid in each of the next three quarters. The purchase of the noncontrolling interest resulted in a reduction to APIC of $25.7 million (a non-cash transaction) for the excess of the purchase price over the noncontrolling interest balance.

23

Table of Contents

During the fourth quarter of 2024, the Company purchased the remaining noncontrolling interest of Zelman Holdings, LLC for cash consideration of $11.9 million, all of which was paid at the time of closing. The purchase of the noncontrolling interest is expected to result in an increase to APIC of $9.8 million (a non-cash transaction) for the excess of the noncontrolling interest balance over the purchase price.

NOTE 11—SEGMENTS

The Company’s executive leadership team, which functions as the Company’s chief operating decision making body, makes decisions and assesses performance based on the following three reportable segments. The reportable segments are determined based on the product or service provided and reflect the manner in which management is currently evaluating the Company’s financial information.  

(i)Capital Markets (“CM”)—CM provides a comprehensive range of commercial real estate finance products to its customers, including Agency lending, debt brokerage, property sales, and appraisal and valuation services. The Company’s long-established relationships with the Agencies and institutional investors enable CM to offer a broad range of loan products and services to the Company’s customers, including first mortgage, second trust, supplemental, construction, mezzanine, preferred equity, and small-balance loans. CM provides property sales services to owners and developers of multifamily properties and commercial real estate and multifamily property appraisals for various investors. CM also provides real estate-related investment banking and advisory services, including housing market research.

As part of Agency lending, CM temporarily funds the loans it originates (loans held for sale) before selling them to the Agencies and earns net interest income on the spread between the interest income on the loans and the warehouse interest expense. For Agency loans, CM recognizes the fair value of expected net cash flows from servicing, which represents the right to receive future servicing fees. CM also earns fees for origination of loans for both Agency lending and debt brokerage, fees for property sales, appraisals, and investment banking and advisory services, and subscription revenue for its housing market research. Direct internal, including compensation, and external costs that are specific to CM are included within the results of this reportable segment.

(ii)Servicing & Asset Management (“SAM”)—SAM’s activities include: (i) servicing and asset-managing the portfolio of loans the Company (a) originates and sells to the Agencies, (b) brokers to certain life insurance companies, and (c) originates through its principal lending and investing activities, (ii) managing third-party capital invested in commercial real estate assets through senior secured debt or limited partnership equity instruments, e.g., preferred equity, mezzanine debt, etc. either through funds or direct investments, and (iii) managing third-party capital invested in tax credit equity funds focused on the LIHTC sector and other commercial real estate.

SAM earns revenue mainly through fees for servicing and asset-managing the loans in the Company’s servicing portfolio and asset management fees for managing third-party capital. Direct internal, including compensation, and external costs that are specific to SAM are included within the results of this reportable segment.

(iii)Corporate—The Corporate segment consists primarily of the Company’s treasury operations and other corporate-level activities. The Company’s treasury activities include monitoring and managing liquidity and funding requirements, including corporate debt. Other corporate-level activities include equity-method investments, 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 the CM or SAM segments in presenting segment operating results. The Company does allocate interest expense and income tax expense. Corporate debt and the related interest expense are allocated first based on specific acquisitions where debt was directly used to fund the acquisition, such as the acquisition of Alliant, and then based on the remaining segment assets. Income tax expense is allocated proportionally based on income from operations at each segment, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.

​

​

24

Table of Contents

The following tables provide a summary and reconciliation of each segment’s results for the three months ended September 30, 2024 and 2023.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment Results (in thousands)

​

For the three months ended September 30, 2024

Revenues

​

​

CM

​

​

SAM

​

​

Corporate

​

​

Consolidated

Loan origination and debt brokerage fees, net

​

$

72,723

​

​

823

​

​

—

​

$

73,546

Fair value of expected net cash flows from servicing, net

​

​

43,426

​

​

—

​

​

—

​

​

43,426

Servicing fees

​

​

—

​

​

82,222

​

​

—

​

​

82,222

Property sales broker fees

​

​

19,322

​

​

—

​

​

—

​

​

19,322

Investment management fees

​

​

—

​

​

11,744

​

​

—

​

​

11,744

Net warehouse interest income (expense)

​

​

(2,798)

​

​

651

​

​

—

​

​

(2,147)

Placement fees and other interest income

​

​

—

​

​

40,299

​

​

3,258

​

​

43,557

Other revenues

​

​

11,039

​

​

9,145

​

​

450

​

​

20,634

Total revenues

​

$

143,712

​

$

144,884

​

$

3,708

​

$

292,304

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

104,987

​

​

20,951

​

​

19,600

​

$

145,538

Amortization and depreciation

​

​

1,137

​

​

54,668

​

​

1,756

​

​

57,561

Provision (benefit) for credit losses

​

 

—

​

​

2,850

​

​

—

​

 

2,850

Interest expense on corporate debt

​

 

4,888

​

​

11,711

​

​

1,633

​

 

18,232

Goodwill impairment

​

​

—

​

​

—

​

​

—

​

​

—

Fair value adjustments to contingent consideration liabilities

​

​

(1,366)

​

​

—

​

​

—

​

​

(1,366)

Other operating expenses

​

 

5,137

​

​

6,611

​

​

20,236

​

 

31,984

Total expenses

​

$

114,783

​

$

96,791

​

$

43,225

​

$

254,799

Income (loss) from operations

​

$

28,929

​

$

48,093

​

$

(39,517)

​

$

37,505

Income tax expense (benefit)

​

 

7,073

​

​

10,756

​

​

(9,007)

​

 

8,822

Net income (loss) before noncontrolling interests

​

$

21,856

​

$

37,337

​

$

(30,510)

​

$

28,683

Less: net income (loss) from noncontrolling interests

​

 

26

​

​

(145)

​

​

—

​

 

(119)

Walker & Dunlop net income (loss)

​

$

21,830

​

$

37,482

​

$

(30,510)

​

$

28,802

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

25

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment Results (in thousands)

​

For the three months ended September 30, 2023

Revenues

​

​

CM

​

​

SAM

​

​

Corporate

​

​

Consolidated

Loan origination and debt brokerage fees, net

​

$

56,149

​

$

—

​

$

—

​

$

56,149

Fair value of expected net cash flows from servicing, net

​

​

35,375

​

​

—

​

​

—

​

​

35,375

Servicing fees

​

​

—

​

​

79,200

​

​

—

​

​

79,200

Property sales broker fees

​

​

16,862

​

​

—

​

​

—

​

​

16,862

Investment management fees

​

​

—

​

​

13,362

​

​

—

​

​

13,362

Net warehouse interest income (expense)

​

​

(2,565)

​

​

534

​

​

—

​

​

(2,031)

Placement fees and other interest income

​

​

—

​

​

39,475

​

​

3,525

​

​

43,000

Other revenues

​

​

11,875

​

​

15,569

​

​

(618)

​

​

26,826

Total revenues

​

$

117,696

​

$

148,140

​

$

2,907

​

$

268,743

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

97,973

​

$

17,139

​

$

21,395

​

$

136,507

Amortization and depreciation

​

​

1,137

​

​

54,375

​

​

1,967

​

​

57,479

Provision (benefit) for credit losses

​

 

—

​

​

421

​

​

—

​

 

421

Interest expense on corporate debt

​

 

4,874

​

​

11,096

​

​

1,624

​

 

17,594

Goodwill impairment

​

​

14,000

​

​

—

​

​

—

​

​

14,000

Fair value adjustments to contingent consideration liabilities

​

​

(14,000)

​

​

—

​

​

—

​

​

(14,000)

Other operating expenses

​

 

4,193

​

​

5,039

​

​

19,297

​

 

28,529

Total expenses

​

$

108,177

​

$

88,070

​

$

44,283

​

$

240,530

Income (loss) from operations

​

$

9,519

​

$

60,070

​

$

(41,376)

​

$

28,213

Income tax expense (benefit)

​

 

2,386

​

​

15,040

​

​

(10,357)

​

 

7,069

Net income (loss) before noncontrolling interests

​

$

7,133

​

$

45,030

​

$

(31,019)

​

$

21,144

Less: net income (loss) from noncontrolling interests

​

 

83

​

​

(397)

​

 

—

​

 

(314)

Walker & Dunlop net income (loss)

​

$

7,050

​

$

45,427

​

$

(31,019)

​

$

21,458

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

26

Table of Contents

The following tables provide a summary and reconciliation of each segment’s results for the nine months ended September 30, 2024 and 2023 and total assets as of September 30, 2024 and 2023.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment Results and Total Assets (in thousands)

​

As of and for the nine months ended September 30, 2024

Revenues

​

​

CM

​

​

SAM

​

​

Corporate

​

​

Consolidated

Loan origination and debt brokerage fees, net

​

$

180,264

​

$

2,356

​

$

—

​

$

182,620

Fair value of expected net cash flows from servicing, net

​

​

97,673

​

​

—

​

​

—

​

​

97,673

Servicing fees

​

​

—

​

​

242,683

​

​

—

​

​

242,683

Property sales broker fees

​

​

39,408

​

​

—

​

​

—

​

​

39,408

Investment management fees

​

​

—

​

​

40,086

​

​

—

​

​

40,086

Net warehouse interest income (expense)

​

​

(6,322)

​

​

1,475

​

​

—

​

​

(4,847)

Placement fees and other interest income

​

​

—

​

​

113,072

​

​

10,927

​

​

123,999

Other revenues

​

​

32,756

​

​

34,679

​

​

1,982

​

​

69,417

Total revenues

​

$

343,779

​

$

434,351

​

$

12,909

​

$

791,039

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

276,655

​

$

59,083

​

$

54,330

​

$

390,068

Amortization and depreciation

​

​

3,412

​

​

160,912

​

​

5,171

​

​

169,495

Provision (benefit) for credit losses

​

 

—

​

​

6,310

​

​

—

​

​

6,310

Interest expense on corporate debt

​

 

15,038

​

​

33,848

​

​

4,879

​

​

53,765

Goodwill impairment

​

​

—

​

​

—

​

​

—

​

​

—

Fair value adjustments to contingent consideration liabilities

​

​

(1,366)

​

​

—

​

​

—

​

​

(1,366)

Other operating expenses

​

 

14,831

​

​

18,462

​

​

60,093

​

​

93,386

Total expenses

​

$

308,570

​

$

278,615

​

$

124,473

​

$

711,658

Income (loss) from operations

​

$

35,209

​

$

155,736

​

$

(111,564)

​

$

79,381

Income tax expense (benefit)

​

 

8,689

​

​

38,430

​

​

(27,531)

​

 

19,588

Net income (loss) before noncontrolling interests

​

$

26,520

​

$

117,306

​

$

(84,033)

​

$

59,793

Less: net income (loss) from noncontrolling interests

​

 

353

​

​

(3,891)

​

​

—

​

 

(3,538)

Walker & Dunlop net income (loss)

​

$

26,167

​

$

121,197

​

$

(84,033)

​

$

63,331

​

​

​

​

​

​

​

​

​

​

​

​

​

Total assets

​

$

1,711,722

​

​

2,495,600

​

​

371,909

​

$

4,579,231

​

​

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Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

Segment Results and Total Assets (in thousands)

​

As of and for the nine months ended September 30, 2023

Revenues

​

​

CM

​

​

SAM

​

​

Corporate

​

​

Consolidated

Loan origination and debt brokerage fees, net

​

$

167,679

​

$

522

​

$

—

​

$

168,201

Fair value of expected net cash flows from servicing, net

​

​

107,446

​

​

—

​

​

—

​

​

107,446

Servicing fees

​

​

—

​

​

232,027

​

​

—

​

​

232,027

Property sales broker fees

​

​

38,831

​

​

—

​

​

—

​

​

38,831

Investment management fees

​

​

—

​

​

44,844

​

​

—

​

​

44,844

Net warehouse interest income (expense)

​

​

(7,006)

​

​

3,450

​

​

—

​

​

(3,556)

Placement fees and other interest income

​

​

—

​

​

100,636

​

​

8,674

​

​

109,310

Other revenues

​

​

40,735

​

​

42,697

​

​

(431)

​

​

83,001

Total revenues

​

$

347,685

​

$

424,176

​

$

8,243

​

$

780,104

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

281,502

​

$

53,669

​

$

53,254

​

$

388,425

Amortization and depreciation

​

​

3,412

​

​

161,935

​

​

5,390

​

​

170,737

Provision (benefit) for credit losses

​

 

—

​

​

(11,088)

​

​

—

​

 

(11,088)

Interest expense on corporate debt

​

 

13,870

​

​

31,385

​

​

4,623

​

 

49,878

Goodwill impairment

​

​

14,000

​

​

—

​

​

—

​

​

14,000

Fair value adjustments to contingent consideration liabilities

​

​

(14,000)

​

​

—

​

​

—

​

​

(14,000)

Other operating expenses

​

 

15,037

​

​

16,465

​

​

51,820

​

 

83,322

Total expenses

​

$

313,821

​

$

252,366

​

$

115,087

​

$

681,274

Income (loss) from operations

​

$

33,864

​

$

171,810

​

$

(106,844)

​

$

98,830

Income tax expense (benefit)

​

 

8,462

​

​

42,931

​

​

(26,698)

​

 

24,695

Net income (loss) before noncontrolling interests

​

$

25,402

​

$

128,879

​

$

(80,146)

​

$

74,135

Less: net income (loss) from noncontrolling interests

​

 

1,741

​

​

(3,364)

​

 

—

​

 

(1,623)

Walker & Dunlop net income (loss)

​

$

23,661

​

$

132,243

​

$

(80,146)

​

$

75,758

​

​

​

​

​

​

​

​

​

​

​

​

​

Total assets

​

$

1,424,270

​

$

2,361,245

​

$

492,336

​

$

4,277,851

​

​

​

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Table of Contents

NOTE 12—VARIABLE INTEREST ENTITIES

​

The Company provides alternative investment management services through the syndication of tax credit funds and development of affordable housing projects. To facilitate the syndication and development of affordable housing projects, the Company is involved with the acquisition and/or formation of limited partnerships and joint ventures with investors, property developers, and property managers that are variable interest entities (“VIEs”).

A detailed discussion of the Company’s accounting policies regarding the consolidation of VIEs and significant transactions involving VIEs is included in NOTE 2 and NOTE 17 of the 2023 Form 10-K.

As of September 30, 2024 and December 31, 2023, the assets and liabilities of the consolidated tax credit funds were immaterial. The table below presents the assets and liabilities of the Company’s consolidated joint venture development VIEs included in the Condensed Consolidated Balance Sheets:

​

​

​

​

​

​

​

​

Consolidated VIEs (in thousands)

    

​

September 30, 2024

    

​

December 31, 2023

Assets:

​

​

​

​

​

​

Cash and cash equivalents

​

$

630

​

$

2,841

Restricted cash

​

​

4,163

​

​

2,811

Receivables, net

​

​

27,707

​

​

28,256

Other Assets

​

​

48,246

​

​

47,249

Total assets of consolidated VIEs

​

$

80,746

​

$

81,157

​

​

​

​

​

​

​

Liabilities:

​

​

​

​

​

​

Other liabilities

​

$

57,578

​

$

53,526

Total liabilities of consolidated VIEs

​

$

57,578

​

$

53,526

​

​

​

​

​

​

​

​

The table below presents the carrying value and classification of the Company’s interests in nonconsolidated VIEs included in the Condensed Consolidated Balance Sheets:

​

​

​

​

​

​

​

​

Nonconsolidated VIEs (in thousands)

​

​

September 30, 2024

    

​

December 31, 2023

Assets

​

​

​

​

​

​

Committed investments in tax credit equity

​

$

333,713

​

$

154,028

Other assets: Equity-method investments

​

​

62,365

​

​

60,195

Total interests in nonconsolidated VIEs

​

$

396,078

​

$

214,223

​

​

​

​

​

​

​

Liabilities

​

​

​

​

​

​

Commitments to fund investments in tax credit equity

​

$

289,250

​

$

140,259

Total commitments to fund nonconsolidated VIEs

​

$

289,250

​

$

140,259

​

​

​

​

​

​

​

Maximum exposure to losses(1)(2)

​

$

396,078

​

$

214,223

​

​

​

​

​

​

​

(1)Maximum exposure determined as “Total interests in nonconsolidated VIEs.” The maximum exposure for the Company’s investments in tax credit equity is limited to the carrying value of its investment, as there are no funding obligations or other commitments related to the nonconsolidated VIEs other than the amounts presented in the table above.
(2)Based on historical experience and the underlying expected cash flows from the underlying investment, the maximum exposure of loss is not representative of the actual loss, if any, that the Company may incur.

