Financial Data and Key Metrics Changes - The total transaction volume for Q1 2025 was $7 billion, up 10% from the previous year, driving total revenue growth of 4% [6][7] - GAAP EPS for the quarter was $0.08, significantly down due to increased personnel costs, debt offering fees, and additions to the loan loss reserve [7][16] - Adjusted EBITDA declined to $65 million, and adjusted core EPS decreased to $0.85 [16][18] Business Line Data and Key Metrics Changes - Capital Markets segment revenues grew 25% to $103 million, with Fannie Mae lending volume up 67% and total agency volumes up 30% year over year [18][19] - The Servicing and Asset Management segment saw a 3% increase in servicing fees but total segment revenues declined 7% due to lower investment management fees and placement fees [20][21] - The research and investment banking business, Zelman, experienced a revenue increase of 129% to $11 million, driven by several investment banking transactions [19][33] Market Data and Key Metrics Changes - 88% of Q1 volume was in multifamily assets, indicating strong demand in that sector [8] - There is nearly $200 billion of equity looking to invest in North American commercial real estate, particularly in the multifamily sector [8][12] - The median priced home in America increased from $285,000 in February 2020 to $385,000 in February 2025, impacting the affordability of single-family housing [11][12] Company Strategy and Development Direction - The company is focused on expanding its market share with major lending partners like Fannie Mae, Freddie Mac, and HUD, aiming for an average production of $200 million per banker broker in 2025 [30][32] - Recent strategic moves include entering the hospitality investment sales space and opening a new office in London to tap into European and Middle Eastern markets [14][15] - The company plans to launch WD Suite, a web-based software aimed at engaging private clients and enhancing deal flow [27][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving annual guidance despite Q1 earnings being lower than expected, citing strong pipelines and market conditions [25][37] - The company noted that commercial real estate owners are under pressure to refinance and deploy capital, which is expected to drive transaction volumes [56] - Management highlighted the positive changes at HUD and the engagement of Fannie and Freddie in the market as favorable indicators for future growth [31][37] Other Important Information - The company incurred $10 million in expenses related to debt refinancing, loan loss provisions, and personnel separations during the quarter [17][18] - A quarterly dividend of $0.67 per share was approved, consistent with the previous quarter [24] Q&A Session Summary Question: Insights on investor behavior and underwriting assumptions - Management noted that there has been no significant fallout in deal flow despite market volatility, with investors eager to enter the market [42] Question: Expectations for GSEs hitting their caps - Management indicated that both Fannie and Freddie are actively competing in the market, which is a positive sign for achieving their caps [45][46] Question: Discussion on operating expenses and future cost ratios - Management confirmed that operating expenses are currently high due to volume fluctuations but expect to reduce the ratio as transaction volumes increase [53][55]

Market Trends & Investor Sentiment - There's significant demand for commercial real estate (CRE) investment opportunities in North America[10] - Multifamily sales volume has rebounded to pre-pandemic levels[13] - Investor buying sentiment reflects a desire to transact in the multifamily environment[16] - The 2024 multifamily absorption rate was 2.2 times above the pre-COVID average[20] - The delta between the cost of homeownership and renting remains wide[24] Financial Performance (Q1 2025 vs Q1 2024) - Consolidated total transaction volume increased by 10%, from $6394459 thousand to $7035932 thousand[31] - Total revenues increased by 25%, from $81897 thousand to $102570 thousand[31] - Net income increased by 135%, from -$6700 thousand to $2360 thousand[31] - Adjusted EBITDA increased by 31%, from -$19297 thousand to -$13327 thousand[31] - Total revenues for Servicing & Asset Management ("SAM") decreased by 7%, from $141235 thousand to $131903 thousand[35] - Net income for SAM decreased by 56%, from $43283 thousand to $19126 thousand[35] - Adjusted EBITDA for SAM decreased by 10%, from $119658 thousand to $107902 thousand[35] Future Outlook & Goals - The company anticipates high single-digits to double-digits growth in adjusted core earnings per share for 2025[38] - The company anticipates flat to high single-digits growth in adjusted EBITDA for 2025[38] - The company aims to increase average transaction volume per banker/broker to $200 million, a 16% increase[41]

[First Quarter 2025 Financial Highlights](index=1&type=section&id=First%20Quarter%202025%20Financial%20Highlights) [Q1 2025 Performance Overview](index=1&type=section&id=First%20Quarter%202025%20Highlights) In the first quarter of 2025, Walker & Dunlop saw a 10% year-over-year increase in total transaction volume to $7.0 billion and a 4% rise in total revenues to $237.4 million, though a significant 77% decline in net income to $2.8 million and diluted EPS to $0.08 was driven by an 8% increase in total expenses, primarily due to higher personnel costs, a corporate debt write-off, and increased credit loss provisions, yet the company maintains its 2025 outlook citing improving transaction volumes and durable profit streams reflected in less severe declines in adjusted core net income and adjusted EBITDA Q1 2025 Key Financial Metrics (YoY) | Metric | Q1 2025 | % Change YoY | | :--- | :--- | :--- | | Total Transaction Volume | $7.0 billion | 10% ▲ | | Total Revenues | $237.4 million | 4% ▲ | | Net Income | $2.8 million | 77% ▼ | | Diluted EPS | $0.08 | 77% ▼ | | Adjusted EBITDA | $65.0 million | 12% ▼ | | Adjusted core EPS | $0.85 | 