Servicing fees and originations buoy Walker & Dunlop 2010 revenue
Financial services firm Walker & Dunlop (WD) grew its fiscal 2010 revenue by 37% on loan origination fees, higher servicing fees and an expanded commercial mortgage servicing portfolio, the Bethesda, Md.-based company said Tuesday. This revenue spurt occurred as the commercial real estate financier highlights the need to follow GSE regulatory reform due to its frequent use of Fannie Mae, Freddie Mac and the department of Housing and Urban Development as capital sources. "We will closely monitor legislative developments and continue to use Fannie Mae, Freddie Mac and HUD as sources of capital for our multifamily financing activity," the firm said in a statement. "We will also grow our non-agency lending operations for life insurance companies, CMBS, and other sources of capital for commercial real estate." Walker & Dunlop's profit declined from $39.5 million, or $2.76 per share, in fiscal 2009 to $8.2 million, or 55 cents per share, for fiscal 2010. In the fourth quarter of 2010, Walker & Dunlop posted a net loss of $21.3 million, compared to a profit of $10.8 million in the same quarter a year earlier. The company's profit decline in fiscal 2010 is attributed to a tax status change that occurred after Walker & Dunlop finalized an initial public offering in December, resulting in a $31.6 million deferred tax charge. At the same time, the company's revenue growth in 2010 shows significant expansion within its mortgage banking segment. For fiscal 2010, the company reported gains from mortgage banking activity in the $85.2-million range, up from $57.9 million a year earlier, reflecting 47% growth. Fourth-quarter gains in mortgage banking activity also grew 50% over 2009 levels, hitting $26.7 million. Meanwhile, gains tied to mortgage servicing rights grew 42% from $30.2 million in 2009 to $43.1 million in 2010. Walker & Dunlop added, "Gains attributable to mortgage servicing rights, however, are only earned on originations of Fannie Mae, Freddie Mac and HUD loans. Therefore, as the mix of the company's origination varies among those three sources of capital and other sources of capital where the company does not recognize MSRs, the gains attributable to MSRs may, or may not, move in tandem with aggregate origination volumes." By year-end 2010, the company's loan originations totaled $3.2 billion, up 42% from $2.2 billion in 2009. In addition, the servicing portfolio was valued at $14.6 billion, up 11% from last year. Servicing fees for the entire year totaled $27 million, up 29% from a year ago. Write to Kerri Panchuk.