Walker & Dunlop Reports Third Quarter 2012 Results

              Walker & Dunlop Reports Third Quarter 2012 Results

PR Newswire

BETHESDA, Md., Nov. 8, 2012

BETHESDA, Md., Nov. 8, 2012 /PRNewswire/ --

THIRD QUARTER 2012 HIGHLIGHTS

  oClosed acquisition of CWCapital on September 4, 2012; integration on track
  oLoan originations of $2.2 billion, up 141% over third quarter 2011
  oTotal revenues of $70.1 million, up 110% over third quarter 2011
  oServicing portfolio of $33.9 billion at September 30, 2012, up 113% over
    September 30, 2011
  oServicing fees of $13.3 million, up 52% over third quarter 2011
  oAdjusted net income of $14.3 million or $0.56 per diluted share, up 135%
    over third quarter 2011
  oGAAP net income of $7.1 million or $0.28 diluted share, up 17% over the
    third quarter 2011

Walker & Dunlop, Inc. (NYSE: WD) (the "Company") announced today exceptional
third quarter earnings and dramatic growth in loan originations, revenue and
adjusted net income that reflect the growth of Walker & Dunlop and the
successful acquisition of CWCapital. Revenues for the third quarter totaled
$70.1 million, an increase of 110% from $33.4 million in the third quarter
2011. The increase in revenues was driven by a 141% increase in loan
originations and a 52% increase in servicing fee income. Adjusted net income,
which excludes selected expenses^1 relating to the acquisition of CWCapital,
increased 135% to $14.3 million, or $0.56 per diluted share, from $6.1
million, or $0.28 per diluted share, for the third quarter 2011. GAAP net
income for the third quarter 2012 improved 17% from the third quarter 2011 to
$7.1 million, or $0.28 per diluted share.

"Seventy-five years ago today, Walker & Dunlop was founded by my grandfather
and great uncle. It is a true thrill to be announcing fantastic third quarter
results that reflect our firm's market position and dramatic growth on this
monumental anniversary," stated Willy Walker, Walker & Dunlop's Chairman,
President and Chief Executive Officer. "Walker & Dunlop is now one of the
largest commercial real estate finance companies in the United States. The
combination of our vastly expanded origination network, along with our growing
servicing portfolio, provides Walker & Dunlop with the market presence and
financial wherewithal to achieve our goal of becoming the premier commercial
real estate finance company in the United States."

"The acquisition of CWCapital in September is yet another transformative
strategic move for our company. Although the third quarter results reflect
only one month of the combined entity's financial performance, the impact from
CWCapital has been immediate and profound. We worked tirelessly throughout the
summer to begin integrating the two firms, and although not complete, we are
well on our way to bringing these two great firms together in a rapid and
effective manner."

"Our third quarter financial performance shows that we are executing on our
strategic business plan exceptionally well. We continue to gain scale and
market share in our core commercial loan origination business, with loan
originations up 141% over the third quarter 2011. Our servicing portfolio has
also grown dramatically, now totaling $33.9 billion, up 113% from the third
quarter 2011. The growth in originations and servicing income produced a 110%
increase in revenues resulting in 135% growth in adjusted net income over the
third quarter 2011."

"After Tuesday's election, the debate over the future of the GSEs begins
again, with a re-elected but new Obama Administration, Treasury Department,
Congress, and Senate. We expect GSE reform to be a hot topic of debate, and
are hopeful a clear path forward for the GSEs is established during the next
Congress. What the election did not change is the significant demand for
capital to refinance the trillions of dollars of commercial real estate loans
that mature between now and 2018. Walker & Dunlop expects to originate between
$6.7 billion and $7.4 billion of commercial mortgages in 2012 and between $8
billion and $10 billion of commercial mortgages in 2013, making us one of the
largest commercial mortgage lenders in the country. We will use this market
position, access to deal flow, and financial expertise to meet the needs of
our customers and capitalize on the massive refinancing market opportunity."

OPERATING RESULTS

LOAN ORIGINATIONS for the third quarter 2012 increased $1.3 billion, or 141%,
to $2.2 billion when compared to the third quarter 2011. During the month of
September, the newly integrated CWCapital platform contributed approximately
$1.0 billion to our third quarter loan originations. On a standalone basis,
Walker & Dunlop's loan originations grew by $247.0 million, or 27%, over the
third quarter 2011.

