10-Q 1 wd-20240331x10q.htm 10-Q
http://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenues003287400033095000P6M2000000http://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenueshttp://fasb.org/us-gaap/2023#Revenues00014977702024Q1--12-31false0001497770srt:MaximumMemberus-gaap:MoneyMarketFundsMember2024-01-012024-03-310001497770us-gaap:CommonClassAMember2024-01-012024-03-310001497770us-gaap:CommonClassAMember2023-01-012023-03-310001497770wd:TierTwoMortgageLoansNewMemberwd:FannieMaeMemberwd:RiskSharingObligationsMemberus-gaap:MortgageBackedSecuritiesMember2024-01-012024-03-310001497770wd:TierTwoMortgageLoansNewMemberwd:FannieMaeMemberwd:RiskSharingObligationsMemberus-gaap:MoneyMarketFundsMember2024-01-012024-03-310001497770us-gaap:AssetPledgedAsCollateralWithRightMemberwd:PledgedSecuritiesFannieMaeDusProgramMember2024-03-310001497770wd:PledgedRestrictedCashMember2024-03-310001497770us-gaap:MortgageBackedSecuritiesMember2024-03-310001497770us-gaap:MoneyMarketFundsMember2024-03-310001497770us-gaap:AssetPledgedAsCollateralWithRightMemberwd:PledgedSecuritiesFannieMaeDusProgramMember2023-12-310001497770wd:PledgedRestrictedCashMember2023-12-310001497770us-gaap:MortgageBackedSecuritiesMember2023-12-310001497770us-gaap:MoneyMarketFundsMember2023-12-310001497770us-gaap:AssetPledgedAsCollateralWithRightMemberwd:PledgedSecuritiesFannieMaeDusProgramMember2023-03-310001497770wd:PledgedRestrictedCashMember2023-03-310001497770us-gaap:MortgageBackedSecuritiesMember2023-03-310001497770us-gaap:MoneyMarketFundsMember2023-03-310001497770us-gaap:AssetPledgedAsCollateralWithRightMemberwd:PledgedSecuritiesFannieMaeDusProgramMember2022-12-310001497770wd:PledgedRestrictedCashMember2022-12-310001497770us-gaap:MortgageBackedSecuritiesMember2022-12-310001497770us-gaap:MoneyMarketFundsMember2022-12-310001497770wd:PledgedCashAndCashEquivalentsMember2024-03-310001497770wd:PledgedCashAndCashEquivalentsMember2023-12-310001497770wd:PledgedCashAndCashEquivalentsMember2023-03-310001497770wd:PledgedCashAndCashEquivalentsMember2022-12-310001497770wd:FannieMaeMemberwd:RiskSharingObligationsMember2024-01-012024-03-310001497770wd:FannieMaeDusLoanProgramMember2024-01-012024-03-310001497770wd:FannieMaeDusLoanProgramMember2023-01-012023-12-310001497770wd:LoansHeldForInvestmentMemberwd:FannieMaeDusLoanProgramMember2024-03-310001497770wd:FreddieMacLoanTwoMember2024-03-310001497770wd:FreddieMacLoanOneMember2024-03-310001497770wd:FannieMaeFreddieMacHudAndGinnieMaeMember2024-03-310001497770us-gaap:FederalHomeLoanMortgageCorporationCertificatesAndObligationsFHLMCMember2024-01-012024-03-310001497770srt:MinimumMemberwd:FannieMaeMemberwd:RiskSharingObligationsMember2024-03-310001497770srt:MaximumMember2023-01-012023-12-310001497770wd:FreddieMacLoanTwoMember2024-01-012024-03-310001497770wd:FreddieMacLoanOneMember2024-01-012024-03-310001497770wd:TierTwoMortgageLoansNewMemberwd:FannieMaeMemberwd:RiskSharingObligationsMember2024-01-012024-03-310001497770us-gaap:OtherLiabilitiesMemberwd:FreddieMacLoanTwoMember2024-03-310001497770wd:LoansAndOtherServicingAccountsMember2024-01-012024-03-310001497770us-gaap:ServicingContractsMember2024-01-012024-03-310001497770wd:ShareRepurchaseProgram2024Member2024-03-310001497770wd:ShareRepurchaseProgram2024Member2024-02-012024-02-290001497770srt:MaximumMemberwd:ShareRepurchaseProgram2024Member2024-02-290001497770wd:ShareRepurchaseProgram2024Member2024-01-012024-03-310001497770us-gaap:CommonStockMember2024-01-012024-03-310001497770us-gaap:CommonStockMember2023-01-012023-03-310001497770us-gaap:RetainedEarningsMember2024-03-310001497770us-gaap:NoncontrollingInterestMember2024-03-310001497770us-gaap:AdditionalPaidInCapitalMember2024-03-310001497770us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-03-310001497770us-gaap:RetainedEarningsMember2023-12-310001497770us-gaap:NoncontrollingInterestMember2023-12-310001497770us-gaap:AdditionalPaidInCapitalMember2023-12-310001497770us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-12-310001497770us-gaap:RetainedEarningsMember2023-03-310001497770us-gaap:NoncontrollingInterestMember2023-03-310001497770us-gaap:AdditionalPaidInCapitalMember2023-03-310001497770us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-03-310001497770us-gaap:RetainedEarningsMember2022-12-310001497770us-gaap:NoncontrollingInterestMember2022-12-310001497770us-gaap:AdditionalPaidInCapitalMember2022-12-310001497770us-gaap:AccumulatedOtherComprehensiveIncomeMember2022-12-310001497770us-gaap:ServicingContractsMember2023-03-310001497770us-gaap:ServicingContractsMember2022-12-310001497770us-gaap:ServicingContractsMember2024-01-012024-03-310001497770us-gaap:ServicingContractsMember2023-01-012023-03-310001497770us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-01-012024-03-310001497770us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:ServicingFeesMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:PropertySalesBrokerFeesMemberwd:CapitalMarketsMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:NetWarehouseInterestIncomeExpenseNetMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:NetWarehouseInterestIncomeExpenseNetMemberwd:CapitalMarketsMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:LoanOriginationAndDebtBrokerageFeesNetMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:LoanOriginationAndDebtBrokerageFeesNetMemberwd:CapitalMarketsMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:InvestmentManagementFeesMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:FairValueOfExpectedFutureCashFlowsFromServicingRightsNetMemberwd:CapitalMarketsMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:EscrowEarningsAndOtherInterestIncomeMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:EscrowEarningsAndOtherInterestIncomeMemberus-gaap:CorporateMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:ProductAndServiceOtherMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:ProductAndServiceOtherMemberwd:CapitalMarketsMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:ProductAndServiceOtherMemberus-gaap:CorporateMember2024-01-012024-03-310001497770wd:ServicingFeesMember2024-01-012024-03-310001497770wd:NetWarehouseInterestIncomeExpenseNetMember2024-01-012024-03-310001497770wd:FairValueOfExpectedFutureCashFlowsFromServicingRightsNetMember2024-01-012024-03-310001497770wd:EscrowEarningsAndOtherInterestIncomeMember2024-01-012024-03-310001497770us-gaap:ProductAndServiceOtherMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:ServicingFeesMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:PropertySalesBrokerFeesMemberwd:CapitalMarketsMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:NetWarehouseInterestIncomeExpenseNetMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:NetWarehouseInterestIncomeExpenseNetMemberwd:CapitalMarketsMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:LoanOriginationAndDebtBrokerageFeesNetMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:LoanOriginationAndDebtBrokerageFeesNetMemberwd:CapitalMarketsMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:InvestmentManagementFeesMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:FairValueOfExpectedFutureCashFlowsFromServicingRightsNetMemberwd:CapitalMarketsMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:EscrowEarningsAndOtherInterestIncomeMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:EscrowEarningsAndOtherInterestIncomeMemberus-gaap:CorporateMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:ProductAndServiceOtherMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:ProductAndServiceOtherMemberwd:CapitalMarketsMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:ProductAndServiceOtherMemberus-gaap:CorporateMember2023-01-012023-03-310001497770wd:ServicingFeesMember2023-01-012023-03-310001497770wd:NetWarehouseInterestIncomeExpenseNetMember2023-01-012023-03-310001497770wd:FairValueOfExpectedFutureCashFlowsFromServicingRightsNetMember2023-01-012023-03-310001497770wd:EscrowEarningsAndOtherInterestIncomeMember2023-01-012023-03-310001497770us-gaap:ProductAndServiceOtherMember2023-01-012023-03-310001497770wd:PropertySalesBrokerFeesMember2024-01-012024-03-310001497770wd:LoanOriginationAndDebtBrokerageFeesNetMember2024-01-012024-03-310001497770wd:InvestmentManagementFeesMember2024-01-012024-03-310001497770wd:ApplicationFeesSubscriptionRevenuesOtherRevenuesFromLihtcOperationsAndOtherRevenuesMember2024-01-012024-03-310001497770wd:PropertySalesBrokerFeesMember2023-01-012023-03-310001497770wd:LoanOriginationAndDebtBrokerageFeesNetMember2023-01-012023-03-310001497770wd:InvestmentManagementFeesMember2023-01-012023-03-310001497770wd:ApplicationFeesSubscriptionRevenuesOtherRevenuesFromLihtcOperationsAndOtherRevenuesMember2023-01-012023-03-310001497770wd:ProvisionBenefitForCreditLossesMemberwd:FreddieMacLoanTwoMember2024-01-012024-03-310001497770wd:LoansHeldForSaleMember2024-03-310001497770wd:LoansHeldForSaleMember2023-12-310001497770us-gaap:AccumulatedOtherComprehensiveIncomeMember2024-01-012024-03-310001497770us-gaap:AccumulatedOtherComprehensiveIncomeMember2023-01-012023-03-310001497770us-gaap:NoncontrollingInterestMember2024-01-012024-03-310001497770us-gaap:NoncontrollingInterestMember2023-01-012023-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityTwoMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-04-012024-04-300001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityTwoMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityThreeMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityOneMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityFourMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityFiveMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:FannieMaeMemberwd:FannieMaeRepurchaseAgreementUncommittedLineAndOpenMaturityMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:NationalBanksMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:NationalBanksMemberwd:LoansHeldForInvestmentMemberwd:InterimWarehouseFacilityMember2024-03-310001497770wd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMember2024-03-310001497770wd:FannieMaeDusLoanProgramMember2024-03-310001497770wd:FannieMaeDusLoanProgramMember2023-03-310001497770wd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770wd:CapitalMarketsMember2024-01-012024-03-310001497770wd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770wd:CapitalMarketsMember2023-01-012023-03-310001497770wd:ServicingAndAssetManagementMember2023-12-310001497770wd:CapitalMarketsMember2023-12-310001497770wd:ServicingAndAssetManagementMember2022-12-310001497770wd:CapitalMarketsMember2022-12-310001497770wd:ServicingAndAssetManagementMember2024-03-310001497770wd:CapitalMarketsMember2024-03-310001497770us-gaap:CorporateMember2024-03-310001497770us-gaap:CorporateMember2023-12-310001497770wd:ServicingAndAssetManagementMember2023-03-310001497770wd:CapitalMarketsMember2023-03-310001497770us-gaap:CorporateMember2023-03-310001497770us-gaap:CorporateMember2022-12-310001497770us-gaap:OtherIntangibleAssetsMember2023-03-310001497770us-gaap:OtherIntangibleAssetsMember2022-12-310001497770us-gaap:ServicingContractsMember2024-03-310001497770us-gaap:OtherIntangibleAssetsMember2024-03-310001497770us-gaap:ServicingContractsMember2023-12-310001497770us-gaap:OtherIntangibleAssetsMember2023-12-310001497770us-gaap:LoanParticipationsAndAssignmentsMember2024-03-310001497770us-gaap:LoanParticipationsAndAssignmentsMember2023-12-310001497770us-gaap:RetainedEarningsMember2024-01-012024-03-310001497770us-gaap:RetainedEarningsMember2023-01-012023-03-310001497770srt:MaximumMember2024-01-012024-03-310001497770us-gaap:FairValueInputsLevel3Memberus-gaap:DerivativeFinancialInstrumentsLiabilitiesMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2024-03-310001497770us-gaap:DerivativeFinancialInstrumentsAssetsMemberus-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueDiscountedCashFlowMember2024-03-310001497770us-gaap:InterestRateLockCommitmentsMember2024-03-310001497770us-gaap:ForwardContractsMember2024-03-310001497770us-gaap:InterestRateLockCommitmentsMember2023-12-310001497770us-gaap:ForwardContractsMember2023-12-310001497770us-gaap:OperatingSegmentsMemberwd:ServicingAndAssetManagementMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:CapitalMarketsMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:CorporateMember2024-01-012024-03-310001497770us-gaap:OperatingSegmentsMemberwd:ServicingAndAssetManagementMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberwd:CapitalMarketsMember2023-01-012023-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:CorporateMember2023-01-012023-03-310001497770wd:PledgedSecuritiesFannieMaeDusProgramMember2024-03-310001497770wd:NationalBanksMembersrt:MinimumMemberwd:LineOfCreditAgencyWarehouseFacilityFourMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMembersrt:MaximumMemberwd:LineOfCreditAgencyWarehouseFacilityFourMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityTwoMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityThreeMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityOneMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMemberwd:LineOfCreditAgencyWarehouseFacilityFiveMemberwd:LoansHeldForSaleMemberwd:AgencyWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMembersrt:MinimumMemberwd:LoansHeldForInvestmentMemberwd:InterimWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770wd:NationalBanksMembersrt:MaximumMemberwd:LoansHeldForInvestmentMemberwd:InterimWarehouseFacilityMemberus-gaap:SecuredOvernightFinancingRateSofrOvernightIndexSwapRateMember2024-01-012024-03-310001497770us-gaap:CommonStockMember2024-03-310001497770us-gaap:CommonStockMember2023-12-310001497770us-gaap:CommonStockMember2023-03-310001497770us-gaap:CommonStockMember2022-12-3100014977702024-05-012024-05-0100014977702022-12-310001497770srt:WeightedAverageMemberus-gaap:FairValueInputsLevel3Memberwd:ContingentConsiderationLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberwd:MeasurementInputProbabilityOfEarnoutAchievementMemberus-gaap:ValuationTechniqueOptionPricingModelMember2024-03-310001497770srt:MinimumMemberus-gaap:FairValueInputsLevel3Memberwd:ContingentConsiderationLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberwd:MeasurementInputProbabilityOfEarnoutAchievementMemberus-gaap:ValuationTechniqueOptionPricingModelMember2024-03-310001497770srt:MaximumMemberus-gaap:FairValueInputsLevel3Memberwd:ContingentConsiderationLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberwd:MeasurementInputProbabilityOfEarnoutAchievementMemberus-gaap:ValuationTechniqueOptionPricingModelMember2024-03-310001497770us-gaap:FairValueInputsLevel3Memberwd:ContingentConsiderationLiabilityMemberus-gaap:FairValueMeasurementsRecurringMemberus-gaap:ValuationTechniqueOptionPricingModelMember2024-03-310001497770us-gaap:OtherLiabilitiesMember2024-03-310001497770us-gaap:OtherLiabilitiesMember2023-12-310001497770us-gaap:OtherLiabilitiesMember2023-03-310001497770us-gaap:OtherLiabilitiesMember2022-12-310001497770us-gaap:MortgageBackedSecuritiesMember2024-03-310001497770us-gaap:MortgageBackedSecuritiesMember2023-12-310001497770us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001497770us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001497770us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2024-03-310001497770us-gaap:FairValueMeasurementsRecurringMember2024-03-310001497770us-gaap:EstimateOfFairValueFairValueDisclosureMember2024-03-310001497770us-gaap:CarryingReportedAmountFairValueDisclosureMember2024-03-310001497770us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001497770us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001497770us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2023-12-310001497770us-gaap:FairValueMeasurementsRecurringMember2023-12-310001497770us-gaap:EstimateOfFairValueFairValueDisclosureMember2023-12-310001497770us-gaap:CarryingReportedAmountFairValueDisclosureMember2023-12-310001497770wd:LoansHeldForSaleMember2024-01-012024-03-310001497770wd:LoansHeldForSaleMember2023-01-012023-12-3100014977702023-01-012023-12-310001497770us-gaap:OperatingSegmentsMemberwd:ServicingAndAssetManagementMember2024-03-310001497770us-gaap:OperatingSegmentsMemberwd:CapitalMarketsMember2024-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:CorporateMember2024-03-310001497770us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2024-03-310001497770us-gaap:VariableInterestEntityNotPrimaryBeneficiaryMember2023-12-310001497770us-gaap:OperatingSegmentsMemberwd:ServicingAndAssetManagementMember2023-03-310001497770us-gaap:OperatingSegmentsMemberwd:CapitalMarketsMember2023-03-310001497770us-gaap:OperatingSegmentsMemberus-gaap:CorporateMember2023-03-3100014977702023-03-310001497770us-gaap:OtherIntangibleAssetsMember2024-01-012024-03-310001497770us-gaap:OtherIntangibleAssetsMember2023-01-012023-03-310001497770us-gaap:AdditionalPaidInCapitalMember2024-01-012024-03-310001497770us-gaap:AdditionalPaidInCapitalMember2023-01-012023-03-3100014977702023-01-012023-03-310001497770us-gaap:OtherLiabilitiesMember2024-01-012024-03-310001497770us-gaap:OtherLiabilitiesMember2023-01-012023-03-310001497770us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2024-03-3100014977702024-03-310001497770us-gaap:VariableInterestEntityPrimaryBeneficiaryMember2023-12-3100014977702023-12-310001497770wd:FannieMaeMemberwd:RiskSharingObligationsMember2024-03-3100014977702024-04-2400014977702024-01-012024-03-31xbrli:sharesiso4217:USDxbrli:pureiso4217:USDxbrli:shareswd:segmentwd:loan

