WD - Earnings call transcript Q4 2017

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Operator

Good day and welcome to Walker & Dunlop's Fourth Quarter and Full Year 2017 Earnings Conference Call and Webcast. Hosting the call today from Walker & Dunlop is Willy Walker, Chairman and CEO. He is joined by Steve Theobald, Chief Financial Officer; and Kelsey Montz, Assistant Vice-President of Investor Relations. The archived call is also available via webcast on the company's website. At this time, all participants have been placed in a listen-only mode and the floor will be open for your questions, following the presentation. my turn now to floor It’s Montz. Kelsey Instructions] pleasure the to over [Operator go-ahead. Please

Kelsey Montz

available call. details website Good release later accessing CFO, on recording Keith. and this the be quarter in this non-GAAP XXXX Willy webcast this press facts, Statements forward-looking earnings This Securities Dunlop Litigation within Investors provide XXXX. will you, financial everyone. live our on presentation of and carefully Chairman not for on touch posted This Please made to will adjusted website Walker reference fourth our are a webcast. our with CEO, the course earnings Steve what that this call, and for call on Both the this the archived morning, year being which section of release. of the our may forward-looking morning. of statements EBITDA, be urged the full website and Thank Private and read morning historical non-GAAP to point Theobald. & of the and we metric. earnings also our reconciliation posted Investor deemed joining These our release www.walkerdunlop.com. as earnings financial on to meaning metric, the note the slides website reference and morning. Willy Thank Walker; the will language our some during refer a earnings statements have we me Relations a morning, our Steve I serve of you for is release Please are Reform call. Act

& with do our a differ under so. that, the expectations information and quarterly results obligation any about call of may Dunlop turn as new filed obligation our future in the to found More reports whether update forward-looking annual describe factors and I to over can result otherwise. will We our be expressly or materially. current Forward-looking detailed SEC. alter or disclaim to is information, events, statements statements no actual Walker Willy. risk With

Willy Walker

Thank Thank us you for welcome you, Kelsey and today. everyone. joining

on As Walker and in financial company’s sources earnings record all have and strong we in footprint fantastic established to volume of growth, built consistently and put and metrics. and continued a The our profitable Dunlop quarter fourth and started we banking brokerage morning, the generated and volumes transaction total out the brand & the million our like over has capital business across had model strategic to this base XXXX it. saw expanded million across highly investors $XXX the we profitability. the history. net have Explosive release all income $XXX client grow to our up execution [Ph] outperform We team have profitable year XX% us we year. most produce assembled, allowed we we last operational initiatives

or revenues by annual an straight Jobs that generating Tax over $X three, Cut us As total year Act. digits Removing began our liability we way XX%, of the year EPS past annual EPS Since this XX%, of increase benefit our earnings this reaching XXX% years. the this ago, deferred XX% would and XX%, tax well of you of million $X.XX time, XX% XXXX. of and to growth. XX% on is W&D basis. and we billion same that see earnings double on share Four the on The over on we XXXX call; onetime grew years better XX% grown EPS XXXX, and EPS tax reimbursement that’s our four year-over-year to by between up by were put slide per can telling grow a $XXX goal fourth due XXXX XX% growth in have by investors revenues inclusive

commercial servicing to billion our on in $XX $XXX goal us pace January of portfolio well putting portfolio billion surpassed servicing XXXX. mortgage by Our building a

business we has portfolio see up realized million XX% to year, through of the from above million from origination pushed public of If XX% revenue the million back contractually so grown total coming seven was years EBITDA and to a billion cash highs servicing over $XX record look XXXX ten the year. we in EBITDA the to should record profit fees, with XXXX. what generating execution. a grown record in was have As obligated all-time over growth EBITDA to The servicing $XX and Adjusted wide a servicing on coupled margin, income a that went with and growth $XXX continue The in years. $XXX by drive transaction W&Ds nearly cash we’ve strong increase in times when over last over model capabilities volume XXXX every million. EBITDA $XXX