GAINS FROM MORTGAGE BANKING ACTIVITIES were $53.4 million for the third
quarter 2012 compared to $21.6 million for the third quarter 2011, a 148%
increase. Gains from mortgage banking activities are the revenues recognized
through the loan origination and sale process ("loan origination fees"), and
gains attributable to mortgage servicing rights ("MSRs"). LOAN ORIGINATION
FEES were $27.7 million for the third quarter 2012 compared to $9.7 million
for the third quarter 2011, a 187% increase. MSRs were $25.7 million for the
third quarter 2012 compared to $11.9 million for the third quarter 2011, a
116% increase. Gains from mortgage banking activities as a percentage of loan
originations were 245 basis points for the third quarter 2012, compared to 238
basis points in the third quarter 2011, a 3% increase, primarily due to the
increase in average loan origination fees.

TOTAL EXPENSES were $58.3 million for the third quarter 2012 compared to $23.7
million for the third quarter 2011, an increase of $34.6 million, or 146%.
Personnel expense increased $20.8 million due to commission costs associated
with the higher volume of loan originations, new salaries due to the growth of
the Company, and the acquisition of CWCapital which included severance expense
of $1.1 million. Total expenses for the third quarter 2012 include $11.7
million of selected expenses attributable to the acquisition of CWCapital,
comprised of $7.4 million in amortization of the loan origination pipeline
acquired, $2.3 million in legal and banking fees, $1.0 million for transition
services paid to the seller, and the aforementioned severance costs. Adjusted
total expenses, which excludes selected expenses, were $46.6 million for the
third quarter 2012, an increase of 97% from the third quarter of 2011.

ADJUSTED INCOME FROM OPERATIONS, which excludes selected expenses,  was $23.5
million for the third quarter 2012, an increase of 144% over the third quarter
2011, resulting in a 34% ADJUSTED OPERATING MARGIN compared to 29% for the
same period last year. GAAP income from operations was $11.8 million for the
third quarter 2012, an increase of 22% over the third quarter 2011, resulting
in a GAAP operating margin of 17% compared to 29% for the same period last
year.

SERVICING PORTFOLIO

The SERVICING PORTFOLIO totaled $33.9 billion at September 30, 2012, a 113%
increase from $15.9 billion at September 30, 2011. Walker & Dunlop acquired
the right to service $14.5 billion of mortgage loans from CWCapital, with an
estimated acquisition date fair value of $130.5 million.

SERVICING FEES were $13.3 million for the third quarter 2012 compared to $8.8
million for the third quarter 2011, a 52% increase. The increase in servicing
fees was due to the organic growth of the servicing portfolio over the past
year, as well as one month of servicing fees from the portfolio acquired from
CWCapital.

The WEIGHTED AVERAGE SERVICING FEE was 23 basis points at September 30, 2012,
compared to 22 basis points at September 30, 2011.

CREDIT QUALITY AND RISK-SHARING OBLIGATIONS

The Company's AT RISK SERVICING PORTFOLIO, which is comprised of loans subject
to a defined risk-sharing formula, was $12.9 billion at September 30, 2012,
compared to $7.2 billion at September 30, 2011, a 79% increase.

60+ DAY DELINQUENCIES were $19.1 million, or 0.15% of the at risk servicing
portfolio, at September 30, 2012. No loans in the at risk servicing portfolio
were 60+ days delinquent at September 30, 2011.

PROVISION FOR RISK-SHARING OBLIGATIONS for the third quarter 2012 was a
recovery of $(0.8) million compared to a charge of $0.9 million in the third
quarter 2011, a $1.8 million or 191% decrease. During the third quarter 2012,
a previously recognized loss was reversed due to a property being sold at a
greater value than anticipated.

The Company had no NET WRITE-OFFS in the third quarter 2012, compared to $0.7
million or 0.01% of the Company's at risk portfolio in the third quarter
2011. Write-offs represent the cash settlement of provisions for losses
recognized in prior periods.

Credit quality within the Company's at risk portfolio remains very strong
following the acquisition of CWCapital.

