Walker & Dunlop, Inc. [WD] Filings

10-Q 1 wd-20210930x10q.htm 10-Q

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, 2021


☐	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)

7501 Wisconsin Avenue, Suite 1200E

Bethesda, Maryland 20814

(301) 215-5500

(Address of principal executive offices and 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, 2021, there were 32,038,216 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	26

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	53

Item 4.	Controls and Procedures	54

PART II	OTHER INFORMATION	54

Item 1.	Legal Proceedings	54

Item 1A.	Risk Factors	54

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	55

Item 3.	Defaults Upon Senior Securities	56

Item 4.	Mine Safety Disclosures	56

Item 5.	Other Information	56

Item 6.	Exhibits	57

	Signatures	58

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, 2021	December 31, 2020
Assets
Cash and cash equivalents	$	318,188	$	321,097
Restricted cash		34,875		19,432
Pledged securities, at fair value		148,774		137,236
Loans held for sale, at fair value		2,711,900		2,449,198
Loans held for investment, net		233,685		360,402
Mortgage servicing rights		929,825		862,813
Goodwill and other intangible assets		341,703		250,838
Derivative assets		85,486		49,786
Receivables, net		106,228		65,735
Other assets		206,198		134,438
Total assets	$	5,116,862	$	4,650,975

Liabilities
Warehouse notes payable	$	2,848,579	$	2,517,156
Note payable		289,763		291,593
Allowance for risk-sharing obligations		61,607		75,313
Guaranty obligation, net		49,060		52,306
Derivative liabilities		13,263		5,066
Other liabilities		470,654		513,319
Total liabilities	$	3,732,926	$	3,454,753

Stockholders' Equity
Preferred stock (authorized 50,000; none issued)	$	—	$	—
Common stock ($0.01 par value; authorized 200,000 shares; issued and outstanding 31,194 shares at September 30, 2021 and 30,678 shares at December 31, 2020)		312		307
Additional paid-in capital ("APIC")		271,562		241,004
Accumulated other comprehensive income ("AOCI")		2,737		1,968
Retained earnings		1,090,506		952,943
Total stockholders’ equity	$	1,365,117	$	1,196,222
Noncontrolling interests		18,819		—
Total equity	$	1,383,936	$	1,196,222
Commitments and contingencies (NOTES 2 and 9)		—		—
Total liabilities and equity	$	5,116,862	$	4,650,975

See accompanying notes to condensed consolidated financial statements.

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,
	2021		2020		2021		2020
Revenues
Loan origination and debt brokerage fees, net	$	123,242	$	83,825	$	306,593	$	238,105
Fair value of expected net cash flows from servicing, net		89,482		78,065		209,266		236,434
Servicing fees		70,628		60,265		205,658		172,561
Property sales broker fees		33,677		6,756		65,173		19,928
Net warehouse interest income		5,583		7,558		14,768		22,454
Escrow earnings and other interest income		2,032		2,275		5,972		15,689
Other revenues		21,646		8,272		44,559		28,827
Total revenues	$	346,290	$	247,016	$	851,989	$	733,998

Expenses
Personnel	$	170,181	$	114,548	$	407,817	$	310,993
Amortization and depreciation		53,498		41,919		148,879		123,998
Provision (benefit) for credit losses		1,266		3,483		(14,380)		32,029
Interest expense on corporate debt		1,766		1,786		5,291		6,724
Other operating expenses		24,836		16,165		62,171		47,324
Total expenses	$	251,547	$	177,901	$	609,778	$	521,068
Income from operations	$	94,743	$	69,115	$	242,211	$	212,930
Income tax expense		22,953		15,925		56,311		50,076
Net income before noncontrolling interests	$	71,790	$	53,190	$	185,900	$	162,854
Less: net income (loss) from noncontrolling interests		69		—		69		(224)
Walker & Dunlop net income	$	71,721	$	53,190	$	185,831	$	163,078
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes		159		1,219		769		731
Walker & Dunlop comprehensive income	$	71,880	$	54,409	$	186,600	$	163,809

Basic earnings per share (NOTE 10)	$	2.23	$	1.69	$	5.80	$	5.21
Diluted earnings per share (NOTE 10)	$	2.21	$	1.66	$	5.73	$	5.11

Basic weighted-average shares outstanding		31,064		30,560		30,969		30,379
Diluted weighted-average shares outstanding		31,459		31,074		31,367		30,995

See accompanying notes to condensed consolidated financial statements.

