Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2021 | Apr. 29, 2021 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2021 | |
Entity File Number | 001-35000 | |
Entity Registrant Name | Walker & Dunlop, Inc. | |
Entity Incorporation, State or Country Code | MD | |
Entity Tax Identification Number | 80-0629925 | |
Entity Address, Address Line One | 7501 Wisconsin Avenue, Suite 1200E | |
Entity Address, City or Town | Bethesda | |
Entity Address, State or Province | MD | |
Entity Address, Postal Zip Code | 20814 | |
City Area Code | 301 | |
Local Phone Number | 215-5500 | |
Title of 12(b) Security | Common Stock, $0.01 Par Value Per Share | |
Trading Symbol | WD | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 31,794,823 | |
Entity Central Index Key | 0001497770 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2021 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Assets | ||
Cash and cash equivalents | $ 277,277 | $ 321,097 |
Restricted cash | 14,805 | 19,432 |
Pledged securities, at fair value | 139,570 | 137,236 |
Loans held for sale, at fair value | 1,048,385 | 2,449,198 |
Loans held for investment, net | 281,788 | 360,402 |
Mortgage servicing rights | 909,884 | 862,813 |
Goodwill and other intangible assets | 262,906 | 250,838 |
Derivative assets | 58,130 | 49,786 |
Receivables, net | 59,526 | 65,735 |
Other assets | 151,694 | 134,438 |
Total assets | 3,203,965 | 4,650,975 |
Liabilities | ||
Warehouse notes payable | 1,112,340 | 2,517,156 |
Note payable | 291,045 | 291,593 |
Allowance for risk-sharing obligations | 64,580 | 75,313 |
Guaranty obligation, net | 51,836 | 52,306 |
Derivative liabilities | 9,250 | 5,066 |
Other liabilities | 429,782 | 513,319 |
Total liabilities | 1,958,833 | 3,454,753 |
Equity | ||
Preferred stock (authorized 50,000 shares; none issued) | ||
Common stock ($0.01 par value; authorized 200,000 shares; issued and outstanding 30,977 shares at March 31, 2021 and 30,678 shares at December 31, 2020) | 310 | 307 |
Additional paid-in capital ("APIC") | 248,069 | 241,004 |
Accumulated other comprehensive income ("AOCI") | 1,810 | 1,968 |
Retained earnings | 994,943 | 952,943 |
Total stockholders' equity | 1,245,132 | 1,196,222 |
Total equity | 1,245,132 | 1,196,222 |
Commitments and contingencies (NOTES 2 and 9) | ||
Total liabilities and equity | $ 3,203,965 | $ 4,650,975 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares shares in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Consolidated Balance Sheets | ||
Preferred shares, authorized | 50,000 | 50,000 |
Preferred shares, issued | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, authorized | 200,000 | 200,000 |
Common stock, issued | 30,977 | 30,678 |
Common stock, outstanding | 30,977 | 30,678 |
Consolidated Statements of Inco
Consolidated Statements of Income and Comprehensive Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Revenues | ||
Loan origination and debt brokerage fees, net | $ 75,879 | $ 76,373 |
Fair value of expected net cash flows from servicing, net | 57,935 | 68,000 |
Servicing fees | 65,978 | 55,434 |
Net warehouse interest income | 4,555 | 5,495 |
Escrow earnings and other interest income | 2,117 | 10,743 |
Property sales broker fees. | 9,042 | 9,612 |
Other revenues | 8,782 | 8,500 |
Total revenues | 224,288 | 234,157 |
Expenses | ||
Personnel | 96,215 | 89,525 |
Amortization and depreciation | 46,871 | 39,762 |
Provision (benefit) for credit losses | (11,320) | 23,643 |
Interest expense on corporate debt | 1,765 | 2,860 |
Other operating expenses | 17,587 | 18,090 |
Total expenses | 151,118 | 173,880 |
Income from operations | 73,170 | 60,277 |
Income tax expense | 15,118 | 12,672 |
Net income before noncontrolling interests | 58,052 | 47,605 |
Less: net income (loss) from noncontrolling interests | (224) | |
Walker and Dunlop net income | 58,052 | 47,829 |
Net change in unrealized gains (losses) on pledged available-for-sale securities, net of taxes | (158) | (1,917) |
Walker and Dunlop comprehensive income | $ 57,894 | $ 45,912 |
Basic earnings per share (NOTE 10) | $ 1.82 | $ 1.53 |
Diluted earnings per share (NOTE 10) | $ 1.79 | $ 1.49 |
Basic weighted average shares outstanding | 30,823 | 30,226 |
Diluted weighted average shares outstanding | 31,276 | 31,160 |
Loans Held for Sale | ||
Revenues | ||
Net warehouse interest income | $ 2,459 | $ 1,492 |
Loans Held for Investment | ||
Revenues | ||
Net warehouse interest income | $ 2,096 | $ 4,003 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | APIC | AOCI | Retained EarningsCumulative Effect Adjustment | Retained Earnings | Noncontrolling Interests | Cumulative Effect Adjustment | Total |
Balances at the beginning of the period (ASU 2016-13) at Dec. 31, 2019 | $ (23,678) | $ (23,678) | ||||||
Balances at the beginning of the period at Dec. 31, 2019 | $ 300 | $ 237,877 | $ 737 | $ 796,775 | $ 6,596 | $ 1,042,285 | ||
Balance at the beginning of the period (in shares) at Dec. 31, 2019 | 30,035 | |||||||
Change in Stockholders' Equity | ||||||||
Walker and Dunlop net income | 47,829 | 47,829 | ||||||
Net income (loss) from noncontrolling interests | (224) | (224) | ||||||
Contributions from noncontrolling interests | 675 | 675 | ||||||
Other comprehensive income (loss), net of tax | (1,918) | (1,918) | ||||||
Stock-based compensation - equity classified | 5,061 | 5,061 | ||||||
Issuance of common stock in connection with equity compensation plans | $ 7 | 11,362 | 11,369 | |||||
Issuance of common stock in connection with equity compensation plans (in shares) | 675 | |||||||
Repurchase and retirement of common stock | $ (4) | (18,293) | (8,440) | (26,737) | ||||
Repurchase and retirement of common stock (in shares) | (380) | |||||||
Cash dividends paid | (11,347) | (11,347) | ||||||
Balances at the end of the period at Mar. 31, 2020 | $ 303 | 236,007 | (1,181) | 801,139 | $ 7,047 | 1,043,315 | ||
Balance at the end of the period (in shares) at Mar. 31, 2020 | 30,330 | |||||||
Balances at the beginning of the period at Dec. 31, 2020 | $ 307 | 241,004 | 1,968 | 952,943 | $ 1,196,222 | |||
Balance at the beginning of the period (in shares) at Dec. 31, 2020 | 30,678 | 30,678 | ||||||
Change in Stockholders' Equity | ||||||||
Walker and Dunlop net income | 58,052 | $ 58,052 | ||||||
Other comprehensive income (loss), net of tax | (158) | (158) | ||||||
Stock-based compensation - equity classified | 7,836 | 7,836 | ||||||
Issuance of common stock in connection with equity compensation plans | $ 4 | 12,602 | 12,606 | |||||
Issuance of common stock in connection with equity compensation plans (in shares) | 430 | |||||||
Repurchase and retirement of common stock | $ (1) | (13,373) | (13,374) | |||||
Repurchase and retirement of common stock (in shares) | (131) | |||||||
Cash dividends paid | (16,052) | (16,052) | ||||||
Balances at the end of the period at Mar. 31, 2021 | $ 310 | $ 248,069 | $ 1,810 | $ 994,943 | $ 1,245,132 | |||
Balance at the end of the period (in shares) at Mar. 31, 2021 | 30,977 | 30,977 |
Consolidated Statements of Ch_2
Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
TOTAL EQUITY. | ||
Cash dividends paid. amount per common share | $ 0.50 | $ 0.36 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Cash flows from operating activities | ||
Net income before noncontrolling interests | $ 58,052 | $ 47,605 |
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 | (57,935) | (68,000) |
Change in the fair value of premiums and origination fees | 21,562 | (22,414) |
Amortization and depreciation | 46,871 | 39,762 |
Provision (benefit) for credit losses | (11,320) | 23,643 |
Proceeds from transfers of loans held for sale | (3,577,153) | (3,168,168) |
Sales of loans to third parties | 4,917,187 | 2,846,631 |
Other operating activities, net | (81,572) | 8,315 |
Net cash provided by (used in) operating activities | 1,315,692 | (292,626) |
Cash flows from investing activities | ||
Capital expenditures | (1,794) | (778) |
Purchase of equity-method investments | (1,124) | (563) |
Purchase of pledged available-for-sale ("AFS") securities | (2,000) | (5,000) |
Proceeds from prepayment and sale of pledged AFS securities | 20,884 | 3,711 |
Distributions from (investments in) joint ventures, net | (7,026) | (6,455) |
Acquisitions, net of cash acquired | (7,506) | (43,784) |
Originations of loans held for investment | (33,750) | |
Principal collected on loans held for investment upon payoff | 113,495 | 88,779 |
Net cash provided by (used in) investing activities | 81,179 | 35,910 |
Cash flows from financing activities | ||
Borrowings (repayments) of warehouse notes payable, net | (1,400,704) | 419,763 |
Borrowings of interim warehouse notes payable | 25,313 | 29,898 |
Repayments of interim warehouse notes payable | (29,534) | (49,850) |
Repayments of note payable | (745) | (744) |
Proceeds from issuance of common stock | 12,606 | 6,369 |
Repurchase of common stock | (13,374) | (26,737) |
Cash dividends paid | (16,052) | (11,347) |
Payment of contingent consideration | (1,641) | |
Debt issuance costs | (769) | (964) |
Net cash provided by (used in) financing activities | (1,423,259) | 364,747 |
Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents (NOTE 2) | (26,388) | 108,031 |
Cash, cash equivalents, restricted cash, and restricted cash equivalents at beginning of period | 358,002 | 136,566 |
Total of cash, cash equivalents, restricted cash, and restricted cash equivalents at end of period | 331,614 | 244,597 |
Supplemental Disclosure of Cash Flow Information: | ||
Cash paid to third parties for interest | $ 9,621 | 11,207 |
Cash paid (returned) for income taxes | $ 121 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2021 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
Organization and Basis of Presentation | 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 “we,” “us,” “our,” “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, 2020 (“2020 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, 2021 are not necessarily indicative of the results that may be expected for the year ending December 31, 2021 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 appraisal services, and engages in commercial real estate investment management activities. Through its mortgage bankers and property sales brokers, the Company offers its customers agency lending, debt brokerage, and principal lending and investing products and multifamily property sales 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, in which cases the Company does not fund the loan. The Company also provides a variety of commercial real estate debt and equity solutions through its principal lending and investing products, including interim loans, and preferred equity on commercial real estate properties. Interim loans on multifamily properties are offered (i) through the Company and recorded on the Company’s balance sheet (the “Interim Loan Program”) and (ii) through a joint venture with an affiliate of Blackstone Mortgage Trust, Inc., in which the Company holds a 15% ownership interest (the “Interim Program JV”). Interim loans on all commercial real estate property types are also offered through separate accounts managed by the Company’s subsidiary, Walker & Dunlop Investment Partners (“WDIP”). Preferred equity on commercial real estate properties are offered through funds managed by WDIP. The Company brokers the sale of multifamily properties through its wholly owned subsidiary, Walker & Dunlop Investment Sales (“WDIS”). In some cases, the Company also provides the debt financing for the property sale. During the second quarter of 2019, the Company formed a joint venture, branded as “Apprise by Walker & Dunlop,” with an international technology services company to offer automated multifamily appraisal services (the “Appraisal JV”). The Appraisal JV leverages technology and data science to dramatically improve the consistency, transparency, and speed of multifamily appraisals in the U.S. through the licensing of the partner’s technology and leveraging of the Company’s expertise in the commercial real estate industry. The Company owns a 50% interest in the Appraisal JV and accounts for the interest as an equity-method investment. The operations of the Appraisal JV for the three months ended March 31, 2021 and 2020 and our investment in the Appraisal JV as of March 31, 2021 and December 31, 2020 were immaterial. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of Significant Accounting Policies | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation 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 Net income (loss) from noncontrolling interests Subsequent Events Use of Estimates Derivative Assets and Liabilities— Derivative assets Loan origination and debt brokerage fees, net Derivative assets Fair value of expected net cash flows from servicing, net Loan origination and debt brokerage fees, net Loans Held for Investment, net As of March 31, 2021, Loans held for investment, net Loans held for investment, net During the third quarter of 2018, the Company transferred a portfolio of participating interests in loans held for investment to a third party that is scheduled to mature in the third quarter of 2021. The Company accounted for the transfer as a secured borrowing. The aggregate unpaid principal balance of the loans of $81.5 million was presented as a component of Loans held for investment, net Other liabilities The Company assesses the credit quality of loans held for investment in the same manner as it does for the loans in the Fannie Mae at-risk portfolio and records an allowance for these loans as necessary. The allowance for loan losses is estimated collectively for loans with similar characteristics. The collective allowance is based on the same methodology that the Company uses to estimate its Current Expected Credit Losses (“CECL”) reserves for at-risk Fannie Mae DUS loans (with the exception of a reversion period) because the nature of the underlying collateral is the same, and the loans have similar characteristics, except they are significantly shorter in maturity. The reasonable and supportable forecast period used for the CECL allowance for loans held for investment is one year. The loss rate for the forecast period was 20 basis points and 36 basis points as of March 31, 2021 and December 31, 2020, respectively. The loss rate for the remaining period until maturity was nine basis points as of both March 31, 2021 and December 31, 2020. One loan held for investment with an unpaid principal balance of $14.7 million that was originated in 2017 was delinquent and on non-accrual status as of March 31, 2021 and December 31, 2020. The Company had a $3.7 million reserve for this loan based on its collateral fair value as of March 31, 2021 and December 31, 2020 and has not recorded any interest related to this loan since it went on non-accrual status in 2019. All other loans were current as of March 31, 2021 and December 31, 2020. The amortized cost basis of loans that were current as of March 31, 2021 and December 31, 2020 was $271.3 million and $350.5 million, respectively. As of March 31, 2021, $46.1 million, $144.3 million, and $81.5 million of the loans that were current were originated in 2020, 2019, and 2018, respectively. Prior to 2019, the Company had not experienced any delinquencies related to loans held for investment. Provision (Benefit) for Credit Losses — Provision (benefit) for credit losses Provision (benefit) for credit losses For the three months ended March 31, Components of Provision (Benefit) for Credit Losses (in thousands) 2021 2020 Provision (benefit) for loan losses $ (587) $ 1,106 Provision (benefit) for risk-sharing obligations (10,733) 22,537 Provision (benefit) for credit losses $ (11,320) $ 23,643 Net Warehouse Interest Income— Net warehouse interest income For the three months ended March 31, Components of Net Warehouse Interest Income (in thousands) 2021 2020 Warehouse interest income - loans held for sale $ 9,118 $ 7,402 Warehouse interest expense - loans held for sale (6,659) (5,910) Net warehouse interest income - loans held for sale $ 2,459 $ 1,492 Warehouse interest income - loans held for investment $ 3,228 $ 6,306 Warehouse interest expense - loans held for investment (1,132) (2,303) Warehouse interest income - secured borrowings 865 846 Warehouse interest expense - secured borrowings (865) (846) Net warehouse interest income - loans held for investment $ 2,096 $ 4,003 Total net warehouse interest income $ 4,555 $ 5,495 Statement of Cash Flows March 31, December 31, (in thousands) 2021 2020 2020 2019 Cash and cash equivalents $ 277,277 $ 205,309 $ 321,097 $ 120,685 Restricted cash 14,805 30,745 19,432 8,677 Pledged cash and cash equivalents (NOTE 9) 39,532 8,543 17,473 7,204 Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 331,614 $ 244,597 $ 358,002 $ 136,566 Income Taxes Contracts with Customers For the three months ended March 31, Description in thousands 2021 2020 Statement of income line item Certain loan origination fees $ 23,901 $ 21,348 Loan origination and debt brokerage fees, net Property sales broker fees, investment management fees, application fees, and other 15,292 15,064 Other revenues Total revenues derived from contracts with customers $ 39,193 $ 36,412 Litigation Recently Adopted and Recently Announced Accounting Pronouncement s Reclassifications |
MORTGAGE SERVICING RIGHTS
MORTGAGE SERVICING RIGHTS | 3 Months Ended |
Mar. 31, 2021 | |
MSRs | |
Mortgage Servicing Rights | |
Mortgage Servicing Rights | NOTE 3—MORTGAGE SERVICING RIGHTS The fair value of the mortgage servicing rights (“MSRs”) as of March 31, 2021 and December 31, 2020 was $1.2 billion and $1.1 billion, respectively. 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: The impact of a 100 - basis point increase in the discount rate at March 31, 2021 would be a decrease in the fair value of $36.0 million to the MSRs outstanding as of March 31, 2021. The impact of a 200 - basis point increase in the discount rate at March 31, 2021 would be a decrease in the fair value of $69.8 million to the MSRs outstanding as March 31, 2021. 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 capitalized MSRs (net of accumulated amortization) for the three months ended March 31, 2021 and 2020 follows: For the three months ended March 31, Roll Forward of MSRs (in thousands) 2021 2020 Beginning balance $ 862,813 $ 718,799 Additions, following the sale of loan 96,640 44,214 Amortization (42,552) (35,218) Pre-payments and write-offs (7,017) (5,309) Ending balance $ 909,884 $ 722,486 The following table summarizes the gross value, accumulated amortization, and net carrying value of the Company’s MSRs as of March 31, 2021 and December 31, 2020: Components of MSRs (in thousands) March 31, 2021 December 31, 2020 Gross Value $ 1,469,405 $ 1,394,901 Accumulated amortization (559,521) (532,088) Net carrying value $ 909,884 $ 862,813 The expected amortization of MSRs held in the Condensed Consolidated Balance Sheet as of March 31, 2021 is shown in the table below. Actual amortization may vary from these estimates. Expected (in thousands) Amortization Nine Months Ending December 31, 2021 $ 125,189 Year Ending December 31, 2022 $ 155,380 2023 141,056 2024 120,153 2025 100,742 2026 81,909 Thereafter 185,455 Total $ 909,884 |
GUARANTY OBLIGATION AND ALLOWAN
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | 3 Months Ended |
Mar. 31, 2021 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | |
Guaranty Obligation and Allowance for Risk-Sharing Obligations | NOTE 4—GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS When a loan is sold under the Fannie Mae 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. Activity related to the guaranty obligation for the three months ended March 31, 2021 and 2020 is presented in the following table: For the three months ended March 31, Roll Forward of Guaranty Obligation (in thousands) 2021 2020 Beginning balance $ 52,306 $ 54,695 Additions, following the sale of loan 1,721 1,862 Amortization (2,191) (2,267) Other — 1,468 Ending balance $ 51,836 $ 55,758 Substantially all loans sold under the Fannie Mae DUS program contain partial or full risk-sharing guaranties that are based on the performance of the loan serviced in the at-risk servicing portfolio. The Company records an estimate of the loss reserve for CECL for all loans in our Fannie Mae at-risk servicing portfolio and presents this loss reserve as Allowance for risk-sharing obligations For the three months ended March 31, Roll Forward of Allowance for Risk-Sharing Obligations (in thousands) 2021 2020 Beginning balance $ 75,313 $ 11,471 Adjustment related to adoption of CECL — 31,570 Provision (benefit) for risk-sharing obligations (10,733) 22,537 Write-offs — — Other — (1,468) Ending balance $ 64,580 $ 64,110 As a result of the onset of the COVID-19 pandemic and the resulting forecasts for significant unemployment rates for the remainder of 2020, the Company’s loss rate for the forecast period was seven basis points as of March 31, 2020, resulting in the substantial provision for risk-sharing obligations for the three months ended March 31, 2020 and an increase in the allowance for risk-sharing obligations as of March 31, 2020 as seen above. During the first quarter of 2021, economic conditions began to improve significantly, with reported and forecast unemployment rates significantly improved compared to both December 31, 2020 and March 31, 2020. In response to improving unemployment statistics and the expected continued overall health of the multifamily market, the Company adjusted the loss rate for the forecast period downwards to four basis points as of March 31, 2021 from six basis points as of December 31, 2020, resulting in the benefit for risk-sharing obligations for the three months ended March 31, 2021 as seen above. For the remaining expected life of the portfolio, the Company reverted over a one-year period to a historical loss rate of two basis points for all periods shown in the roll forward above. The calculated CECL reserve for the Company’s $45.4 billion at-risk Fannie Mae servicing portfolio as of March 31, 2021 was $57.0 million compared to $67.0 million as of December 31, 2020. The weighted-average remaining life of the at-risk Fannie Mae servicing portfolio as of March 31, 2021 was 7.6 years. Two loans that defaulted in 2019 had aggregate collateral-based reserves of $7.6 million and $8.3 million as of March 31, 2021 and December 31, 2020, respectively. As of March 31, 2021, the maximum quantifiable contingent liability associated with the Company’s guarantees for the at-risk loans serviced under the Fannie Mae DUS agreement was $9.3 billion. 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. |
SERVICING
SERVICING | 3 Months Ended |
Mar. 31, 2021 | |
Loans and Other Servicing Accounts | |
Servicing | |
Servicing | NOTE 5—SERVICING The total unpaid principal balance of loans the Company was servicing for various institutional investors was $109.9 billion as of March 31, 2021 compared to $107.2 billion as of December 31, 2020. As of March 31, 2021 and December 31, 2020 custodial escrow accounts relating to loans serviced by the Company totaled $2.5 billion and $3.1 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 earn interest income on these escrow balances, presented as Escrow earnings and other interest income |
WAREHOUSE NOTES PAYABLE
WAREHOUSE NOTES PAYABLE | 3 Months Ended |
Mar. 31, 2021 | |
WAREHOUSE NOTES PAYABLE | |