YEAR-TO-DATE RESULTS

Due to the CWCapital acquisition, year-to-date results include eight months of
standalone Walker & Dunlop earnings and one month of the combined enterprise.
Total revenues for the nine months ended September 30, 2012 were $151.2
million compared to $104.8 million for the same period last year, a 44%
increase. The increase in total revenues was largely driven by a 54% increase
in loan originations, from $2.7 billion to $4.2 billion, and a 113% increase
in the aggregate servicing portfolio, from $15.9 billion to $33.9 billion,
since September 30, 2011.

Adjusted total expenses for the nine months ended September 30, 2012, which
excludes selected expenses, were $102.1 million, compared to $66.0 million for
the same period last year, a 55% increase. Total GAAP expenses for the nine
months ended September 30, 2012 were $114.9 million, a 74% increase over the
same period last year. Personnel expense as a percentage of total revenues
for the nine months ended September 30, 2012 was 40%, compared to 32% for the
same period last year.

Adjusted net income, which excludes selected expenses, increased 26% to $30.0
million, or $1.30 per diluted share, for the nine months ended September 30,
2012, compared to $23.8 million, or $1.10 per diluted share, for the nine
months ended September 30, 2011. GAAP net income decreased 7% to $22.2 million
for the nine months ended September 30, 2012, or $0.96 per diluted share.
Adjusted operating margin, which excludes selected expenses, was 32% for the
nine months ended September 30, 2012, compared to 37% for the same period last
year. Our GAAP operating margin was 24% for the nine months ended September
30, 2012, compared to 37% for the same period last year.

^1 Selected expenses include acquisition and integration costs related
specifically to the CWCapital acquisition, and amortization of customer
contracts acquired from CWCapital. For details of these selected expenses,
and a reconciliation of adjusted net income, adjusted earnings per diluted
share, adjusted total expenses, adjusted income from operations, and adjusted
operating margin, see "Adjusted Financial Metrics Reconciliation to GAAP" and
"Non-GAAP Financial Measures".

Conference Call Information

The Company will host a conference call to discuss its quarterly results on
Thursday, November 8, 2012 at 8:30 a.m. Eastern time. Analysts and investors
interested in participating are invited to call (866) 952-1907 from within the
United States or (785) 424-1826 from outside the United States and are asked
to reference the Conference ID: WDQ312. A simultaneous webcast of the call
will be available on the Investor Relations section of the Walker & Dunlop
website at http://www.walkerdunlop.com. Presentation materials, related to the
conference call, will be posted to the Investor Relations section of the
Company's website prior to the call.

A telephonic replay of the call will also be available from approximately
11:00 a.m. Eastern time November 8, 2012 through November 22, 2012. Please
call (800) 695-2533 from the United States or (402) 530-9029 from outside the
United States. An audio replay will also be available on the Investor
Relations section of the Company's website, along with the presentation
materials.

About Walker & Dunlop

Through its subsidiary Walker & Dunlop, LLC, Walker & Dunlop, Inc. (NYSE: WD)
is one of the leading commercial real estate finance companies in the United
States, with a primary focus on multifamily lending. As a Fannie Mae DUS®,
Freddie Mac Program Plus® and MAP- and LEAN-approved FHA lender, the
Multifamily and FHA Finance groups are focused on lending to property owners,
investors, and developers of multifamily properties across the country. The
Capital Markets group specializes in financing commercial real estate for
owners and investors across the United States, securing capital from large
institutions such as life insurance companies, commercial banks,CMBS lenders,
pension funds, and specialty finance companies. The Principal Investments
group provides institutional advisory, asset management, and investment
management services with respect to debt, structured debt and equity,
including interim financing. Walker & Dunlop, LLC has over 400 employees
located in 21 offices nationwide. More information about the Company can be
found at www.walkerdunlop.com.

Non-GAAP Financial Measures

To supplement the financial statements presented in accordance with United
States generally accepted accounting principles (GAAP), the Company presents
the following non-GAAP financial measures, each of which excludes selected
expenses related to the CWCapital acquisition: adjusted net income, adjusted
earnings per diluted share, adjusted total expenses, adjusted income from
operations and adjusted operating margin.