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 March 31, 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 April 24, 2024, there were 33,718,116 total shares of common stock outstanding.

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

52

Item 4.

Controls and Procedures

53

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

54

Item 3.

Defaults Upon Senior Securities

54

Item 4.

Mine Safety Disclosures

54

Item 5.

Other Information

55

Item 6.

Exhibits

56

Signatures

58

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, except per share data)

(Unaudited)

March 31, 2024

December 31, 2023

Assets

 

Cash and cash equivalents

$

216,532

$

328,698

Restricted cash

 

21,071

 

21,422

Pledged securities, at fair value

 

190,679

 

184,081

Loans held for sale, at fair value

 

497,933

 

594,998

Mortgage servicing rights

 

881,834

 

907,415

Goodwill

901,710

901,710

Other intangible assets

 

178,221

 

181,975

Receivables, net

 

250,406

 

233,563

Committed investments in tax credit equity

122,332

154,028

Other assets

 

565,194

 

544,457

Total assets

$

3,825,912

$

4,052,347

Liabilities

Warehouse notes payable

$

521,977

$

596,178

Notes payable

 

772,037

 

773,358

Allowance for risk-sharing obligations

 

30,124

 

31,601

Commitments to fund investments in tax credit equity

114,206

140,259

Other liabilities

651,660

764,822

Total liabilities

$

2,090,004

$

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 33,095 shares at March 31, 2024 and 32,874 shares at December 31, 2023)

 

331

 

329

Additional paid-in capital ("APIC")

 

427,184

 

425,488

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

(492)

(479)

Retained earnings

 

1,288,313

 

1,298,412

Total stockholders’ equity

$

1,715,336

$

1,723,750

Noncontrolling interests

 

20,572

 

22,379

Total equity

$

1,735,908

$

1,746,129

Commitments and contingencies (NOTES 2 and 9)

 

 

Total liabilities and equity

$

3,825,912

$

4,052,347

See accompanying notes to condensed consolidated financial statements.

3

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

March 31, 

    

2024

    

2023

 

Revenues

Loan origination and debt brokerage fees, net

$

43,740

$

47,084

Fair value of expected net cash flows from servicing, net

20,898

30,013

Servicing fees

 

80,043

75,766

Property sales broker fees

8,821

11,624

Investment management fees

13,520

15,173

Net warehouse interest income (expense)

 

(1,116)

1

Placement fees and other interest income

 

39,402

30,924

Other revenues

 

22,751

28,161

Total revenues

$

228,059

$

238,746

Expenses

Personnel

$

111,463

$

118,613

Amortization and depreciation

55,891

56,966

Provision (benefit) for credit losses

 

524

(10,775)

Interest expense on corporate debt

 

17,659

15,274

Other operating expenses

 

28,843

24,063

Total expenses

$

214,380

$

204,141

Income from operations

$

13,679

$

34,605

Income tax expense

 

2,864

7,135

Net income before noncontrolling interests

$

10,815

$

27,470

Less: net income (loss) from noncontrolling interests

 

(1,051)

 

805

Walker & Dunlop net income

$

11,866

$

26,665

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

(13)

(53)

Walker & Dunlop comprehensive income

$

11,853

$

26,612

Basic earnings per share (NOTE 10)

$

0.35

$

0.80

Diluted earnings per share (NOTE 10)

$

0.35

$

0.79

Basic weighted-average shares outstanding

 

32,978

 

32,529

Diluted weighted-average shares outstanding

33,048

 

32,816

See accompanying notes to condensed consolidated financial statements.