29% ▼ | | Servicing Portfolio | $135.6 billion | 3% ▲ | - The Board of Directors declared a quarterly dividend of **$0.67 per share** for the second quarter of 2025[1](index=1&type=chunk)[3](index=3&type=chunk) - Management attributes the significant drop in GAAP net income to increased severance expense, fees from a corporate debt issuance, and credit losses, while noting that adjusted figures were down materially less[2](index=2&type=chunk) - The company expressed optimism for the remainder of 2025, anticipating that pent-up demand will drive higher transaction volumes, supported by initial deregulatory changes at HUD and the GSEs[2](index=2&type=chunk) [Consolidated Operating and Financial Results](index=2&type=section&id=Consolidated%20Operating%20and%20Financial%20Results) [Consolidated First Quarter 2025 Operating Results](index=2&type=section&id=Consolidated%20First%20Quarter%202025%20Operating%20Results) The company's consolidated operating results for Q1 2025 show a 10% increase in total transaction volume, driven by strong growth in Fannie Mae, HUD, and property sales volumes, which offset a decline in brokered debt financing, while the managed portfolio grew by 3% to $154.2 billion, key profitability metrics declined with net income falling 77% due to rising expenses, and credit metrics showed an increase in the at-risk portfolio and defaulted loans, leading to a $3.7 million provision for credit losses [Transaction Volumes](index=2&type=section&id=Transaction%20Volumes) Total transaction volume for Q1 2025 increased by 10% year-over-year to $7.0 billion, primarily fueled by a 67% surge in Fannie Mae volumes, a 948% increase in Ginnie Mae-HUD volumes, and a 58% rise in property sales volume, partially offset by a 23% decrease in brokered debt financing and a 17% drop in Freddie Mac volumes Q1 2025 Transaction Volumes (in thousands) | Category | Q1 2025 | Q1 2024 | % Variance | | :--- | :--- | :--- | :--- | | Fannie Mae | $1,511,794 | $903,368 | 67% | | Freddie Mac | $808,247 | $974,926 | (17)% | | Ginnie Mae - HUD | $148,158 | $14,140 | 948% | | Brokered | $2,552,943 | $3,319,074 | (23)% | | Property sales volume | $1,839,290 | $1,167,151 | 58% | | **Total transaction volume** | **$7,035,932** | **$6,394,459** | **10%** | - The **58% increase in property sales volume** outperformed the broader market's **36% increase**, indicating strengthening investment conviction in the multifamily sector[7](index=7&type=chunk) - The decline in brokered debt financing was attributed to market volatility causing investors to be selective on transaction timing, though the supply of capital from various providers remains strong[7](index=7&type=chunk) [Managed Portfolio & Key Performance Metrics](index=3&type=section&id=Managed%20Portfolio%20%26%20Key%20Performance%20Metrics) As of March 31, 2025, the total managed portfolio grew 3% year-over-year to $154.2 billion, with the servicing portfolio increasing by 3% to $135.6 billion and assets under management (AUM) rising 6% to $18.5 billion, despite this growth, key performance metrics deteriorated significantly as net income and diluted EPS both fell 77%, and the operating margin compressed from 6% to 2%, primarily due to personnel expenses rising to 51% of total revenues from 49% a year ago Managed Portfolio as of March 31, 2025 (in thousands) | Category | Q1 2025 | Q1 2024 | % Variance | | :--- | :--- | :--- | :--- | | Total Servicing Portfolio | $135,648,716 | $131,963,765 | 3% | | Assets under management | $18,518,413 | $17,465,398 | 6% | | **Total Managed Portfolio** | **$154,167,129** | **$149,429,163** | **3%** | Q1 2025 Key Performance Metrics (YoY) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Walker & Dunlop net income | $2,754 thousand | $11,866 thousand | | Diluted EPS | $0.08 | $0.35 | | Operating margin | 2% | 6% | | Return on equity | 1% | 3% | | Personnel expenses (% of revenue) | 51% | 49% | - The fair value of mortgage servicing rights (MSRs) remained stable at **$1.4 billion** as of March 31, 2025, the same as the prior year[12](index=12&type=chunk) [Key Credit Metrics](index=4&type=section&id=Key%20Credit%20Metrics) The at-risk servicing portfolio grew 8% year-over-year to $64.5 billion, primarily due to new Fannie Mae loans, while defaulted loans increased 72% to $108.5 million (0.17% of the at-risk portfolio) from $63.3 million (0.11%) a year ago, leading the company to record a $3.7 million provision for credit losses in Q1 2025 mainly related to newly defaulted loans and the growth of the at-risk portfolio, and during 2024, the company received repurchase requests for five GSE loans, with two still outstanding with an aggregate balance of $46.1 million as of March 31, 2025 Key Credit Metrics as of March 31 (in thousands) | Metric | 2025 | 2024 | % Variance | | :--- | :--- | :--- | :--- | | At-risk servicing portfolio | $64,450,319 | $59,498,851 | 8% | | Defaulted loans | $108,530 | $63,264 | 72% | | Defaulted loans (% of at-risk) | 0.17% | 0.11% | - | - As of March 31, 2025, there were **eight at-risk loans in default**, compared to **six loans** a year prior, with associated collateral-based reserves of **$7.5 million**[19](index=19&type=chunk) - A provision for credit losses of **$3.7 million** was recorded in Q1 2025, primarily due to new defaults and an increase in the at-risk servicing portfolio[19](index=19&type=chunk) [Financial Results by Segment](index=5&type=section&id=Financial%20Results%20by%20Segment) Segment performance varied in Q1 2025, with the Capital Markets segment seeing a 25% revenue increase and turning a prior-year loss into a $2.4 million net income driven by higher origination and property sales fees, conversely, the Servicing & Asset Management segment's net income fell 56% to $19.1 million due to decreased investment management and placement fees, and the Corporate segment reported a wider net loss of $18.7 million, up from $24.7 million in the prior year, due to increased operating expenses - Interest expense on corporate debt and income tax expense are determined at a consolidated level and then allocated to each segment[21](index=21&type=chunk) - Consolidated interest expense on corporate debt decreased **12% YoY** due to lower short-term interest rates, however, a **$4.2 million write-off** of unamortized debt issuance costs was recorded in other operating expenses due to a debt refinancing[22](index=22&type=chunk) [Capital Markets](index=6&type=section&id=Capital%20Markets) The Capital Markets segment reported a significant turnaround, with total revenues increasing 25% YoY to $102.6 million, leading to a net income of $2.4 million compared to a net loss of $6.7 million in Q1 2024, driven by a 33% increase in MSR income and a 53% rise in property sales broker fees, reflecting higher Fannie Mae/HUD volumes and strong property sales, despite personnel expenses rising 9% due to higher commissions and $2.4 million in severance costs for underperforming producers Capital Markets Financial Results (in thousands) | Metric | Q1 2025 | Q1 2024 | % Variance | | :--- | :--- | :--- | :--- | | Total revenues | $102,570 | $81,897 | 25% | | Total expenses | $98,029 | $90,227 | 9% | | Walker & Dunlop net income (loss) | $2,360 | $(6,700) | (135)% | - A shift in debt financing mix towards more profitable Fannie Mae and HUD executions led to higher origination fee rates (**0.90% vs 0.84%**) and MSR rates (**0.55% vs 0.40%**)[25](index=25&type=chunk) - Other revenues increased **66%**, primarily due to higher investment banking revenues from several M&A transactions that closed during the quarter[25](index=25&type=chunk) - The company expects to recognize around **$5 million of severance and related expenses** in the first half of 2025, with **$2.4 million** already recorded in Q1[26](index=26&type=chunk) [Servicing & Asset Management](index=7&type=section&id=Servicing%20%26%20Asset%20Management) The Servicing & Asset Management segment experienced a decline in profitability, with total revenues down 7% YoY to $131.9 million and net income falling 56% to $19.1 million, as servicing fees grew 3% due to a larger portfolio, this was more than offset by a 28% drop in investment management fees and a 17% decrease in placement fees and other interest income attributed to lower short-term interest rates, while expenses rose 8% driven by a $3.7 million provision for credit losses and higher personnel costs Servicing & Asset Management Financial Results (in thousands) | Metric | Q1 2025 | Q1 2024 | % Variance | | :--- | :--- | :--- | :--- | | Total revenues | $131,903 | $141,235 | (7)% | | Total expenses | $95,155 | $87,964 | 8% | | Walker & Dunlop net income | $19,126 | $43,283 | (56)% | - Investment management fees decreased due to a reduction in accruals from LIHTC fund asset dispositions and lower realization revenues from private credit strategies[30](index=30&type=chunk) - The provision for credit losses increased significantly to **$3.7 million** from **$0.5 million** in Q1 2024, primarily due to an update to the historical loss factor and new defaults[27](index=27&type=chunk)[33](index=33&type=chunk) [Corporate](index=8&type=section&id=Corporate) The Corporate segment, which includes support functions, reported a net loss of $18.7 million for Q1 2025, a 24% improvement from the $24.7 million loss in Q1 2024, despite an 8% increase in total expenses, with the improvement in net loss due to a larger income tax benefit, and total expenses rising to $38.9 million driven by an 8% increase in both personnel costs (due to higher headcount) and other operating expenses (due to increased professional fees and a debt-related write-off) Corporate Segment Financial Results (in thousands) | Metric | Q1 2025 | Q1 2024 | % Variance | | :--- | :--- | :--- | :--- | | Total revenues | $2,894 | $4,927 | (41)% | | Total expenses | $38,939 | $36,189 | 8% | | Walker & Dunlop net loss | $(18,732) | $(24,717) | (24)% | - Personnel expense increased **8%** due to higher salaries, benefits, and stock compensation from increased average headcount[34](index=34&type=chunk) - Other operating expenses rose **8%**, primarily due to increased professional fees and the write-off of unamortized issuance costs related to the partial paydown of the term loan[34](index=34&type=chunk) [Capital Management and Shareholder Returns](index=9&type=section&id=Capital%20Sources%20and%20Uses) [Capital Management and Shareholder Returns](index=9&type=section&id=Capital%20Sources%20and%20Uses) In Q1 2025, Walker & Dunlop focused on optimizing its capital structure and returning value to shareholders by declaring a Q2 dividend of $0.67 per share, completing a $400 million senior unsecured notes offering due 2033 at 6.625% and using the proceeds to pay down its senior secured term loan to $450 million, extending the maturity to 2032, which resulted in a $4.2 million write-off of deferred issuance costs, and authorizing a new $75 million share repurchase program, under which no shares have yet been repurchased - A dividend of **$0.67 per share** for Q2 2025 was declared, payable on May 29, 2025[36](index=36&type=chunk) - The company issued **$400 million of 6.625% senior unsecured notes** due 2033 and concurrently paid down its senior secured term loan to **$450 million**, extending its maturity to 2032[37](index=37&type=chunk) - A new 12-month, **$75.0 million share repurchase program** was authorized in February 2025, with no repurchases made as of March 31, 2025[39](index=39&type=chunk) [Standard Disclosures](index=9&type=section&id=Standard%20Disclosures) [Non-GAAP Financial Measures](index=9&type=section&id=Non-GAAP%20Financial%20Measures) The company utilizes non-GAAP financial measures such as adjusted EBITDA, adjusted core net income, and adjusted core EPS to supplement its GAAP-based financial statements, as management believes these measures provide investors with a better understanding of operating performance, allow for more meaningful period-to-period comparisons, and help identify underlying business trends, though these