These supplemental measures exclude acquisition and integration costs
specifically related to the CWCapital acquisition, and amortization of
customer contracts and other intangible assets acquired from CWCapital. The
Company believes that these non-GAAP measures facilitate a review of the
comparability of the Company's operating performance on a period-to-period
basis because such costs are not, in our view, related to the Company's
ongoing operational performance. We use these non-GAAP measures to evaluate
the operating performance of our business, for comparison with forecasts and
strategic plans, and for benchmarking performance externally against
competitors. Since we find these measures to be useful, we believe that
investors benefit from seeing results "through the eyes" of management in
addition to seeing GAAP results. We believe that these non-GAAP measures, when
read in conjunction with the Company's GAAP financials, provide useful
information to investors by offering:

  othe ability to make more meaningful period-to-period comparisons of the
    Company's on-going operating results;
  othe ability to better identify trends in the Company's underlying business
    and perform related trend analyses; and
  oa better understanding of how management plans and measures the Company's
    underlying business.

These non-GAAP measures are not in accordance with or an alternative for GAAP,
and may be different from non-GAAP measures used by other companies. We
believe that these non-GAAP measures have limitations in that they do not
reflect all of the amounts associated with the Company's results of operations
as determined in accordance with GAAP and that these measures should only be
used to evaluate the Company's results of operations in conjunction with the
corresponding GAAP measures. The presentation of this additional information
is not meant to be considered in isolation or as a substitute for the most
directly comparable GAAP measures. We compensate for the limitations of
non-GAAP financial measures by relying upon GAAP results to gain a complete
picture of our performance.

For more information on these non-GAAP financial measures, refer to the
section of this press release titled "Adjusted Financial Metrics
Reconciliation to GAAP."

Forward-Looking Statements

Some of the statements contained in this press release may constitute
forward-looking statements within the meaning of the federal securities laws.
Forward-looking statements relate to expectations, projections, plans and
strategies, anticipated events or trends and similar expressions concerning
matters that are not historical facts. In some cases, you can identify
forward-looking statements by the use of forward-looking terminology such as
''may,'' ''will,'' ''should,'' ''expects,'' ''intends,'' ''plans,''
''anticipates,'' ''believes,'' ''estimates,'' ''predicts,'' or ''potential''
or the negative of these words and phrases or similar words or phrases that
are predictions of or indicate future events or trends and which do not relate
solely to historical matters. You can also identify forward-looking statements
by discussions of strategy, plans or intentions.

The forward-looking statements contained in this press release reflect our
current views about future events and are subject to numerous known and
unknown risks, uncertainties, assumptions and changes in circumstances that
may cause actual results to differ significantly from those expressed or
contemplated in any forward-looking statement.

While forward-looking statements reflect our good faith projections,
assumptions and expectations, they are not guarantees of future results.
Furthermore, we disclaim any obligation to publicly update or revise any
forward-looking statement to reflect changes in underlying assumptions or
factors, new information, data or methods, future events or other changes,
except as required by applicable law. For a further discussion of these and
other factors that could cause future results to differ materially from those
expressed or contemplated in any forward-looking statements, see the section
entitled ''Risk Factors" in our most recent Annual Report on Form 10-K and in
our subsequent SEC filings.



Walker & Dunlop, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
September 30, 2012 and December 31, 2011
(In thousands, except share and per share data)
                                                     September 30,   December
                                                                     31,
                                                     2012            2011
                                                     (unaudited)
Assets
     Cash and cash equivalents                     $ 82,613        $ 53,817
     Restricted cash                                 6,991           7,164
     Pledged securities, at fair value               32,080          18,959
     Loans held for sale, at fair value              1,293,320       268,167
     Loans held for investment                       16,426          —
     Servicing fees and other receivables, net       28,443          18,501
     Derivative assets                               37,986          10,638
     Mortgage servicing rights                       294,704         137,079
     Goodwill                                        53,401          —
     Intangible assets                               12,490          1,196
     Other assets                                    20,250          7,075
Total assets                                       $ 1,878,704     $ 522,596
Liabilities and Stockholders' Equity
Liabilities
     Accounts payable and other accrued expenses   $ 108,941       $ 76,163
     Performance deposits from borrowers             12,188          10,425
     Derivative liabilities                          17,881          5,223
     Guaranty obligation, net of accumulated         20,114          9,921
     amortization
     Allowance for risk-sharing obligations          16,844          14,917
     Warehouse notes payable                         1,279,947       218,426
     Notes payable                                   83,000          23,869
Total liabilities                                  $ 1,538,915     $ 358,944
Stockholders' Equity
Stockholders' equity:
     Preferred shares, Authorized 50,000,000, none $ —             $ —
     issued.
     Common stock, $0.01 par value. Authorized
     200,000,000; issued and outstanding             334             217
     33,449,119 shares in 2012 and 21,748,598
     shares in 2011.
     Additional paid-in capital                      234,981         81,190
     Retained earnings                               104,474         82,245
Total stockholders' equity                         $ 339,789       $ 163,652
Commitments and contingencies
Total liabilities and stockholders' equity         $ 1,878,704     $ 522,596