​

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Item 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with the historical financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q (“Form 10-Q”). The following discussion contains, in addition to historical information, forward-looking statements that include risks and uncertainties. Our actual results may differ materially from those expressed or contemplated in those forward-looking statements as a result of certain factors, including those set forth under the headings “Forward-Looking Statements” and “Risk Factors” below and in our Annual Report on Form 10-K for the year ended December 31, 2023 (“2023 Form 10-K”).

Forward-Looking Statements

Some of the statements in this Quarterly Report on Form 10-Q of Walker & Dunlop, Inc. and subsidiaries (the “Company,” “Walker & Dunlop,” “we,” “us,” or “our”), 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 which 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 Form 10-Q 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. Statements regarding the following subjects, among others, may be forward-looking:

​

●the future of the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac,” and together with Fannie Mae, the “GSEs”), including their existence, relationship to the U.S. federal government, origination capacities, and their impact on our business;
●changes to and trends in the interest rate environment and its impact on our business;
●our growth strategy;
●our projected financial condition, liquidity, and results of operations;
●our ability to obtain and maintain warehouse and other loan funding arrangements;
●our ability to make future dividend payments or repurchase shares of our common stock;
●availability of and our ability to attract and retain qualified personnel and our ability to develop and retain relationships with borrowers, key principals, and lenders;
●degree and nature of our competition;
●changes in governmental regulations, policies, and programs, tax laws and rates, and similar matters, and the impact of such regulations, policies, and actions;
●our ability to comply with the laws, rules, and regulations applicable to us, including additional regulatory requirements for broker-dealer and other financial services firms;
●trends in the commercial real estate finance market, commercial real estate values, the credit and capital markets, or the general economy, including demand for multifamily housing and rent growth;
●general volatility of the capital markets and the market price of our common stock; and
●other risks and uncertainties associated with our business described in our 2023 Form 10-K and our subsequent Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed with the Securities and Exchange Commission.

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. 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 “Risk Factors.”

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Table of Contents

Business

Overview

We are a leading commercial real estate (i) services, (ii) finance, and (iii) technology company in the United States. Through investments in people, brand, and technology, we have built a diversified suite of commercial real estate services to meet the needs of our customers. Our services include (i) multifamily lending, property sales, appraisal, valuation, and research, (ii) commercial real estate debt brokerage and advisory services, (iii) investment management, and (iv) affordable housing lending, property sales, tax credit syndication, development, and investment. We leverage our technological resources and investments to (i) provide an enhanced experience for our customers, (ii) identify refinancing and other financial and investment opportunities for new and existing customers, and (iii) drive efficiencies in our internal processes. We believe our people, brand, and technology provide us with a competitive advantage, as evidenced by 68% of refinancing volumes coming from new loans to us and 19% of total transaction volumes coming from new customers for the nine months ended September 30, 2024.

We are one of the largest service providers to multifamily operators in the country. We originate, sell, and service a range of multifamily and other commercial real estate financing products, including loans through the programs of the GSEs, and the Federal Housing Administration, a division of the U.S. Department of Housing and Urban Development (together with Ginnie Mae, “HUD”) (collectively, the “Agencies”). We retain servicing rights and asset management responsibilities on substantially all loans that we originate for the Agencies’ programs. We broker, and occasionally service, loans to commercial real estate operators for many life insurance companies, commercial banks, and other institutional investors, in which cases we do not fund the loan but rather act as a loan broker.

We provide multifamily property sales brokerage and appraisal and valuation services and engage in commercial real estate investment management activities, including a focus on the affordable housing sector through low-income housing tax credit (“LIHTC”) syndication. We engage in the development and preservation of affordable housing projects through joint ventures with real estate developers and the management of funds focused on affordable housing. We provide housing market research and real estate-related investment banking and advisory services, which provide our clients and us with market insight into many areas of the housing market. Our clients are owners and developers of multifamily properties and other commercial real estate assets across the country. We also underwrite, service, and asset-manage shorter-term loans on transitional commercial real estate. Most of these shorter-term interim loans are closed through a joint venture or through separate accounts managed by our investment management subsidiary, Walker & Dunlop Investment Partners, Inc. (“WDIP”). In the past, some of these interim loans were closed and retained by us through our Interim Loan Program (as defined below in Investment Management and Principal Lending and Investing). We are a leader in commercial real estate technology, developing and acquiring technology resources that (i) provide innovative solutions and a better experience for our customers, (ii) allow us to drive efficiencies across our internal processes, and (iii) allow us to accelerate growth of our small-balance lending business and our appraisal platform, Apprise by Walker & Dunlop (“Apprise”).

Walker & Dunlop, Inc. is a holding company. We conduct the majority of our operations through Walker & Dunlop, LLC, our operating company.

Segments

Our executive leadership team, which functions as our chief operating decision making body, makes decisions and assesses performance based on the following three reportable segments: (i) Capital Markets, (ii) Servicing & Asset Management, and (iii) Corporate. The reportable segments are determined based on the product or service provided and reflect the manner in which management is currently evaluating the Company’s financial information. The segments and related services are described in the following paragraphs.

Capital Markets (“CM”)

CM provides a comprehensive range of commercial real estate finance products to our customers, including Agency lending, debt brokerage, property sales, appraisal and valuation services, and real estate related investment banking and advisory services, including housing market research. Our long-established relationships with the Agencies and institutional investors enable us to offer a broad range of loan products and services to our customers. We provide property sales services to owners and developers of multifamily properties and commercial real estate and multifamily property appraisals for various investors. Additionally, we earn subscription fees for our housing related research. The primary services within CM are described below.

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Table of Contents

Agency Lending

We are one of the leading lenders with the Agencies, where we originate and sell multifamily, manufactured housing communities, student housing, affordable housing, seniors housing, and small-balance multifamily loans. For additional information on our Agency lending services, refer to Item 1. Business in our 2023 Form 10-K.

We recognize Loan origination and debt brokerage fees, net and the Fair value of expected net cash flows from servicing, net from our lending with the Agencies when we commit to both originate a loan with a borrower and sell that loan to an investor. The loan origination and debt brokerage fees, net and the fair value of expected net cash flows from servicing, net for these transactions reflect the fair value attributable to loan origination fees, premiums on the sale of loans, net of any co-broker fees, and the fair value of the expected net cash flows associated with servicing the loans, net of any guaranty obligations retained.

We generally fund our Agency loan products through warehouse facility financing and sell them to investors in accordance with the related loan sale commitment, which we obtain concurrent with rate lock. Proceeds from the sale of the loan are used to pay off the warehouse facility borrowing. The sale of the loan is typically completed within 60 days after the loan is closed. We earn net warehouse interest income or expense from loans held for sale while they are outstanding equal to the difference between the note rate on the loan and the cost of borrowing of the warehouse facility. Our cost of borrowing can exceed the note rate on the loan, resulting in a net interest expense.

Our loan commitments and loans held for sale are currently not exposed to unhedged interest rate risk during the loan commitment, closing, and delivery process. The sale or placement of each loan to an investor is negotiated at the same time we establish the coupon rate for the loan. We also seek to mitigate the risk of a loan not closing by collecting good faith deposits from the borrower. The deposit is returned to the borrower only after the loan is closed. Any potential loss from a catastrophic change in the property condition while the loan is held for sale using warehouse facility financing is mitigated through property insurance equal to replacement cost. We are also protected contractually from an investor’s failure to purchase the loan. We have experienced an immaterial number of failed deliveries in our history and have incurred immaterial losses on such failed deliveries.

We may be obligated to repurchase loans that are originated for the Agencies’ programs if certain representations and warranties that we provide in connection with such originations are breached.

As part of our overall growth strategy, we are focused on significantly growing and investing in our small-balance multifamily lending platform, which involves a high volume of transactions with smaller loan balances. We have supported our small-balance lending platform with acquisitions in the past that have provided data analytics and further advanced our technology development capabilities in this area.

Debt Brokerage

Our mortgage bankers who focus on debt brokerage are engaged by borrowers to work with a variety of institutional lenders, banks, and various other institutional lenders to find the most appropriate debt and/or equity solution for the borrowers’ needs. These financing solutions are then funded directly by the lender, and we receive an origination fee for our services. On occasion, we service the loans after they are originated by the lender.

Property Sales

Through our subsidiary Walker & Dunlop Investment Sales (“WDIS”), we offer property sales brokerage services to owners and developers of multifamily and hospitality properties that are seeking to sell these properties. Through these property sales brokerage services, we seek to maximize proceeds and certainty of closure for our clients using our knowledge of the commercial real estate and capital markets and relying on our experienced transaction professionals. We receive a sales commission for brokering the sale of these assets on behalf of our clients, and we often are able to provide financing for the purchaser of the properties through our Agency or debt brokerage teams. We have increased the number of property sales brokers and the geographical reach of our investment sales platform over the past several years through hiring and acquisitions and intend to continue this expansion in support of our growth strategy, geographical reach, and service offerings. Our geographical reach now covers many major markets in the United States, and our service offerings now include sales of land, student, senior housing, hospitality, and affordable properties.

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Table of Contents

Housing Market Research and Real Estate Investment Banking Services

Our subsidiary Zelman & Associates (“Zelman”), is a nationally recognized housing market research and investment banking firm that enhances the information we provide to our clients and increases our access to high-quality market insights in many areas of the housing market, including construction trends, demographics, housing demand and mortgage finance. Zelman generates revenues through the sale of its housing market research data and related publications to banks, investment banks and other financial institutions. Zelman is also a leading independent investment bank providing comprehensive M&A advisory services and capital markets solutions to our clients within the housing and commercial real estate sectors. As part of our growth strategy, we have increased the number of investment bankers to broaden our reach and expertise within the residential housing, building products, multifamily and commercial real estate sectors. Prior to the fourth quarter of 2024, we owned a 75% controlling interest in Zelman. During the fourth quarter of 2024, we purchased the remaining 25% interest in Zelman.

​

Appraisal and Valuation Services

We offer multifamily appraisal and valuation services though our subsidiary, Apprise. Apprise leverages technology and data science to dramatically improve the consistency, transparency, and speed of multifamily property appraisals in the U.S. through our proprietary technology and provides appraisal services to a client list that includes many national commercial real estate lenders. Apprise also provides quarterly and annual valuation services to some of the largest institutional commercial real estate investors in the country. We have increased the number of valuation specialists and the geographical reach of our appraisal platform over the past several years through hiring and recruiting in support of our long-term growth strategy. The growth strategy has resulted in an increase in our market share of the appraisal market over the past several years. Additionally, these valuation specialists provide support for and insight to our Agency lending and property sales professionals.

Servicing & Asset Management (“SAM”)

SAM focuses on servicing and asset-managing the portfolio of loans we originate and sell to the Agencies, broker to certain life insurance companies, and originate through our principal lending and investing activities, and managing third-party capital invested in tax credit equity funds focused on the affordable housing sector and other commercial real estate. We earn servicing fees for overseeing the loans in our servicing portfolio and asset management fees for the capital invested in our funds. Additionally, we earn revenue through net interest income on the loans and the warehouse interest expense for loans held for investment. The primary services within SAM are described below. For additional information on our SAM services, refer to Item 1. Business in our 2023 Form 10-K.

Loan Servicing

We retain servicing rights and asset management responsibilities on substantially all of our Agency loan products that we originate and sell and generate cash revenues from the fees we receive for servicing the loans, from the placement fees on escrow deposits held on behalf of borrowers, and from other ancillary fees relating to servicing the loans. Servicing fees, which are based on servicing fee rates set at the time an investor agrees to purchase the loan and on the unpaid principal balance of the loan, are generally paid monthly for the duration of the loan. Our Fannie Mae and Freddie Mac servicing arrangements generally provide for prepayment protection to us in the event of a voluntary prepayment. For loans serviced outside of Fannie Mae and Freddie Mac, we typically do not have similar prepayment protections. For most loans we service under the Fannie Mae Delegated Underwriting and Servicing (“DUS”) program, we are required to advance the principal and interest payments and guarantee fees for four months should a borrower cease making payments under the terms of their loan, including while that loan is in forbearance. After advancing for four months, we may request reimbursement by Fannie Mae for the principal and interest advances, and Fannie Mae will reimburse us for these advances within 60 days of the request. Under the Ginnie Mae program, we are obligated to advance the principal and interest payments and guarantee fees until the HUD loan is brought current, fully paid or assigned to HUD. We are eligible to assign a loan to HUD once it is in default for 30 days. If the loan is not brought current, or the loan otherwise defaults, we are not reimbursed for our advances until such time as we assign the loan to HUD or work out a payment modification for the borrower. For loans in default, we may repurchase those loans out of the Ginnie Mae security, at which time our advance requirements cease, and we may then modify and resell the loan or assign the loan back to HUD and be reimbursed for our advances. We are not obligated to make advances on the loans we service under the Freddie Mac Optigo® program and our bank and life insurance company servicing agreements.

We have risk-sharing obligations on substantially all loans we originate under the Fannie Mae DUS program. When a Fannie Mae DUS loan is subject to full risk-sharing, we absorb losses on the first 5% of the unpaid principal balance of a loan at the time of loss settlement, and above 5% we share a percentage of the loss with Fannie Mae, with our maximum loss capped at 20% of the original unpaid principal balance of the loan (subject to doubling or tripling if the loan does not meet specific underwriting criteria or if the loan defaults within 12 months of its sale to Fannie Mae). Our full risk-sharing is currently limited to loans up to $300 million, which equates to a maximum loss per loan of $60 million (such exposure would occur in the event that the underlying collateral is determined to be completely without value at the time of loss).

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Table of Contents

For loans in excess of $300 million, we receive modified risk-sharing. We also may request modified risk-sharing at the time of origination on loans below $300 million, which reduces our potential risk-sharing losses from the levels described above if we do not believe that we are being fully compensated for the risks of the transaction. The full risk-sharing limit has varied over time. Accordingly, loans originated in prior periods may have been subject to modified risk-sharing at much lower levels.

Our servicing fees for risk-sharing loans include compensation for the risk-sharing obligations and are larger than the servicing fees we would receive from Fannie Mae for loans with no risk-sharing obligations. We receive a lower servicing fee for modified risk-sharing than for full risk-sharing. For brokered loans we also service, we collect ongoing servicing fees while those loans remain in our servicing portfolio. The servicing fees we typically earn on brokered loan transactions are substantially lower than the servicing fees we earn on Agency loans.

Investment Management and Principal Lending and Investing

Investment Management—Through our subsidiary, WDIP, we function as the operator of a private commercial real estate investment adviser focused on the management of debt, preferred equity, and mezzanine equity investments in middle-market commercial real estate funds. WDIP’s current regulatory assets under management (“AUM”) of $2.0 billion primarily consist of six investment vehicles: Fund III, Fund IV, Fund V, Fund VI, Fund VII (collectively, the “Funds”), and separate accounts managed primarily for life insurance companies. AUM for the Funds and for the separate accounts consists of both unfunded commitments and funded investments. Unfunded commitments are highest during the fundraising and investment phases. WDIP receives management fees based on both unfunded commitments and funded investments. Additionally, with respect to the Funds, WDIP receives a percentage of the return above the fund return hurdle rate specified in the fund agreements.