measures are not intended as a substitute for GAAP and may not be comparable to similarly titled measures of other companies - The company uses **adjusted EBITDA**, **adjusted core net income**, and **adjusted core EPS** to evaluate operating performance, for comparison with forecasts, and for benchmarking against competitors[42](index=42&type=chunk)[45](index=45&type=chunk) - Adjustments to derive these non-GAAP measures typically exclude items like amortization and depreciation, provision for credit losses, MSR income, and certain non-recurring charges like goodwill impairment or write-offs from debt refinancing[44](index=44&type=chunk) [Forward-Looking Statements](index=10&type=section&id=Forward-Looking%20Statements) This section contains standard cautionary language regarding forward-looking statements, which are based on current expectations and projections about future events, these statements are not guarantees of future results and are subject to numerous risks and uncertainties, and the company disclaims any obligation to update these statements and directs readers to its SEC filings, such as the Annual Report on Form 10-K, for a more detailed discussion of risk factors - Forward-looking statements reflect current views and are subject to known and unknown risks that may cause actual results to differ significantly[46](index=46&type=chunk)[47](index=47&type=chunk) - Key risk factors include general economic and real estate market conditions, changes in interest rates, regulatory changes to GSEs or HUD, and changes in federal fiscal and monetary policies[48](index=48&type=chunk) [Financial Statements and Supplemental Data](index=12&type=section&id=Financial%20Statements%20and%20Supplemental%20Data) [Condensed Consolidated Financial Statements](index=12&type=section&id=Condensed%20Consolidated%20Financial%20Statements) The unaudited condensed consolidated financial statements present the company's financial position and results of operations, with the balance sheet as of March 31, 2025, showing total assets of $4.51 billion and total equity of $1.74 billion, and the income statement for Q1 2025 detailing revenues of $237.4 million and net income of $2.8 million, a significant decrease from $11.9 million in Q1 2024, primarily due to higher operating expenses Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total assets | $4,511,878 | $4,381,993 | | Total liabilities | $2,767,789 | $2,622,130 | | Total equity | $1,744,089 | $1,759,863 | Condensed Consolidated Income Statement Highlights (in thousands) | Account | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total revenues | $237,367 | $228,059 | | Total expenses | $232,123 | $214,380 | | Walker & Dunlop net income | $2,754 | $11,866 | [Supplemental Operating and Credit Data](index=14&type=section&id=Supplemental%20Operating%20and%20Credit%20Data) This section provides detailed quarterly trends, showing Q1 2025 total transaction volume of $7.0 billion was up from Q1 2024's $6.4 billion but down from Q4 2024's $13.4 billion, indicating seasonal patterns, while the total servicing portfolio continued its steady growth, reaching $135.6 billion, and key credit metrics show the at-risk portfolio grew to $64.5 billion, with defaulted loans at $108.5 million, an increase both year-over-year and quarter-over-quarter Quarterly Transaction Volume Trend (in thousands) | Volume Type | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Total Debt Financing Volume | $5,196,642 | $9,996,208 | $5,227,308 | | Property Sales Volume | $1,839,290 | $3,450,614 | $1,167,151 | | **Total Transaction Volume** | **$7,035,932** | **$13,446,822** | **$6,394,459** | Quarterly Key Credit Metrics Trend (in thousands) | Metric | Mar 31, 2025 | Dec 31, 2024 | Mar 31, 2024 | | :--- | :--- | :--- | :--- | | At-risk servicing portfolio | $64,450,319 | $63,365,672 | $59,498,851 | | Defaulted loans | $108,530 | $41,737 | $63,264 | [Reconciliation of GAAP to Non-GAAP Measures](index=16&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Measures) This section provides detailed reconciliations of GAAP measures to the company's non-GAAP metrics, for Q1 2025, Walker & Dunlop's net income of $2.8 million is reconciled to an Adjusted EBITDA of $65.0 million by adjusting for items such as income tax, interest, amortization, MSR income, and a $4.2 million write-off of debt issuance costs, similarly, net income is reconciled to an Adjusted Core Net Income of $29.2 million, resulting in an Adjusted Core EPS of $0.85, which management believes better reflects core operating performance Q1 2025 Reconciliation of Net Income to Adjusted EBITDA (in thousands) | Item | Amount | | :--- | :--- | | **Walker & Dunlop Net Income** | **$2,754** | | Income tax expense | $2,519 | | Interest expense on corporate debt | $15,514 | | Amortization and depreciation | $57,621 | | Provision for credit losses | $3,712 | | MSR income | $(27,811) | | Other adjustments | $10,657 | | **Adjusted EBITDA** | **$64,966** | Q1 2025 Reconciliation of Diluted EPS to Adjusted Core EPS | Metric | Amount | | :--- | :--- | | Diluted EPS | $0.08 | | Adjustments (per share) | $0.77 | | **Adjusted Core EPS** | **$0.85** |

Group 1: Stock Performance and Price Targets - Walker & Dunlop (WD) shares have increased by 1.1% over the past four weeks, closing at $86.28, with a mean price target of $108.33 indicating a potential upside of 25.6% [1] - The average price target ranges from a low of $105 to a high of $115, with a standard deviation of $5.77, suggesting a 21.7% increase at the lowest estimate and a 33.3% upside at the highest [2] - Analysts' growing optimism regarding WD's earnings prospects is supported by strong agreement in revising EPS estimates higher, which correlates with near-term stock price movements [9][10] Group 2: Analyst Insights and Consensus - The Zacks Consensus Estimate for WD has increased by 4.2% over the past month, indicating positive sentiment among analysts [10] - WD holds a Zacks Rank 2 (Buy), placing it in the top 20% of over 4,000 ranked stocks based on earnings estimates, suggesting a strong potential upside [11] - A tight clustering of price targets, indicated by a low standard deviation, reflects a high degree of agreement among analysts about the stock's price movement direction [7]