Walker & Dunlop, Inc. and Subsidiaries
Condensed Consolidated Statements of Income
(In thousands, except share and per share data)
(Unaudited)
                        For the three months ended   For the nine months ended
                        September 30,                September 30,
                        2012           2011          2012           2011
Revenues
 Gains from mortgage  $ 53,400      $  21,562      $ 107,136     $  69,678
 banking activities
 Servicing fees         13,307         8,757         32,513         24,517
 Net warehouse          1,248          1,052         3,259          2,828
 interest income
 Escrow earnings and    708            342           1,772          1,115
 other interest income
 Other                  1,463          1,643         6,568          6,621
      Total           $ 70,126      $  33,356      $ 151,248     $  104,759
      revenues
Expenses
 Personnel            $ 32,173      $  11,343      $ 61,177      $  33,413
 Amortization and       17,000         6,267         31,002         16,258
 depreciation
 Provision for
 risk-sharing           (848)          937           1,126          3,447
 obligations
 Interest expense       388            180           719            646
 on corporate debt
 Other operating        9,635          4,977         20,843         12,260
 expenses
      Total           $ 58,348      $  23,704      $ 114,867     $  66,024
      expenses
Income from           $ 11,778      $  9,652       $ 36,381      $  38,735
operations
 Income tax             4,680          3,573         14,152         14,886
 expense
Net income            $ 7,098       $  6,079       $ 22,229      $  23,849
Basic earnings        $ 0.28        $  0.28        $ 0.97        $  1.10
per share
Diluted earnings      $ 0.28        $  0.28        $ 0.96        $  1.10
per share
Basic weighted
average shares          25,091,153     21,629,463    22,881,795     21,614,062
outstanding
Diluted weighted
average shares          25,443,601     21,782,383    23,101,832     21,727,540
outstanding



OPERATING DATA
(dollars in thousands)
                        For the three months        For the nine months ended
                        ended                       September 30,
                        September 30,
(Dollars in             2012           2011         2012           2011
thousands )
Origination Data:
Origination Volumes
by Investor
Fannie Mae           $  1,134,185   $  389,884    $ 2,012,225   $  1,248,972
Freddie Mac             552,971        178,787      860,779        443,218
Ginnie Mae - HUD        228,135        57,746       438,056        422,331
Other (1)               265,504        280,250      881,174        609,025
Total                $  2,180,795   $  906,667    $ 4,192,234   $  2,723,546
Key Metrics (as a
percentage of
total revenues):
Personnel expenses      46%            34%          40%            32%
Other operating         14%            15%          14%            12%
expenses
Total expenses          83%            71%          76%            63%
Operating margin        17%            29%          24%            37%
Key Origination Metrics
(as a percentage
of origination
volume):
Origination related     1.27%          1.07%        1.31%          1.19%
fees
Fair value of MSRs      1.18%          1.31%        1.24%          1.37%
created, net
Fair value of MSRs
created, net as a
percentage
of GSE and HUD
origination volume      1.34%          1.90%        1.57%          1.77%
(2)
                                                    As of September 30,
Servicing Portfolio                                 2012           2011
by Type:
Fannie Mae                                        $ 18,452,944  $  10,136,692
Freddie Mac                                         8,422,748      2,715,788
Ginnie Mae - HUD                                    4,422,182      1,262,989
Other (1)                                           2,588,688      1,825,330
Total                                             $ 33,886,562  $  15,940,799
Key Servicing
Metrics (end of
period):
Weighted-average                                    0.23%          0.22%
servicing fee rate
(1) CMBS, life insurance companies, commercial banks and interim loans. 2012
origination volume includes $29.8 million interim loan volume, which are
classified as held for investment while outstanding.
(2) The fair value of the expected net future cash flows associated with the
servicing of the loan, net of any guaranty obligation retained, as a
percentage of GSE and HUD volume reflects revenue recognized, as a percentage
of loan origination volume, on those loans which the Company will record an
MSR upon sale of the loan. No MSRs arerecorded on "Other" originations or
interim loan originations. For the three and nine months ended September 30,
2012, interim loan volume was $13.3 and $29.8 million, respectively.