Through a joint venture with an affiliate of Blackstone Mortgage Trust, Inc., WDIP also offers short-term senior secured debt financing products that provide floating-rate, interest-only loans for terms of generally up to three years to experienced borrowers seeking to acquire or reposition multifamily properties that do not currently qualify for permanent financing (the “Interim Program JV” or the “joint venture”). The joint venture funds its operations using a combination of equity contributions from its owners and third-party credit facilities. We hold a 15% ownership interest in the Interim Program JV and are responsible for sourcing, underwriting, servicing, and asset-managing the loans originated by the joint venture. The Interim Program JV assumes full risk of loss while the loans it originates are outstanding, while we assume risk commensurate with our 15% ownership interest.

Principal Lending and Investing—Using a combination of our own capital and warehouse debt financing, we offer interim loans that do not meet the criteria of the Interim Program JV (the “Interim Loan Program”). We underwrite, service, and asset-manage all loans executed through the Interim Loan Program. We originate and hold these Interim Loan Program loans for investment, which are included on our balance sheet, and during the time that these loans are outstanding, we assume the full risk of loss. We have steadily reduced interim loan originations in order to focus on raising third-party capital solutions to meet market demand and pursue our investment management growth strategy.

In the fourth quarter of 2023, WDIP launched a credit fund focused on transitional lending with a large, institutional insurance company. The credit fund focuses on the same core product as the Interim Loan Program and Interim Program JV, and we expect to further wind down our reliance on the Interim Loan Program and Interim Program JV as a result of launching this credit fund. The Company underwrites, services, and asset manages all loans originated for the credit fund and has a 5% co-investment obligation. WDIP also receives a percentage of the return above the fund return hurdle rate specified in the fund operating agreements.

Affordable Housing Real Estate Services

We provide affordable housing investment management and real estate services through our subsidiaries, collectively known as Walker & Dunlop Affordable Equity programs (“WDAE”). WDAE is one of the largest tax credit syndicators and affordable housing developers in the U.S. and provides alternative investment management services focused on the affordable housing sector through LIHTC syndication, development of affordable housing projects through joint ventures, and affordable housing preservation fund management. Our affordable housing investment management team works with our developer clients to identify properties that will generate LIHTCs and meet our affordable investors’ needs, and forms limited partnership funds (“LIHTC funds”) with third-party investors that invest in the limited partnership interests in these properties. WDAE serves as the general partner of these LIHTC funds, and it receives fees, such as asset management fees, and a portion of refinance and disposition proceeds as compensation for its work as the general partner of the fund. Additionally, WDAE earns a syndication fee from the LIHTC funds for the identification, organization, and acquisition of affordable housing projects that generate LIHTCs.

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We invest, as the managing or non-managing member of joint ventures, with developers of affordable housing projects that are partially funded through LIHTCs. When possible, WDAE syndicates the LIHTC investment necessary to build properties through these joint venture partnerships. The joint ventures earn developer fees, and we receive the portion of the economic benefits commensurate with our investment in the joint ventures, including cash flows from operations and sale/refinance. Additionally, WDAE invests with third-party investors (either in a fund or joint-venture structure) with the goal of preserving affordability on multifamily properties coming out of the LIHTC 15-year compliance period or on which market forces are unlikely to keep the properties affordable.

Corporate

The Corporate segment consists primarily of our treasury operations and other corporate-level activities. Our treasury operations include monitoring and managing our liquidity and funding requirements, including our corporate debt. Other major corporate-level functions include our equity-method investments, accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups.

Basis of Presentation

The accompanying condensed consolidated financial statements include all the accounts of the Company and its wholly-owned subsidiaries, and all intercompany transactions have been eliminated.

Critical Accounting Estimates

Our condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”), which requires management to make estimates based on certain judgments and assumptions that are inherently uncertain and affect reported amounts. The estimates and assumptions are based on historical experience and other factors management believes to be reasonable. Actual results may differ from those estimates and assumptions and the use of different judgments and assumptions may have a material impact on our results. The following critical accounting estimates involve significant estimation uncertainty that may have or is reasonably likely to have a material impact on our financial condition or results of operations. Additional information about our critical accounting estimates and other significant accounting policies is discussed in NOTE 2 of the consolidated financial statements in our 2023 Form 10-K.

Mortgage Servicing Rights (“MSRs”). MSRs are recorded at fair value at loan sale. The fair value at loan sale is based on estimates of expected net cash flows associated with the servicing rights and takes into consideration an estimate of loan prepayment. Initially, the fair value amount is included as a component of the derivative asset fair value at the loan commitment date. The estimated net cash flows from servicing, which includes assumptions for discount rate, placement fees, prepayment speed, and servicing costs, are discounted at a rate that reflects the credit and liquidity risk of the MSR over the estimated life of the underlying loan. The discount rates used throughout the periods presented for all MSRs were between 8-14% and varied based on the loan type. The life of the underlying loan is estimated giving consideration to the prepayment provisions in the loan and assumptions about loan behaviors around those provisions. Our model for MSRs assumes no prepayment prior to the expiration of the prepayment provisions and full prepayment of the loan at or near the point when the prepayment provisions have expired. The estimated net cash flows also include cash flows related to the future placement fees on deposit accounts associated with servicing the loans that are based on an earnings rate assumption. We include a servicing cost assumption to account for our expected costs to service a loan. The servicing cost assumption has had a de minimis impact on the estimate historically. We record an individual MSR asset for each loan at loan sale.

The assumptions used to estimate the fair value of capitalized MSRs are developed internally and are periodically compared to assumptions used by other market participants. Due to the relatively few transactions in the multifamily MSR market and the lack of significant changes in assumptions by market participants, we have experienced limited volatility in the assumptions historically, including the assumption that most significantly impacts the estimate: the discount rate. We do not expect to see significant volatility in the assumptions for the foreseeable future. We actively monitor the assumptions used and make adjustments to those assumptions when market conditions change, or other factors indicate such adjustments are warranted. Over the past three years, we have adjusted the placement fee assumption related to escrow deposits several times to reflect the current and expected future earnings rate projected for the life of the MSR. Subsequent to loan origination, the carrying value of the MSR is amortized over the expected life of the loan. We engage a third party on a semi-annual basis to assist with performing a fair value assessment of our servicing portfolio, primarily for financial statement disclosure purposes. Changes in our discount rate assumptions may materially impact the fair value of the MSRs (NOTE 3 of the condensed consolidated financial statements details the portfolio-level impact of a change in the discount rate).

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Allowance for Risk-Sharing Obligations. This reserve liability (referred to as “allowance”) for risk-sharing obligations relates to our Fannie Mae at-risk servicing portfolio and is presented as a separate liability on our balance sheets. We record an estimate of the loss reserve for the current expected credit losses (“CECL”) for all loans in our Fannie Mae at-risk servicing portfolio. For those loans that are collectively evaluated, we use the weighted-average remaining maturity method (“WARM”) to calculate an estimated loss (“CECL allowance”). WARM uses an average annual loss rate that contains loss content over multiple vintages and loan terms and is used as a foundation for estimating the CECL allowance. The average annual loss rate is applied to the estimated unpaid principal balance over the contractual term, adjusted for estimated prepayments and amortization to arrive at the CECL allowance for the portion of the portfolio collectively evaluated as described further below.

One of the key components of a WARM calculation is the runoff rate, which is the expected rate at which loans in the current portfolio will amortize and prepay in the future based on our historical prepayment and amortization experience. We group loans by similar origination dates (vintage) and contractual maturity terms for purposes of calculating the runoff rate. We originate loans under the DUS program with various terms generally ranging from several years to 15 years; each of these various loan terms has a different runoff rate. The runoff rates applied to each vintage and contractual maturity term are determined using historical data; however, changes in prepayment and amortization behavior may significantly impact the estimate. We have not experienced significant changes in the runoff rate since we implemented CECL in 2020.

The weighted-average annual loss rate is calculated using a 10-year look-back period, utilizing the average portfolio balance and settled losses for each year. A 10-year period is used as we believe that this period of time includes sufficiently different economic conditions to generate a reasonable estimate of expected results in the future, given the relatively long-term nature of the current portfolio. As the weighted-average annual loss rate utilizes a rolling 10-year look-back period, the loss rate used in the estimate will change as loss data from earlier periods in the look-back period continue to fall off and as new loss data are added. For example, in the first quarter of 2024, loss data from earlier periods in the look-back period with significantly higher losses fell off and were replaced with more recent loss data with significantly lower losses, resulting in the weighted-average annual loss rate declining from 0.6 basis points to 0.3 basis points.

We currently use one year for our reasonable and supportable forecast period (“forecast period”) as we believe forecasts beyond one year are inherently less reliable. During the forecast period we apply an adjusted loss factor based on generally available economic and unemployment forecasts and a blended loss rate from historical periods that we believe reflect the forecasts. We revert to the historical loss rate over a one-year period on a straight-line basis. Over the past couple of years, the loss rate used in the forecast period reflects our expectations of the economic conditions impacting the multifamily sector over the coming year in relation to the historical period. For example, despite our historical loss rate declining from 0.6 basis points as of December 31, 2023 to 0.3 basis points as of March 31, 2024, our forecast-period loss rate remained relatively unchanged from 2.4 basis points as of December 31, 2023, to 2.3 basis points as of March 31, 2024. The forecast loss rate remaining the same reflects our relatively unchanged view of the uncertainty of the evolving macroeconomic conditions facing the multifamily sector.

NOTE 4 of the condensed consolidated financial statements outlines adjustments made in the loss rates used to account for the expected economic conditions as of a given period and the related impact on the estimate.

Changes in our expectations and forecasts have materially impacted, and in the future may materially impact, these inputs and the CECL allowance.

We evaluate our risk-sharing loans on a quarterly basis to determine whether there are loans that are probable of foreclosure. Specifically, we assess a loan’s qualitative and quantitative risk factors, such as payment status, property financial performance, local real estate market conditions, loan-to-value ratio, debt-service-coverage ratio, and property condition. When a loan is determined to be probable of foreclosure based on these factors (or has foreclosed), we remove the loan from the WARM calculation and individually assess the loan for potential credit loss. This assessment requires certain judgments and assumptions to be made regarding the property values and other factors, which may differ significantly from actual results. Loss settlement with Fannie Mae has historically concluded within 18 to 36 months after foreclosure. Historically, the initial collateral-based reserves have not varied significantly from the final settlement.

We actively monitor the judgments and assumptions used in our Allowance for Risk-Sharing Obligation estimate and make adjustments to those assumptions when market conditions change, or when other factors indicate such adjustments are warranted. We believe the level of Allowance for Risk-Sharing Obligation is appropriate based on our expectations of future market conditions; however, changes in one or more of the judgments or assumptions used above could have a significant impact on the estimate.

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Contingent Consideration Liabilities. The Company often includes an earnout as part of the consideration paid for acquisitions to align the long-term interests of the acquiree with those of the Company. These earnouts contain milestones for achievement, which typically are revenue, revenue-like, or productivity measurements. If the milestone is achieved, the acquiree is paid the additional consideration. Upon acquisition, the Company is required to estimate the fair value of the earnout and include that fair value measurement as a component of the total consideration paid in the calculation of goodwill. The fair value of the earnout is recorded as a contingent consideration liability and is included within Other liabilities in the Condensed Consolidated Balance Sheet and adjusted to the estimated fair value at the end of each reporting period.

The determination of the fair value of contingent consideration liabilities requires significant management judgment and unobservable inputs to (i) determine forecasts and scenarios of future revenues, net cash flows and certain other performance metrics, (ii) assign a probability of achievement for the forecasts and scenarios, and (iii) select a discount rate. A Monte Carlo simulation analysis is used to determine many iterations of potential fair values. The average of these iterations is then used to determine the estimated fair value. We typically obtain the assistance of third-party valuation specialists to assist with the fair value estimation. The probability of the earnout achievement is based on management’s estimate of the expected future performance and other financial metrics of each of the acquired entities, which are subject to significant uncertainty. Changes to the aforementioned inputs impact the estimate; for example, in 2023, we recorded a $62.5 million reduction to the fair value of our contingent consideration liabilities based on revised management forecasts, scenarios, and other valuation inputs.

The aggregate fair value of our contingent consideration liabilities as of September 30, 2024 was $79.4 million. This fair value represents management’s best estimate of the discounted cash payments that will be made in the future for all of our contingent consideration arrangements. The maximum remaining undiscounted earnout payments as of September 30, 2024 was $258.5 million. In prior years, we made two large acquisitions that included significant amounts of contingent consideration to maximize alignment of the key principals and management teams.

Goodwill. As of both September 30, 2024 and December 31, 2023, we reported goodwill of $901.7 million. Goodwill represents the excess of cost over the identifiable net assets of businesses acquired. Goodwill is assigned to the reporting unit to which the acquisition relates. Goodwill is recognized as an asset and is reviewed for impairment annually as of October 1. Between annual impairment analyses, we perform an evaluation of recoverability, when events and circumstances indicate that it is more-likely-than not that the fair value of a reporting unit is below its carrying value. Impairment testing requires an assessment of qualitative factors to determine if there are indicators of potential impairment, followed by, if necessary, an assessment of quantitative factors. These factors include, but are not limited to, whether there has been a significant or adverse change in the business climate that could affect the value of an asset and/or significant or adverse changes in cash flow projections or earnings forecasts. These assessments require management to make judgments, assumptions, and estimates about projected cash flows, discount rates and other factors. Due to the challenging macroeconomic conditions in 2023, the projected cash flows for some of our reporting units declined, resulting in goodwill impairment in 2023 of $62.0 million that was attributed to reporting units within the Capital Markets segment. Due to improving macroeconomic conditions, as of September 30, 2024, there are no indicators of goodwill impairment; however, improvements in the macroeconomic conditions remain slow and may indicate additional goodwill impairment as we perform our annual goodwill impairment analysis.

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Table of Contents

Overview of Current Business Environment

In 2022 and 2023, inflation surged past historical norms, prompting the Federal Open Market Committee (“FOMC”) to aggressively raise the target Federal Funds Rate from near zero in March 2022 to a range of 5.25% to 5.50% by July 2023. This rapid increase, alongside high inflation and an uncertain economic outlook, led to substantial volatility in the capital markets, resulting in higher interest rates and reduced capital supply, trends that persisted into the first half of 2024. The commercial real estate sector is dependent on stable capital costs and available capital and experienced a notable decline in transaction activity, impacting our overall business performance in the first half of 2024.

​

The economy remains robust, with GDP and employment data showing resilience, while inflation has slowed considerably this year. In light of these conditions, the FOMC signaled it was nearing the end of its restrictive monetary policy throughout the second quarter of 2024. The shift in policy helped reduce market volatility, stabilize interest rates, and improve capital supply entering the second half of 2024. Consequently, our transaction activity rose by 37% quarter on quarter, signaling signs of a market recovery. In September 2024, the FOMC reduced the Fed Funds Rate by 0.50%, to 4.75% to 5.00%, further solidifying the near-term path for interest rates.  

​

Improved macroeconomic conditions led to increased transaction volumes for our business during the third quarter of 2024, which surged to $11.6 billion, our highest quarterly total in nearly two years, with notable increases in property sales (44%), Brokered (28%) and GSE (26%) transaction volumes compared to the third quarter last year. The multifamily property sales market was significantly disrupted by rapidly rising rates and a tighter supply of capital during the past two years. With supportive conditions in the third quarter 2024, our property sales volume surged to $3.6 billion, more than we closed for the first two quarters of the year combined. Increased transactions in the multifamily property sales sector provided a boost to the debt financing market as many acquisitions rely on debt financing. Consequently, we experienced a significant increase in GSE lending volumes this quarter to $3.5 billion, up 33% from the second quarter 2024. As the supply of third-party capital to commercial real estate continues to improve, life insurance companies, banks, and CMBS lenders increased their transaction activity, contributing to a 5% rise in our debt brokerage volumes compared to the second quarter 2024.