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, 2021
	Common Stock							Retained		Noncontrolling		Total Stockholders'
	Shares	Amount		APIC		AOCI		Earnings		Interests		Equity
Balance at December 31, 2020	30,678	$	307	$	241,004	$	1,968	$	952,943	$	—	$	1,196,222
Walker & Dunlop net income	—		—		—		—		58,052		—		58,052
Other comprehensive income (loss), net of tax	—		—		—		(158)		—		—		(158)
Stock-based compensation - equity classified	—		—		7,836		—		—		—		7,836
Issuance of common stock in connection with equity compensation plans	430		4		12,602		—		—		—		12,606
Repurchase and retirement of common stock	(131)		(1)		(13,373)		—		—		—		(13,374)
Cash dividends paid ($0.50 per common share)	—		—		—		—		(16,052)		—		(16,052)
Balance at March 31, 2021	30,977	$	310	$	248,069	$	1,810	$	994,943	$	—	$	1,245,132
Walker & Dunlop net income	—		—		—		—		56,058		—		56,058
Other comprehensive income (loss), net of tax	—		—		—		768		—		—		768
Stock-based compensation - equity classified	—		—		7,892		—		—		—		7,892
Issuance of common stock in connection with equity compensation plans	64		1		530		—		—		—		531
Repurchase and retirement of common stock	(7)		(1)		(815)		—		—		—		(816)
Cash dividends paid ($0.50 per common share)	—		—		—		—		(16,070)		—		(16,070)
Balance at June 30, 2021	31,034	$	310	$	255,676	$	2,578	$	1,034,931	$	—	$	1,293,495
Walker & Dunlop net income	—		—		—		—		71,721		—		71,721
Net income (loss) from noncontrolling interests	—		—		—		—		—		69		69
Other comprehensive income (loss), net of tax	—		—		—		159		—		—		159
Stock-based compensation - equity classified	—		—		10,426		—		—		—		10,426
Issuance of common stock in connection with equity compensation plans	124		2		1,706		—		—		—		1,708
Issuance of common stock in connection with acquisitions	50		1		5,249								5,250
Repurchase and retirement of common stock	(14)		(1)		(1,495)		—		—		—		(1,496)
Noncontrolling interests from acquisitions	—		—		—		—		—		18,750		18,750
Cash dividends paid ($0.50 per common share)	—		—		—		—		(16,146)		—		(16,146)
Balance at September 30, 2021	31,194	$	312	$	271,562	$	2,737	$	1,090,506	$	18,819	$	1,383,936