Warehouse Notes Payable | NOTE 6—WAREHOUSE NOTES PAYABLE As of March 31, 2021, to provide financing to borrowers under the Agencies’ programs, the Company has 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, as of March 31, 2021, the Company has arranged for warehouse lines of credit in the amount of $0.4 billion with certain national banks to assist in funding loans held for investment under the Interim Loan Program (“Interim Warehouse Facilities”). The Company has pledged substantially all of its loans held for investment against these Interim Warehouse Facilities. The Company’s ability to originate loans held for investment depends upon its ability to secure and maintain these types of short-term financings on acceptable terms. The maximum amount and outstanding borrowings under Warehouse notes payable March 31, 2021 (dollars in thousands) Committed Uncommitted Total Facility Outstanding Facility (1) Amount Amount Capacity Balance Interest rate (2) Agency Warehouse Facility #1 $ 425,000 $ — $ 425,000 $ 132,460 30-day LIBOR plus 1.40% Agency Warehouse Facility #2 700,000 300,000 1,000,000 76,391 30-day LIBOR plus 1.40% Agency Warehouse Facility #3 600,000 265,000 865,000 88,618 30-day LIBOR plus 1.15% Agency Warehouse Facility #4 350,000 — 350,000 147,055 30-day LIBOR plus 1.40% Agency Warehouse Facility #5 — 1,000,000 1,000,000 276,915 30-day LIBOR plus 1.45% Agency Warehouse Facility #6 150,000 100,000 250,000 88,500 30-day LIBOR plus 1.40% Total National Bank Agency Warehouse Facilities $ 2,225,000 $ 1,665,000 $ 3,890,000 $ 809,939 Fannie Mae repurchase agreement, uncommitted line and open maturity — 1,500,000 1,500,000 173,215 Total Agency Warehouse Facilities $ 2,225,000 $ 3,165,000 $ 5,390,000 $ 983,154 Interim Warehouse Facility #1 $ 135,000 $ — $ 135,000 $ 71,572 30-day LIBOR plus 1.90% Interim Warehouse Facility #2 100,000 — 100,000 34,000 30-day LIBOR plus 1.65% to 2.00% Interim Warehouse Facility #3 75,000 75,000 150,000 4,640 30-day LIBOR plus 1.75% to 3.25% Interim Warehouse Facility #4 19,810 — 19,810 19,810 30-day LIBOR plus 3.00% Total National Bank Interim Warehouse Facilities $ 329,810 $ 75,000 $ 404,810 $ 130,022 Debt issuance costs — — — (836) Total warehouse facilities $ 2,554,810 $ 3,240,000 $ 5,794,810 $ 1,112,340 (1) Agency Warehouse Facilities, including the Fannie Mae repurchase agreement are used to fund loans held for sale, while Interim Warehouse Facilities are used to fund loans held for investment. (2) Interest rate presented does not include the effect of interest rate floors. The following amendments to the Agency Warehouse Facilities were executed in the normal course of business to support the growth of the Company’s Agency business. During May 2021, the Company executed an amendment to the agreement related to Agency Warehouse Facility #1 that decreased the borrowing rate to 30-day London Interbank Offered Rate (“LIBOR”) plus 130 basis points from 30-day LIBOR plus 140 basis points and decreased the 30-day LIBOR floor to zero from 25 basis points. During April 2021, the Company executed an amendment to the agreement related to Agency Warehouse Facility #2 that extended the maturity date to April 14, 2022. No other material modifications have been made to the agreement during 2021. During April 2021, the Company executed an amendment to the agreement related to Agency Warehouse Facility #3 that extended the maturity date to May 14, 2022. Additionally, the amendment increased the borrowing rate to 30-day LIBOR plus 140 basis points from 30-day LIBOR plus 115 basis points and decreased the 30-day LIBOR floor to 15 basis points from 50 basis points. No other material modifications have been made to the agreement during 2021. During the first quarter of 2021, the Company executed an agreement to establish Agency Warehouse Facility #6. The warehouse facility has a $150.0 million maximum committed borrowing capacity, provides us with the ability to fund Fannie Mae, Freddie Mac, HUD, and FHA loans, and matures March 5, 2022. Advances are made at 100% of the loan balance, and the borrowings under the warehouse agreement bear interest at a rate of 30-day LIBOR plus 140 basis points with a 30-day LIBOR floor of 25 basis points. In addition to the committed borrowing capacity, the agreement provides $100.0 million of uncommitted borrowing capacity that bears interest at the same rate as the committed facility. The facility agreement requires the Company’s compliance with the same financial covenants as provided in the facility agreement for Agency Warehouse Facility #1, as described in the Company’s 2020 Form 10-K. No material modifications have been made to the agreement during 2021. During April 2021, the Company executed an amendment to the agreement related to Interim Warehouse Facility #1 that extended the maturity date to May 14, 2022 and decreased the 30-day LIBOR floor to 15 basis points from 50 basis points. No other material modifications have been made to the agreement during 2021. The warehouse notes payable are subject to various financial covenants, all of which the Company was in compliance with as of March 31, 2021. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Goodwill and Other Intangible Assets | NOTE 7—GOODWILL AND OTHER INTANGIBLE ASSETS A summary of the Company’s goodwill for the three months ended March 31, 2021 and 2020 is as follows: For the three months ended March 31, Roll Forward of Goodwill (in thousands) 2021 2020 Beginning balance $ 248,958 $ 180,424 Additions from acquisitions 12,231 64,462 Impairment — — Ending balance $ 261,189 $ 244,886 The immaterial additions from acquisitions during 2021 shown in the table above during the three months ended March 31, 2021 relates to the purchase of certain assets and the assumption of certain liabilities from an As of March 31, 2021 and December 31, 2020, the balance of intangible assets acquired from acquisitions totaled $1.7 million and $1.9 million, respectively. As of March 31, 2021, the weighted-average period over which the Company expects these intangible assets to be amortized is 3.9 years. A summary of the Company’s contingent consideration liabilities, which is included in Other liabilities A summary of the Company’s contingent consideration liabilities, which is included in Other liabilities , as of and for the three months ended March 31, 2021 and 2020 is as follows: For the three months ended March 31, Roll Forward of Contingent Consideration Liabilities (in thousands) 2021 2020 Beginning balance $ 28,829 $ 5,752 Additions 5,229 16,073 Accretion 430 227 Payments — (5,800) Ending balance $ 34,488 $ 16,252 The contingent consideration liabilities above relate to (i) acquisitions of debt brokerage companies and an investment sale brokerage company completed in 2017, 2020, and 2021 and (ii) the purchase of noncontrolling interests in 2020. The contingent consideration may be earned over a five-year period after the closing of the acquisition, provided certain revenue targets have been met. The last of the five earn-out periods related to the contingent consideration ends in the first quarter of 2026. The Company estimated the fair value of the contingent consideration using a probability-based, discounted cash flow model. The contingent consideration included for the acquisitions and purchase of noncontrolling interests is non-cash and thus not reflected in the amount of cash consideration paid on the Condensed Consolidated Statements of Cash Flows. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2021 | |
FAIR VALUE MEASUREMENTS | |
Fair Value Measurements | NOTE 8—FAIR VALUE MEASUREMENTS The Company uses valuation techniques that are consistent with the market approach, the income approach, and/or the cost approach to measure assets and liabilities that are measured at fair value. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity's own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. In that regard, accounting standards establish a fair value hierarchy for valuation inputs that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows: ● Level 1 —Financial assets and liabilities whose values are based on unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access. ● Level 2 —Financial assets and liabilities whose values are based on inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These might include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (such as interest rates, volatilities, prepayment speeds, credit risks, etc.) or inputs that are derived principally from or corroborated by market data by correlation or other means. ● Level 3 —Financial assets and liabilities whose values are based on inputs that are both unobservable and significant to the overall valuation. The Company's MSRs are measured at fair value at inception, and thereafter on a nonrecurring basis. That is, the instruments are not measured at fair value on an ongoing basis but are subject to fair value measurement when there is evidence of impairment and for disclosure purposes (NOTE 3). The Company's MSRs do not trade in an active, open market with readily observable prices. While sales of multifamily MSRs do occur on occasion, precise terms and conditions vary with each transaction and are not readily available. Accordingly, the estimated fair value of the Company’s MSRs was developed using discounted cash flow models that calculate the present value of estimated future net servicing income. The model considers contractually specified servicing fees, prepayment assumptions, estimated revenue from escrow accounts, costs to service, and other economic factors. The Company periodically reassesses and adjusts, when necessary, the underlying inputs and assumptions used in the model to reflect observable market conditions and assumptions that a market participant would consider in valuing an MSR asset. During the first quarter of 2021, the Company reduced the discount rate and escrow earnings rate assumptions for its capitalized MSRs. MSRs are carried at the lower of amortized cost or fair value. A description of the valuation methodologies used for assets and liabilities measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy, is set forth below. ● Derivative Instruments —The derivative positions consist of interest rate lock commitments with borrowers and forward sale agreements to the Agencies. The fair value of these instruments is estimated using a discounted cash flow model developed based on changes in the applicable U.S. Treasury rate and other observable market data. The value was determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company, and are classified within Level 3 of the valuation hierarchy . ● Loans Held for Sale —All loans held for sale presented in the Condensed Consolidated Balance Sheets are reported at fair value. The Company determines the fair value of the loans held for sale using discounted cash flow models that incorporate quoted observable inputs from market participants such as changes in the U.S. Treasury rate. Therefore, the Company classifies these loans held for sale as Level 2 . ● Pledged Securities —Investments in money market funds are valued using quoted market prices from recent trades. Therefore, the Company classifies this portion of pledged securities as Level 1. The Company determines the fair value of its AFS investments in Agency debt securities using discounted cash flows that incorporate observable inputs from market participants and then compares the fair value to broker estimates of fair value . Consequently, the Company classifies this portion of pledged securities as Level 2. The following table summarizes financial assets and financial liabilities measured at fair value on a recurring basis as of March 31, 2021, and December 31, 2020, segregated by the level of the valuation inputs within the fair value hierarchy used to measure fair value: Quoted Prices in Significant Significant Active Markets Other Other For Identical Observable Unobservable Assets Inputs Inputs Balance as of (in thousands) (Level 1) (Level 2) (Level 3) Period End March 31, 2021 Assets Loans held for sale $ — $ 1,048,385 $ — $ 1,048,385 Pledged securities 39,532 100,038 — 139,570 Derivative assets — — 58,130 58,130 Total $ 39,532 $ 1,148,423 $ 58,130 $ 1,246,085 Liabilities Derivative liabilities $ — $ — $ 9,250 $ 9,250 Total $ — $ — $ 9,250 $ 9,250 December 31, 2020 Assets Loans held for sale $ — $ 2,449,198 $ — $ 2,449,198 Pledged securities 17,473 119,763 — 137,236 Derivative assets — — 49,786 49,786 Total $ 17,473 $ 2,568,961 $ 49,786 $ 2,636,220 Liabilities Derivative liabilities $ — $ — $ 5,066 $ 5,066 Total $ — $ — $ 5,066 $ 5,066 There were no transfers between any of the levels within the fair value hierarchy during the three months ended March 31, 2021. Derivative instruments (Level 3) are outstanding for short periods of time (generally less than 60 days). A roll forward of derivative instruments is presented below for the three months ended March 31, 2021 and 2020: Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments For the three months ended March 31, Derivative Assets and Liabilities, net (in thousands) 2021 2020 Beginning balance $ 44,720 $ 15,532 Settlements (129,655) (174,295) Realized gains recorded in earnings (1) 84,935 158,763 Unrealized gains (losses) recorded in earnings (1) 48,880 (14,390) Ending balance $ 48,880 $ (14,390) (1) Realized and unrealized gains (losses) from derivatives are recognized in Loan origination and debt brokerage fees, net and Fair value of expected net cash flows from servicing, net in