​

We anticipate long-term interest rates will remain stable, encouraging further adjustments in capital flow and gradually boosting transaction activity in the coming quarters. The Mortgage Bankers Association (MBA) forecasts multifamily lending will rise to $339 billion in 2024, a 25% increase from $271 billion in 2023. For this forecast to hold true, liquidity and interest rates must remain stable, promoting continued growth in the property sales sector and underlying debt financing markets, particularly our GSE lending executions, both of which we expect to remain elevated in the fourth quarter.

​

The Federal Housing Finance Agency (FHFA) set the 2024 loan origination caps for Fannie Mae and Freddie Mac at $70 billion each, a 7% decrease from 2023 but a 38% increase over actual 2023 lending volumes. For the year to date period ended September 30, 2024, Fannie Mae and Freddie Mac reported multifamily origination volumes of $32.5 billion and $35.1 billion, respectively, reflecting a 22% decrease and an 8% increase, respectively, compared to the same period in 2023, but leaving $72.4 billion in combined available lending capacity for the fourth quarter of 2024.

​

A large number of new multifamily properties were completed in 2023, primarily in sunbelt markets, and a near record 600,000 units are expected to be delivered this year. The increase in completions this year has presented an opportunity for our multifamily property sales team, as many builders look to sell stabilized assets. We are actively competing for market share, as customers increasingly seek experienced brokers to maximize value.

​

Macroeconomic conditions for multifamily properties remain stable. The national unemployment rate remains low at 4.1% in September 2024. According to RealPage, vacancies stabilized around 5.6% as of September 2024, down from 5.8% in December 2023 and consistent with September 2023. Despite the large supply of new units this year, many properties and regions across the U.S. continue growing rents with Zelman, our housing research arm, predicting national rent growth of approximately 2% this year. Beyond 2024, multifamily completions are anticipated to decrease significantly due to stalled new construction starts in 2023 and 2024, largely driven by tighter liquidity and the aforementioned macroeconomic challenges during the last two years. Long term, we believe the fundamentals for multifamily properties will trend positively due to constrained supply resulting from reduced construction starts, recent negative trends in household formation and a lack of entry-level single-family homes driving strong demand for rental housing in many areas. That will continue to position multifamily assets as an attractive investment option, benefitting our property sales, GSE lending and HUD lending operations.

We initiated the Interim Program Joint Venture to enhance our capacity for originating Interim Program loans beyond our own balance sheet. Over the past two years, we have shifted our transitional lending strategy towards our investment management platform and our registered investment adviser, WDIP. In light of increased distress in the transitional lending market, especially within CLOs, we are actively raising capital to address market demand as these loans mature in 2024 and 2025. Our first credit fund, launched in the fourth quarter of 2023,

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Table of Contents

successfully raised $150 million from a prominent life insurance company, enabling WDIP to deploy nearly half a billion dollars of leveraged capital to the transitional multifamily lending market this year. We are continuing to raise additional capital to support this strategy, with WDIP underwriting, servicing and managing all loans originated for the credit fund, while maintaining only a 5% co-investment obligation from the Company.

​

Through our subsidiary, WDAE, we provide alternative investment management services focused on affordable housing, including LIHTC syndication, joint venture development, and community preservation fund management. We ranked as the eighth largest LIHTC syndicator in 2023 and continue to pursue combined LIHTC syndication and affordable housing services to generate significant long-term financing, property sales, and syndication opportunities. Additionally, the FHFA’s 2024 loan origination caps of $140 billion require that at least 50% of the GSEs’ multifamily business target affordable housing. We anticipate these initiatives, combined with ongoing demand for affordable housing, will create growth opportunities for both WDAE and our debt financing and property sales teams focused on this sector.

Consolidated Results of Operations

The following is a discussion of our consolidated results of operations for the three- and nine-month periods ended September 30, 2024 and 2023. The financial results are not necessarily indicative of future results. Our quarterly results have fluctuated in the past and are expected to fluctuate in the future, reflecting the interest rate environment, the volume of transactions, business acquisitions, regulatory actions, industry trends, and general economic conditions. The table below provides supplemental data regarding our financial performance.

​

SUPPLEMENTAL OPERATING DATA

CONSOLIDATED

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

​

September 30, 

​

September 30, 

​

(in thousands)

    

2024

    

2023

​

2024

    

2023

    

Transaction Volume:

​

​

​

​

​

​

​

​

​

​

​

​

​

Debt Financing Volume

​

$

8,013,432

​

$

6,047,394

​

$

20,158,458

​

$

17,781,027

​

Property Sales Volume

​

 

3,602,675

​

 

2,508,073

​

 

6,300,609

​

 

5,907,138

​

Total Transaction Volume

​

$

11,616,107

​

$

8,555,467

​

$

26,459,067

​

$

23,688,165

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(in thousands, except per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Performance Metrics

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating margin

​

​

13

%  

​

10

%  

​

10

%  

​

13

%  

Return on equity

​

​

7

​

​

5

​

​

5

​

​

6

​

Walker & Dunlop net income

​

$

28,802

​

$

21,458

​

$

63,331

​

$

75,758

​

Adjusted EBITDA(1)

​

​

78,905

​

​

74,065

​

​

233,972

​

​

212,541

​

Diluted EPS

​

​

0.85

​

​

0.64

​

​

1.87

​

​

2.25

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Expense Metrics (as a percentage of total revenues):

​

​

​

​

​

​

​

​

​

​

​

​

​

Personnel expenses

​

​

50

%  

​

51

%  

​

49

%  

​

50

%  

Other operating expenses

​

​

11

​

​

11

​

​

12

​

​

11

​

​

​

​

​

​

​

​

​

(in thousands)

​

As of September 30, 

Managed Portfolio

    

2024

    

2023

Servicing Portfolio

​

$

134,080,546

​

$

128,959,434

Assets under management

​

​

18,210,452

​

​

17,334,877

Total Managed Portfolio

​

$

152,290,998

​

$

146,294,311

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

​

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Table of Contents

The following tables present period-to-period comparisons of our financial results for the three- and nine-month periods ended September 30, 2024 and 2023.

​

FINANCIAL RESULTS – THREE MONTHS

CONSOLIDATED

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

 

​

​

​

September 30, 

​

Dollar

​

Percentage

 

​

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

​

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

Loan origination and debt brokerage fees, net

​

$

73,546

​

$

56,149

​

$

17,397

​

31

%  

​

Fair value of expected net cash flows from servicing, net

​

​

43,426

​

​

35,375

​

​

8,051

​

23

​

​

Servicing fees

​

 

82,222

​

 

79,200

​

 

3,022

​

4

​

​

Property sales broker fees

​

​

19,322

​

​

16,862

​

​

2,460

​

15

​

​

Investment management fees

​

​

11,744

​

​

13,362

​

​

(1,618)

​

(12)

​

​

Net warehouse interest income (expense)

​

 

(2,147)

​

 

(2,031)

​

 

(116)

​

(6)

​

​

Placement fees and other interest income

​

 

43,557

​

 

43,000

​

 

557

​

1

​

​

Other revenues

​

 

20,634

​

 

26,826

​

 

(6,192)

​

(23)

​

​

Total revenues

​

$

292,304

​

$

268,743

​

$

23,561

​

9

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

145,538

​

$

136,507

​

$

9,031

​

7

%  

​

Amortization and depreciation

​

 

57,561

​

 

57,479

​

 

82

​

0

​

​

Provision (benefit) for credit losses

​

 

2,850

​

 

421

​

 

2,429

​

577

​

​

Interest expense on corporate debt

​

 

18,232

​

 

17,594

​

 

638

​

4

​

​

Goodwill impairment

​

​

-

​

​

14,000

​

​

(14,000)

​

(100)

​

​

Fair value adjustments to contingent consideration liabilities

​

​

(1,366)

​

​

(14,000)

​

​

12,634

​

90

​

​

Other operating expenses

​

 

31,984

​

 

28,529

​

 

3,455

​

12

​

​

Total expenses

​

$

254,799

​

$

240,530

​

$

14,269

​

6

​

​

Income from operations

​

$

37,505

​

$

28,213

​

$

9,292

​

33

​

​

Income tax expense

​

 

8,822

​

 

7,069

​

 

1,753

​

25

​

​

Net income before noncontrolling interests

​

$

28,683

​

$

21,144

​

$

7,539

​

36

​

​

Less: net income (loss) from noncontrolling interests

​

 

(119)

​

 

(314)

​

 

195

 

62

​

​

Walker & Dunlop net income

​

$

28,802

​

$

21,458

​

$

7,344

​

34

​

​

​

Three months ended September 30, 2024 compared to three months ended September 30, 2023

The increase in revenues was primarily driven by increases in loan origination and debt brokerage fees, net (“Origination fees”), the fair value of expected net cash flows from servicing, net (“MSR income”), servicing fees, and property sales broker fees, partially offset by decreases in investment management fees and other revenues. Origination fees increased primarily due to the increase in our debt financing volumes. MSR income increased mostly due to an increase in our Agency debt financing volume. Servicing fees increased primarily due to the increase in the size of our GSE servicing portfolio. The increase in property sales broker fees was largely driven by an increase in property sales volume. Investment management fees decreased largely as a result of a decline in asset management fees from our LIHTC operations. Other revenues decreased primarily due to lower syndication and other revenues from our LIHTC operations.

The increase in expenses was primarily due to increases in personnel expense, provision (benefit) for credit losses, fair value adjustments to contingent consideration, and other operating expenses, partially offset by a decrease in goodwill impairment. Personnel expense increased primarily due to an increase in commission costs due to the aforementioned increase in debt financing volume and origination fees. The increase in provision for credit losses was mainly attributable to an increase in the estimated fair value of the liability associated with a loan forbearance and indemnification agreement with Freddie Mac entered into during the first quarter of 2024. The period-over-period change in fair value adjustments to contingent consideration liabilities increased expenses as the fair value adjustments made to contingent consideration liabilities in the third quarter of 2024 were associated with a much smaller acquisition than those made in the prior year. Other operating expenses increased due to increases in professional fees, office expenses, and miscellaneous expenses. Goodwill impairment decreased due to a goodwill impairment triggering event that occurred in the third quarter of 2023, with no similar event in occurring in the third quarter of 2024.

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Table of Contents

The increase in income tax expense was primarily by the 33% increase in income from operations. Partially, offsetting the increase in income tax expense was a lower estimated annual effective tax rate for the three months ended September 30, 2024 compared to the three months ended September 30, 2023 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 – NINE MONTHS

CONSOLIDATED

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

​

​

 

​

​

​

September 30, 

​

Dollar

​

Percentage

 

​

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

  

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

​

Loan origination and debt brokerage fees, net

​

$

182,620

​

$

168,201

​

$

14,419

​

9

%  

​

Fair value of expected net cash flows from servicing, net

​

​

97,673

​

​

107,446

​

​

(9,773)

​

(9)

​

​

Servicing fees

​

 

242,683

​

 

232,027

​

 

10,656

​

5

​

​

Property sales broker fees

​

​

39,408

​

​

38,831

​

​

577

​

1

​

​

Investment management fees

​

​

40,086

​

​

44,844

​

​

(4,758)

​

(11)

​

​

Net warehouse interest income (expense)

​

 

(4,847)

​

 

(3,556)

​

 

(1,291)

​

(36)

​

​

Placement fees and other interest income

​

 

123,999

​

 

109,310

​

 

14,689

​

13

​

​

Other revenues

​

 

69,417

​

 

83,001

​

 

(13,584)

​

(16)

​

​

Total revenues

​

$

791,039

​

$

780,104

​

$

10,935

​

1

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

​

Personnel

​

$

390,068

​

$

388,425

​

$

1,643

​

0

%  

​

Amortization and depreciation

​

​

169,495

​

​

170,737

​

​

(1,242)

​

(1)

​

​

Provision (benefit) for credit losses

​

 

6,310

​

 

(11,088)

​

 

17,398

​

157

​

​

Interest expense on corporate debt

​

 

53,765

​

 

49,878

​

 

3,887

​

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

​

 

93,386

​

 

83,322

​

 

10,064

​

12

​

​

Total expenses

​

$

711,658

​

$

681,274

​

$

30,384

​

4

​

​

Income from operations

​

$

79,381

​

$

98,830

​

$

(19,449)

​

(20)

​

​

Income tax expense

​

 

19,588

​

 

24,695

​

 

(5,107)

​

(21)

​

​

Net income before noncontrolling interests

​

$

59,793

​

$

74,135

​

$

(14,342)

​

(19)

​

​

Less: net income (loss) from noncontrolling interests

​

 

(3,538)

​

 

(1,623)

​

 

(1,915)

 

(118)

​

​

Walker & Dunlop net income

​

$

63,331

​

$

75,758

​

$

(12,427)

​

(16)

​

​

​

​

​

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

The increase in revenues was largely driven by increases in origination fees, servicing fees, and placement fees and other interest income, partially offset by decreases in MSR income, investment management fees, and other revenues. Origination fees increased primarily due to the increase in debt financing volumes. Servicing fees increased primarily due to the increase in the size of our GSE servicing portfolio. Placement fees and other interest income increased primarily as a result of a higher placement fee rate due to a higher short-term interest rate environment. MSR income decreased largely due to a decrease in Fannie Mae debt financing volume. Investment management fees decreased largely as a result of a decline in asset management fees from our LIHTC operations. Other revenues declined primarily due to a decline in investment banking revenues and a decrease in syndication and other revenues from our LIHTC operations.

The increase in expenses was primarily due to a significant change in the provision (benefit) for credit losses and increases in fair value adjustments to contingent consideration liabilities, interest expense on corporate debt, and other operating expenses, partially offset by a decrease in goodwill impairment. Provision (benefit) for credit losses switched from a large benefit in 2023 to a provision in 2024. The provision for credit losses in 2024 was primarily attributable to losses related to the forbearance and indemnification agreements with Freddie Mac discussed in NOTE 2. The benefit for credit losses in 2023 was primarily due to the annual update of our historical loss rate that resulted in a large decrease to the calculated expected credit losses. The period-over-period change in fair value adjustments to contingent consideration liabilities increased expenses as the fair value adjustments made to contingent consideration liabilities in 2024 were associated with a much

41

Table of Contents

smaller acquisition than those made in the prior year. Interest expense on corporate debt increased largely due to an increase in the interest rate on the debt as its floating rate is tied to short-term interest rates, which were higher overall in 2024 than 2023. Other operating expenses increased largely as a result of increased travel and entertainment mostly related to our all-company meeting, with no comparable activity in 2023, software costs associated with automation efforts, and miscellaneous expenses. Goodwill impairment decreased due to a goodwill impairment triggering event that occurred in the third quarter of 2023, with no similar event in occurring in the third quarter of 2024.

The decrease in income tax expense was principally driven by the 20% decrease in income from operations and 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.

A discussion of the financial results for our segments is included further below.

Non-GAAP Financial Measure

To supplement our financial statements presented in accordance with GAAP, we use 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 corporate debt, and amortization and depreciation, adjusted for provision (benefit) for credit losses, net write-offs, stock-based incentive compensation charges, 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. In cases where the fair value adjustment of contingent consideration liabilities is a trigger for goodwill impairment, the goodwill impairment is netted against the fair value adjustment of contingent consideration liabilities and included as a net number. 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.

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 our GAAP financials, provides useful information to investors by offering:

●the ability to make more meaningful period-to-period comparisons of our ongoing operating results;
●the ability to better identify trends in our underlying business and perform related trend analyses; and
●a better understanding of how management plans and measures our underlying business.