4

Walker & Dunlop, Inc. and Subsidiaries

Consolidated Statements of Changes in Equity

(In thousands, except per share data)

(Unaudited)

For the three months ended March 31, 2024

Stockholders' Equity

Common Stock

Retained

Noncontrolling

Total

  

Shares

  

Amount

  

APIC

  

AOCI

  

Earnings

  

Interests

  

Equity

 

Balance at 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 at March 31, 2024

33,095

$

331

$

427,184

$

(492)

$

1,288,313

$

20,572

$

1,735,908

For the three months ended March 31, 2023

Stockholders' Equity

Common Stock

Retained

Noncontrolling

Total

  

Shares

  

Amount

  

APIC

  

AOCI

  

Earnings

  

Interests

  

Equity

Balance at 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 at March 31, 2023

32,679

$

327

$

405,303

$

(1,621)

$

1,281,119

$

29,968

$

1,715,096

See accompanying notes to condensed consolidated financial statements.

5

Walker & Dunlop, Inc. and Subsidiaries

Condensed Consolidated Statements of Cash Flows

(In thousands)

(Unaudited)

For the three months ended March 31, 

    

2024

    

2023

Cash flows from operating activities

Net income before noncontrolling interests

$

10,815

$

27,470

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

 

(20,898)

 

(30,013)

Change in the fair value of premiums and origination fees

 

9,225

 

2,536

Amortization and depreciation

 

55,891

 

56,966

Provision (benefit) for credit losses

 

524

 

(10,775)

Originations of loans held for sale

(1,187,645)

(2,512,635)

Proceeds from transfers of loans held for sale

1,260,295

2,001,507

Other operating activities, net

(89,810)

(81,728)

Net cash provided by (used in) operating activities

$

38,397

$

(546,672)

Cash flows from investing activities

Capital expenditures

$

(3,221)

$

(2,526)

Purchases of equity-method investments

(4,048)

(11,049)

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

(8,000)

Proceeds from prepayment and sale of pledged AFS securities

3,061

2,797

Distributions from joint ventures

627

733

Repurchase of Agency loans

(13,469)

Originations of loans held for investment

(139)

Principal collected on loans held for investment

 

 

19,468

Net cash provided by (used in) investing activities

$

(25,050)

$

9,284

Cash flows from financing activities

Borrowings (repayments) of warehouse notes payable, net

$

(74,359)

$

516,288

Repayments of interim warehouse notes payable

 

(2,460)

 

(14,521)

Repayments of notes payable

 

(2,000)

 

(116,046)

Borrowings of notes payable

196,000

Proceeds from issuance of common stock

 

1,220

 

449

Repurchase of common stock

 

(9,789)

 

(17,395)

Cash dividends paid

(21,965)

(21,221)

Payment of contingent consideration

(13,820)

(25,690)

Distributions to noncontrolling interest holders

(500)

(600)

Debt issuance costs

 

(480)

 

(3,460)

Net cash provided by (used in) financing activities

$

(124,153)

$

513,804

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

$

(110,806)

$

(23,584)

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

$

280,597

$

234,699

Supplemental Disclosure of Cash Flow Information:

Cash paid to third parties for interest

$

18,145

$

26,393

Cash paid (refunded) for income taxes

(604)

1,236

See accompanying notes to condensed consolidated financial statements.

6

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 (“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 months ended March 31, 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

Principles of Consolidation—The condensed consolidated financial statements include the accounts of Walker & Dunlop, Inc., its wholly-owned subsidiaries, and its majority owned subsidiaries. All intercompany balances and transactions are eliminated in consolidation. The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or the voting interest model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. If the Company determines it holds a variable interest in a VIE and has a controlling financial interest and therefore is considered the primary beneficiary, the Company consolidates the entity. In instances where the Company holds a variable interest in a VIE but is not the primary beneficiary, the Company uses the equity-method of accounting.

If the Company determines it does not hold a variable interest in a VIE, it then applies the voting interest model. Under the voting interest model, the Company consolidates an entity when it holds a majority voting interest in an entity. If the Company does not have a majority voting interest but has significant influence, it uses the equity method of accounting. In instances where the Company owns less than 100% of the equity interests of an entity but owns a majority of the voting interests or has control over an entity, the Company accounts for the portion of equity not attributable to Walker & Dunlop, Inc. as Noncontrolling interests on the Condensed Consolidated Balance Sheets and the portion of net income not attributable to Walker & Dunlop, Inc. as Net income (loss) from noncontrolling interests in the Condensed Consolidated Statements of Income.

Subsequent Events—The Company has evaluated the effects of all events that have occurred subsequent to March 31, 2024. The Company has made certain disclosures in the notes to the condensed consolidated financial statements of events that have occurred subsequent to March 31, 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, 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.