the Condensed Consolidated Statements of Income. The following table presents information about significant unobservable inputs used in the recurring measurement of the fair value of the Company’s Level 3 assets and liabilities as of March 31, 2021: Quantitative Information about Level 3 Measurements (in thousands) Fair Value Valuation Technique Unobservable Input (1) Input Value (1) Derivative assets $ 58,130 Discounted cash flow Counterparty credit risk — Derivative liabilities $ 9,250 Discounted cash flow Counterparty credit risk — (1) Significant increases in this input may lead to significantly lower fair value measurements. The carrying amounts and the fair values of the Company's financial instruments as of March 31, 2021 and December 31, 2020 are presented below: March 31, 2021 December 31, 2020 Carrying Fair Carrying Fair (in thousands) Amount Value Amount Value Financial Assets: Cash and cash equivalents $ 277,277 $ 277,277 $ 321,097 $ 321,097 Restricted cash 14,805 14,805 19,432 19,432 Pledged securities 139,570 139,570 137,236 137,236 Loans held for sale 1,048,385 1,048,385 2,449,198 2,449,198 Loans held for investment, net 281,788 282,842 360,402 362,586 Derivative assets 58,130 58,130 49,786 49,786 Total financial assets $ 1,819,955 $ 1,821,009 $ 3,337,151 $ 3,339,335 Financial Liabilities: Derivative liabilities $ 9,250 $ 9,250 $ 5,066 $ 5,066 Secured borrowings 73,312 73,312 73,314 73,314 Warehouse notes payable 1,112,340 1,113,176 2,517,156 2,518,101 Note payable 291,045 294,028 291,593 294,773 Total financial liabilities $ 1,485,947 $ 1,489,766 $ 2,887,129 $ 2,891,254 The following methods and assumptions were used for recurring fair value measurements as of March 31, 2021 and December 31, 2020. Cash and Cash Equivalents and Restricted Cash —The carrying amounts approximate fair value because of the short maturity of these instruments (Level 1). Pledged Securities —Consist of cash, highly liquid investments in money market accounts invested in government securities, and investments in Agency debt securities. The investments of the money market funds typically have maturities of 90 days or less and are valued using quoted market prices from recent trades. The fair value of the Agency debt securities incorporates the contractual cash flows of the security discounted at market-rate, risk-adjusted yields. Loans Held For Sale —Consist of originated loans that are generally transferred or sold within 60 days from the date that a mortgage loan is funded and are valued using discounted cash flow models that incorporate observable prices from market participants. Derivative Instruments — Consist of interest rate lock commitments and forward sale agreements. These instruments are valued using discounted cash flow models developed based on changes in the U.S. Treasury rate and other observable market data. The value is determined after considering the potential impact of collateralization, adjusted to reflect nonperformance risk of both the counterparty and the Company . Fair Value of Derivative Instruments and Loans Held for Sale — In the normal course of business, the Company enters into contractual commitments to originate and sell multifamily mortgage loans at fixed prices with fixed expiration dates. The commitments become effective when the borrowers "lock-in" a specified interest rate within time frames established by the Company. All mortgagors are evaluated for creditworthiness prior to the extension of the commitment. Market risk arises if interest rates move adversely between the time of the "lock-in" of rates by the borrower and the sale date of the loan to an investor . To mitigate the effect of the interest rate risk inherent in providing rate lock commitments to borrowers, the Company enters into a sale commitment with the investor simultaneously with the rate lock commitment with the borrower. The sale contract with the investor locks in an interest rate and price for the sale of the loan. The terms of the contract with the investor and the rate lock with the borrower are matched in substantially all respects, with the objective of eliminating interest rate risk to the extent practical. Sale commitments with the investors have an expiration date that is longer than our related commitments to the borrower to allow, among other things, for the closing of the loan and processing of paperwork to deliver the loan into the sale commitment . Both the rate lock commitments to borrowers and the forward sale contracts to buyers are undesignated derivatives and, accordingly, are marked to fair value through Loan origination and debt brokerage fees, net in the Condensed Consolidated Statements of Income. The fair value of the Company's rate lock commitments to borrowers and loans held for sale and the related input levels includes, as applicable : ● the estimated gain of the expected loan sale to the investor (Level 2); ● the expected net cash flows associated with servicing the loan, net of any guaranty obligations retained (Level 2); ● the effects of interest rate movements between the date of the rate lock and the balance sheet date (Level 2); and ● the nonperformance risk of both the counterparty and the Company (Level 3; derivative instruments only). The estimated gain considers the origination fees the Company expects to collect upon loan closing (derivative instruments only) and premiums the Company expects to receive upon sale of the loan (Level 2). The fair value of the expected net cash flows associated with servicing the loan is calculated pursuant to the valuation techniques applicable to the fair value of future servicing, net at loan sale (Level 2). To calculate the effects of interest rate movements, the Company uses applicable published U.S. Treasury prices, and multiplies the price movement between the rate lock date and the balance sheet date by the notional loan commitment amount (Level 2). The fair value of the Company's forward sales contracts to investors considers effects of interest rate movements between the trade date and the balance sheet date (Level 2). The market price changes are multiplied by the notional amount of the forward sales contracts to measure the fair value. The fair value of the Company’s interest rate lock commitments and forward sales contracts is adjusted to reflect the risk that the agreement will not be fulfilled. The Company’s exposure to nonperformance in interest rate lock commitments and forward sale contracts is represented by the contractual amount of those instruments. Given the credit quality of our counterparties and the short duration of interest rate lock commitments and forward sale contracts, the risk of nonperformance by the Company’s counterparties has historically been minimal (Level 3). The following table presents the components of fair value and other relevant information associated with the Company’s derivative instruments and loans held for sale as of March 31, 2021 and December 31, 2020. Fair Value Adjustment Components Balance Sheet Location Fair Value Notional or Estimated Total Adjustment Principal Gain Interest Rate Fair Value Derivative Derivative to Loans (in thousands) Amount on Sale Movement Adjustment Assets Liabilities Held for Sale March 31, 2021 Rate lock commitments $ 828,045 $ 25,150 $ (16,350) $ 8,800 $ 14,157 $ (5,357) $ — Forward sale contracts 1,845,330 — 40,080 40,080 43,973 (3,893) — Loans held for sale 1,046,135 25,980 (23,730) 2,250 — — 2,250 Total $ 51,130 $ — $ 51,130 $ 58,130 $ (9,250) $ 2,250 December 31, 2020 Rate lock commitments $ 1,374,784 $ 45,581 $ (1,697) $ 43,884 $ 43,895 $ (11) $ — Forward sale contracts 3,760,953 — 836 836 5,891 (5,055) — Loans held for sale 2,386,169 62,167 861 63,028 — — 63,028 Total $ 107,748 $ — $ 107,748 $ 49,786 $ (5,066) $ 63,028 |
FANNIE MAE COMMITMENTS AND PLED
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES | 3 Months Ended |
Mar. 31, 2021 | |
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES | |
Fannie Mae Commitments and Pledged Securities | NOTE 9—FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES Fannie Mae DUS Related Commitments The Company is generally required to share the risk of any losses associated with loans sold under the Fannie Mae DUS program. The Company is required to secure these obligations by assigning restricted cash balances and securities to Fannie Mae, which are classified as Pledged securities, at fair value The Company is in compliance with the March 31, 2021 collateral requirements as outlined above. As of March 31, 2021, reserve requirements for the DUS loan portfolio will require the Company to fund $69.7 million in additional restricted liquidity over the next 48 months, assuming no further principal paydowns, prepayments, or defaults within the at-risk portfolio. Fannie Mae has in the past reassessed the DUS Capital Standards and may make changes to these standards in the future. The Company generates sufficient cash flow from its operations to meet these capital standards and does not expect any future changes to have a material impact on its future operations; however, any future increases to collateral requirements may adversely impact the Company’s available cash. Fannie Mae has established benchmark standards for capital adequacy and reserves the right to terminate the Company's servicing authority for all or some of the portfolio if, at any time, it determines that the Company's financial condition is not adequate to support its obligations under the DUS agreement. The Company is required to maintain acceptable net worth as defined in the agreement, and the Company satisfied the requirements as of March 31, 2021. The net worth requirement is derived primarily from unpaid principal balances on Fannie Mae loans and the level of risk sharing. At March 31, 2021, the net worth requirement was $240.5 million, and the Company's net worth, as defined in the requirements, was $1.1 billion, as measured at our wholly owned operating subsidiary, Walker & Dunlop, LLC. As of March 31, 2021, the Company was required to maintain at least $47.7 million of liquid assets to meet operational liquidity requirements for Fannie Mae, Freddie Mac, HUD, and Ginnie Mae, and the Company had operational liquidity, as defined in the requirements, of $301.0 million as of March 31, 2021, as measured at our wholly owned operating subsidiary, Walker & Dunlop, LLC. Pledged Securities, at Fair Value Pledged securities, at fair value March 31, December 31, Pledged Securities (in thousands) 2021 2020 2020 2019 Restricted cash $ 24,578 $ 2,989 $ 4,954 $ 2,150 Money market funds 14,954 5,554 12,519 5,054 Total pledged cash and cash equivalents $ 39,532 $ 8,543 $ 17,473 $ 7,204 Agency MBS 100,038 112,952 119,763 114,563 Total pledged securities, at fair value $ 139,570 $ 121,495 $ 137,236 $ 121,767 The information in the preceding table is presented to reconcile beginning and ending cash, cash equivalents, restricted cash, and restricted cash equivalents in the Condensed Consolidated Statements of Cash Flows as more fully discussed in NOTE 2. The Company’s investments included within Pledged securities, at fair value Fair Value and Amortized Cost of Agency MBS (in thousands) March 31, 2021 December 31, 2020 Fair value $ 100,038 $ 119,763 Amortized cost 97,621 117,136 Total gains for securities with net gains in AOCI 2,520 2,669 Total losses for securities with net losses in AOCI (103) (42) Fair value of securities with unrealized losses 2,286 12,267 None of the pledged securities has been in a continuous unrealized loss position for more than 12 months. The following table provides contractual maturity information related to Agency MBS. The money market funds invest in short-term Federal Government and Agency debt securities and have no stated maturity date. March 31, 2021 Detail of Agency MBS Maturities (in thousands) Fair Value Amortized Cost Within one year $ — $ — After one year through five years 7,187 7,157 After five years through ten years 65,168 64,399 After ten years 27,683 26,065 Total $ 100,038 $ 97,621 |
EARNINGS PER SHARE AND STOCKHOL
EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY | 3 Months Ended |
Mar. 31, 2021 | |
EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY | |
Earnings Per Share and Stockholders' Equity | NOTE 10—EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY Earnings per share (“EPS”) is calculated under the two-class method. The two-class method allocates all earnings (distributed and undistributed) to each class of common stock and participating securities based on their respective rights to receive dividends. The Company grants share-based awards to various employees and nonemployee directors under the 2020 Equity Incentive Plan that entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities. The following table presents the calculation of basic and diluted EPS for the three months ended March 31, 2021 and 2020 under the two-class method. Participating securities were included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the treasury-stock method. For the three months ended March 31, EPS Calculations (in thousands, except per share amounts) 2021 2020 Calculation of basic EPS Walker & Dunlop net income $ 58,052 $ 47,829 Less: dividends and undistributed earnings allocated to participating securities 1,967 1,510 Net income applicable to common stockholders $ 56,085 $ 46,319 Weighted-average basic shares outstanding 30,823 30,226 Basic EPS $ 1.82 $ 1.53 Calculation of diluted EPS Net income applicable to common stockholders $ 56,085 $ 46,319 Add: reallocation of dividends and undistributed earnings based on assumed conversion 20 34 Net income allocated to common stockholders $ 56,105 $ 46,353 Weighted-average basic shares outstanding 30,823 30,226 Add: weighted-average diluted non-participating securities 453 934 Weighted-average diluted shares outstanding 31,276 31,160 Diluted EPS $ 1.79 $ 1.49 The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury-stock method includes the unrecognized compensation costs associated with the awards. An immaterial number of average outstanding options to purchase common stock and average restricted shares were excluded from the computation of diluted earnings per share under the treasury method for the three months ended March 31, 2021 and 2020, because the effect would have been anti-dilutive (the exercise price of the options or the grant date market price of the restricted shares was greater than the average market price of the Company’s shares during the periods presented). During the first quarter of 2021, the Company’s Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million of the Company’s common stock over a 12-month period beginning on February 12, 2021. During the first quarter of 2021, the Company did not repurchase any shares of its common stock under the share repurchase program. As of March 31, 2021, the Company had $75.0 million of authorized share repurchase capacity remaining under the 2021 share repurchase program. In February 2021, our Board of Directors declared a dividend of $0.50 per share for the first quarter of 2021, which the Company paid during the first quarter of 2021. Based upon the Company’s financial performance for the three months ended March 31, 2021, strong cash position, and projected future liquidity needs, on May 5, 2021, the Company’s Board of Directors declared a dividend of $0.50 per share for the second quarter of 2021. The dividend will be paid on June 4, 2021 to all holders of record of the Company’s restricted and unrestricted common stock as of May 20, 2021. The Company’s Note payable (“Term Loan”) contains direct restrictions to the amount of dividends the Company may pay, and the warehouse debt facilities and agreements with the Agencies contain minimum equity, liquidity, and other capital requirements that indirectly restrict the amount of dividends the Company may pay. The Company does not believe that these restrictions currently limit the amount of dividends the Company can pay for the foreseeable future. |
SUMMARY OF SIGNIFICANT ACCOUN_2
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Principles of Consolidation | Principles of Consolidation 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 Net income (loss) from noncontrolling interests |
Subsequent Events | Subsequent Events |
Use of Estimates | Use of Estimates |
Derivative Assets and Liabilities | Derivative Assets and Liabilities— Derivative assets Loan origination and debt brokerage fees, net Derivative assets Fair value of expected net cash flows from servicing, net Loan origination and debt brokerage fees, net |
Loans Held for Investment, net | As of March 31, 2021, Loans held for investment, net Loans held for investment, net During the third quarter of 2018, the Company transferred a portfolio of participating interests in loans held for investment to a third party that is scheduled to mature in the third quarter of 2021. The Company accounted for the transfer as a secured borrowing. The aggregate unpaid principal balance of the loans of $81.5 million was presented as a component of Loans held for investment, net Other liabilities The Company assesses the credit quality of loans held for investment in the same manner as it does for the loans in the Fannie Mae at-risk portfolio and records an allowance for these loans as necessary. The allowance for loan losses is estimated collectively for loans with similar characteristics. The collective allowance is based on the same methodology that the Company uses to estimate its Current Expected Credit Losses (“CECL”) reserves for at-risk Fannie Mae DUS loans (with the exception of a reversion period) because the nature of the underlying collateral is the same, and the loans have similar characteristics, except they are significantly shorter in maturity. The reasonable and supportable forecast period used for the CECL allowance for loans held for investment is one year. The loss rate for the forecast period was 20 basis points and 36 basis points as of March 31, 2021 and December 31, 2020, respectively. The loss rate for the remaining period until maturity was nine basis points as of both March 31, 2021 and December 31, 2020. One loan held for investment with an unpaid principal balance of $14.7 million that was originated in 2017 was delinquent and on non-accrual status as of March 31, 2021 and December 31, 2020. The Company had a $3.7 million reserve for this loan based on its collateral fair value as of March 31, 2021 and December 31, 2020 and has not recorded any interest related to this loan since it went on non-accrual status in 2019. All other loans were current as of March 31, 2021 and December 31, 2020. The amortized cost basis of loans that were current as of March 31, 2021 and December 31, 2020 was $271.3 million and $350.5 million, respectively. As of March 31, 2021, $46.1 million, $144.3 million, and $81.5 million of the loans that were current were originated in 2020, 2019, and 2018, respectively. Prior to 2019, the Company had not experienced any delinquencies related to loans held for investment. |
Provision for Credit Losses | Provision (Benefit) for Credit Losses — Provision (benefit) for credit losses Provision (benefit) for credit losses For the three months ended March 31, Components of Provision (Benefit) for Credit Losses (in thousands) 2021 2020 Provision (benefit) for loan losses $ (587) $ 1,106 Provision (benefit) for risk-sharing obligations (10,733) 22,537 Provision (benefit) for credit losses $ (11,320) $ 23,643 |
Net Warehouse Interest Income | Net Warehouse Interest Income— Net warehouse interest income For the three months ended March 31, Components of Net Warehouse Interest Income (in thousands) 2021 2020 Warehouse interest income - loans held for sale $ 9,118 $ 7,402 Warehouse interest expense - loans held for sale (6,659) (5,910) Net warehouse interest income - loans held for sale $ 2,459 $ 1,492 Warehouse interest income - loans held for investment $ 3,228 $ 6,306 Warehouse interest expense - loans held for investment (1,132) (2,303) Warehouse interest income - secured borrowings 865 846 Warehouse interest expense - secured borrowings (865) (846) Net warehouse interest income - loans held for investment $ 2,096 $ 4,003 Total net warehouse interest income $ 4,555 $ 5,495 |
Statement of Cash Flows | Statement of Cash Flows March 31, December 31, (in thousands) 2021 2020 2020 2019 Cash and cash equivalents $ 277,277 $ 205,309 $ 321,097 $ 120,685 Restricted cash 14,805 30,745 19,432 8,677 Pledged cash and cash equivalents (NOTE 9) 39,532 8,543 17,473 7,204 Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 331,614 $ 244,597 $ 358,002 $ 136,566 |
Income Taxes | Income Taxes |
Contracts with Customers | Contracts with Customers For the three months ended March 31, Description in thousands 2021 2020 Statement of income line item Certain loan origination fees $ 23,901 $ 21,348 Loan origination and debt brokerage fees, net Property sales broker fees, investment management fees, application fees, and other 15,292 15,064 Other revenues Total revenues derived from contracts with customers $ 39,193 $ 36,412 |
Litigation | Litigation |
Recently Adopted and Recently Announced Accounting Pronouncements | Recently Adopted and Recently Announced Accounting Pronouncement s |
Reclassifications | Reclassifications |
SUMMARY OF SIGNIFICANT ACCOUN_3
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Schedule of Components of Provision (Benefit) for Credit Losses | For the three months ended March 31, Components of Provision (Benefit) for Credit Losses (in thousands) 2021 2020 Provision (benefit) for loan losses $ (587) $ 1,106 Provision (benefit) for risk-sharing obligations (10,733) 22,537 Provision (benefit) for credit losses $ (11,320) $ 23,643 |
Schedule of Net Warehouse Interest Income | For the three months ended March 31, Components of Net Warehouse Interest Income (in thousands) 2021 2020 Warehouse interest income - loans held for sale $ 9,118 $ 7,402 Warehouse interest expense - loans held for sale (6,659) (5,910) Net warehouse interest income - loans held for sale $ 2,459 $ 1,492 Warehouse interest income - loans held for investment $ 3,228 $ 6,306 Warehouse interest expense - loans held for investment (1,132) (2,303) Warehouse interest income - secured borrowings 865 846 Warehouse interest expense - secured borrowings (865) (846) Net warehouse interest income - loans held for investment $ 2,096 $ 4,003 Total net warehouse interest income $ 4,555 $ 5,495 |
Schedule of Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents | March 31, December 31, (in thousands) 2021 2020 2020 2019 Cash and cash equivalents $ 277,277 $ 205,309 $ 321,097 $ 120,685 Restricted cash 14,805 30,745 19,432 8,677 Pledged cash and cash equivalents (NOTE 9) 39,532 8,543 17,473 7,204 Total cash, cash equivalents, restricted cash, and restricted cash equivalents $ 331,614 $ 244,597 $ 358,002 $ 136,566 |
Schedule of Contracts with Customers | For the three months ended March 31, Description in thousands 2021 2020 Statement of income line item Certain loan origination fees $ 23,901 $ 21,348 Loan origination and debt brokerage fees, net Property sales broker fees, investment management fees, application fees, and other 15,292 15,064 Other revenues Total revenues derived from contracts with customers $ 39,193 $ 36,412 |
MORTGAGE SERVICING RIGHTS (Tabl
MORTGAGE SERVICING RIGHTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
MORTGAGE SERVICING RIGHTS | |
Schedule of Activity Related to Capitalized MSRs, Net of Accumulated Amortization | For the three months ended March 31, Roll Forward of MSRs (in thousands) 2021 2020 Beginning balance $ 862,813 $ 718,799 Additions, following the sale of loan 96,640 44,214 Amortization (42,552) (35,218) Pre-payments and write-offs (7,017) (5,309) Ending balance $ 909,884 $ 722,486 |
Summary of Components of Net Carrying Value of MSRs | Components of MSRs (in thousands) March 31, 2021 December 31, 2020 Gross Value $ 1,469,405 $ 1,394,901 Accumulated amortization (559,521) (532,088) Net carrying value $ 909,884 $ 862,813 |
Schedule of Expected Amortization of MSRs | Expected (in thousands) Amortization Nine Months Ending December 31, 2021 $ 125,189 Year Ending December 31, 2022 $ 155,380 2023 141,056 2024 120,153 2025 100,742 2026 81,909 Thereafter 185,455 Total $ 909,884 |
GUARANTY OBLIGATION AND ALLOW_2
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | |
Schedule of Activity Related to Guaranty Obligation | For the three months ended March 31, Roll Forward of Guaranty Obligation (in thousands) 2021 2020 Beginning balance $ 52,306 $ 54,695 Additions, following the sale of loan 1,721 1,862 Amortization (2,191) (2,267) Other — 1,468 Ending balance $ 51,836 $ 55,758 |