We believe that adjusted EBITDA has limitations in that it does not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP and that adjusted EBITDA should only be used to evaluate our results of operations in conjunction with net income on both a consolidated and segment basis. Adjusted EBITDA is reconciled to net income as follows:

​

42

Table of Contents

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP

CONSOLIDATED

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

​

September 30, 

​

September 30, 

​

(in thousands)

    

2024

    

2023

    

2024

    

2023

    

Reconciliation of Walker & Dunlop Net Income to Adjusted EBITDA

​

​

​

​

​

​

​

​

​

​

Walker & Dunlop Net Income

​

$

28,802

​

$

21,458

​

$

63,331

​

$

75,758

​

Income tax expense

​

 

8,822

​

 

7,069

​

 

19,588

​

 

24,695

​

Interest expense on corporate debt

​

 

18,232

​

 

17,594

​

 

53,765

​

 

49,878

​

Amortization and depreciation

​

 

57,561

​

 

57,479

​

 

169,495

​

 

170,737

​

Provision (benefit) for credit losses

​

 

2,850

​

 

421

​

 

6,310

​

 

(11,088)

​

Net write-offs(1)

​

 

(468)

​

 

(2,008)

​

 

(468)

​

 

(8,041)

​

Stock-based compensation expense

​

 

6,532

​

 

7,427

​

 

19,624

​

 

22,468

​

MSR income

​

 

(43,426)

​

 

(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)

​

​

—

​

​

—

​

​

—

​

​

—

​

Adjusted EBITDA

​

$

78,905

​

$

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 adjustments 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.

​

The following tables present period-to-period comparisons of the components of adjusted EBITDA for the three- and nine-month periods ended September 30, 2024 and 2023.

​

ADJUSTED EBITDA – THREE MONTHS

CONSOLIDATED

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

Loan origination and debt brokerage fees, net

$

73,546

​

$

56,149

​

$

17,397

​

31

%  

Servicing fees

 

82,222

​

 

79,200

​

 

3,022

​

4

​

Property sales broker fees

​

19,322

​

​

16,862

​

​

2,460

​

15

​

Investment management fees

​

11,744

​

​

13,362

​

​

(1,618)

​

(12)

​

Net warehouse interest income (expense)

 

(2,147)

​

 

(2,031)

​

 

(116)

​

(6)

​

Placement fees and other interest income

 

43,557

​

 

43,000

​

 

557

​

1

​

Other revenues

 

20,753

​

 

27,140

​

 

(6,387)

​

(24)

​

Personnel

 

(139,006)

​

 

(129,080)

​

 

(9,926)

​

8

​

Net write-offs

 

(468)

​

 

(2,008)

​

 

1,540

​

(77)

​

Other operating expenses

 

(30,618)

​

 

(28,529)

​

 

(2,089)

​

7

​

Adjusted EBITDA

$

78,905

​

$

74,065

​

$

4,840

​

7

​

​

Three months September 30, 2024 compared to three months ended September 30, 2023

​

Origination fees increased due to the increase in debt financing volume. Servicing fees increased largely due to growth in the average servicing portfolio period over period. Property sales broker fees increased as a result of the growth in property sales volume. Investment management fees decreased due to a decline in asset management fees from our LIHTC operations. Other revenues decreased due to lower syndication and other revenues from our LIHTC operations. Net write-offs decreased due to the size of loss settlement, as we had a larger loss settlement on a loan in our at-risk portfolio during the third quarter of 2023 compared to the third quarter of 2024. Other operating expenses increased due to increases in professional fees, office expenses, and miscellaneous expenses.

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Table of Contents

ADJUSTED EBITDA – NINE MONTHS

CONSOLIDATED

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended 

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

Loan origination and debt brokerage fees, net

$

182,620

​

$

168,201

​

$

14,419

​

9

%  

Servicing fees

 

242,683

​

 

232,027

​

 

10,656

​

5

​

Property sales broker fees

​

39,408

​

​

38,831

​

​

577

​

1

​

Investment management fees

​

40,086

​

​

44,844

​

​

(4,758)

​

(11)

​

Net warehouse interest income (expense)

 

(4,847)

​

 

(3,556)

​

 

(1,291)

​

(36)

​

Placement fees and other interest income

 

123,999

​

 

109,310

​

 

14,689

​

13

​

Other revenues

 

72,955

​

 

84,624

​

 

(11,669)

​

(14)

​

Personnel

 

(370,444)

​

 

(365,957)

​

 

(4,487)

​

1

​

Net write-offs(1)

 

(468)

​

 

(8,041)

​

 

7,573

​

(94)

​

Other operating expenses

 

(92,020)

​

 

(87,742)

​

 

(4,278)

​

5

​

Adjusted EBITDA

$

233,972

​

$

212,541

​

$

21,431

​

10

​

(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.

​

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

Origination fees increased due to the increase in debt financing volume. Servicing fees increased largely due to growth in the average servicing portfolio period over period. Investment management fees decreased due to a decline in asset management fees from our LIHTC operations. Placement fees and other interest income increased largely as result of higher placement fee rates due to a higher short-term interest rate environment. Other revenues declined mostly due to decreases in investment banking revenues and syndication and other revenues from our LIHTC operations. Personnel expenses increased primarily due to an increase in commission costs. Net write-offs decreased due to the size and number of loss settlements, as we had two loss settlements with larger losses in 2023 compared to one small loss settlement in 2024. Other operating expenses increased largely as a result of increased (i) travel and entertainment mostly related to our all-company meeting, with no comparable activity in 2023, (ii) software costs associated with automation efforts, and (iii) miscellaneous expenses.

Financial Condition

Cash Flows from Operating Activities

Our cash flows from operating activities are generated from loan sales, servicing fees, placement fees, net warehouse interest income (expense), property sales broker fees, investment management fees, research subscription fees, investment banking advisory fees, and other income, net of loan originations and operating costs. Our cash flows from operations are impacted by the fees generated by our loan originations and property sales, the timing of loan closings, and the period of time loans are held for sale in the warehouse loan facility prior to delivery to the investor.

Cash Flows from Investing Activities

Our cash flows from investing activities include capital expenditures, the funding and repayment of loans held for investment, contributions to and distributions from joint ventures, purchases of equity-method investments, cash paid for acquisitions, and the purchase of available-for-sale (“AFS”) securities pledged to Fannie Mae.

Cash Flows from Financing Activities

We use our warehouse loan facilities and, when necessary, our corporate cash to fund loan closings, both for loans held for sale and loans held for investment. We believe that our current warehouse loan facilities are adequate to meet our loan origination needs. Historically, we have used a combination of long-term debt and cash flows from operating activities to fund large acquisitions. Additionally, we repurchase shares, pay cash dividends, make long-term debt principal payments, and repay short-term borrowings on a regular basis. We issue stock primarily in connection with the exercise of stock options (cash inflow) and occasionally for acquisitions (non-cash transactions).

44

Table of Contents

Nine Months Ended September 30, 2024 Compared to Nine Months Ended September 30, 2023

The following table presents a period-to-period comparison of the significant components of cash flows for the nine months ended September 30, 2023 and 2024.

SIGNIFICANT COMPONENTS OF CASH FLOWS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Net cash provided by (used in) operating activities

​

$

(401,458)

​

$

(332,412)

​

$

(69,046)

​

21

%  

Net cash provided by (used in) investing activities

​

 

(37,143)

​

 

146,569

​

 

(183,712)

​

(125)

​

Net cash provided by (used in) financing activities

​

 

313,838

​

 

228,207

​

 

85,631

​

38

​

Total of cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period

​

​

266,640

​

​

300,647

​

​

(34,007)

​

(11)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash provided by (used in) operating activities

​

​

​

​

​

​

​

​

​

​

​

​

Net receipt (use) of cash for loan origination activity

​

$

(441,774)

​

$

(378,891)

​

$

(62,883)

​

17

%  

Net cash provided by (used in) operating activities, excluding loan origination activity

​

​

40,316

​

​

46,479

​

​

(6,163)

​

(13)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash provided by (used in) investing activities

​

​

​

​

​

​

​

​

​

​

​

​

Purchases of pledged AFS securities

​

$

(20,900)

​

$

—

​

$

(20,900)

​

N/A

%  

Originations and repurchase of loans held for investment

​

​

(25,619)

​

​

(366)

​

​

(25,253)

​

6,900

​

Principal collected on loans held for investment

​

 

17,659

​

 

161,167

​

 

(143,508)

​

(89)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Cash provided by from (used in) financing activities

​

​

​

​

​

​

​

​

​

​

​

​

Borrowings (repayments) of warehouse notes payable, net

​

$

452,497

​

$

387,109

​

$

65,388

​

17

%  

Repayments of interim warehouse notes payable

​

 

(13,884)

​

​

(119,835)

​

 

105,951

​

(88)

​

Repayments of notes payable

​

​

(6,013)

​

​

(120,046)

​

​

114,033

​

(95)

​

Repurchase of common stock

​

​

(12,012)

​

​

(18,928)

​

​

6,916

​

(37)

​

Borrowings of note payable

​

​

—

​

​

196,000

​

​

(196,000)

​

(100)

​

Payment of contingent consideration

​

​

(34,317)

​

​

(26,090)

​

​

(8,227)

​

32

​

Purchase of noncontrolling interest

​

​

(5,000)

​

​

—

​

​

(5,000)

​

N/A

​

​

Operating Activities

Cash provided by (used in) operating activities changed due to:

(i)Loan origination activity. Agency loans originated are held for short periods of time, generally less than 60 days, and impact cash flows presented as of a point in time due to the timing difference between the date of origination and date of delivery. The increase in net cash used in loan origination activities is primarily attributable to originations outpacing sales by $441.8 million in 2024 compared to $378.9 million in 2023.
(ii)Other activities. Cash flows provided by other operating activities were $40.3 million in 2024, down from $46.5 million in 2023. The primary reason for the change was a change in the adjustment for credit losses. The provision (benefit) for credit losses was a $6.3 million positive adjustment for the nine months ended September 30, 2024 compared to an $11.1 million negative adjustment for the nine months ended September 30, 2023. This positive benefit to cash from operating activities was partially offset by a $9.2 million increase in other operating activities, net and a $14.3 million decrease in net income.

Investing Activities

Cash provided by (used in) investing activities changed due to:

(i)  AFS securities. Purchases of AFS securities increased during 2024 as we reinvested proceeds from the prepayment of AFS securities.

45

Table of Contents

(ii)  Principal collected on loans held for investment. The principal collected on loans held of investment decreased, as we have been winding down our Interim Loan Program (“ILP”) loans over the past several years. As of the beginning of 2024, we only had two ILP loans compared to nine loans as of the beginning of 2023.

(iii)Originations and repurchase of loans held for investment. The increase was due to an Agency loan repurchase during 2024 with no comparable activity in 2023 and the origination of a short-term bridge loan during 2024 compared to minimal originations in 2023.

Financing Activities

Cash provided by (used in) financing activities changed due to:

(i)  Net borrowings of warehouse notes payable. The increase was due to the aforementioned increase in cash used in loan origination activity.

(ii) Repayments of interim warehouse notes payable. The decrease was due to the aforementioned decrease in net principal collected on loans held for investment.

(iii)Repayments of notes payable. In 2023, we had an additional borrowing under our Term Loan (as defined in Liquidity and Capital Resources below), a portion of which was used to repay a note payable at one of our subsidiaries, with no comparable activity in 2024. The activity in 2024 represents routine quarterly principal payments on our Term Loan.
(iv)Repurchase of common stock. The decrease in repurchases of common stock was related to a decrease in the number and value of employee stock vesting events related to previously issued equity grants under our various share-based compensation plans.

Partially offsetting the aforementioned changes that increased cash were the following activities that decreased cash:

(i)  Borrowings of note payable. The decrease was attributable to an additional borrowing under our Term Loan (as discussed in Liquidity and Capital Resources below) in 2023, with no comparable activity in 2024.

(ii) Payment of contingent consideration. The increase was due to earnout targets being met by one of our larger contingent consideration liabilities at a higher rate in 2024 than in 2023.

(iii) Purchase of noncontrolling interest. This was a unique transaction in 2024 with no comparable activity in 2023.

Segment Results

The Company is managed based on our three reportable segments: (i) Capital Markets, (ii) Servicing & Asset Management, and (iii) Corporate. The segment results below are intended to present each of the reportable segments on a stand-alone basis.

​

​

46

Table of Contents

Capital Markets

​

SUPPLEMENTAL OPERATING DATA

CAPITAL MARKETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

​

​

​

​

September 30, 

​

Dollar

    

Percentage

(in thousands)

    

2024

    

2023

​

Change

​

Change

Transaction Volume

​

​

​

​

​

​

​

​

​

​

​

​

Components of Debt Financing Volume

​

​

​

​

​

​

​

​

​

​

​

​

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

​

Total Debt Financing Volume

​

$

7,847,557

​

$

6,047,394

​

$

1,800,163

​

30

%  

Property sales volume

​

​

3,602,675

​

​

2,508,073

​

​

1,094,602

​

44

​

Total Transaction Volume

​

$

11,450,232

​

$

8,555,467

​

$

2,894,765

​

34

%  

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Performance Metrics (in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

21,830

​

$

7,050

​

​

14,780

​

210

​

Adjusted EBITDA(2)

​

​

(4,601)

​

​

(15,704)

​

​

11,103

​

71

​

Operating margin

​

​

20

%

​

8

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Revenue Metrics (as a percentage of debt financing volume)

​

​

​

​

​

​

​

​

​

Origination fees

​

​

0.93

%  

​

0.93

%  

​

​

​

​

​

MSR income

​

​

0.55

​

​

0.58

​

​

​

​

​

​

MSR income, as a percentage of Agency debt financing volume

​

​

1.14

​

​

1.22

​

​

​

 

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

​

​

​

​

September 30, 

​

Dollar

    

Percentage

(in thousands)

​

2024

    

2023

    

Change

​

Change

Transaction Volume

​

​

​

​

​

​

​

​

​

​

​

​

Components of Debt Financing Volume

​

​

​

​

​

​

​

​

​

​

​

​

Fannie Mae

​

$

4,415,528

​

$

5,328,992

​

$

(913,464)

​

(17)

%  

Freddie Mac

​

 

3,674,055

​

 

3,260,672

​

​

413,383

​

13

​

Ginnie Mae ̶ HUD

​

 

472,092

​

 

361,929

​

​

110,163

​

30

​

Brokered(1)

​

 

11,200,133

​

 

8,829,434

​

 

2,370,699

​

27

​

Total Debt Financing Volume

​

$

19,761,808

​

$

17,781,027

​

$

1,980,781

​

11

%  

Property sales volume

​

​

6,300,609

​

​

5,907,138

​

​

393,471

​

7

​

Total Transaction Volume

​

$

26,062,417

​

$

23,688,165

​

$

2,374,252

​

10

%  

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Performance Metrics (in thousands)

​

​

​

​

​

​

​

​

​

​

​

​

Net income

​

$

26,167

​

$

23,661

​

​

2,506

​

11

%

Adjusted EBITDA(2)

​

​

(32,431)

​

​

(44,725)

​

​

12,294

​

27

​

Operating margin

​

​

10

%

​

10

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Key Revenue Metrics (as a percentage of debt financing volume)

​

​

​

​

​

​

​

​

​

Origination fees

​

​

0.91

%  

​

0.94

%  

​

​

​

​

​

MSR income

​

​

0.49

​

​

0.60

​

​

​

​

​

​

MSR income, as a percentage of Agency debt financing volume

​

​

1.14

​

​

1.20

​

​

​

​

​

​

(1)Brokered transactions for life insurance companies, commercial banks, and other capital sources.
(2)This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure.”

