Bethesda, Md.-based Walker & Dunlop (WD) second-quarter earnings declined 17% to $9.3 million, or 42 cents a share, as compensation and personnel costs climbed more than 30%.

In the year-ago period, the multifamily lender reported net income of $11.1 million, or 51 cents a share.

The company failed to match analysts’ estimates of 51 cents a share, according to Zack’s Investment Research.

The elevated costs in the quarter offset revenues of $46.7 million, a 10% increase over second-quarter 2011 revenues of $42.4 million.

Total expenses at Walker & Dunlop rose 31% to $31.6 million from $24.2 million from a year earlier. Within that $7.4 million increase, personnel expenses and compensation accounted for $4.5 million, of which $1.7 million was the result of higher commissions on an 11% increase in loan origination. The remaining $2.8 million in personnel cost is attributed to increased fixed compensation expense from the growth of the company’s origination team.

Loan origination in the quarter grew a slight 2% to $1.34 billion from a year earlier. Since June 2011, Walker & Dunlop has added 41 full-time employees, of which 76% directly support origination efforts.

"The second quarter of 2012 was a transformative quarter for our company,” Walker & Dunlop Chief Executive Willy Walker said. “We announced the definitive agreement to acquire CWCapital, and we tripled the origination capacity in our capital markets group by adding two terrific origination teams."

The company anticipates closing the CWCapital acquisition on August 31.

Gains from mortgage banking activities came in at $33.9 million in the second quarter after totaling $31.3 million in the second quarter 2011, an 8% increase.  Gains from mortgage banking activities are comprised of loan origination fees and gains attributable to mortgage servicing rights.

Walker & Dunlop expects to report origination volume of $1.1 billion to $1.4 billion in the third quarter. It reiterated its full year 2012 guidance of $4.5 billion to $5.25 billion.