Summary of Allowance for Risk-Sharing Obligations | For the three months ended March 31, Roll Forward of Allowance for Risk-Sharing Obligations (in thousands) 2021 2020 Beginning balance $ 75,313 $ 11,471 Adjustment related to adoption of CECL — 31,570 Provision (benefit) for risk-sharing obligations (10,733) 22,537 Write-offs — — Other — (1,468) Ending balance $ 64,580 $ 64,110 |
WAREHOUSE NOTES PAYABLE (Tables
WAREHOUSE NOTES PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
WAREHOUSE NOTES PAYABLE | |
Schedule of warehouse lines of credit | March 31, 2021 (dollars in thousands) Committed Uncommitted Total Facility Outstanding Facility (1) Amount Amount Capacity Balance Interest rate (2) Agency Warehouse Facility #1 $ 425,000 $ — $ 425,000 $ 132,460 30-day LIBOR plus 1.40% Agency Warehouse Facility #2 700,000 300,000 1,000,000 76,391 30-day LIBOR plus 1.40% Agency Warehouse Facility #3 600,000 265,000 865,000 88,618 30-day LIBOR plus 1.15% Agency Warehouse Facility #4 350,000 — 350,000 147,055 30-day LIBOR plus 1.40% Agency Warehouse Facility #5 — 1,000,000 1,000,000 276,915 30-day LIBOR plus 1.45% Agency Warehouse Facility #6 150,000 100,000 250,000 88,500 30-day LIBOR plus 1.40% Total National Bank Agency Warehouse Facilities $ 2,225,000 $ 1,665,000 $ 3,890,000 $ 809,939 Fannie Mae repurchase agreement, uncommitted line and open maturity — 1,500,000 1,500,000 173,215 Total Agency Warehouse Facilities $ 2,225,000 $ 3,165,000 $ 5,390,000 $ 983,154 Interim Warehouse Facility #1 $ 135,000 $ — $ 135,000 $ 71,572 30-day LIBOR plus 1.90% Interim Warehouse Facility #2 100,000 — 100,000 34,000 30-day LIBOR plus 1.65% to 2.00% Interim Warehouse Facility #3 75,000 75,000 150,000 4,640 30-day LIBOR plus 1.75% to 3.25% Interim Warehouse Facility #4 19,810 — 19,810 19,810 30-day LIBOR plus 3.00% Total National Bank Interim Warehouse Facilities $ 329,810 $ 75,000 $ 404,810 $ 130,022 Debt issuance costs — — — (836) Total warehouse facilities $ 2,554,810 $ 3,240,000 $ 5,794,810 $ 1,112,340 (1) Agency Warehouse Facilities, including the Fannie Mae repurchase agreement are used to fund loans held for sale, while Interim Warehouse Facilities are used to fund loans held for investment. (2) Interest rate presented does not include the effect of interest rate floors. |
GOODWILL AND OTHER INTANGIBLE_2
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
GOODWILL AND OTHER INTANGIBLE ASSETS | |
Schedule of Goodwill | For the three months ended March 31, Roll Forward of Goodwill (in thousands) 2021 2020 Beginning balance $ 248,958 $ 180,424 Additions from acquisitions 12,231 64,462 Impairment — — Ending balance $ 261,189 $ 244,886 |
Schedule of Contingent Liability | A summary of the Company’s contingent consideration liabilities, which is included in Other liabilities , as of and for the three months ended March 31, 2021 and 2020 is as follows: For the three months ended March 31, Roll Forward of Contingent Consideration Liabilities (in thousands) 2021 2020 Beginning balance $ 28,829 $ 5,752 Additions 5,229 16,073 Accretion 430 227 Payments — (5,800) Ending balance $ 34,488 $ 16,252 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
FAIR VALUE MEASUREMENTS | |
Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis | Quoted Prices in Significant Significant Active Markets Other Other For Identical Observable Unobservable Assets Inputs Inputs Balance as of (in thousands) (Level 1) (Level 2) (Level 3) Period End March 31, 2021 Assets Loans held for sale $ — $ 1,048,385 $ — $ 1,048,385 Pledged securities 39,532 100,038 — 139,570 Derivative assets — — 58,130 58,130 Total $ 39,532 $ 1,148,423 $ 58,130 $ 1,246,085 Liabilities Derivative liabilities $ — $ — $ 9,250 $ 9,250 Total $ — $ — $ 9,250 $ 9,250 December 31, 2020 Assets Loans held for sale $ — $ 2,449,198 $ — $ 2,449,198 Pledged securities 17,473 119,763 — 137,236 Derivative assets — — 49,786 49,786 Total $ 17,473 $ 2,568,961 $ 49,786 $ 2,636,220 Liabilities Derivative liabilities $ — $ — $ 5,066 $ 5,066 Total $ — $ — $ 5,066 $ 5,066 |
Schedule of Roll Forward of Derivative Instruments | Fair Value Measurements Using Significant Unobservable Inputs: Derivative Instruments For the three months ended March 31, Derivative Assets and Liabilities, net (in thousands) 2021 2020 Beginning balance $ 44,720 $ 15,532 Settlements (129,655) (174,295) Realized gains recorded in earnings (1) 84,935 158,763 Unrealized gains (losses) recorded in earnings (1) 48,880 (14,390) Ending balance $ 48,880 $ (14,390) (1) Realized and unrealized gains (losses) from derivatives are recognized in Loan origination and debt brokerage fees, net and Fair value of expected net cash flows from servicing, net in the Condensed Consolidated Statements of Income. |
Schedule of Significant Unobservable Inputs Used in the Measurement of the Fair Value of Level 3 Assets and Liabilities | Quantitative Information about Level 3 Measurements (in thousands) Fair Value Valuation Technique Unobservable Input (1) Input Value (1) Derivative assets $ 58,130 Discounted cash flow Counterparty credit risk — Derivative liabilities $ 9,250 Discounted cash flow Counterparty credit risk — (1) Significant increases in this input may lead to significantly lower fair value measurements. |
Schedule of Carrying Amounts and the Fair Values of the Company's Financial Instruments | March 31, 2021 December 31, 2020 Carrying Fair Carrying Fair (in thousands) Amount Value Amount Value Financial Assets: Cash and cash equivalents $ 277,277 $ 277,277 $ 321,097 $ 321,097 Restricted cash 14,805 14,805 19,432 19,432 Pledged securities 139,570 139,570 137,236 137,236 Loans held for sale 1,048,385 1,048,385 2,449,198 2,449,198 Loans held for investment, net 281,788 282,842 360,402 362,586 Derivative assets 58,130 58,130 49,786 49,786 Total financial assets $ 1,819,955 $ 1,821,009 $ 3,337,151 $ 3,339,335 Financial Liabilities: Derivative liabilities $ 9,250 $ 9,250 $ 5,066 $ 5,066 Secured borrowings 73,312 73,312 73,314 73,314 Warehouse notes payable 1,112,340 1,113,176 2,517,156 2,518,101 Note payable 291,045 294,028 291,593 294,773 Total financial liabilities $ 1,485,947 $ 1,489,766 $ 2,887,129 $ 2,891,254 |
Schedule of Fair Value of Derivative Instruments and Loans Held for Sale | Fair Value Adjustment Components Balance Sheet Location Fair Value Notional or Estimated Total Adjustment Principal Gain Interest Rate Fair Value Derivative Derivative to Loans (in thousands) Amount on Sale Movement Adjustment Assets Liabilities Held for Sale March 31, 2021 Rate lock commitments $ 828,045 $ 25,150 $ (16,350) $ 8,800 $ 14,157 $ (5,357) $ — Forward sale contracts 1,845,330 — 40,080 40,080 43,973 (3,893) — Loans held for sale 1,046,135 25,980 (23,730) 2,250 — — 2,250 Total $ 51,130 $ — $ 51,130 $ 58,130 $ (9,250) $ 2,250 December 31, 2020 Rate lock commitments $ 1,374,784 $ 45,581 $ (1,697) $ 43,884 $ 43,895 $ (11) $ — Forward sale contracts 3,760,953 — 836 836 5,891 (5,055) — Loans held for sale 2,386,169 62,167 861 63,028 — — 63,028 Total $ 107,748 $ — $ 107,748 $ 49,786 $ (5,066) $ 63,028 |
FANNIE MAE COMMITMENTS AND PL_2
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES | |
Schedule of Pledged Securities at Fair Value | March 31, December 31, Pledged Securities (in thousands) 2021 2020 2020 2019 Restricted cash $ 24,578 $ 2,989 $ 4,954 $ 2,150 Money market funds 14,954 5,554 12,519 5,054 Total pledged cash and cash equivalents $ 39,532 $ 8,543 $ 17,473 $ 7,204 Agency MBS 100,038 112,952 119,763 114,563 Total pledged securities, at fair value $ 139,570 $ 121,495 $ 137,236 $ 121,767 |
Schedule of Investment Information Related to AFS Agency MBS | Fair Value and Amortized Cost of Agency MBS (in thousands) March 31, 2021 December 31, 2020 Fair value $ 100,038 $ 119,763 Amortized cost 97,621 117,136 Total gains for securities with net gains in AOCI 2,520 2,669 Total losses for securities with net losses in AOCI (103) (42) Fair value of securities with unrealized losses 2,286 12,267 |
Schedule of Contractual Maturity Information Related to Agency MBS | March 31, 2021 Detail of Agency MBS Maturities (in thousands) Fair Value Amortized Cost Within one year $ — $ — After one year through five years 7,187 7,157 After five years through ten years 65,168 64,399 After ten years 27,683 26,065 Total $ 100,038 $ 97,621 |
EARNINGS PER SHARE AND STOCKH_2
EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2021 | |
EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY | |
Schedule of Basic and Diluted EPS Under Two-Class Method | For the three months ended March 31, EPS Calculations (in thousands, except per share amounts) 2021 2020 Calculation of basic EPS Walker & Dunlop net income $ 58,052 $ 47,829 Less: dividends and undistributed earnings allocated to participating securities 1,967 1,510 Net income applicable to common stockholders $ 56,085 $ 46,319 Weighted-average basic shares outstanding 30,823 30,226 Basic EPS $ 1.82 $ 1.53 Calculation of diluted EPS Net income applicable to common stockholders $ 56,085 $ 46,319 Add: reallocation of dividends and undistributed earnings based on assumed conversion 20 34 Net income allocated to common stockholders $ 56,105 $ 46,353 Weighted-average basic shares outstanding 30,823 30,226 Add: weighted-average diluted non-participating securities 453 934 Weighted-average diluted shares outstanding 31,276 31,160 Diluted EPS $ 1.79 $ 1.49 |
ORGANIZATION AND BASIS OF PRE_2
ORGANIZATION AND BASIS OF PRESENTATION (Details) | Mar. 31, 2021 |
Interim Program JV | |
Joint Venture | |
Ownership interest | 15.00% |
Appraisal JV | |
Joint Venture | |
Ownership interest | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN_4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Derivative Assets and Liabilities (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Mortgage Banking Activities | ||
Co-broker fees | $ 5.3 | $ 8.3 |
SUMMARY OF SIGNIFICANT ACCOUN_5
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Loans Held-for-Investment, Net (Detail) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021USD ($)loan | Dec. 31, 2020USD ($)loan | |
Loans Held-for-Investment, Net | ||
Amortized cost of loans held for investment, current | $ 271,300,000 | $ 350,500,000 |
Loan originated in 2018 | 81,500,000 | |
Loans originated in 2019 | 144,300,000 | |
Loans originated in 2020 | 46,100,000 | |
Loans Held for Investment | ||
Transfers of financial assets accounted for as secured borrowings | ||
Loan portfolio transferred to third party | 81,500,000 | |
Other Liabilities | ||
Transfers of financial assets accounted for as secured borrowings | ||
Loan portfolio transferred to third party | 73,300,000 | |
Secured borrowing | $ 73,300,000 | |
Loans Held for Investment | ||
Loans Held-for-Investment, Net | ||
Number of loans held for investment | loan | 14 | 18 |
Unpaid principal balance of loans held for investment | $ 286,600,000 | $ 366,300,000 |
Net unamortized deferred fees and costs | 600,000 | 1,100,000 |
Allowance for loan losses | $ 4,200,000 | $ 4,800,000 |
Reasonable and supportable forecast period used for determining CECL reserves | 1 year | |
Charge off rate in forecasted period | 0.20% | 0.36% |
Charge off rate for the remaining period | 0.09% | 0.09% |
Number of delinquent loans | 1 | 1 |
Loans held for investment, delinquent | $ 14,700,000 | $ 14,700,000 |
Number of loans on nonaccrual status | loan | 1 | 1 |
Loans, non-accrual status | $ 14,700,000 | $ 14,700,000 |
Specific reserve for loan | $ 3,700,000 | $ 3,700,000 |
Loans Held for Investment | Maximum | ||
Loans Held-for-Investment, Net | ||
Loan term (in years) | 3 years |
SUMMARY OF SIGNIFICANT ACCOUN_6
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Provision for Credit Losses (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Components of Provision for Credit Losses | ||
Provision (benefit) for loan losses | $ (587) | $ 1,106 |
Provision (benefit) for risk-sharing obligations | (10,733) | 22,537 |
Provision (benefit) for credit losses | $ (11,320) | $ 23,643 |
SUMMARY OF SIGNIFICANT ACCOUN_7
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Net Warehouse Interest Income (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Net Warehouse Interest Income | ||
Net warehouse interest income | $ 4,555 | $ 5,495 |
Loans Held for Sale | ||