Part I [Item 1. Business](index=4&type=section&id=Item%201.%20Business) Walker & Dunlop provides commercial real estate services and finance, primarily in the U.S. multifamily sector, operating through three core segments - The company operates through three reportable segments: Capital Markets, Servicing & Asset Management, and Corporate, determined by the product or service provided[18](index=18&type=chunk) - The company's growth strategy, targeting **$2 billion** in annual revenues by the end of 2025, is unlikely to be achieved on schedule due to macroeconomic disruptions, though long-term goals remain[57](index=57&type=chunk)[59](index=59&type=chunk) - As of December 31, 2024, the company employed **1,399** people, a **6%** increase from the prior year, with a stable **8%** voluntary annualized turnover rate[69](index=69&type=chunk)[73](index=73&type=chunk) [Capital Markets](index=4&type=section&id=Capital%20Markets) The Capital Markets segment offers diverse commercial real estate finance products, including Agency lending, debt brokerage, property sales, and housing market research - The company is one of **25** approved Fannie Mae DUS lenders, sharing in the risk of loss on originated loans, typically capped at **20%** of the loan amount[20](index=20&type=chunk) - As one of **23** approved Freddie Mac lenders, the company originates and sells various multifamily loans, rarely having risk-sharing arrangements unlike the Fannie Mae DUS program[24](index=24&type=chunk) - The company is an approved HUD MAP and LEAN lender and Ginnie Mae issuer, providing construction and permanent loans for multifamily, affordable, and healthcare facilities, with minimal risk of loss due to U.S. government backing[25](index=25&type=chunk)[26](index=26&type=chunk) - Through its subsidiary Zelman & Associates, the company provides housing market research and M&A advisory services, becoming a wholly-owned subsidiary in Q4 2024 after Walker & Dunlop purchased the remaining **25%** interest[36](index=36&type=chunk) [Servicing & Asset Management](index=7&type=section&id=Servicing%20%26%20Asset%20Management) The Servicing & Asset Management segment generates recurring revenue from servicing fees, asset management fees, and net interest income, managing a loan portfolio and investment funds - The company retains servicing rights on nearly all Agency loans it originates, generating fees from servicing, escrow deposit placements, and other ancillary services[39](index=39&type=chunk) - Through its investment management subsidiary WDIP, the company manages **$2.3 billion** in regulatory assets under management (AUM) across various debt and equity funds, launching Debt Fund I in Q4 2023 and closing the first round of Debt Fund II in Q4 2024[47](index=47&type=chunk)[48](index=48&type=chunk) - The company provides affordable housing services through its subsidiary WDAE, one of the largest LIHTC syndicators in the U.S., forming LIHTC funds with third-party investors and earning syndication and asset management fees as general partner[51](index=51&type=chunk) [Our Growth Strategy](index=10&type=section&id=Our%20Growth%20Strategy) The company's 2025 growth strategy targets significant increases in revenues, debt financing, property sales, and AUM, though macroeconomic challenges have delayed most milestones Progress Towards 2025 Milestones | Milestone (in thousands) | 2021 | 2022 | 2023 | 2024 | 2025 Milestone | | :--- | :--- | :--- | :--- | :--- | :--- | | Revenues | $ 1,259,178 | $ 1,258,753 | $ 1,054,440 | $ 1,132,490 | $ 2,000,000 | | Debt financing volume | 48,911,120 | 43,605,984 | 24,202,859 | 30,154,666 | 60,000,000 | | Small balance lending volume | 515,757 | 745,686 | 634,280 | 750,388 | 5,000,000 | | Property sales volume | 19,254,697 | 19,732,654 | 8,784,537 | 9,751,223 | 25,000,000 | | Servicing portfolio | 115,700,564 | 123,133,855 | 130,471,524 | 135,287,012 | 160,000,000 | | Assets under management | 16,437,865 | 16,748,449 | 17,321,452 | 18,423,463 | 10,000,000 | [Item 1A. Risk Factors](index=14&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks related to its business operations, regulatory environment, and corporate structure, including reliance on Agencies and potential DUS program losses - A primary risk is the potential loss of, or changes in, relationships with the Agencies (Fannie Mae, Freddie Mac, HUD), which are the source for all of its loans held for sale[83](index=83&type=chunk) - The company is subject to significant risk of loss from its Fannie Mae DUS program, generally absorbing the first **5%** of losses on a defaulted loan, with a maximum loss capped at **20%** of the original principal balance, with an at-risk servicing portfolio of **$63.4 billion** as of December 31, 2024[91](index=91&type=chunk) - The company may be required to repurchase loans or indemnify purchasers if there is a breach of representations or warranties, with **five** such requests in 2024 totaling **$87.3 million** in unpaid principal balance, resulting in a **$14.2 million** provision for credit losses[100](index=100&type=chunk) - The company is highly dependent on short-term warehouse facilities to fund its loan originations, with **$3.8 billion** of committed and uncommitted loan funding available through **five** commercial banks as of December 31, 2024, where termination or non-renewal would materially impact its ability to originate loans[97](index=97&type=chunk) [Item 1C. Cybersecurity](index=25&type=section&id=Item%201C.