                            ADJUSTED FINANCIAL METRICS RECONCILIATION TO GAAP
                                 For the three months      For the nine months
                                 ended                     ended
                                 September 30,             September 30,
(in thousands, except share      2012           2011       2012        2011
and per
share amounts)
Reconciliation of GAAP Net Income and GAAP Diluted Earnings Per
Share to Adjusted Net Income
and Adjusted Diluted Earnings Per Share
GAAP net income             $    7,098      $   6,079    $ 22,229   $  23,849
Shares (in 000s) (1)             25,444         21,782     23,102      21,728
GAAP diluted earnings per   $    0.28       $   0.28     $ 0.96     $  1.10
share
GAAP net income             $    7,098      $   6,079    $ 22,229   $  23,849
Adjustments:
Severance costs             $    1,058      $   —        $ 1,058    $  —
Amortization of intangibles      7,353          —          7,353       —
Transition services              1,000          —          1,000       —
agreement
Deal-related expenses (2)        2,334          —          3,338       —
Income tax impact of             (4,569)                   (4,959)     —
adjustments
Adjusted net income         $    14,274     $   6,079    $ 30,019   $  23,849
Shares (in 000s) (1)             25,444         21,782     23,102      21,728
Adjusted diluted earnings   $    0.56       $   0.28     $ 1.30     $  1.10
per share
Reconciliation of GAAP Income from Operations and GAAP Operating
Margin to AdjustedIncome from Operations
and Adjusted Operating
Margin
GAAP income from operations $    11,778     $   9,652    $ 36,381   $  38,735
Total revenues                   70,126         33,356     151,248     104,759
GAAP operating margin            17%            29%        24%         37%
GAAP income from operations $    11,778     $   9,652    $ 36,381   $  38,735
Adjustments:
Severance costs             $    1,058      $   —        $ 1,058    $  —
Amortization of intangibles      7,353          —          7,353       —
Transition services              1,000          —          1,000       —
agreement
Deal-related expenses (2)        2,334          —          3,338       —
Adjusted income from        $    23,523     $   9,652    $ 49,130   $  38,735
operations
Total revenues                   70,126         33,356     151,248     104,759
Adjusted operating margin        34%            29%        32%         37%
Reconciliation of GAAP Total Expenses to Adjusted Total
Expenses
GAAP total expenses         $    58,348     $   23,704   $ 114,867  $  66,024
Adjustments:
Severance costs             $    1,058      $   —        $ 1,058    $  —
Amortization of intangibles      7,353          —          7,353       —
Transition services              1,000          —          1,000       —
agreement
Deal-related expenses (2)        2,334          —          3,338       —
Adjusted total expenses     $    46,603     $   23,704   $ 102,118  $  66,024
(1): Diluted weighted average shares outstanding.
(2): Includes legal and advisory fees incurred in connection with the
transaction.