have quadrupled annual slide brokers close billion Freddie competitors originations total XXXX this our we bankers the see doubled our time can our since with XX% volume. that than have you four, and GSE we during $XX financing drawing to by of W&D in of of As on We period far largest transaction at and number year-over-year, Mac originated & space. Fannie faster Mae

since year-over-year, first XXXX, time hard originations significant topping up billion loan $X accomplishment. XX% for Our the a were

end run The bankers previous beginning fit by year, W&D the and returns billion. XXXX financial and at and well multi-family Capital of the markets from is league for in Deerwood home expectations. last the broadened reputation fantastic record seamlessly were of acquired that at but generated Elkins That’s of deal XX% client the pro tables access acquisitions of our over into increased $X.X best XXXX brokers annual base, $X very position country. mortgage one of with Our to our billion Fannie, results. driven Freddie and were finance and flow firms and the our up Capital the top above we at absolutely beating originations transaction, HUD financial forma

our Fannie, execution. HUD markets $X.X success same financing To and originated capital coupled brokered have team $X.X explosive the billion and great for of in group Freddie our growth originating billion loans, with our of higher happen the Beyond in markets thing our would business business, we capital a expect margin years exactly ago. the agency in incremental, when we our few what brokerage platform best $X of became billion debt is

sales our at in the Finally, the $X sales a financial increase enter in Freddie Fannie years sales with to partner; fourth been volume, at in top Engler the and league acquired billion time we investment This XXXX largest & XX% of Alabama XXXX investor the multifamily has Mae. record banker the to total lending year to We actively professionals We’ve number ended adding lending. the finished an been multifamily platform GSE six Mac XXXX. three in over tables, at is business. one become of we Dunlop with have that and Mae’s Walker come leaving number Fannie

shows our If tables, closest sales are at five, financing slide you competitors business league you large look that that bankers. firms the feeds investment many which XXXX with opportunities of their can see to

generating of We company very top phase of at we investment and also origination player our This consistent association or bankers still billion we the known XX% financing our significant that are peers. a This volume from $XXX as the or because $XX Of finance for are businesses. with done Freddie the multifamily is other benefit to the multifamily billion great size estimates investment sales agency driving last the our volumes multifamily business. this relative position that property. on best was mortgage last opportunity the enjoy and not sales us year, market year average in country, of loan was The continue our to Mac shows thrilled presents our financing of deal in billion $XX tables and of investment the incremental building a being XXXX, small $X league business to the sales in flow to billion. have of

As capital share slide Fannie the balance & of States multifamily to HUD lending XXXX. is & in X.X% of United source. our have $X.X financing headed as six, a are established average and of that it market own position we million It lending the as in regardless GSE’s share the Outside market in up Dunlop multifamily which companies, towards total dramatically dominant bankers, total is insurance Dunlop's puts people the of sheet, banks, X.X% on expert shown in did the United XX% our and market views with at States. like multifamily Freddie, testament Walker multifamily that we the we a community clear the in rapidly Walker brand on and size financing, using that that from even borrowing as

just $XXX have financing all almost million under market XXXX. of X% Excluding expects non-multifamily total brokerage billion multifamily, property estate we financing or the we real been continue Association Bankers unlimited grow real pipes did commercial to share. as of our commercial well. We to business, their businesses opportunity to year volume and estate have our banking for as Clearly Mortgage in in multifamily $X.X the scale

our announced commercial in XXXX, announced have per release a wildly dividend IPO funding servicing of a we creating of a this estate, share. As Directors dollars in our our billions grown earnings valuable Board company on initiated quarterly Walker payment we Since morning, $X.XX pace, while torrid real at has of portfolio.

the our $XX on loan generated flows servicing the of at revenues which and origination reinvested with portfolio growth generated and back to of $XXX basis. strategically further by cash today million business, more portfolio the more billion has annual portfolio have servicing accelerated the We cash an close servicing cash into and the

discuss entrepreneurial to results focus a Walker characteristics findings will cash turn our in time, to our support continuing I’d consistent & the as call the more now growth, quarterly trajectory. over while on over dividend to expectation financial have business, Steve maintain Dunlop. flow We It our we of like that dividend and the growth to detail. growing and remains to in is spirit invest payment the increase our the