​

47

Table of Contents

FINANCIAL RESULTS – THREE MONTHS

CAPITAL MARKETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

 

​

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

Origination fees

​

$

72,723

​

$

56,149

​

$

16,574

​

30

%  

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

​

 

(2,798)

​

 

(2,565)

​

 

(233)

​

(9)

​

Other revenues

​

 

11,039

​

 

11,875

​

 

(836)

​

(7)

​

Total revenues

​

$

143,712

​

$

117,696

​

$

26,016

​

22

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

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)

​

Net income (loss)

​

$

21,830

​

$

7,050

​

$

14,780

​

210

​

​

FINANCIAL RESULTS – NINE MONTHS

CAPITAL MARKETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

​

​

 

​

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

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), loans held for sale

​

 

(6,322)

​

 

(7,006)

​

 

684

​

10

​

Other revenues

​

 

32,756

​

 

40,735

​

 

(7,979)

​

(20)

​

Total revenues

​

$

343,779

​

$

347,685

​

$

(3,906)

​

(1)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

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)

​

Net income (loss)

​

$

26,167

​

$

23,661

​

$

2,506

​

11

​

48

Table of Contents

Revenues

Origination fees and MSR income. The following tables provide additional information that helps explain changes in origination fees and MSR income period over period:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

For the nine months ended

​

​

​

September 30, 

​

​

September 30, 

​

Debt Financing Volume by Product Type

​

2024

​

​

2023

​

​

2024

​

​

2023

​

Fannie Mae

​

26

%

​

29

%

​

22

%

​

30

%

Freddie Mac

​

20

​

​

18

​

​

19

​

​

18

​

Ginnie Mae ̶ HUD

​

3

​

​

1

​

​

2

​

​

2

​

Brokered

​

51

​

​

52

​

​

57

​

​

50

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

September 30, 

​

September 30, 

​

Mortgage Banking Details (basis points)

2024

​

2023

​

2024

​

2023

​

Origination Fee Rate (1)

​

93

​

​

93

​

​

91

​

​

94

​

Basis Point Change

​

-

​

​

​

​

​

(3)

​

​

​

​

Percentage Change

​

-

%

​

​

​

​

(3)

%

​

​

​

MSR Rate (2)

​

55

​

​

58

​

​

49

​

​

60

​

Basis Point Change

​

(3)

​

​

​

​

​

(11)

​

​

​

​

Percentage Change

​

(5)

%

​

​

​

​

(18)

%

​

​

​

Agency MSR Rate (3)

​

114

​

​

122

​

​

114

​

​

120

​

Basis Point Change

​

(8)

​

​

​

​

​

(6)

​

​

​

​

Percentage Change

​

(7)

%

​

​

​

​

(5)

%

​

​

​

(1)Origination fees as a percentage of total debt financing volume.
(2)MSR income as a percentage of total debt financing volume, excluding the income and debt financing volume from principal lending and investing.
(3)MSR income as a percentage of Agency debt financing volume.

​

For the three months ended September 30, 2024, the increase in origination fees was the result of the increase in debt financing volume.

For the nine months ended September 30, 2024, the increase in origination fees was primarily driven by the 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. See the “Overview of Current Business Environment” section above for a detailed discussion of the factors driving the change in debt financing activity.

For the three months ended September 30, 2024, the increase in our MSR income was driven by the increase in Agency debt financing volume, partially offset by an 8-basis-point decrease in the Agency MSR rate, largely driven by a decrease in FNMA loans as a percentage of Agency debt financing volume during the quarter.

For the nine months ended September 30, 2024, the decreases in MSR income and Agency MSR rate were driven primarily by the 17% decrease in Fannie Mae debt financing volume shown above. Fannie Mae volume as a percentage of total transaction volume decreased from 30% in 2023 to 22% in 2024.  Fannie Mae loans produce higher MSR income compared to our other product types, due to their higher weighted average servicing fees.

Property sales broker fees. For the three months ended September 30, 2024, the increase was the result of the 44% increase in property sales volumes, partially offset by a decrease in the fee margin.

Other revenues. For the nine months ended September 30, 2024, the decrease was principally due to an $8.3 million decrease in investment banking revenues due to the closing of the largest investment banking advisory transaction in Company history during 2023 with no comparable activity in 2024.

49

Table of Contents

Expenses

Personnel. For the three months ended September 30, 2024, the increase was due to a $5.8 million increase in commission costs due to higher origination fees and property sales broker fees and a $1.8 million increase in subjective bonus compensation expense due to the overall company performance during the quarter.

For the nine months ended September 30, 2024, the decrease was primarily the result of a $3.6 million decrease in salaries and benefits and stock compensation and a $2.6 million decrease in the subjective bonus compensation expense, all of which was primarily due to lower average segment headcount, partially offset a $2.4 million increase in commission costs due to higher origination fees.

Interest expense on corporate debt. 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. The discussion of our consolidated results above has additional information related to the increase in interest expense on corporate debt.

Goodwill Impairment. For both the three and nine months ended September 30, 2024, goodwill impairment decreased due to activity in fair value adjustments to contingent consideration liabilities. The activity in 2023 was a triggering event for goodwill impairment assessment. There were no fair value adjustments to contingent consideration liabilities in 2024 that were triggering events for a goodwill impairment assessment.  

​

Fair value adjustments to contingent consideration liabilities. For both the three and nine months ended September 30, 2024, the fair value adjustments made to the contingent consideration liabilities in 2024 were associated with a much smaller acquisition than those made in the prior year, leading to the increase in expenses year over year.

​

Income tax expense (benefit). Income tax expense (benefit) 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.

Non-GAAP Financial Measure

​

A reconciliation of adjusted EBITDA for our CM segment is presented below. Our segment-level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure. CM adjusted EBITDA is reconciled to net income as follows:

​

50

Table of Contents

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP

CAPITAL MARKETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

September 30, 

​

September 30, 

(in thousands)

    

2024

    

2023

    

2024

    

2023

Reconciliation of Net Income (Loss) to Adjusted EBITDA

​

​

​

​

​

​

​

​

​

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)

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

​

The following tables present period-to-period comparisons of the components of CM adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.

​

ADJUSTED EBITDA – THREE MONTHS

CAPITAL MARKETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

Origination fees

$

72,723

​

$

56,149

​

$

16,574

​

30

%  

Property sales broker fees

​

19,322

​

​

16,862

​

​

2,460

​

15

​

Net warehouse interest income (expense), loans held for sale

 

(2,798)

​

 

(2,565)

​

 

(233)

​

(9)

​

Other revenues

 

11,013

​

 

11,792

​

 

(779)

​

(7)

​

Personnel

 

(101,090)

​

 

(93,749)

​

 

(7,341)

​

8

​

Other operating expenses

 

(3,771)

​

 

(4,193)

​

 

422

​

(10)

​

Adjusted EBITDA

$

(4,601)

​

$

(15,704)

​

$

11,103

​

71

​

​

ADJUSTED EBITDA – NINE MONTHS

CAPITAL MARKETS

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended 

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

Origination fees

$

180,264

​

$

167,679

​

$

12,585

​

8

%  

Property sales broker fees

​

39,408

​

​

38,831

​

​

577

​

1

​

Net warehouse interest income (expense), loans held for sale

 

(6,322)

​

 

(7,006)

​

 

684

​

10

​

Other revenues

 

32,403

​

 

38,994

​

 

(6,591)

​

(17)

​

Personnel

 

(264,719)

​

 

(268,186)

​

 

3,467

​

(1)

​

Other operating expenses

 

(13,465)

​

 

(15,037)

​

 

1,572

​

(10)

​

Adjusted EBITDA

$

(32,431)

​

$

(44,725)

​

$

12,294

​

27

​

​

Three months ended September 30, 2024 compared to three months ended September 30, 2023

​

Origination fees increased due to an increase in debt financing volume. Property sales broker fees increased due to the increase in property sales volume. Personnel expense increased due to increased commission costs and subjective bonus expense.

​

51

Table of Contents

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

​

Origination fees increased due to an increase in debt financing volume. The decrease in other revenues was principally due to a decrease in investment banking revenues. The decrease in personnel expense was primarily due to lower salaries and benefits and subjective bonus compensation due to lower segment headcount, partially offset by an increase in commissions.  

​

Servicing & Asset Management

​

SUPPLEMENTAL OPERATING DATA

SERVICING & ASSET MANAGEMENT

​

​

​

​

​

​

​

​

​

​

​

​

​

​

(in thousands)

​

As of September 30, 

​

Dollar

    

Percentage

Managed Portfolio

    

2024

    

2023

    

Change

​

Change

Components of Servicing Portfolio

​

​

​

​

​

​

​

​

​

​

​

​

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 (1)

​

 

17,156,810

​

 

17,091,925

​

 

64,885

​

0

​

Principal Lending and Investing (2)

​

 

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

%  

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

​

​

(in thousands)

​

September 30, 

​

Dollar

    

Percentage

Key Volume and Performance Metrics

​

2024

​

2023

​

Change

​

Change

Equity syndication volume(3)

​

$

12,155

​

$

54,119

​

$

(41,964)

​

(78)

%  

Principal Lending and Investing debt financing volume(4)

​

​

165,875

​

​

—

​

​

165,875

​

N/A

​

Net income

​

​

37,482

​

​

45,427

​

​

(7,945)

​

(17)

​

Adjusted EBITDA(5)

​

​

117,455

​

​

124,849

​

​

(7,394)

​

(6)

​

Operating margin

​

​

33

%

​

41

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

​

​

​

​

(in thousands)

​

September 30, 

​

Dollar

    

Percentage

Key Volume and Performance Metrics

​

2024

​

2023

​

Change

​

Change

Equity syndication volume(3)

​

$

232,170

​

$

461,212

​

$

(229,042)

​

(50)

%  

Principal Lending and Investing volume(4)

​

​

396,650

​

​

—

​

​

396,650

​

N/A

​

Net income

​

​

121,197

​

​

132,243

​

​

(11,046)

​

(8)

​

Adjusted EBITDA(5)

​

​

361,614

​

​

346,283

​

​

15,331

​

4

​

Operating margin

​

​

36

%

​

41

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of September 30, 

Key Servicing Portfolio Metrics

​

2024

    

2023

Custodial escrow deposit balance (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

​

​

52

Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of September 30, 

(in thousands)

​

2024

​

2023

Components of equity and assets under management

​

​

Equity under management

​

​

Assets under management

​

​

Equity under management

​

​

Assets under management

LIHTC

​

$

6,838,113

​

$

15,772,089

​

$

6,798,263

​

$

15,248,530

Equity funds

​

​

975,964

​

​

975,964

​

​

829,662

​

​

829,662

Debt funds(6)

​

​

782,436

​

​

1,462,399

​

​

671,375

​

​

1,256,685

Total

​

$

8,596,513

​

$

18,210,452

​

$

8,299,300

​

$

17,334,877

​

​

​

​

​

​

​

​

​

​

​

​

​

(1)Brokered loans serviced primarily for life insurance companies, commercial banks, and other capital sources.
(2)Consists of interim loans not managed for the Interim Program JV.
(3)Amount of equity called and syndicated into LIHTC funds.
(4)Comprised solely of WDIP separate account originations.
(5)This is a non-GAAP financial measure. For more information on adjusted EBITDA, refer to the section below titled “Non-GAAP Financial Measure”.
(6)As of September 30, 2024, included $105.4 million of equity under management and $424.8 million of assets under management of Interim program JV loans. The remainder consisted of WDIP debt funds. As of September 30, 2023, includes $151.0 million of equity under management and $736.3 million of assets under management of Interim program JV loans. The remainder consisted of WDIP debt funds.

​

FINANCIAL RESULTS – THREE MONTHS

SERVICING & ASSET MANAGEMENT

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

 

​

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

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 (expense), loans held for investment

​

 

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)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

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

​

Net 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

​

Net income (loss)

​

$

37,482

​

$

45,427

​

$

(7,945)

​

(17)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

53

Table of Contents

FINANCIAL RESULTS – NINE MONTHS

SERVICING & ASSET MANAGEMENT

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

​

​

 

​

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

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 (expense), loans held for investment

​

 

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

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)

​

Net income (loss)

​

$

121,197

​

$

132,243

​

$

(11,046)

​

(8)

​

​

Revenues

Servicing fees. For the three and nine months ended September 30, 2024, the increase was primarily attributable to an increase in the average servicing portfolio period over period as shown below, slightly offset by a decline in the average servicing fee rate. The increase in the average servicing portfolio was driven by the $3.2 billion increase in Fannie Mae and the $1.4 billion increase in Freddie Mac loans serviced over the past year. The decrease in the average servicing fee rate was the result of the WASF on new debt financing volume being lower than the WASF for the loans paid off in the portfolio over the past year.

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

September 30, 

​

September 30, 

​

Servicing Fees Details (in thousands)

2024

​

2023

​

2024

​

2023

​

Average Servicing Portfolio

$

133,563,794

​

$

127,971,088

​

$

132,381,836

​

$

125,741,670

​

Dollar Change

$

5,592,706

​

​

​

​

$

6,640,166

​

​

​

​

Percentage Change

​

4

%

​

​

​

​

5

%

​

​

​

Average Servicing Fee (basis points)

​

24.1

​

​

24.2

​

​

24.1

​

​

24.3

​

Basis Point Change

​

(0.1)

​

​

​

​

​

(0.2)

​

​

​

​

Percentage Change

​

0

%

​

​

​

​

(1)

%

​

​

​

​

Investment management fees. For the three months ended September 30, 2024, investment management fees declined as investment management fees from our LIHTC operations decreased by $3.5 million, partially offset by a $1.9 million increase in investment management fees from our Principal Investing funds. For the nine months ended September 30, 2024, investment management fees decreased primarily due to a decline in investment management fees from our LIHTC operations of $5.6 million. The declines in investment management fees from our LIHTC funds were the result of lower accruals for the fees due to lower anticipated revenues for the year.

Placement fees and other interest income. For the nine months ended September 30, 2024, the increase was driven primarily by an increase in our placement fees on escrow deposits of $11.1 million combined with a $1.6 million increase in investment interest income from

54

Table of Contents

our pledged securities. The placement fee rates on escrow deposits increased as a result of a higher short-term interest rate environment in 2024 compared to the same period in 2023. Short-term interest rates were still rising in the first half of 2023 before stabilizing in the second half of the year and into 2024. Additionally, the average balance of escrow deposits increased 4% year over year.

Other revenues. For the three months ended September 30, 2024, other revenues decreased primarily due to a $3.0 million decrease in income from equity method investments, a $4.2 million reduction in 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.

For the nine months ended September 30, 2024, the other revenues decrease was largely driven by a $9.2 million decrease in syndication and other revenues related to a 50% decrease in gross equity raised year over year as the closing of one of our LIHTC funds was delayed in the third quarter of 2024, partially offset by a $1.1 million increase in income from equity method investments.

Expenses

​

Personnel. For the three and nine months ended September 30, 2024, personnel expense rose due to increases of $2.5 million and $5.4 million, respectively, in salaries and benefits due to increases in average segment headcount. For the three months ended September 30, 2024 only, the increase was also due to an increase in commission costs increased by $1.4 million. The increase in commission costs was due to the increased volume of committed investments in tax credit equity closed during the quarter that are awaiting syndication into LIHTC funds.

Provision (benefit) for credit losses. For the three months ended September 30, 2024, provision (benefit) for credit losses increased primarily due to a $3.0 million increase in the fair value of our forbearance and indemnification agreement with Freddie Mac, with no comparable activity in 2023.

For the nine months ended September 30, 2024, provision (benefit) for credit losses switched from a large benefit in 2023 to a provision in 2024. The provision for credit losses in 2024 was primarily attributable to a $7.6 million provision related to the forbearance and indemnification agreements discussed in NOTE 2, with no comparable activity in 2023. The benefit for credit losses in 2023 was primarily due to the annual update of our historical loss rate that resulted in a large decrease to the calculated expected credit losses. The 2023 update resulted in the loss data from earlier periods within the historical lookback period falling off and being replaced with a period with significantly lower loss data, resulting in the historical loss rate decreasing substantially.

Interest expense on corporate debt. 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. The discussion of our condensed consolidated results above has additional information related to the increase in interest expense on corporate debt.

Other operating expenses. For the three and nine months ended September 30, 2024, the increase was primarily the result of $1.9 million and $2.1 million, respectively, of costs associated with operating properties that we control through loan repurchase or indemnification, with no comparable activity in the prior year.