7

Provision (Benefit) for Credit LossesThe 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. Substantially all of the Provision (benefit) for credit losses for the three months ended March 31, 2024 and 2023 is related to the provision (benefit) for risk-sharing obligations, with the other portion attributable primarily to other credit losses in 2024 and to the provision (benefit) for loan losses related to loans held for investment in 2023.

Agency Loan RepurchasesThe 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 loans from the Agencies, the loan(s) are 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. The Company recorded an immaterial provision for credit loss related to this loan.

Freddie Mac The Company received repurchase requests from Freddie Mac related to two loans with unpaid principal balances (“UPB”) of $11.4 million and $34.8 million. 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, respectively, and transferred the risk of loss for both loans from Freddie Mac to the Company. The fair value of the indemnification related to the $11.4 million 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 $34.8 million loan, the Company has not yet fully completed its inspection and evaluation of the underlying property due to the suspected fraudulent activity committed by the borrower during the origination process. As of March 31, 2024, the Company’s best estimate of the fair value of the indemnification was $2.0 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.

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 repurchased loans 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 both March 31, 2024 and December 31, 2023, the balance of the Interim Loan Program portfolio consisted of a small number of loans with a balance of $40.1 million 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 March 31, 2024 and December 31, 2023. The amortized cost basis of loans that were current was $40.1 million as of both March 31, 2024 and December 31, 2023. As of March 31, 2024, ILP loans were originated between 2019 and 2021.

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 March 31, 2024 and 2023, and December 31, 2023 and 2022.

March 31, 

December 31,

(in thousands)

2024

    

2023

    

2023

    

2022

 

Cash and cash equivalents

$

216,532

$

188,389

$

328,698

$

225,949

Restricted cash

21,071

20,504

21,422

17,676

Pledged cash and cash equivalents (NOTE 9)

 

42,994

 

25,806

 

41,283

 

14,658

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

$

280,597

$

234,699

$

391,403

$

258,283

8

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 $0.6 million and $1.5 million for the three months ended March 31, 2024 and 2023, respectively.

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 months ended March 31, 2024 and 2023 are the following components:

For the three months ended 

March 31, 

Components of Net Warehouse Interest Income (Expense)
(in thousands)

    

2024

    

2023

Warehouse interest income

$

7,493

$

10,507

Warehouse interest expense

 

(8,609)

 

(10,506)

Net warehouse interest income (expense)

$

(1,116)

$

1

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 $2.6 million and $3.3 million for the three months ended March 31, 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 for the year ended December 31, 2023 and presented as Investment management fees in the Condensed Consolidated Statements of Income, the Company’s contracts with customers generally do not require significant 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 months ended March 31, 2024 and 2023:  

For the three months ended 

March 31, 

Description (in thousands)

    

2024

    

2023

 

Statement of income line item

Certain loan origination fees

$

17,787

$

14,029

Loan origination and debt brokerage fees, net

Property sales broker fees

8,821

11,624

Property sales broker fees

Investment management fees

13,520

15,173

Investment management fees

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

 

12,275

 

22,538

Other revenues

Total revenues derived from contracts with customers

$

52,403

$

63,364

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 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.

9

Recently Adopted and Recently Announced Accounting Pronouncements—The Company is currently evaluating Accounting Standards Updates (“ASU”) 2023-07 Segment Reporting and 2023-09 Income Taxes, which have effective dates for interim periods starting in 2024 and 2025, respectively. 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 first 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 March 31, 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 at March 31, 2024 would be a decrease in the fair value of $44.3 million to the MSRs outstanding as of March 31, 2024.

The impact of a 200-basis point increase in the discount rate at March 31, 2024 would be a decrease in the fair value of $85.5 million to the MSRs outstanding as of March 31, 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 months ended March 31, 2024 and 2023 follows:

For the three months ended

 

March 31, 

 

Roll Forward of MSRs (in thousands)

    

2024

    

2023

 

Beginning balance

$

907,415

$

975,226

Additions, following the sale of loan

 

26,410

 

24,030

Amortization

 

(50,531)

 

(49,442)

Pre-payments and write-offs

 

(1,460)

 

(3,408)

Ending balance

$

881,834

$

946,406

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

Components of MSRs (in thousands)

March 31, 2024

December 31, 2023

Gross value

$

1,750,048

$

1,733,844

Accumulated amortization

 

(868,214)

 

(826,429)

Net carrying value

$

881,834

$

907,415

10

The expected amortization of MSRs shown in the Condensed Consolidated Balance Sheet as of March 31, 2024 is shown in the table below. Actual amortization may vary from these estimates.