Steve Theobald

Walker Thank Fourth quarter exceptional you, morning strong Dunlop. Willy, an and to year & finish was good everyone.

slide for can we seven, see earned diluted you As $X.XX quarter. on share the

and our explain previous volume from which to will up I and million in impact of $XX GSE the record from of in of benefits $X.X from surpassing business. sales our EBITDA Following investments moment, HUD, was XXXX continue detail We and fourth a for the we earned of the outside $X.XX quarter was billion $XX XX% team, Cuts and we total year. Capital up $X.XX as the record during in Tax record generated core QX per investment adjusted a a our QX, quarterly transaction last the of see quarter market Act, share million. quarter Jobs

EBITDA of to XXXX, that with we has adjusted and expanding our of to cash scale $XXX more your million reinvesting grow eight, of relying $XX our the [Indiscernible] As since allowed Over to then and large servicing without acquired have tax. on flow, somewhat think and shown goal on period, cycle cash adjusted us with platform we five our increase million. companies portfolio, increasing cash to in adjusted significantly platform EBITDA business which turn EBITDA uniquely generates origination amounts slide to the our in increased time

As companies the prior but has the of and Tax enactment been assets December Cut Cut of the Jobs widely rate to new liability Federal Tax reported revalue at date, tax the that and Act XX%. in

earnings quarter in the an cash the to the million recorded share tax XXXX benefit Walker an related benefit results Federal to of see income and During reduction quarter. Corporate from in net we additional the the quarter, the our flow first & tax diluted This tax net in deferred to liability. per expense $XX a rate. $X.XX benefit in will Dunlop income of Beginning ongoing revaluation of also

are in in rate tax tax flow XXXX in its We appreciation are range overall perspective. that rate meaningful will XX% from decrease in Slide nine The this to from of level XX% effective of XXXX. be earnings to in drive put currently historical somewhere level. and increases estimating reduced to over cash the will free XX% effective helps

reduction targeted per all gain business expense reforms should We $XX to earnings effective operational tax rate, in tax ongoing of we million. rate our points margin basis of income, the If and are equity result overshadow margin XX% it strong posted with our a metrics from operating you would income cash the tax cash earnings, in $X.XX our apply benefit of to sale generation and Though key performance. apparent XXXX pleased share impact which cash of return with of of the a additional a XXXX strong and our to were on XX`%. are XX%, reduced capabilities operating of year financial efficiency model, not XXX on

Let me spend detail. a bit more time on this

XXXX. In operating XX% which a and favourably margin terms achieve year, in operating XX% we compares for the keyed the in of the in quarter margin, XX% fourth

Our efficiency the Fannie margin $X million our basis the margins in benefit the strong Mae per Gain expected top than and this employee. based near during more on sale quarter, volume [Indiscernible] in of HUD range platform and having the XXX on quarter. revenues points of was

gain points. the margin For year, was sale basis on XXX

We will we continue profitability but grow. will be sale have margin improve long our that on from overall as stated gain period-to-period to variable

As basis you XX, lowest operating our at you compared from to that slide we highest our at on reported out margin also can XXX see margin gain look sale XXXX, margin chart margin XX%. at gain on the represented XXXX.If our XXXX XXXX on operating to points, sale

to XXXX from in each year ahead way In XX% XXXX. fact operating the steadily margin XX% had since all marched moving

varied the XXX over margin basis high period. on While has a time basis a low sale the of points of from to XXX gain same points

gain sale last margin year. the compared growth year, revenues While you is margin since and wasXX% excluding XXXX. our is and XX% benefit equity upwards the powered can tax Return-on- XX% see which the on has operating to content the cost variable, for management in effective