Income tax expense. 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.

Non-GAAP Financial Measure

A reconciliation of adjusted EBITDA for our SAM segment is presented below. Our segment-level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided above in our Consolidated Results of Operations—Non-GAAP Financial Measure. SAM adjusted EBITDA is reconciled to net income as follows:

​

55

Table of Contents

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP

SERVICING & ASSET MANAGEMENT

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

September 30, 

​

September 30, 

(in thousands)

    

2024

    

2023

    

2024

    

2023

Reconciliation of Net Income (loss) to Adjusted EBITDA

​

​

​

​

​

​

​

​

​

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 (1)

​

​

(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

(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.

​

The following tables present period-to-period comparisons of the components of SAM adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.

​

ADJUSTED EBITDA – THREE MONTHS

SERVICING & ASSET MANAGEMENT

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

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 (expense), loans held for investment

 

651

​

 

534

​

 

117

​

22

​

Placement fees and other interest income

 

40,299

​

 

39,475

​

 

824

​

2

​

Other revenues

 

9,290

​

 

15,966

​

 

(6,676)

​

(42)

​

Personnel

 

(20,495)

​

 

(16,641)

​

 

(3,854)

​

23

​

Net write-offs

​

(468)

​

​

(2,008)

​

​

1,540

​

(77)

​

Other operating expenses

 

(6,611)

​

 

(5,039)

​

 

(1,572)

​

31

​

Adjusted EBITDA

$

117,455

​

$

124,849

​

$

(7,394)

​

(6)

​

​

ADJUSTED EBITDA – NINE MONTHS

SERVICING & ASSET MANAGEMENT

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended 

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

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, loans held for investment

 

1,475

​

 

3,450

​

 

(1,975)

​

(57)

​

Placement fees and other interest income

 

113,072

​

 

100,636

​

 

12,436

​

12

​

Other revenues

 

38,570

​

 

46,061

​

 

(7,491)

​

(16)

​

Personnel

 

(57,698)

​

 

(52,331)

​

 

(5,367)

​

10

​

Net write-offs

 

(468)

​

 

(8,041)

​

 

7,573

​

(94)

​

Other operating expenses

 

(18,462)

​

 

(20,885)

​

 

2,423

​

(12)

​

Adjusted EBITDA

$

361,614

​

$

346,283

​

$

15,331

​

4

​

56

Table of Contents

Three and nine months ended September 30, 2024 compared to three and nine months ended September 30, 2023

​

For both the three and nine months ended September 30, 2024, servicing fees increased due to growth in the average servicing portfolio period over period as a result of loan originations. Investment management fees declined principally due to a decrease in investment management fees from our LIHTC operations. Other revenues decreased primarily due to a reduction in syndication and other revenues related to lower gross equity raised year over year. Personnel expense rose due to increases in salaries and benefits due to increases in average segment headcount. For the three months ended September 30, 2024 only, the increase was also attributable to an increase in commission costs. Net write-offs decreased due to the size and number of loans charged off in 2023 compared to 2024. Other operating expenses increased due to costs associated with operating properties that we control through loan repurchase or indemnification.

​

For the nine months ended September 30, 2024 only, placement fees and other interest income increased largely due to an increase in placement fee rates.

​

Corporate

​

FINANCIAL RESULTS – THREE MONTHS

CORPORATE

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

 

​

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

Other interest income

​

$

3,258

​

$

3,525

​

$

(267)

​

(8)

%  

Other revenues

​

 

450

​

 

(618)

​

 

1,068

​

173

​

Total revenues

​

$

3,708

​

$

2,907

​

$

801

​

28

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

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

​

Net income (loss)

​

$

(30,510)

​

$

(31,019)

​

$

509

​

2

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjusted EBITDA (1)

​

$

(33,949)

​

$

(35,080)

​

$

1,131

​

3

%

​

​

​

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Table of Contents

FINANCIAL RESULTS – NINE MONTHS

CORPORATE

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended

​

​

​

​

 

​

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

    

2024

    

2023

    

Change

    

Change

 

Revenues

​

​

​

​

​

​

​

​

​

​

​

​

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

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Expenses

​

​

​

​

​

​

​

​

​

​

​

​

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

​

Net income (loss) from operations

​

$

(111,564)

​

$

(106,844)

​

$

(4,720)

​

(4)

​

Income tax expense (benefit)

​

 

(27,531)

​

 

(26,698)

​

 

(833)

​

(3)

​

Net income (loss)

​

$

(84,033)

​

$

(80,146)

​

$

(3,887)

​

(5)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Adjusted EBITDA (1)

​

$

(95,211)

​

$

(89,017)

​

$

(6,194)

​

(7)

%

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

​

Revenues

Other interest income. For the nine months ended September 30, 2024, the increase was due to an increase in the interest rates we earn on our cash deposits held by our corporate segment as interest rates continued to rise throughout 2023 and remained elevated in 2024.

Other revenues. For the nine months ended September 30, 2024, the increase was largely due to an increase in income from equity-method investments.

Expenses

Personnel. For the three months ended September 30, 2024, the decrease was primarily due to a $4.4 million decrease in subjective bonuses tied to company performance, principally for our executive officers, partially offset by a $1.7 million increase in salaries and benefits due to a 2% increase in average segment headcount.

Interest expense on corporate debt. 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. The discussion of our consolidated results above has additional information related to the increase in interest expense on corporate debt.

Other operating expenses. For the nine months ended September 30, 2024, the increase was primarily driven by increases in travel and entertainment, software, and miscellaneous expenses.

Income tax expense (benefit). Income tax expense (benefit) 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.

Non-GAAP Financial Measure

A reconciliation of adjusted EBITDA for our Corporate segment is presented below. Our segment-level adjusted EBITDA represents the segment portion of consolidated adjusted EBITDA. A detailed description and reconciliation of consolidated adjusted EBITDA is provided

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above in our Consolidated Results of Operations—Non-GAAP Financial Measure. Corporate adjusted EBITDA is reconciled to net income as follows:

ADJUSTED FINANCIAL MEASURE RECONCILIATION TO GAAP

CORPORATE

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

For the nine months ended

​

​

September 30, 

​

September 30, 

(in thousands)

    

2024

    

2023

    

2024

    

2023

Reconciliation of Net Income (loss) to Adjusted EBITDA

​

​

​

​

​

​

​

​

​

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)

​

The following tables present period-to-period comparisons of the components of Corporate adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023.

​

ADJUSTED EBITDA – THREE MONTHS

CORPORATE

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the three months ended

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

Other interest income

$

3,258

​

$

3,525

​

$

(267)

​

(8)

%  

Other revenues

 

450

​

 

(618)

​

 

1,068

​

173

​

Personnel

 

(17,421)

​

 

(18,690)

​

 

1,269

​

(7)

​

Other operating expenses

 

(20,236)

​

 

(19,297)

​

 

(939)

​

5

​

Adjusted EBITDA

$

(33,949)

​

$

(35,080)

​

$

1,131

​

3

​

​

ADJUSTED EBITDA – NINE MONTHS

CORPORATE

​

​

​

​

​

​

​

​

​

​

​

​

​

​

For the nine months ended 

​

​

​

​

​

 

​

September 30, 

​

Dollar

​

Percentage

 

(in thousands)

2024

    

2023

    

Change

    

Change

 

Other interest income

 

10,927

​

 

8,674

​

 

2,253

​

26

%  

Other revenues

 

1,982

​

 

(431)

​

 

2,413

​

560

​

Personnel

 

(48,027)

​

 

(45,440)

​

 

(2,587)

​

6

​

Other operating expenses

 

(60,093)

​

 

(51,820)

​

 

(8,273)

​

16

​

Adjusted EBITDA

$

(95,211)

​

$

(89,017)

​

$

(6,194)

​

(7)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three months ended September 30, 2024 compared to three months ended September 30, 2023

​

There were no significant drivers of change in Adjusted EBITDA for the three months ended September 30, 2024 compared to the three months ended September 30, 2023.

​

Nine months ended September 30, 2024 compared to nine months ended September 30, 2023

​

Other interest income increased primarily due to an increase in the interest rates on our cash deposits. Other revenues increased primarily due to an increase in income from equity method investments. The increase in personnel expense was primarily due to a higher subjective bonus tied to company performance, principally for our executive officers. The increase in other operating expenses was primarily driven by increases in travel and entertainment, software, and miscellaneous expenses.

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​

Liquidity and Capital Resources

Uses of Liquidity, Cash and Cash Equivalents

Our significant recurring cash flow requirements consist of liquidity to (i) fund loans held for sale; (ii) pay cash dividends; (iii) fund our portion of the equity necessary to support equity-method investments; (iv) fund investments in properties to be syndicated to LIHTC investment funds that we will asset-manage; (v) make payments related to earnouts from acquisitions, (vi) meet working capital needs to support our day-to-day operations, including debt service payments, joint venture development partnership contributions, advances for servicing and loan repurchases and payments for salaries, commissions, and income taxes, and (vii) meet working capital to satisfy collateral requirements for our Fannie Mae DUS risk-sharing obligations and to meet the operational liquidity requirements of Fannie Mae, Freddie Mac, HUD, Ginnie Mae, and our warehouse facility lenders.

​

Fannie Mae has established benchmark standards for capital adequacy and reserves the right to terminate our servicing authority for all or some of the portfolio if, at any time, it determines that our financial condition is not adequate to support our obligations under the DUS agreement. We are required to maintain acceptable net worth as defined in the standards, and we satisfied the requirements as of September 30, 2024. The net worth requirement is derived primarily from unpaid balances on Fannie Mae loans and the level of risk-sharing. As of September 30, 2024, the net worth requirement was $318.6 million, and our net worth was $936.7 million, as measured at our wholly-owned operating subsidiary, Walker & Dunlop, LLC. As of September 30, 2024, we were required to maintain at least $63.4 million of liquid assets to meet our operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, Ginnie Mae and our warehouse facility lenders. As of September 30, 2024, we had operational liquidity of $155.7 million, as measured at our wholly-owned operating subsidiary, Walker & Dunlop, LLC.

We paid a cash dividend of $0.65 per share during the third quarter of 2024, which is 3% higher than the quarterly dividend paid in the third quarter of 2023. 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 our restricted and unrestricted common stock as of November 22, 2024.

In February 2024, our Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million of shares of our common stock over a 12-month period beginning February 23, 2024. Through September 30, 2024, we have not repurchased any shares under the 2024 stock repurchase program and have $75.0 million of remaining capacity under that program.

Historically, our cash flows from operations and warehouse facilities have been sufficient to enable us to meet our short-term liquidity needs and other funding requirements. We believe that cash flows from operations will continue to be sufficient for us to meet our current obligations for the foreseeable future.

Restricted Cash and Pledged Securities

Restricted cash consists primarily of good faith deposits held on behalf of borrowers between the time we enter into a loan commitment with the borrower and the investor purchases the loan. We are generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program, which is an off-balance sheet arrangement. We are required to secure this obligation by assigning collateral to Fannie Mae. We meet this obligation by assigning pledged securities to Fannie Mae. The amount of collateral required by Fannie Mae is a formulaic calculation at the loan level and considers the balance of the loan, the risk level of the loan, the age of the loan, and the level of risk-sharing. Fannie Mae requires collateral for Tier 2 loans of 75 basis points, which is funded over a 48-month period that begins upon delivery of the loan to Fannie Mae. Collateral held in the form of money market funds holding U.S. Treasuries is discounted 5%, and Agency MBS are discounted 4% for purposes of calculating compliance with the collateral requirements. As of September 30, 2024, we held substantially all of our restricted liquidity in Agency MBS in the aggregate amount of $156.9 million. Additionally, the majority of the loans for which we have risk-sharing are Tier 2 loans. We fund any growth in our Fannie Mae required operational liquidity and collateral requirements from our working capital.

We are in compliance with the September 30, 2024 collateral requirements as outlined above. As of September 30, 2024, reserve requirements for the September 30, 2024 DUS loan portfolio will require us to fund $71.1 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within our at-risk portfolio. Fannie Mae has assessed the DUS Capital Standards in the past and may make changes to these standards in the future. We generate sufficient cash flows from our operations to

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Table of Contents

meet these capital standards and do not expect any future changes to have a material impact on our future operations; however, any future changes to collateral requirements may adversely impact our available cash.

Under the provisions of the DUS agreement, we must also maintain a certain level of liquid assets referred to as the operational and unrestricted portions of the required reserves each year. We satisfied these requirements as of September 30, 2024.

Sources of Liquidity: Warehouse Facilities and Note Payable

Warehouse Facilities

We use a combination of warehouse facilities and notes payable to provide funding for our operations. We use warehouse facilities to fund our Agency Lending and Interim Loan Program. Our ability to originate Agency mortgage loans and loans held for investments depends upon our ability to secure and maintain these types of financing agreements on acceptable terms.  For a detailed description of the terms of each warehouse agreement, refer to “Warehouse Facilities” in NOTE 6 in the consolidated financial statements in our 2023 Form 10-K, as updated in NOTE 6 in the condensed consolidated financial statements in this Form 10-Q.

Note Payable

For a detailed description of the terms of the Credit Agreement and related amendments, refer to “Notes Payable – Term Loan Note Payable” in NOTE 6 in the consolidated financial statements in our 2023 Form 10-K and “Note Payable” in NOTE 6 in the condensed consolidated financial statements in this Form 10-Q.

The warehouse notes payable and note payable are subject to various financial covenants. The Company is in compliance with all of these financial covenants as of September 30, 2024.

​

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Table of Contents

Credit Quality and Allowance for Risk-Sharing Obligations

The following table sets forth certain information useful in evaluating our credit performance.

​

​

​

​

​

​

​

​

​

 

September 30, 

​

(in thousands)

    

2024

    

2023

    

Key Credit Metrics

​

​

​

​

​

​

​

Risk-sharing servicing portfolio:

​

​

​

​

​

​

​

Fannie Mae Full Risk

​

$

57,032,839

​

$

53,549,966

​

Fannie Mae Modified Risk

​

 

9,035,373

​

 

9,295,368

​

Freddie Mac Modified Risk

​

 

69,400

​

 

23,415

​

Total risk-sharing servicing portfolio

​

$

66,137,612

​

$

62,868,749

​

​

​

​

​

​

​

​

​

Non-risk-sharing servicing portfolio:

​

​

​

​

​

​

​

Fannie Mae No Risk

​

$

—

​

$

5,519

​

Freddie Mac No Risk

​

 

40,020,758

​

 

38,632,721

​

GNMA - HUD No Risk

​

 

10,727,323

​

 

10,320,520

​

Brokered

​

 

17,156,810

​

 

17,091,925

​

Total non-risk-sharing servicing portfolio

​

$

67,904,891

​

$

66,050,685

​

Total loans serviced for others

​

$

134,042,503

​

$

128,919,434

​

Interim loans (full risk) servicing portfolio

​

 

38,043

​

 

40,000

​

Total servicing portfolio unpaid principal balance

​

$

134,080,546

​

$

128,959,434

​

​

​

​

​

​

​

​

​

Interim Program JV Managed Loans (1)

​

​

424,774

​

​

736,320

​

​

​

​

​

​

​

​

​

At risk servicing portfolio (2)

​

$

61,237,535

​

$

57,857,659

​

Maximum exposure to at risk portfolio (3)

​

 

12,454,158

​

 

11,750,068

​

Defaulted loans(4)

​

 

59,645

​

 

—

​

​

​

​

​

​

​

​

​

Defaulted loans as a percentage of the at-risk portfolio

​

​

0.10

%  

​

0.00

%  

Allowance for risk-sharing as a percentage of the at-risk portfolio

​

​

0.05

​

​

0.05

​

Allowance for risk-sharing as a percentage of maximum exposure

​

​

0.24

​

​

0.26

​

(1)As of September 30, 2024 and 2023, this balance consisted entirely of Interim Program JV managed loans. We indirectly share in a portion of the risk of loss associated with Interim Program JV managed loans through our 15% equity ownership in the Interim Program JV. We have no exposure to risk of loss for the loans serviced directly for the Interim Program JV partner. The balance of this line is included as a component of assets under management in the Supplemental Operating Data table above.
(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.

