Walker & Dunlop ($18.95 0%) reported first-quarter net income of $5.8 million, or 27 cents a share, falling 12% from year-ago numbers of $6.6 million, or 31 cents a share.
The Bethesda, M.D.-based multifamily lender missed estimates by analysts, who predicted earnings of 31 cents a share, on average, according to Zack’s Investment Research.
The lower earnings are due to increased personnel costs, the write-off of a mortgage servicing right due to the prepayment of a large portfolio of loans and a higher provision for risk-sharing obligations.
Revenue, however, in the quarter increased to $34.4 million, driven by Walker & Dunlop’s increased loan origination volume and growth in servicing fee income. It’s an increase of 19% from a year earlier when revenue totaled $29 million.
The lower net income and higher revenue also are a result of rising expenses. Walker & Dunlop had $24.9 million in expenses in the first quarter, a 37% expansion from $18.1 million a year earlier.
Walker & Dunlop reported $674.5 million worth of loan originations, a 33% jump from $507.5 million in the first quarter 2011. The company said it has done "significant hiring."
Gains from mortgage banking activities — revenue recognized through the loan origination and sale process — came in at $19.8 million, versus $16.8 million a year earlier, an 18% rise. The gains are comprised of loan origination fees and gains attributable to mortgage servicing rights.
Servicing fees were up 22% to $9.4 million from $7.7 million in the year-ago period. The increase was due to the growth of the servicing portfolio coupled with a rise in the weighted average servicing fee.
The first quarter included almost 200% growth in Walker & Dunlop’s capital markets' originations to $209 million. “This growth demonstrates execution of our strategic objective to grow our capital markets business,” Chief Executive Willy Walker said.
“In April, we opened a new office in Fort Lauderdale, Fla., with highly talented professionals that expands our capital markets business outside of the Mid-Atlantic region for the first time in our company’s history," Walker added.
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