%20Cybersecurity) The company's cybersecurity program, guided by NIST CSF and overseen by the Audit and Risk Committee, manages risks and has not identified any material past incidents - The cybersecurity risk management program is guided by the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF)[154](index=154&type=chunk) - Oversight is provided by the Board's Audit and Risk Committee, which receives quarterly reports from the Chief Information Security Officer (CISO)[156](index=156&type=chunk)[158](index=158&type=chunk) - The company has not identified any past cybersecurity threats or incidents that have materially affected its operations, business strategy, results, or financial condition[156](index=156&type=chunk) Part II [Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=26&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Walker & Dunlop's common stock trades on the NYSE, with the company paying quarterly dividends and having a share repurchase program, though no shares were repurchased in 2024 - During 2024, the Board of Directors declared and paid four quarterly dividends totaling **$2.60 per share**, with the dividend increased by **3%** to **$0.67 per share** for the first quarter of 2025[168](index=168&type=chunk) - A share repurchase program authorized for up to **$75.0 million** was in place for 2024, but no shares were purchased under it, with a new **$75.0 million** program authorized for a **12-month** period beginning February 21, 2025[173](index=173&type=chunk) Common Stock Repurchases for Q4 and Year Ended Dec 31, 2024 | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Purchased as Part of Publicly Announced Programs | Value of Shares that May Yet Be Purchased Under Programs | | :--- | :--- | :--- | :--- | :--- | | **4th Quarter 2024** | **3,375** | **$109.52** | **—** | **$75,000,000** | | October 1-31, 2024 | 997 | $110.82 | — | $75,000,000 | | November 1-30, 2024 | 2,378 | $108.97 | — | $75,000,000 | | December 1-31, 2024 | — | — | — | $75,000,000 | | **Total Year 2024** | **126,744** | **N/A** | **—** | **$75,000,000** | [Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=28&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Total revenues increased **7%** to **$1.13 billion** in 2024, but net income remained flat due to higher expenses and a **$14.2 million** provision for credit losses Consolidated Financial Results (2024 vs. 2023) | (in thousands) | 2024 | 2023 | Dollar Change | Percentage Change | | :--- | :--- | :--- | :--- | :--- | | **Total revenues** | **$1,132,490** | **$1,054,440** | **$78,050** | **7%** | | **Total expenses** | **$1,000,989** | **$916,243** | **$84,746** | **9%** | | Income from operations | $131,501 | $138,197 | $(6,696) | (5%) | | **Walker & Dunlop net income** | **$108,167** | **$107,357** | **$810** | **1%** | Total Transaction Volume (2024 vs. 2023) | Transaction Volume (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Debt Financing Volume | $30,154,666 | $24,202,859 | | Property Sales Volume | $9,751,223 | $8,784,537 | | **Total Transaction Volume** | **$39,905,889** | **$32,987,396** | - The commercial real estate market in 2024 was challenged by elevated interest rates and slower rent growth, but showed signs of recovery in the second half of the year, leading to increased transaction volumes, with GSEs' combined lending caps for 2025 set at **$146 billion**, a **22%** increase over 2024 volumes[214](index=214&type=chunk)[216](index=216&type=chunk)[220](index=220&type=chunk) - A goodwill impairment of **$33.0 million** was recognized in 2024, attributed to one of the reporting units associated with the GeoPhy acquisition, due to challenging macroeconomic conditions and lower projected cash flows[211](index=211&type=chunk)[244](index=244&type=chunk) [Critical Accounting Estimates](index=30&type=section&id=Critical%20Accounting%20Estimates) Management identifies MSRs, Allowance for Risk-Sharing, Contingent Consideration, and Goodwill as critical accounting estimates, with a **$33.0 million** goodwill impairment in 2024 - The fair value of Mortgage Servicing Rights (MSRs) is a critical estimate, highly sensitive to assumptions like discount rates and placement fees on escrow accounts, where a **100-basis point** change in the discount rate would impact capitalized MSRs for 2024 by **3%**[194](index=194&type=chunk)[196](index=196&type=chunk) - The Allowance for Risk-Sharing Obligations is calculated using a CECL model based on the weighted-average remaining maturity (WARM) method, with the estimate sensitive to the forecasted loss rate; a **10%** change in this rate as of December 31, 2024, would change the allowance by **8%**[198](index=198&type=chunk)[204](index=204&type=chunk) - Contingent consideration liabilities from acquisitions are remeasured to fair value periodically, with revised forecasts in 2024 leading to a **$50.3 million** reduction in these liabilities, including a **$34.5 million** reduction for the GeoPhy earnout and a **$10.8 million** reduction for the Alliant earnout[206](index=206&type=chunk)[207](index=207&type=chunk) - Goodwill was impaired by **$33.0 million** in 2024 related to a reporting unit within the Capital Markets segment associated with the GeoPhy acquisition, due to declines in projected cash flows amid challenging market conditions[211](index=211&type=chunk) [Segment Results](index=45&type=section&id=Segment%20Results) In 2024, Capital Markets net income rose **62%**, Servicing & Asset Management net income decreased **5%**, and Corporate reported a wider net loss due to increased expenses Segment Net Income (Loss) (2024 vs. 2023) | (in thousands) | 2024 | 2023 | | :--- | :--- | :--- | | Capital Markets | $66,664 | $41,180 | | Servicing & Asset Management | $157,750 | $166,316 | | Corporate | $(116,247) | $(100,139) | | **Walker & Dunlop Net Income** | **$108,167** | **$107,357** | [Liquidity and Capital Resources](index=55&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$5.3 billion** in warehouse facilities and **$253.9 million** in operational liquidity, while managing a growing at-risk servicing portfolio - As of December 31, 2024, the company had **$5.3 billion** in total Agency Warehouse Facilities, including **$1.65 billion** committed, to fund its loan