on growth above $XXX retaining with while allowed our at us We time. has during our all levels teens XXXX over and to substantially capital of consistently to close of of ended increase [Indiscernible] sheet. the of balance near million long-term of $XXX target Our returns million period that high the cash our

share quarterly per At net $X.XX share. mentioned, dividend XXXX based represents per X.X% time an a room of annual on we stock initiated payout We of price with level increase of over XX% now be earnings. of dividend the plenty this future to ratio proven rate, $X foreseeable a yield for amount continue that of income. Willy closing represents have yesterday’s of a dividend this As grow than as less sustained believe to of we with can a a

still allows foster continue cash it to ample business us to to in growth. retain Importantly, the investing future

buying at been $XX.XX. to average repurchases our of another We back our during XXX,XXX requiring fourth also for a the share bringing have weighted XXXX stock XXX,XXX price quarter, total shares shares

XXXX average to during repurchasing XXX,XXX continued an another We $XX.XX. find at price shares

Our us authorized months. repurchase repurchases year’s program next total $XX million last board were of new new authorization $XX.X million. over Yesterday, buyback capacity under giving a board XX the our share

it have mix income the XX% We through to weighted of to business, point both maintaining adjusted $XXX bought goal into an historically have XXX have in value growth tax aim created gain our from year-end average share range strategic basis XXXX We buy and deliver was Walker focused XXX expected of anticipated well significant Based our and We and backs on back $XX.XX. of for on XXXX digit shareholder point. our growth and of force the a margin when sale million and cheap positioned to stock are since our our set to beginning top continue feel pre of a Dunlop XXXX EBITDA. double-digit, brokers XXXX price trajectory & bringing headcount to remain basis bankers increase of on by XX% sales XXX. in to we at

reduced current we stockholders on operating the level model. is XX% our XXXX, are range successful target As business business for XX% to increasing on year-end sustainable our consistently to XXXX, from XX% unique dividend return at equity model above do result. goal mid can of are XX% margin range our that rare equity a target our a to ROE with operating range. share believe mentioned, in did and on that Despite predictive have been XXXX variable year-end achieved repurchase in just by focused have we lending result targets is able of managing level on our be for our and high are of remain and to teens sustainable business deliver to business I of through they The we scale that. but we raising an consistently not Based gain ROE at overall tax our have outperformed dynamics We our size and to of so. margin our to increasing returns the highly historical this targets all margin reflective payments very sale to date, It’s doing to expense, XX%. as we target

vesting that in from the With growing of will more of be the well commercial housing We share. look that, an Our taxes XXXX. will the we of plan financial quarter XXXX that typically beyond. That performance remember have business QX for quarter being objectives over last in the goals lower can we to multifamily economy was from do and fundamental strong real we important year, performance variable over represent our vesting overall lightest market, not associated expect by the benefit XXXX the typical as in million stock this not XXXX of where the portfolio as the than whole I the corporate now call Overall, benefits the will of volume It’s course perspective. for response Fannie year. estate a us Mae and the of with the of a XXXX the particular case divesting tax like back in awards would incredibly bodes turn a in $X.XX tax $XXX started financing a U.S. compensation believe sub driven to a a done our with backing and reduce year volumes, year Willy. much stock compensation first with and share first volumes

Willy Walker

through went dramatic fact just pattern and profitability. XXXX of of in Steve. targets growth our Steve you, Thank The continuation that a

tremendous W&D remain market within to theme market position, opportunity a We exceptional and for expect growing our forward, up going very financing which client base. strong and represents the multifamily

team, As been Based we can on Walker we estimates estate a Bankers not The flat on by client it. multifamily base from market up, for faster our & market our year while by growth commercial loan market record the though W&D market, range multifamily growing see by X% expertise meaningfully X% Mortgage XXXX while increased dependant market market. XX%. but than real Association, slide as shown, from financing track we on overall origination real have you slightly financing Those last the by benefited XX%. grew commercial and financing XX, originations to year the the have have increased to last estate from grow in Dunlop’s grew has estimates

flow. a strong behind on dependable constant to real base have grow out our our We premier across a estate the driving finance, position has become client the United origination mission force commercial market building access of finance firm country field in multifamily a loan the platform been and the strategy States, and our remains but to