  

Expected

(in thousands)

  Amortization  

Nine Months Ending December 31, 

2024

$

146,577

Year Ending December 31, 

2025

$

175,565

2026

 

149,851

2027

 

128,263

2028

 

100,556

2029

 

76,260

Thereafter

104,762

Total

$

881,834

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 and also records collateral-based reserves as necessary and presents this combined loss reserve as Allowance for risk-sharing obligations on the Condensed Consolidated Balance Sheets.

Activity related to the allowance for risk-sharing obligations for the three months ended March 31, 2024 and 2023 follows:

For the three months ended

 

March 31, 

 

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

    

2024

    

2023

 

Beginning balance

$

31,601

$

44,057

Provision (benefit) for risk-sharing obligations

 

(1,477)

 

(10,970)

Write-offs

 

 

Ending balance

$

30,124

$

33,087

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 three months ended March 31, 2024 and 2023 follows.

As of and for the three months ended 

March 31, 

CECL Calculation Inputs, Details, and Provision Impact

2024

    

2023

Forecast-period loss rate (in basis points)

2.3

2.3

Reversion-period loss rate (in basis points)

1.3

1.5

Historical loss rate (in basis points)

0.3

0.6

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

$

59.2

$

54.5

CECL allowance (in millions)

$

25.0

$

28.7

Provision (benefit) for risk-sharing obligations (in millions)

$

(1.5)

$

(11.0)

11

During the first quarters of 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 risk-sharing obligations, 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.

The weighted average remaining life of the at-risk Fannie Mae servicing portfolio as of March 31, 2024 was 6.2 years compared to 6.4 years as of December 31, 2023.

As of March 31, 2024, the Company had six loans with aggregate collateral-based reserves of $5.1 million compared to three loans with an aggregate collateral-based reserve of $2.8 million as of December 31, 2023.

As of March 31, 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 $12.1 billion and $11.1 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 $132.0 billion as of March 31, 2024 compared to $130.5 billion as of December 31, 2023.

As of March 31, 2024 and December 31, 2023, custodial deposit accounts (“escrow deposits”) relating to loans serviced by the Company totaled $2.3 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—WAREHOUSE NOTES PAYABLE

As of March 31, 2024, to provide financing to borrowers under the Agencies’ programs, the Company had committed and uncommitted warehouse lines of credit in the amount of $3.9 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 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 March 31, 2024, the Interim Warehouse Facilities had $454.8 million of total facility capacity with an outstanding balance of $23.1 million. The interest rate on the Interim Warehouse Facilities ranged from SOFR (defined below) plus 135 to 325 basis points.

12

The interest rate for all our 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 March 31, 2024 follows:

March 31, 2024

 

(dollars 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

$

63,826

 

SOFR plus 1.30%

Agency Warehouse Facility #2

 

700,000

 

300,000

 

1,000,000

 

74,831

SOFR plus 1.30%

Agency Warehouse Facility #3

 

600,000

 

265,000

 

865,000

 

48,982

 

SOFR plus 1.35%

Agency Warehouse Facility #4

200,000

225,000

425,000

84,340

SOFR plus 1.30% to 1.35%

Agency Warehouse Facility #5

1,000,000

1,000,000

143,225

SOFR plus 1.45%

Total National Bank Agency Warehouse Facilities

$

1,825,000

$

2,040,000

$

3,865,000

$

415,204

Fannie Mae repurchase agreement, uncommitted line and open maturity

 

 

1,500,000

 

1,500,000

 

83,711

 

Total Agency Warehouse Facilities

$

1,825,000

$

3,540,000

$

5,365,000

$

498,915

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

During 2024, the following amendment to one of the Company’s Agency Warehouse Facilities was executed in the normal course of business to support the Company’s business.

Agency Warehouse Facilities

During April 2024, the Company executed an amendment to Agency Warehouse Facility #2 that extended the maturity date to April 11, 2025. No other material modifications have been made to the agreement during 2024.

No other material modifications have been made to the Agency Warehouse Facilities during the year.

NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill

A summary of the Company’s goodwill by reportable segments for the three months ended March 31, 2024 and 2023 follows:

For the three months ended

March 31, 

(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

Measurement-period and other adjustments

Ending gross goodwill balance

$

524,189