originations[550](index=550&type=chunk) - The company was required to maintain **$64.5 million** of liquid assets for operational liquidity and held **$253.9 million** as of December 31, 2024, with its net worth of **$992.6 million** also exceeding the Fannie Mae requirement of **$324.4 million**[341](index=341&type=chunk)[342](index=342&type=chunk) Key Credit Metrics | (in thousands) | Dec 31, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total risk-sharing servicing portfolio | $68,211,744 | $63,722,521 | | Total non-risk-sharing servicing portfolio | $67,075,268 | $66,708,864 | | **Total servicing portfolio UPB** | **$135,323,938** | **$130,471,524** | | At risk servicing portfolio | $63,365,672 | $58,801,055 | | Defaulted loans | $41,737 | $27,214 | | Defaulted loans as a % of at-risk portfolio | 0.07% | 0.05% | - In 2024, the company received repurchase demands for **five** loans with an aggregate unpaid principal balance (UPB) of **$87.3 million**, resulting in a **$14.2 million** provision for credit losses and **$10.6 million** in related operating costs[368](index=368&type=chunk) [Item 7A. Quantitative and Qualitative Disclosures About Market Risk](index=59&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to interest rate risk affecting placement fees and borrowing costs, and market value risk on MSRs, with a **100-basis point** rate change having a material impact Annual Impact of a 100 Basis Point Change in Interest Rates (as of Dec 31, 2024) | Impact on: | 100 bps Increase (in millions) | 100 bps Decrease (in millions) | | :--- | :--- | :--- | | Placement fee revenue | $26.9 | $(26.9) | | Net warehouse interest income | $(6.2) | $6.2 | | Income from operations (Corporate Debt) | $(7.8) | $7.8 | - The fair value of MSRs is subject to market value risk, where a **100-basis point** increase in the discount rate would decrease the MSR fair value by approximately **$41.9 million** as of December 31, 2024[377](index=377&type=chunk) [Item 9A. Controls and Procedures](index=61&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2024, with an unqualified auditor opinion - Management concluded that both disclosure controls and procedures, and internal control over financial reporting were effective as of December 31, 2024[381](index=381&type=chunk)[382](index=382&type=chunk) - The independent auditor, KPMG LLP, issued an unqualified opinion on the effectiveness of the company's internal control over financial reporting as of December 31, 2024[382](index=382&type=chunk) Part III [Part III](index=61&type=section&id=PART%20III) Part III incorporates information by reference from the company's Proxy Statement, covering directors, executive compensation, security ownership, and related transactions Part IV [Part IV](index=62&type=section&id=PART%20IV) Part IV lists financial statements, schedules, and exhibits filed with the Form 10-K, including consolidated financial statements and the independent auditor's report [Item 15. Exhibits and Financial Statement Schedules](index=62&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists all documents filed with the Form 10-K, including consolidated financial statements, auditor's report, and various corporate exhibits Financial Statements and Supplementary Data [Reports of Independent Registered Public Accounting Firm](index=74&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG issued unqualified opinions on the financial statements and internal controls, identifying MSR valuation as a critical audit matter due to subjective judgments - The auditor issued an unqualified opinion, stating the financial statements are presented fairly in all material respects in conformity with U.S. GAAP[419](index=419&type=chunk) - The auditor identified the initial fair value measurement of Mortgage Servicing Rights (MSRs) as a Critical Audit Matter, highlighting the high degree of subjective judgment required to assess key assumptions like the discount rate and placement fee rate[424](index=424&type=chunk)[425](index=425&type=chunk) [Notes to the Consolidated Financial Statements](index=81&type=section&id=Notes%20to%20the%20Consolidated%20Financial%20Statements) The notes detail accounting policies, financial instruments, and operations, including a **$33.0 million** goodwill impairment and a **$14.2 million** provision for credit losses in 2024 - In 2024, the company received repurchase or indemnification requests for **five** loans, resulting in the recognition of loans held for investment and secured borrowings on the balance sheet, a **$14.2 million** provision for credit losses, and **$10.6 million** in other operating expenses[478](index=478&type=chunk)[483](index=483&type=chunk)[485](index=485&type=chunk) Roll Forward of MSRs (in thousands) | | 2024 | 2023 | | :--- | :--- | :--- | | Beginning balance | $907,415 | $975,226 | | Additions, following the sale of loan | 156,984 | 142,129 | | Amortization | (203,600) | (199,633) | | Pre-payments and write-offs | (8,400) | (10,307) | | **Ending balance** | **$852,399** | **$907,415** | Roll Forward of Allowance for Risk-Sharing Obligations (in thousands) | | 2024 | 2023 | | :--- | :--- | :--- | | Beginning balance | $31,601 | $44,057 | | Provision (benefit) for risk-sharing obligations | (974) | (10,448) | | Write-offs | (468) | (2,008) | | Other | (2,000) | — | | **Ending balance** | **$28,159** | **$31,601** | - A single customer (Fannie Mae) represented **35.6%** of total revenues for the year ended December 31, 2024[679](index=679&type=chunk)

Q4 Q4 2024 EARNINGS While forward-looking statements reflect our good faith projections, assumptions and expectations, they are not guarantees of future results. Furthermore, we disclaim any obligation to publicly update or revise any forward-looking statement to reflect changes in underlying assumptions or factors, new information, data or methods, future events or other changes, except as required by applicable law. Factors that could cause our results to differ materially include, but are not limited to: ...