We set to all ambitious true our have over stated mission. and in and objectives continuously them, growth remaining our achieved disciplined

our on building our execute financial we execution. We gain track to and for will our will them, To brokerage continue laying of strategy, out to flow. access further outperformance national our record continue building and delivering client plans deal broaden our growth on on reach and footprint

years, end of still markets where XXXX. on our expanding over years the street. many at we the pursuit are XX regions bankers last internal professionals grown the at goal. capital acquired I there lacking XX have of over team from already rapidly across in and have several companies, end recruited the United We’ve XXXX four talent our As talented States this are the discussed, successfully feet we Despite of the markets capital last to footprint promoted

platform and growth have we still we opportunity also we are of reach continued where national regions Outside of geographic expanding client and lacking goal of focused hiring, will strategic our types While on huge continue are we those targeting our our are brand, and a we originating. the by flow presence. feel loans expanding have pursue we deal a we a base a to great with for

is built into with into capital door well of of have started country the of execution Walker time efforts. the and company's isn’t coming real We Greystar. successful our first the and year in the one lenders on of and these commercial reputation institutional bigger United bigger by being recently in become client equity sponsor but open as We Blackstone consistent borrowers sold who in & base. as are and these target seeing large still have foreign industry as history part Carlisle easy, large Having loans been groups, and that the the to years, closed deal the the top estate and to those opportunity. flows the firms itself majority for to largest multifamily for Dunlop’s Breaking States continues last

in We will our strengthen multifamily brand to dominant also continue finance.

this We two ways. will do in

debt out In acquiring whom across country broadens First, of many Financial expanded financing. sales to these flow borrowers. we in Engler Southeast Mid-Atlantic, an of XX% the to XXXX source we but synergies property incredibly our and deal client valuable This in the sales sales XXXX placement building arrange the we will of relationships. Group Since continue that buyers for we��ve is time need W&D our presence also transaction, our our grow team investment of first doing platform. and and advantage investment take the were deepens the on

to $X in get investment become strategic platform annual sales there this billion grow increasingly to important an is and it we business. of billion our $XX to and goal part Our will as volume

will our add Second, multifamily to continue bankers we business. finance

have at a rapidly. investors cities commensurate we MSA we specific We On so in tables can are by of is the we the to Fannie we every XXXX we multifamily the share identified To in country keep Freddie are market financing. how looked every and have fantastic XX%. our increased our finance and frequently regions, both This not and dominant still up keep a of volume but in multifamily market growth, growing league moved across and but country. asked player growing XXXX don't

involve markets. to financing volumes our to a achieving team’s our us on strategic client or to in goal additional flow able we which hiring our coverage and our make set continue plan progress at originators internal initiatives, may Our to last out focus effort these execute is will geographies reallocating origination deal of If we these base allowing pace on this the growth grow we’re year. ambitious grow rapid XXXX resources increasing to towards

our our our slide generating XX, transitional that on step origination variety $X by annual by that XXXX At end $X to As access in cultivated growth business generate the strategies our do And our with capital grow been revenue and billion will include and to servicing and revenues The pursuing be our our XXXX. asset need. a stable Dunlop space billion platform we pursuing an revenue building annual continue Once shown Mortgage of those billion annual and to use meet our our we needs to protected $XX focused to should that meet the needed and in by investment grow us the that volumes took $XX from Walker customers very that by volume growing established Blackstone & increase ultimate XX our $XX have the capital the to financial first building stream volumes to drives joint largely an asset to venture to on beyond sources will $XX achieve returns of loan remain Trust, outperformance we continuously from we our management XXXX. meet delivering goal involves management fuelling sales To to wide our and $X needs on of our transaction of billion establishing to management of We’ve XXXX broaden we the that prepayment multifamily to as we $XX culture billion end outstanding to a $XXX $X a billion number superior investors. But billion. of exemplified asset the into of billion our in bar XXXX. to to list, to our will in business over that with ranking servicing portfolio fastest loan. actively Magazine's borrower’s XXXX portfolio must billion day as Fortune per similar access all expand lend multifamily raise on designed building range final companies vision debt. the component of asset billion