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, 2020
		Stockholders' Equity
	Common Stock							Retained		Noncontrolling		Total
	Shares	Amount		APIC		AOCI		Earnings		Interests		Equity
Balance at December 31, 2019	30,035	$	300	$	237,877	$	737	$	796,775	$	6,596	$	1,042,285
Cumulative-effect adjustment for adoption of ASU 2016-13, net of tax	—		—		—		—		(23,678)		—		(23,678)
Walker & Dunlop net income	—		—		—		—		47,829		—		47,829
Net loss from noncontrolling interests	—		—		—		—		—		(224)		(224)
Contributions from noncontrolling interests											675		675
Other comprehensive income (loss), net of tax	—		—		—		(1,918)		—		—		(1,918)
Stock-based compensation - equity classified	—		—		5,061		—		—		—		5,061
Issuance of common stock in connection with equity compensation plans	675		7		11,362		—		—		—		11,369
Repurchase and retirement of common stock	(380)		(4)		(18,293)		—		(8,440)		—		(26,737)
Cash dividends paid ($0.36 per common share)	—		—		—		—		(11,347)		—		(11,347)
Balance at March 31, 2020	30,330	$	303	$	236,007	$	(1,181)	$	801,139	$	7,047	$	1,043,315
Walker & Dunlop net income	—		—		—		—		62,059		—		62,059
Purchase of noncontrolling interests	—		—		(3,295)		—		—		(7,047)		(10,342)
Other comprehensive income (loss), net of tax	—		—		—		1,430		—		—		1,430
Stock-based compensation - equity classified	—		—		5,592		—		—		—		5,592
Issuance of common stock in connection with equity compensation plans	50		1		195		—		—		—		196
Repurchase and retirement of common stock	(11)		—		(405)		—		—		—		(405)
Cash dividends paid ($0.36 per common share)	—		—		—		—		(11,294)		—		(11,294)
Balance at June 30, 2020	30,369	$	304	$	238,094	$	249	$	851,904	$	—	$	1,090,551
Walker & Dunlop net income	—		—		—		—		53,190		—		53,190
Purchase of noncontrolling interests	—		—		(21,635)		—		—		—		(21,635)
Other comprehensive income (loss), net of tax	—		—		—		1,219		—		—		1,219
Stock-based compensation - equity classified	—		—		6,598		—		—		—		6,598
Issuance of common stock in connection with equity compensation plans and purchase of noncontrolling interests	574		5		11,923		—		—		—		11,928
Repurchase and retirement of common stock	(324)		(3)		(4,678)		—		(10,702)		—		(15,383)
Cash dividends paid ($0.36 per common share)	—		—		—		—		(11,343)		—		(11,343)
Balance at September 30, 2020	30,619	$	306	$	230,302	$	1,468	$	883,049	$	—	$	1,115,125

See accompanying notes to condensed consolidated financial statements.

Table of Contents

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)


	For the nine months ended September 30,
	2021		2020
Cash flows from operating activities
Net income before noncontrolling interests	$	185,900	$	162,854
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		(209,266)		(236,434)
Change in the fair value of premiums and origination fees		6,909		(24,393)
Amortization and depreciation		148,879		123,998
Provision (benefit) for credit losses		(14,380)		32,029
Originations of loans held for sale		(12,761,432)		(15,923,846)
Proceeds from transfers of loans held for sale		12,459,511		13,517,432
Other operating activities, net		(13,100)		51,492
Net cash provided by (used in) operating activities	$	(196,979)	$	(2,296,868)

Cash flows from investing activities
Capital expenditures	$	(5,507)	$	(2,050)
Purchases of equity-method investments		(8,029)		(974)
Purchases of pledged available-for-sale ("AFS") securities		(7,250)		(14,130)
Proceeds from prepayment and sale of pledged AFS securities		28,781		15,531
Investments in joint ventures		(58,065)		(16,215)
Distributions from joint ventures		34,012		12,677
Acquisitions, net of cash received		(62,208)		(46,784)
Originations of loans held for investment		(269,737)		(36,950)
Principal collected on loans held for investment		397,328		236,519
Net cash provided by (used in) investing activities	$	49,325	$	147,624

Cash flows from financing activities
Borrowings (repayments) of warehouse notes payable, net	$

Walker & Dunlop, Inc. [WD] Filings
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10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-25]
10-Q	[2020-11-04]
10-Q	[2020-08-05]
10-Q	[2020-05-06]
10-K	[2020-02-26]
10-Q	[2019-11-06]
10-Q	[2019-08-07]
10-Q	[2019-05-01]
10-K	[2019-03-01]
10-Q	[2018-10-31]
10-Q	[2018-08-01]
10-Q	[2018-05-02]
10-K	[2018-02-23]
10-Q	[2017-11-08]
10-Q	[2017-08-02]
10-Q	[2017-05-03]
10-K	[2017-02-24]
10-Q	[2016-11-02]
10-Q	[2016-08-03]
10-Q	[2016-05-04]
10-K	[2016-02-26]
10-Q	[2015-11-04]
10-Q	[2015-08-05]
10-Q	[2015-05-06]
10-K	[2015-03-05]
10-Q	[2014-11-06]
10-Q	[2014-08-06]
10-Q	[2014-05-08]
10-K	[2014-03-07]
10-Q	[2013-11-07]
10-Q	[2013-08-08]
10-Q	[2013-05-09]
10-K	[2013-03-18]
10-Q	[2012-11-08]
10-Q	[2012-08-09]
10-Q	[2012-05-10]
10-K	[2012-03-09]