KEY CREDIT METRICS
(dollars in thousands)
                      As of and for the three       As of and for the nine
                      months                        months
                      ended September 30,          ended September 30,
(Dollars in           2012           2011           2012           2011
thousands)
Key Credit Metrics
Fannie Mae
servicing
portfolio:
Fannie Mae Full    $  11,096,910  $  6,299,110   $  11,096,910  $  6,299,110
Risk
Fannie Mae            4,131,980      2,312,804      4,131,980      2,312,804
Modified Risk
Fannie Mae No Risk    3,224,054      1,524,778      3,224,054      1,524,778
Total Fannie Mae   $  18,452,944  $  10,136,692  $  18,452,944  $  10,136,692
Freddie Mac
servicing
portfolio:
Freddie Mac        $  69,037      $  —           $  69,037      $  —
Modified Risk
Freddie Mac No        8,353,711      2,715,788      8,353,711      2,715,788
Risk
Total Freddie Mac  $  8,422,748   $  2,715,788   $  8,422,748   $  2,715,788
GNMA/HUD servicing
portfolio:
GNMA/HUD Full Risk $  5,018       $  —           $  5,018       $  —
GNMA/HUD No Risk      4,417,164      1,262,989      4,417,164      1,262,989
Total GNMA/HUD     $  4,422,182   $  1,262,989   $  4,422,182   $  1,262,989
Interim loans
(full risk)        $  16,500      $  —           $  16,500      $  —
servicing
portfolio
Capital markets
servicing          $  2,572,188   $  1,825,330   $  2,572,188   $  1,825,330
portfolio
Total servicing
portfolio unpaid   $  33,886,562  $  15,940,799  $  33,886,562  $  15,940,799
principal balance
At risk servicing  $  12,931,149  $  7,242,674   $  12,931,149  $  7,242,674
portfolio (1)
60+ Day
delinquencies,        19,050         —              19,050         —
within at risk
portfolio
At risk loan
balances
associated with
allowance for
risk-sharing       $  153,670     $  149,416     $  153,670     $  149,416
obligations (2)
Allowance for
risk-sharing
obligations:
Beginning balance  $  13,629      $  13,383      $  14,917      $  10,873
Provision for
risk-sharing          (848)          937            1,126          3,447
obligations
Allowance for
risk-sharing
obligations,
 CWCapital         4,063          —              4,063          —
acquisition
Net write-offs        —              (680)          (3,262)        (680)
Ending balance     $  16,844      $  13,640      $  16,844      $  13,640
60+ Day
delinquencies as a
percentage
of the at risk        0.15%          0.00%          0.15%          0.00%
portfolio
Provision for
risk-sharing as a
percentage
of the at risk        -0.01%         0.01%          0.01%          0.05%
portfolio
Allowance for
risk-sharing as a
percentage
of the at risk        0.13%          0.19%          0.13%          0.19%
portfolio
Net write-offs as
a percentage of
the
at risk portfolio     0.00%          0.01%          0.03%          0.01%
Allowance for
risk-sharing as a
percentage
of the
specifically          10.96%         9.13%          10.96%         9.13%
identified at risk
balances
(1) At risk servicing portfolio is defined as the balance of Fannie Mae DUS
loans subject to the risk-sharing formula described below, as well as a small
number of Freddie Mac and GNMA/HUD loans on which we share in the risk of
loss. Use of the at risk portfolio provides for comparability of the full
risk-sharing and modified risk-sharing loans because the provision and
allowance for risk-sharing obligations are based on the at risk balances of
the associated loans. Accordingly, we have presented the key statistics as a
percentage of the at risk portfolio.


For example, a $15 million loan with 50% risk-sharing has the same potential
risk exposure as a $7.5 million loan with full DUS risk-sharing. Accordingly,
if the $15 million loan with 50% risk-sharing was to default, the Company
would view the overall loss as a percentage of the at risk balance, or $7.5
million, to ensure comparability between all risk-sharing obligations. To
date, all of the Company's risk-sharing obligations that we have settled have
been from full risk-sharing loans.


(2) There are loans within our servicing portfolio which are greater than 60
days delinquent, for which no allowance has been recorded. We do not
anticipate recognizing a loss for these loans upon settlement of our
risk-sharing obligation with Fannie Mae because our estimate of the value of
the underlying collateral is greater than the unpaid principal balance of the
associated loan.





SOURCE Walker & Dunlop, Inc.

Website: http://www.walkerdunlop.com
Contact: Investors: Claire Harvey Vice President, Investor Relations Phone:
+1-301-634-2143, charvey@walkerdunlop.com; Media: Susan Weber, Vice President,
Marketing, Phone: +1-301-215-5515, sweber@walkerdunlop.com
 
Press spacebar to pause and continue. Press esc to stop.