Net Warehouse Interest Income | ||
Warehouse interest income | 9,118 | 7,402 |
Warehouse interest expense | (6,659) | (5,910) |
Net warehouse interest income | 2,459 | 1,492 |
Loans Held for Investment | ||
Net Warehouse Interest Income | ||
Warehouse interest income | 3,228 | 6,306 |
Warehouse interest expense | (1,132) | (2,303) |
Net warehouse interest income | 2,096 | 4,003 |
Secured Borrowings | ||
Net Warehouse Interest Income | ||
Warehouse interest income | 865 | 846 |
Warehouse interest expense | $ (865) | $ (846) |
SUMMARY OF SIGNIFICANT ACCOUN_8
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash Flows (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Cash, Cash Equivalents, Restricted Cash, and Restricted Cash Equivalents | ||||
Cash and cash equivalents | $ 277,277 | $ 321,097 | $ 205,309 | $ 120,685 |
Restricted cash | 14,805 | 19,432 | 30,745 | 8,677 |
Pledged cash and cash equivalents (NOTE 9) | 39,532 | 17,473 | 8,543 | 7,204 |
Total cash, cash equivalents, restricted cash, and restricted cash equivalents | $ 331,614 | $ 358,002 | $ 244,597 | $ 136,566 |
SUMMARY OF SIGNIFICANT ACCOUN_9
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes (Detail) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | ||
Excess tax benefits recognized | $ 4.1 | $ 2.9 |
SUMMARY OF SIGNIFICANT ACCOU_10
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Contracts with Customers (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Contracts with Customers | ||
Revenue from contracts with customer | $ 39,193 | $ 36,412 |
Loan Origination Fees | Loan Origination and Debt Brokerage Fees, Net | ||
Contracts with Customers | ||
Revenue from contracts with customer | 23,901 | 21,348 |
Property Sales Broker Fees, Investment Management Fees, Application Fees and Other | Other Revenues | ||
Contracts with Customers | ||
Revenue from contracts with customer | $ 15,292 | $ 15,064 |
MORTGAGE SERVICING RIGHTS - Fai
MORTGAGE SERVICING RIGHTS - Fair Value Disclosures (Detail) - MSRs - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2021 | Dec. 31, 2020 | |
Servicing | ||
Fair value of the MSRs | $ 1,200 | $ 1,100 |
Sensitivity Analysis of Fair Value, example 1, impact of percent adverse change in discount rate, percent | 1.00% | |
Decrease in fair value as a result of 100 basis point increase in discount rate | $ 36 | |
Sensitivity Analysis of Fair Value, example 2, impact of percent adverse change in discount rate, percent | 2.00% | |
Decrease in fair value as a result of 200 basis point increase in discount rate | $ 69.8 |
MORTGAGE SERVICING RIGHTS - Sch
MORTGAGE SERVICING RIGHTS - Schedule of Activity Related to Capitalized MSRs (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Mortgage Servicing Rights | ||
Beginning balance | $ 862,813 | |
Ending balance | 909,884 | |
MSRs | ||
Mortgage Servicing Rights | ||
Beginning balance | 862,813 | $ 718,799 |
Additions, following sale of loan | 96,640 | 44,214 |
Amortization | (42,552) | (35,218) |
Pre-payments and write-offs | (7,017) | (5,309) |
Ending balance | $ 909,884 | $ 722,486 |
MORTGAGE SERVICING RIGHTS - Sum
MORTGAGE SERVICING RIGHTS - Summary of Components of Net Carrying Value of Acquired and Originated MSRs (Detail) - MSRs - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Mortgage Servicing Rights Acquired and Originated | ||
Gross value | $ 1,469,405 | $ 1,394,901 |
Accumulated amortization | (559,521) | (532,088) |
Net carrying value | $ 909,884 | $ 862,813 |
MORTGAGE SERVICING RIGHTS - S_2
MORTGAGE SERVICING RIGHTS - Schedule of Expected Amortization of MSRs (Detail) - MSRs - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Future amortization | ||
Nine Months Ending December 31, 2021 | $ 125,189 | |
2022 | 155,380 | |
2023 | 141,056 | |
2024 | 120,153 | |
2025 | 100,742 | |
2026 | 81,909 | |
Thereafter | 185,455 | |
Net carrying value | $ 909,884 | $ 862,813 |
GUARANTY OBLIGATION AND ALLOW_3
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS - Schedule of Activity Related to Guaranty Obligation (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS | ||
Guaranty obligation, net of accumulated amortization - beginning balance | $ 52,306 | $ 54,695 |
Additions, following the sale of loan | 1,721 | 1,862 |
Amortization | (2,191) | (2,267) |
Other | 1,468 | |
Guaranty obligation, net of accumulated amortization - ending balance | $ 51,836 | $ 55,758 |
GUARANTY OBLIGATION AND ALLOW_4
GUARANTY OBLIGATION AND ALLOWANCE FOR RISK-SHARING OBLIGATIONS - Summary of Allowance for Risk-Sharing Obligations (Detail) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2021USD ($)loan | Dec. 31, 2020USD ($) | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($)loan | |
Allowance for Risk-Sharing Contracts | ||||
Beginning balance | $ 75,313 | $ 11,471 | $ 11,471 | |
Adjustment related to adoption of CECL | 31,570 | |||
Provision (benefit) for risk-sharing obligations | (10,733) | 22,537 | ||
Other | (1,468) | |||
Ending balance | $ 64,580 | $ 75,313 | $ 64,110 | $ 75,313 |
Number of defaulted loans | loan | 2 | 2 | ||
Amount of specific reserves placed on defaulted at risk loans | $ 7,600 | $ 8,300 | $ 8,300 | |
Fannie Mae DUS program | ||||
Allowance for Risk-Sharing Contracts | ||||
Maximum quantifiable contingent liability associated with guarantees | $ 9,300,000 | |||
Fannie Mae DUS Program | ||||
Allowance for Risk-Sharing Contracts | ||||
Charge off rate in forecasted period | 0.04% | 0.06% | 0.07% | |
Reversion period used for determining CECL reserves | 1 year | 1 year | ||
Charge off rate for the remaining period | 0.02% | 0.02% | ||
At risk servicing portfolio | $ 45,400,000 | |||
CECL reserve for at risk servicing portfolio | $ 57,000 | $ 67,000 | $ 67,000 | |
Weighted average remaining life of the at risk servicing portfolio | 7 years 7 months 6 days |
SERVICING - (Detail)
SERVICING - (Detail) - Loans serviced - USD ($) $ in Billions | Mar. 31, 2021 | Dec. 31, 2020 |
Servicing | ||
Servicing portfolio loans unpaid principal balance | $ 109.9 | $ 107.2 |
Custodial escrow accounts | $ 2.5 | $ 3.1 |
WAREHOUSE NOTES PAYABLE - Summa
WAREHOUSE NOTES PAYABLE - Summary Information (Detail) - USD ($) $ in Thousands | May 06, 2021 | Apr. 30, 2021 | Mar. 31, 2021 | Mar. 31, 2020 | Dec. 31, 2020 |
Warehouse notes payable | |||||
Committed Amount | $ 2,554,810 | ||||
Uncommitted Amount | 3,240,000 | ||||
Total Facility Capacity | 5,794,810 | ||||
Outstanding Balance | 1,112,340 | $ 2,517,156 | |||
Debt issuance costs | (836) | ||||
Loans Held for Sale | |||||
Warehouse notes payable | |||||
Interest expense | 6,659 | $ 5,910 | |||
Loans Held for Sale | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | 2,225,000 | ||||
Uncommitted Amount | 3,165,000 | ||||
Total Facility Capacity | 5,390,000 | ||||
Outstanding Balance | 983,154 | ||||
Loans Held for Sale | Agency Warehouse Facility #1 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | 425,000 | ||||
Total Facility Capacity | 425,000 | ||||
Outstanding Balance | $ 132,460 | ||||
Loans Held for Sale | Agency Warehouse Facility #1 | Agency Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.30% | 1.40% | |||
Loans Held for Sale | Agency Warehouse Facility #1 | Agency Warehouse Facility | 30-day LIBOR | Minimum | |||||
Warehouse notes payable | |||||
Interest rate floor | 0.00% | 0.25% | |||
Loans Held for Sale | Agency Warehouse Facility #2 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 700,000 | ||||
Uncommitted Amount | 300,000 | ||||
Total Facility Capacity | 1,000,000 | ||||
Outstanding Balance | $ 76,391 | ||||
Maturity date | Apr. 14, 2022 | ||||
Loans Held for Sale | Agency Warehouse Facility #2 | Agency Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.40% | ||||
Loans Held for Sale | Agency Warehouse Facility #3 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 600,000 | ||||
Uncommitted Amount | 265,000 | ||||
Total Facility Capacity | 865,000 | ||||
Outstanding Balance | $ 88,618 | ||||
Maturity date | May 14, 2022 | ||||
Loans Held for Sale | Agency Warehouse Facility #3 | Agency Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.40% | 1.15% | |||
Loans Held for Sale | Agency Warehouse Facility #3 | Agency Warehouse Facility | 30-day LIBOR | Minimum | |||||
Warehouse notes payable | |||||
Interest rate floor | 0.15% | 0.50% | |||
Loans Held for Sale | Agency Warehouse Facility #4 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 350,000 | ||||
Total Facility Capacity | 350,000 | ||||
Outstanding Balance | $ 147,055 | ||||
Loans Held for Sale | Agency Warehouse Facility #4 | Agency Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.40% | ||||
Loans Held for Sale | Agency Warehouse Facility #5 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Uncommitted Amount | $ 1,000,000 | ||||
Total Facility Capacity | 1,000,000 | ||||
Outstanding Balance | $ 276,915 | ||||
Loans Held for Sale | Agency Warehouse Facility #5 | Agency Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.45% | ||||
Loans Held for Sale | Agency Warehouse Facility #6 | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 150,000 | ||||
Uncommitted Amount | 100,000 | ||||
Total Facility Capacity | 250,000 | ||||
Outstanding Balance | $ 88,500 | ||||
Maturity date | Mar. 5, 2022 | ||||
Advances made as a percentage of the loan balance | 100.00% | ||||
Loans Held for Sale | Agency Warehouse Facility #6 | Agency Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.40% | ||||
Loans Held for Sale | Agency Warehouse Facility #6 | Agency Warehouse Facility | 30-day LIBOR | Minimum | |||||
Warehouse notes payable | |||||
Interest rate floor | 0.25% | ||||
Loans Held for Investment | |||||
Warehouse notes payable | |||||
Interest expense | $ 1,132 | $ 2,303 | |||
Loans Held for Investment | Interim Warehouse Facility #1 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | 135,000 | ||||
Total Facility Capacity | 135,000 | ||||
Outstanding Balance | $ 71,572 | ||||
Maturity date | May 14, 2022 | ||||
Loans Held for Investment | Interim Warehouse Facility #1 | Interim Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.90% | ||||
Loans Held for Investment | Interim Warehouse Facility #1 | Interim Warehouse Facility | 30-day LIBOR | Minimum | |||||
Warehouse notes payable | |||||
Interest rate floor | 0.15% | 0.50% | |||
Loans Held for Investment | Interim Warehouse Facility #2 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 100,000 | ||||
Total Facility Capacity | 100,000 | ||||
Outstanding Balance | $ 34,000 | ||||
Loans Held for Investment | Interim Warehouse Facility #2 | Interim Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.65% | ||||
Loans Held for Investment | Interim Warehouse Facility #3 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 75,000 | ||||
Uncommitted Amount | 75,000 | ||||
Total Facility Capacity | 150,000 | ||||
Outstanding Balance | $ 4,640 | ||||
Loans Held for Investment | Interim Warehouse Facility #3 | Interim Warehouse Facility | 30-day LIBOR | Minimum | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 1.75% | ||||
Loans Held for Investment | Interim Warehouse Facility #3 | Interim Warehouse Facility | 30-day LIBOR | Maximum | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 3.25% | ||||
Loans Held for Investment | Interim Warehouse Facility #4 | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | $ 19,810 | ||||
Total Facility Capacity | 19,810 | ||||
Outstanding Balance | $ 19,810 | ||||
Loans Held for Investment | Interim Warehouse Facility #4 | Interim Warehouse Facility | 30-day LIBOR | |||||
Warehouse notes payable | |||||
Percentage added to reference rate | 3.00% | ||||
National Banks | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Total Facility Capacity | $ 3,900,000 | ||||
National Banks | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Total Facility Capacity | 400,000 | ||||
National Banks | Loans Held for Sale | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | 2,225,000 | ||||
Uncommitted Amount | 1,665,000 | ||||
Total Facility Capacity | 3,890,000 | ||||
Outstanding Balance | 809,939 | ||||
National Banks | Loans Held for Investment | Interim Warehouse Facility | |||||
Warehouse notes payable | |||||
Committed Amount | 329,810 | ||||
Uncommitted Amount | 75,000 | ||||
Total Facility Capacity | 404,810 | ||||
Outstanding Balance | 130,022 | ||||
Fannie Mae | Loans Held for Sale | Uncommitted Agency Warehouse Facility | Agency Warehouse Facility | |||||