Financial Data and Key Metrics Changes - The company closed total transaction volume of $13.4 billion in Q4 2024, up 45% year-over-year, generating diluted earnings per share of $1.32, up 42% from Q4 2023 [7] - Q4 adjusted EBITDA was $95 million, up 8% year-over-year, while adjusted core EPS was $1.34, down 6% from last year [8] - Full year diluted EPS was $3.19, flat from 2023, adjusted core EPS was $4.97, up 6%, and adjusted EBITDA reached a record level of $329 million, up 9% from 2023 [8][23] Business Line Data and Key Metrics Changes - Agency loan originations totaled $4.9 billion in Q4, with revenues from mortgage servicing rights up 62% from Q4 2023 [8] - The Capital Markets segment saw transaction volumes grow 45% year-over-year, with segment revenue surging 40% to $181 million [26][27] - The Servicing & Asset Management (SAM) segment generated revenues of $157 million, up 13% year-over-year, with servicing fees increasing by 4% [28] Market Data and Key Metrics Changes - Fannie Mae lending volume was $3.2 billion in Q4, up 91% from Q4 2023, while Freddie Mac loan originations grew by 19% to $1.6 billion [9][10] - The company finished the year as Fannie Mae's largest DUS partner for the sixth consecutive year [9] - The property sales team closed $3.5 billion in transactions in Q4, up 20% year-over-year, with total property sales for the year reaching $9.8 billion, up 11% from 2023 [11] Company Strategy and Development Direction - The company plans to continue investing in its Capital Markets business and expand its service offerings, including entering the hospitality sector and enhancing its affordable housing platform [57][58] - The company is focused on achieving its five-year growth plan called Drive to '25, which includes scaling its servicing and asset management businesses [62] - The company is optimistic about the commercial real estate market's recovery and aims to leverage its client relationships and transaction expertise to generate growth [42][56] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying fundamentals of the multifamily sector, noting strong rent growth and significant capital available for deployment [43][44] - The company anticipates a choppy market in 2025 but expects growth driven by increased transaction activity and cash origination fees [45][46] - Management acknowledged challenges such as inflation and interest rate fluctuations but remains optimistic about the company's positioning and growth potential [42][50] Other Important Information - The company increased its quarterly dividend for the seventh consecutive year to $0.67 per share, reflecting its strong cash generation capabilities [41] - The company has implemented new process controls to mitigate credit risks and has established a special asset management group to manage repurchased loans [20][36] Q&A Session Summary Question: Opportunities for formal alignment with alternative asset managers - Management indicated that while partnerships are always a possibility, they are confident in their ability to scale their asset management business independently [66][67] Question: Outlook for low-income housing tax credit syndication business - Management expressed confidence in the growth of the affordable housing business, supported by recent management changes and the importance of low-income housing tax credits [68][70] Question: Drivers behind Fannie Mae's strong performance - Management clarified that the strong performance was due to standard deal flow rather than a few large transactions, with servicing fees under pressure due to market conditions [73][75] Question: Completeness of the W&D business model - Management stated that while they feel well-positioned, they are always looking to improve and expand their service offerings to remain competitive [79][81] Question: Market conditions for distressed assets - Management noted that while some assets may face distress, the overall market is not expected to experience broad-scale distress due to the availability of capital [90][91] Question: Updates on GSE privatization discussions - Management indicated that privatization of Fannie Mae and Freddie Mac is a topic of discussion, with potential implications for the market depending on political developments [95][98] Question: Expansion into hospitality market - Management highlighted the opportunity in the hospitality sector, noting the strong performance of leisure hospitality and the potential for growth despite challenges in urban markets [99][106]

Core Insights - Walker & Dunlop reported significant growth in revenue and net income for Q4 2024, exceeding analyst expectations despite challenges in adjusted earnings [2][6][7] - The company achieved total revenue of $341.5 million, a 24.5% increase year-over-year, and net income of $44.8 million, up 42% from the previous year [3][7] Financial Performance - Adjusted Core EPS was $1.34, surpassing the forecast of $1.225 but down 6% from $1.42 in Q4 2023 [3][8] - Total transaction volume reached $13.4 billion, reflecting a 45% increase compared to $9.3 billion in Q4 2023 [3][6] - The Capital Markets segment saw a 56% increase in debt financing volume, contributing significantly to revenue growth [6] Business Overview - Walker & Dunlop specializes in commercial real estate finance, maintaining strong relationships with government-sponsored enterprises like Fannie Mae and Freddie Mac [4] - The company focuses on technology integration to enhance efficiency and expand market reach, utilizing platforms like Apprise and GeoPhy [4][9] Strategic Focus - The company is concentrating on increasing transaction volumes and expanding its servicing portfolio, which grew to $135.3 billion [5][6] - Investment management and affordable housing initiatives are key components of revenue diversification [5] Market Outlook - Management remains optimistic about market conditions and anticipates further growth in transaction volumes, positioning the company to benefit from a recovering real estate market [10][11] - A strategic focus on technology-driven service offerings is planned to maintain a competitive edge in the industry [11]

Walker & Dunlop (WD) came out with quarterly earnings of $1.34 per share, missing the Zacks Consensus Estimate of $1.52 per share. This compares to earnings of $1.42 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -11.84%. A quarter ago, it was expected that this provider of commercial real estate financial services would post earnings of $1.29 per share when it actually produced earnings of $1.19, delivering a surprise of -7. ...

Fourth quarter 2024 Earnings Release Exhibit 99.1 Walker & Dunlop Reports Fourth Quarter 2024 Financial Results 42% Increase in Net Income and Diluted Earnings per Share Generate Strong Finish to 2024 FOURTH QUARTER 2024 HIGHLIGHTS FULL-YEAR 2024 HIGHLIGHTS ● Total transaction volume of $39.9 billion, up 21% from 2023 BETHESDA, MD – FEBRUARY 13, 2025 – Walker & Dunlop, Inc. (NYSE: WD) (the "Company," or "Walker & Dunlop") reported quarterly total transaction volume of $13.4 billion, up 45% from the fourth q ...