Walker & Dunlop posts profit of $11.13 million in 2Q
[[Update 1: Adds 2Q 2010 pro forma net income of $7.2 million]] Multifamily lender Walker & Dunlop (WD) posted an $11.13 million, or 51 cents per share, profit for the second quarter as revenue hit a record level, jumping 38% to $42.4 million over last year. Originations during the period grew by 95%, attributing to the company's record revenue. The company's overall profit edged down from last year when income hit $11.7 million, or 80 cents per share, on revenue of $30.1 million in the second quarter. Walker & Dunlop explained the year-over-year difference saying, "Net income for the second quarter of 2011 should be compared to the second quarter 2010 pro forma net income of $7.2 million or 49 cents, a 55% increase, due to the changes in corporate tax structure relating to the company’s initial public offering." At the same time, the company bested analyst projections, which estimated earnings for the second quarter in the 40 cents-per-share range. While revenue rose in the most recent period, expenses rose 28% to $24.2 million, compared to $19 million in the second quarter of 2010. Personnel expenses alone rose to $12.9 million due to commissions on higher origination volumes. Sixty-day delinquencies on loans dropped to 0.14% of the portfolio, while loan originations for the period hit $1.3 billion, up from $672 million in 2010. The lender attributed its success in the quarter to macroeconomic conditions favorable to the firm's mission and improvements in the commercial real estate space. "Our origination pipeline remains robust which allows us to establish third quarter 2011 guidance of $750 million to $1.1 billion and to reaffirm our loan origination guidance of $3.5 billion to $4.25 billion for the year," said CEO Willy Walker. Gains on mortgage banking activities rose $31.3 million, a 48% jump from $21.2 million last year due to an uptick in loan origination volume. Servicing fees hit $8 million, up from $6.5 million a year ago as the servicing portfolio grew and the weighted average servicing fees tied to newly originated loans rose. The firm's at-risk servicing portfolio — the balance of Fannie Mae loans subject to potential risks — hit $7 billion, up from $6.4 billion in June. Still, the firm said the overall credit quality within the at-risk servicing portfolio remains strong. The company had no net write-offs — or the extinguishment of loans unlikely to be repaid — in the second quarter. Write to: Kerri Panchuk.