Warehouse notes payable | |||||
Uncommitted Amount | 1,500,000 | ||||
Total Facility Capacity | 1,500,000 | ||||
Outstanding Balance | $ 173,215 |
GOODWILL AND OTHER INTANGIBLE_3
GOODWILL AND OTHER INTANGIBLE ASSETS - Schedule of Goodwill (Detail) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2021USD ($)item | Mar. 31, 2020USD ($) | Dec. 31, 2020USD ($) | |
Goodwill activity | |||
Beginning balance | $ 248,958 | $ 180,424 | |
Additions from acquisitions | 12,231 | 64,462 | |
Ending balance | 261,189 | $ 244,886 | |
Assets acquired | |||
Intangible assets acquired | $ 1,700 | $ 1,900 | |
Weighted average amortization period | 3 years 10 months 24 days | ||
Debt Brokerage Companies | |||
Assets acquired | |||
Number of acquisitions during the period | item | 1 | ||
Total consideration transferred | $ 12,700 | ||
Cash consideration | 7,500 | ||
Contingent consideration | $ 5,200 | ||
Debt Brokerage Company Two | |||
Assets acquired | |||
Amortization period | 5 years |
GOODWILL AND OTHER INTANGIBLE_4
GOODWILL AND OTHER INTANGIBLE ASSETS - Contingent Consideration Liabilities (Detail) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021USD ($)period | Mar. 31, 2020USD ($) | |
Contingent consideration liabilities | ||
Number of initial annual contingent consideration earn-out periods | period | 5 | |
Other Liabilities | ||
Contingent consideration liabilities | ||
Beginning balance | $ 28,829 | $ 5,752 |
Additions | 5,229 | 16,073 |
Accretion | 430 | 227 |
Payments | (5,800) | |
Ending balance | $ 34,488 | $ 16,252 |
FAIR VALUE MEASUREMENTS - Summa
FAIR VALUE MEASUREMENTS - Summary of Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||||
Loans held for sale | $ 1,048,385 | $ 2,449,198 | ||
Pledged securities | 139,570 | 137,236 | $ 121,495 | $ 121,767 |
Derivative assets | 58,130 | 49,786 | ||
Liabilities | ||||
Derivative liabilities | 9,250 | 5,066 | ||
Recurring | ||||
Assets | ||||
Loans held for sale | 1,048,385 | 2,449,198 | ||
Pledged securities | 139,570 | 137,236 | ||
Derivative assets | 58,130 | 49,786 | ||
Total financial assets | 1,246,085 | 2,636,220 | ||
Liabilities | ||||
Derivative liabilities | 9,250 | 5,066 | ||
Total financial liabilities | 9,250 | 5,066 | ||
Level 1 | Recurring | ||||
Assets | ||||
Pledged securities | 39,532 | 17,473 | ||
Total financial assets | 39,532 | 17,473 | ||
Level 2 | Recurring | ||||
Assets | ||||
Loans held for sale | 1,048,385 | 2,449,198 | ||
Pledged securities | 100,038 | 119,763 | ||
Total financial assets | 1,148,423 | 2,568,961 | ||
Level 3 | Recurring | ||||
Assets | ||||
Derivative assets | 58,130 | 49,786 | ||
Total financial assets | 58,130 | 49,786 | ||
Liabilities | ||||
Derivative liabilities | 9,250 | 5,066 | ||
Total financial liabilities | $ 9,250 | $ 5,066 |
FAIR VALUE MEASUREMENTS - Addit
FAIR VALUE MEASUREMENTS - Additional Information (Detail) $ in Thousands | 3 Months Ended |
Mar. 31, 2021USD ($) | |
Fair Value Measurements | |
Amount of transfers between any of the levels within the fair value hierarchy | $ 0 |
Maximum | |
Fair Value Measurements | |
Contract term | 60 days |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Roll Forward of Derivative Instruments (Detail) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Derivative assets and liabilities, net | ||
Beginning balance | $ 44,720 | $ 15,532 |
Settlements | (129,655) | (174,295) |
Realized gains recorded in earnings | 84,935 | 158,763 |
Unrealized gains recorded in earnings | 48,880 | (14,390) |
Ending balance | $ 48,880 | $ (14,390) |
FAIR VALUE MEASUREMENTS - Sch_2
FAIR VALUE MEASUREMENTS - Schedule of Significant Unobservable Inputs Used in the Measurement of the Fair Value of Level 3 Assets and Liabilities (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Fair Value Measurements | ||
Derivative assets | $ 58,130 | $ 49,786 |
Derivative liabilities | 9,250 | 5,066 |
Level 3 | Discounted Cash Flow | Derivative Assets | ||
Fair Value Measurements | ||
Derivative assets | 58,130 | |
Level 3 | Derivative Liabilities | Discounted Cash Flow | ||
Fair Value Measurements | ||
Derivative liabilities | 9,250 | |
Recurring | ||
Fair Value Measurements | ||
Derivative assets | 58,130 | 49,786 |
Derivative liabilities | 9,250 | 5,066 |
Recurring | Level 3 | ||
Fair Value Measurements | ||
Derivative assets | 58,130 | 49,786 |
Derivative liabilities | $ 9,250 | $ 5,066 |
FAIR VALUE MEASUREMENTS - Sch_3
FAIR VALUE MEASUREMENTS - Schedule of Carrying Amounts and the Fair Values of the Company's Financial Instruments (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Financial assets: | ||||
Cash and cash equivalents | $ 277,277 | $ 321,097 | $ 205,309 | $ 120,685 |
Restricted cash | 14,805 | 19,432 | 30,745 | 8,677 |
Pledged securities | 139,570 | 137,236 | $ 121,495 | $ 121,767 |
Loans held for sale | 1,048,385 | 2,449,198 | ||
Loans held for investment, net | 281,788 | 360,402 | ||
Derivative assets | 58,130 | 49,786 | ||
Financial liabilities: | ||||
Derivative liabilities | 9,250 | 5,066 | ||
Warehouse notes payable | 1,112,340 | 2,517,156 | ||
Note payable | 291,045 | 291,593 | ||
Carrying Amount | ||||
Financial assets: | ||||
Cash and cash equivalents | 277,277 | 321,097 | ||
Restricted cash | 14,805 | 19,432 | ||
Pledged securities | 139,570 | 137,236 | ||
Loans held for sale | 1,048,385 | 2,449,198 | ||
Loans held for investment, net | 281,788 | 360,402 | ||
Derivative assets | 58,130 | 49,786 | ||
Total financial assets | 1,819,955 | 3,337,151 | ||
Financial liabilities: | ||||
Derivative liabilities | 9,250 | 5,066 | ||
Secured borrowings | 73,312 | 73,314 | ||
Warehouse notes payable | 1,112,340 | 2,517,156 | ||
Note payable | 291,045 | 291,593 | ||
Total financial liabilities | 1,485,947 | 2,887,129 | ||
Fair Value | ||||
Financial assets: | ||||
Cash and cash equivalents | 277,277 | 321,097 | ||
Restricted cash | 14,805 | 19,432 | ||
Pledged securities | 139,570 | 137,236 | ||
Loans held for sale | 1,048,385 | 2,449,198 | ||
Loans held for investment, net | 282,842 | 362,586 | ||
Derivative assets | 58,130 | 49,786 | ||
Total financial assets | 1,821,009 | 3,339,335 | ||
Financial liabilities: | ||||
Derivative liabilities | 9,250 | 5,066 | ||
Secured borrowings | 73,312 | 73,314 | ||
Warehouse notes payable | 1,113,176 | 2,518,101 | ||
Note payable | 294,028 | 294,773 | ||
Total financial liabilities | $ 1,489,766 | $ 2,891,254 |
FAIR VALUE MEASUREMENTS - Gener
FAIR VALUE MEASUREMENTS - General information (Detail) | 3 Months Ended |
Mar. 31, 2021 | |
Loans Held for Sale | |
Other information | |
Period of originated loans within which they are transferred or sold | 60 days |
Money Market Funds | Maximum | |
Other information | |
Maximum term of maturity of pledged securities | 90 days |
FAIR VALUE MEASUREMENTS - Sch_4
FAIR VALUE MEASUREMENTS - Schedule of Fair Value of Derivative Instruments and Loans Held for Sale (Detail) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2021 | Dec. 31, 2020 | |
Derivative notional amount and balance sheet location | ||
Estimated Gain on Sale | $ 51,130 | $ 107,748 |
Total Fair Value Adjustment | 51,130 | 107,748 |
Derivative assets | 58,130 | 49,786 |
Derivative Liabilities | (9,250) | (5,066) |
Fair Value Adjustment to Loans Held for Sale | 2,250 | 63,028 |
Loans Held for Sale | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 1,046,135 | 2,386,169 |
Estimated Gain on Sale | 25,980 | 62,167 |
Interest Rate Movement | (23,730) | 861 |
Total Fair Value Adjustment | 2,250 | 63,028 |
Fair Value Adjustment to Loans Held for Sale | 2,250 | 63,028 |
Rate Lock Commitments | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 828,045 | 1,374,784 |
Estimated Gain on Sale | 25,150 | 45,581 |
Interest Rate Movement | (16,350) | (1,697) |
Total Fair Value Adjustment | 8,800 | 43,884 |
Derivative assets | 14,157 | 43,895 |
Derivative Liabilities | (5,357) | (11) |
Forward Sale Contracts | ||
Derivative notional amount and balance sheet location | ||
Notional or Principal Amount | 1,845,330 | 3,760,953 |
Interest Rate Movement | 40,080 | 836 |
Total Fair Value Adjustment | 40,080 | 836 |
Derivative assets | 43,973 | 5,891 |
Derivative Liabilities | $ (3,893) | $ (5,055) |
FANNIE MAE COMMITMENTS AND PL_3
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES - Commitments (Detail) - DUS Risk-Sharing Obligations - Fannie Mae $ in Millions | 3 Months Ended |
Mar. 31, 2021USD ($) | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Period of funding for collateral requirement | 48 months |
Amount of additional capital required to be funded over the next 48 months | $ 69.7 |
Net worth | 1,100 |
Minimum liquid assets to be maintained to meet operational liquidity requirements | 47.7 |
Operational liquidity | 301 |
Minimum | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Net worth requirement | $ 240.5 |
New Tier 2 loans | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Collateral requirements percentage | 0.75% |
Period of funding for collateral requirement | 48 months |
New Tier 2 loans | Money Market Funds | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Restricted liquidity collateral reduction percentage | 5.00% |
New Tier 2 loans | Agency Mortgage Backed Securities | |
LITIGATION, COMMITMENTS, AND CONTINGENCIES | |
Restricted liquidity collateral reduction percentage | 4.00% |
FANNIE MAE COMMITMENTS AND PL_4
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES - Pledged Securities at Fair Value (Detail) - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Pledged Securities | ||||
Restricted cash | $ 24,578 | $ 4,954 | $ 2,989 | $ 2,150 |
Money market funds | 14,954 | 12,519 | 5,554 | 5,054 |
Total pledged cash and cash equivalents | 39,532 | 17,473 | 8,543 | 7,204 |
Agency MBS | 100,038 | 119,763 | 112,952 | 114,563 |
Pledged securities, at fair value | $ 139,570 | $ 137,236 | $ 121,495 | $ 121,767 |
FANNIE MAE COMMITMENTS AND PL_5
FANNIE MAE COMMITMENTS AND PLEDGED SECURITIES - Agency Multifamily Mortgage Based Securities Pledged Securities (Detail) - Agency Mortgage Backed Securities - USD ($) $ in Thousands | Mar. 31, 2021 | Dec. 31, 2020 |
Investments in Agency debt securities | ||
Fair Value | $ 100,038 | $ 119,763 |
Amortized cost | 97,621 | 117,136 |
Total gains for securities with net gains in AOCI | 2,520 | 2,669 |
Total losses for securities with net losses in AOCI | (103) | (42) |
Fair value of securities with unrealized losses | 2,286 | 12,267 |
Maturities - Fair Value | ||
After one year through five years | 7,187 | |
After five years through ten years | 65,168 | |
After ten years | 27,683 | |
Total | 100,038 | 119,763 |
Maturities - Amortized Cost | ||
After one year through five years | 7,157 | |
After five years through ten years | 64,399 | |
After ten years | 26,065 | |
Total | $ 97,621 | $ 117,136 |
EARNINGS PER SHARE AND STOCKH_3
EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY - Basic and Diluted EPS (Detail) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2021 | Mar. 31, 2020 | |
Calculation of basic EPS | ||
Walker and Dunlop net income | $ 58,052 | $ 47,829 |
Less: dividends and undistributed earnings allocated to participating securities | 1,967 | 1,510 |
Net income applicable to common stockholders | $ 56,085 | $ 46,319 |
Basic weighted average shares outstanding | 30,823 | 30,226 |
Basic EPS | $ 1.82 | $ 1.53 |
Calculation of diluted EPS | ||
Add: reallocation of dividends and undistributed earnings based on assumed conversion | $ 20 | $ 34 |
Net income allocated to common stockholders | $ 56,105 | $ 46,353 |
Add: weighted-average diluted non-participating securities | 453 | 934 |
Weighted average diluted shares outstanding | 31,276 | 31,160 |
Diluted EPS | $ 1.79 | $ 1.49 |
EARNINGS PER SHARE AND STOCKH_4
EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY - Share Repurchase and Dividends (Detail) - USD ($) $ / shares in Units, $ in Millions | May 05, 2021 | Feb. 28, 2021 | Mar. 31, 2021 |
Repurchases of common stock | |||
Cash dividends declared per common share | $ 0.50 | $ 0.50 | |
Share Repurchase Program 2021 | |||
Repurchases of common stock | |||
Share repurchase program, period for repurchases | 12 months | ||
Authorized share repurchase capacity remaining | $ 75 | ||
Share Repurchase Program 2021 | Maximum | |||
Repurchases of common stock | |||
Repurchase authorization | $ 75 |