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.

(3)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.
(4)Defaulted loans represent loans in our Fannie Mae at-risk portfolio that are probable of foreclosure or that have foreclosed and for which the Company has 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 the Company are not included here.

Fannie Mae DUS risk-sharing obligations are based on a tiered formula and represent substantially all of our risk-sharing activities. The risk-sharing tiers and the amount of the risk-sharing obligations we absorb under full risk-sharing are provided below. Except as described in

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the following paragraph, the maximum amount of risk-sharing obligations we absorb at the time of default is generally 20% of the origination unpaid principal balance (“UPB”) of the loan.

​

​

​

​

Risk-Sharing Losses

    

Percentage Absorbed by Us

​

First 5% of UPB at the time of loss settlement

​

100%

​

Next 20% of UPB at the time of loss settlement

​

25%

​

Losses above 25% of UPB at the time of loss settlement

​

10%

​

Maximum loss

 

20% of origination UPB

​

Fannie Mae can double or triple our risk-sharing obligation if the loan does not meet specific underwriting criteria or if a loan defaults within 12 months of its sale to Fannie Mae. We may request modified risk-sharing at the time of origination, which reduces our potential risk-sharing obligation from the levels described above.

We use several techniques to manage our risk exposure under the Fannie Mae DUS risk-sharing program. These techniques include maintaining a strong underwriting and approval process, evaluating and modifying our underwriting criteria given the underlying multifamily housing market fundamentals, limiting our geographic market and borrower exposures, and electing the modified risk-sharing option under the Fannie Mae DUS program.

The Segments – Capital Markets section of “Item 1. Business” in our 2023 Form 10-K contains a discussion of the risk-sharing caps we have with Fannie Mae.  

We regularly monitor the credit quality of all loans for which we have a risk-sharing obligation. Loans with indicators of underperforming credit are placed on a watch list, assigned a numerical risk rating based on our assessment of the relative credit weakness, and subjected to additional evaluation or loss mitigation. Indicators of underperforming credit include poor financial performance, poor physical condition, poor management, and delinquency. A collateral-based reserve is recorded when it is probable that a risk-sharing loan will foreclose or has foreclosed and it is expected to result in a loss for the Company, and a reserve for estimated credit losses and a guaranty obligation are recorded for all other risk-sharing loans. We do not record a collateral-based reserve when it is probable that a risk sharing loan will foreclose or has foreclosed, but it is not expected to result in a loss for the Company.

The allowance for risk-sharing obligations for the Company’s $60.6 billion at-risk Fannie Mae servicing portfolio as September 30, 2024 was $29.9 million compared to $31.6 million as of December 31, 2023.

As of September 30, 2024, seven at-risk loans with an aggregate UPB of $59.6 million were in default compared to no at-risk loans as of September 30, 2023. The collateral-based reserve on defaulted loans was $6.5 million and zero as of September 30, 2024 and 2023, respectively. We had a benefit for risk-sharing obligations of $0.2 million for the three months ended September 30, 2024 compared to a provision for risk-sharing obligations of $0.6 million for the three months ended September 30, 2023. We had benefits for risk-sharing obligations of $1.3 million and $11.1 million for the nine months ended September 30, 2024 and 2023, respectively.

We are obligated to repurchase loans that are originated for the Agencies’ programs if certain representations and warranties that we provide in connection with such originations are breached. NOTE 2 in the condensed consolidated financial statements has additional details regarding our repurchase obligations.

New/Recent Accounting Pronouncements

As seen in NOTE 2 in the condensed consolidated financial statements in Item 1 of Part I of this Form 10-Q, there are no accounting pronouncements that the Financial Accounting Standards Board has issued that have the potential to materially impact us but have not yet been adopted by us as of September 30, 2024.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Interest Rate Risk

For loans held for sale to Fannie Mae, Freddie Mac, and HUD, we are not currently exposed to unhedged interest rate risk during the loan commitment, closing, and delivery processes. The sale or placement of each loan to an investor is negotiated prior to closing on the loan

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with the borrower, and the sale or placement is typically effectuated within 60 days of closing. The coupon rate for the loan is set at the same time we establish the interest rate with the investor.

Some of our assets and liabilities are subject to changes in interest rates. Placement fee revenue from escrow deposits generally track the effective Federal Funds Rate (“EFFR”). The EFFR was 483 basis points and 533 basis points as of September 30, 2024 and 2023, respectively. The following table shows the impact on our placement fee revenue due to a 100-basis point increase and decrease in EFFR based on our escrow balances outstanding at each period end. A portion of these changes in earnings as a result of a 100-basis point increase in the EFFR would be delayed by several months due to the negotiated nature of some of our placement arrangements.

​

​

​

​

​

​

​

​

(in thousands)

​

As of September 30, 

​

Change in annual placement fee revenue due to:

    

2024

    

2023

    

100 basis point increase in EFFR

​

$

30,814

​

$

28,164

​

100 basis point decrease in EFFR

​

 

(30,814)

​

 

(28,164)

​

The borrowing cost of our warehouse facilities used to fund loans held for sale is based on SOFR. The base SOFR was 496 basis points and 531 basis points as of September 30, 2024 and 2023, respectively. The interest income on our loans held for investment is based on SOFR. The SOFR reset date for loans held for investment is the same date as the SOFR reset date for the corresponding warehouse facility. The following table shows the impact on our annual net warehouse interest income due to a 100-basis point increase and decrease in SOFR, based on our warehouse borrowings outstanding at each period end. The changes shown below do not reflect an increase or decrease in the interest rate earned on our loans held for sale.

​

​

​

​

​

​

​

​

(in thousands)

​

As of September 30, 

​

Change in annual net warehouse interest income due to:

    

2024

    

2023

​

100 basis point increase in SOFR

​

$

(10,382)

​

$

(7,822)

​

100 basis point decrease in SOFR

​

 

10,382

​

 

7,822

​

Our Corporate Debt is based on Adjusted Term SOFR. The following table shows the impact on our annual earnings due to a 100-basis point increase and decrease in SOFR as of September 30, 2024 and 2023, respectively, based on the note payable balance outstanding at each period end.

​

​

​

​

​

​

​

​

(in thousands)

​

As of September 30, 

​

Change in annual income from operations due to:

    

2024

    

2023

​

100 basis point increase in SOFR

​

$

(7,805)

​

$

(7,885)

​

100 basis point decrease in SOFR

​

 

7,805

​

 

7,885

​

​

Market Value Risk

The fair value of our MSRs is subject to market-value risk. A 100-basis point increase or decrease in the weighted average discount rate would decrease or increase, respectively, the fair value of our MSRs by approximately $43.1 million as of September 30, 2024 compared to $43.2 million as of September 30, 2023. Our Fannie Mae and Freddie Mac loans include economic deterrents that reduce the risk of loan prepayment prior to the expiration of the prepayment protection period, including prepayment premiums, loan defeasance, or yield maintenance fees. These prepayment protections generally extend the duration of the loan compared to a loan without similar protections. As of both September 30, 2024 and 2023, 90% of the loans for which we earn servicing fees are protected from the risk of prepayment through prepayment provisions; given this significant level of prepayment protection, we do not hedge our servicing portfolio for prepayment risk.

Item 4. Controls and Procedures

As of the end of the period covered by this report, an evaluation was performed under the supervision and with the participation of our management, including the principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

Based on that evaluation, the principal executive officer and principal financial officer concluded that the design and operation of these disclosure controls and procedures as of the end of the period covered by this report were effective to provide reasonable assurance that

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information required to be disclosed in our reports under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the U.S. Securities and Exchange Commission’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure.

There have been no changes in our internal control over financial reporting during the quarter ended September 30, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

In the ordinary course of business, we may be party to various claims and litigation, none of which we believe is material. We cannot predict the outcome of any pending litigation and may be subject to consequences that could include fines, penalties, and other costs, and our reputation and business may be impacted. Our management believes that any liability that could be imposed on us in connection with the disposition of any pending lawsuits would not have a material adverse effect on our business, results of operations, liquidity, or financial condition.

Item 1A. Risk Factors

We have included in Part I, Item 1A of our 2023 Form 10-K descriptions of certain risks and uncertainties that could affect our business, future performance, or financial condition (the “Risk Factors”). There have been no material changes from the disclosures provided in our 2023 Form 10-K. Investors should consider the Risk Factors prior to making an investment decision with respect to the Company’s stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Issuer Purchases of Equity Securities

Under the Company’s 2024 Equity Incentive Plan, which was approved by stockholders on May 2, 2024 and constitutes an amendment and restatement of the Company’s 2020 Equity Incentive Plan, subject to the Company’s approval, grantees have the option of electing to satisfy minimum tax withholding obligations at the time of vesting or exercise by allowing the Company to withhold and purchase the shares of stock otherwise issuable to the grantee. During the quarter ended September 30, 2024, we purchased thirteen thousand shares to satisfy grantee tax withholding obligations on share-vesting events. During the first quarter of 2024, the Company’s Board of Directors approved a share repurchase program that permits the repurchase of up to $75.0 million of the Company’s common stock over a 12-month period beginning on February 23, 2024. During the quarter ended September 30, 2024, we did not repurchase any shares under this share repurchase program. The Company had $75.0 million of authorized share repurchase capacity remaining as of September 30, 2024.

The following table provides information regarding common stock repurchases for the quarter ended September 30, 2024:

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Total Number of

​

Approximate 

​

​

​

​

​

​

​

​

 Shares Purchased as

​

Dollar Value

​

​

​

Total Number

​

Average 

​

Part of Publicly

​

 of Shares that May

​

​

    

of Shares

    

Price Paid

    

Announced Plans

    

 Yet Be Purchased Under

​

Period

​

Purchased

​

 per Share 

​

or Programs

​

the Plans or Programs

​

July 1-31, 2024

 

721

​

$

93.87

​

—

​

​

75,000,000

​

August 1-31, 2024

 

12,764

​

​

105.59

​

—

​

​

75,000,000

​

September 1-30, 2024

 

—

​

​

—

​

—

​

​

75,000,000

​

3rd Quarter

​

13,485

​

$

104.96

​

—

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

Rule 10b5-1 Trading Arrangements

​

During the quarter ended September 30, 2024, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) of the Company adopted or terminated a “Rule 10b5-1 trading agreement” or “non-Rule 10b5-1 trading agreement,” as each term is defined in Item 408 of Regulation S-K.

​

​

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Item 6. Exhibits

(a) Exhibits:

2.1

​

Contribution Agreement, dated as of October 29, 2010, by and among Mallory Walker, Howard W. Smith, William M. Walker, Taylor Walker, Richard C. Warner, Donna Mighty, Michael Alinksy, Edward B. Hermes, Deborah A. Wilson and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 2.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)

2.2

​

Contribution Agreement, dated as of October 29, 2010, between Column Guaranteed LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 2.2 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)

2.3

​

Amendment No. 1 to Contribution Agreement, dated as of December 13, 2010, by and between Walker & Dunlop, Inc. and Column Guaranteed LLC (incorporated by reference to Exhibit 2.3 to Amendment No. 6 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 13, 2010)

2.4

​

Purchase Agreement, dated June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, CW Financial Services LLC and CWCapital LLC (incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K/A filed on June 15, 2012)

2.5

​

Purchase Agreement, dated as of August 30, 2021, by and among Walker & Dunlop, Inc., WDAAC, LLC, Alliant Company, LLC, Alliant Capital, Ltd., Alliant Fund Asset Holdings, LLC, Alliant Asset Management Company, LLC, Alliant Strategic Investments II, LLC, ADC Communities, LLC, ADC Communities II, LLC, AFAH Finance, LLC, Alliant Fund Acquisitions, LLC, Vista Ridge 1, LLC, Alliant, Inc., Alliant ADC, Inc., Palm Drive Associates, LLC, and Shawn Horwitz (incorporated by reference to Exhibit 2.5 of the Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021)

2.6

​

Share Purchase Agreement dated February 4, 2022 by and among Walker & Dunlop, Inc., WD-GTE, LLC, GeoPhy B.V. (“GeoPhy”), the several persons and entities constituting the holders of all of GeoPhy’s issued and outstanding shares of capital stock, and Shareholder Representative Services LLC, as representative of the Shareholders (incorporated by reference to Exhibit 2.6 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021)

3.1

​

Articles of Amendment and Restatement of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 3.1 to Amendment No. 4 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on December 1, 2010)

3.2

​

Amended and Restated Bylaws of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on February 10, 2023)

4.1

​

Specimen Common Stock Certificate of Walker & Dunlop, Inc. (incorporated by reference to Exhibit 4.1 to Amendment No. 2 to the Company’s Registration Statement on Form S-1 (File No. 333-168535) filed on September 30, 2010)

4.2

​

Registration Rights Agreement, dated December 20, 2010, by and among Walker & Dunlop, Inc. and Mallory Walker, Taylor Walker, William M. Walker, Howard W. Smith, III, Richard C. Warner, Donna Mighty, Michael Yavinsky, Ted Hermes, Deborah A. Wilson and Column Guaranteed LLC (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 27, 2010)

4.3

​

Stockholders Agreement, dated December 20, 2010, by and among William M. Walker, Mallory Walker, Column Guaranteed LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 27, 2010)

4.4

​

Piggy-Back Registration Rights Agreement, dated June 7, 2012, by and among Column Guaranteed, LLC, William M. Walker, Mallory Walker, Howard W. Smith, III, Deborah A. Wilson, Richard C. Warner, CW Financial Services LLC and Walker & Dunlop, Inc. (incorporated by reference to Exhibit 4.3 to the Company’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2012 filed on August 9, 2012)

4.5

​

Voting Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, Mallory Walker, William M. Walker, Richard Warner, Deborah Wilson, Richard M. Lucas, and Howard W. Smith, III, and CW Financial Services LLC (incorporated by reference to Annex C of the Company’s proxy statement filed on July 26, 2012)

4.6

​

Voting Agreement, dated as of June 7, 2012, by and among Walker & Dunlop, Inc., Walker & Dunlop, LLC, Column Guaranteed, LLC and CW Financial Services LLC (incorporated by reference to Annex D of the Company’s proxy statement filed on July 26, 2012)

10.1

​

Amendment No. 7 to Master Repurchase Agreement, dated as of September 12, 2024, by and among Walker & Dunlop, LLC, Walker & Dunlop Inc., and JP Morgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on September 16, 2024)

10.2

​

Amendment No. 3 to Amended and Restated Letter, dated as of September 12, 2024, by and among Walker & Dunlop, LLC, Walker & Dunlop, Inc., and JP Morgan Chase Bank, N.A. (incorporated by reference to Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on September 16, 2024)

31.1

*

Certification of Walker & Dunlop, Inc.'s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2

*

Certification of Walker & Dunlop, Inc.'s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32

**

Certification of Walker & Dunlop, Inc.'s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS

​

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH

*

Inline XBRL Taxonomy Extension Schema Document

101.CAL

*

Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF

*

Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB

*

Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE

*

Inline XBRL Taxonomy Extension Presentation Linkbase Document

104

​

Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

*: Filed herewith.

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**:

Furnished herewith. Information in this Form 10-Q furnished herewith shall not be deemed to be “filed” for the purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such a filing.

​

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

​

​

​

​

​

 

​

 Walker & Dunlop, Inc.

 

 

Date: November 7, 2024

​

By:  

/s/ William M. Walker

 

​

 

William M. Walker

 

​

 

Chairman and Chief Executive Officer 

 

​

 

 

 

​

 

 

Date: November 7, 2024

​

By:  

/s/ Gregory A. Florkowski

 

​

 

Gregory A. Florkowski

 

​

 

Executive Vice President and Chief Financial Officer

​

​

​

​

68