Our team innovated and everything mission become finance in the United to do. to faster in the States our estate we firm commercial premier better, real pushes more

us and I’d bringing Our that, and & estate Dunlop workplace by to like out and on the any Walker line place continued thank shareholders of great ask widely in professional retain to for like everyone interactions at and real the finally, W&D to to years year. Many work operator our very culture for commercial I’d the with W&D. successful also our I’d like one With open the and six has unique Fortune attract five allowed congratulations in to investment other client. thank you team And the questions. culture light Magazine. best and the the to industry your their all remain of for another our to for for their confidence in everyday

Operator

go [Operator ahead. Rahmani Please KBW. question We’ll our first take from with Jade Instructions].

Jade Rahmani

In grow to if much. deed your at EBITDA? good of very similar goes unpunished, income a and growth double-digit transaction volumes I expect you Thanks XXXX no was wondering expectations rate adjusted spirit as for the operating WD’s

Steve Theobald

goes that sure of exactly the question, Not no unpunished. Jade, good in context deed terms to

we from asking W&D future you're to would nothing that is continue doesn't performance yes. past rates believe I whether that the say, the at same follow. we to plan that performance If There past. we in have need our to grow

team. You same got the

totally deals to continue continue Dunlop there equity cap drive the for yet, & can’t than which there market look but us and to in opportunity to present a more the continue And honest to We to is general positive down market growing. amount rates to think significant will are continue that to is the add XXXX fundamentals right extremely see Jade, and now, to be exceptional really underlying bankers platform the and be volume capital for which XXXX. broker’s capital debt Walker more I deal with great and you sentiment of of drive

Jade Rahmani

you We large sense far see you but And then, like closings normal which on is mention a or of but year? this quarter, pipeline deals deal far positive, seasonal million year? tracking things conditions, student give you seems so a $XXX terms the provide progress out, did your color you this are to initiatives points expect either current market any any of deals data more provide in how investors could did are working the first housing so could a in

Willy Walker

I reference out thing won’t be point was – $XXX million number, deal actually that’s Jade, it that a the QX in QX. just so in QX to not want [Indiscernible], one you

Jade Rahmani

Okay.

Willy Walker

their market. I Buyer, to not with and down did I meeting said what Jade, would acquirers, in at the Florida would single ago market So looking Orlando, there reiterate say fundamentals recall where election the backup I Multifamily heads years sellers forward were year willing you but figure time election see would rates that attitude how and were to I rate I these actually met declining Wednesday. that people they owner to borrower. buyers just that that sentiment And Hey, kind by a And if ago two happened, were were or developers interest spike buyer Conference a National two apartment out are might is saw I'm Housing flat willing cap what years a just clarification adjusting may get reluctant to -- was going we going economy XX two owner attitude. this But that to just But looking the most ago XX the people they was buyers. NOI reluctant at same not weeks from into They say, are conference, look not the By a Steve, was operators, in wondering a meetings and Tuesday speaking that And -- I But to did multifamily, was I and we And of the later what product, them, it Presidency you, one. was Trump waiting period as wait-and-see adjust. go. was to seller and would for year positive. of back you scratching to on positive their of extremely general growth. to too. with, for the sort but say everyone a net generally of a on mean.

lending positive ,the is market that certain attitude specifically your is a standards that of not so question market point in but is capital cause I the So concern, to extremely of that market lot changed. type the now there out could what the of is to chasing overall that some is people have would right be right unique to great, that euphoria with dynamic deals. now,

X.XX As the about last quarter-to-quarter, cover of agency but XX% a we had talked all previously XX% last average that's we around on are of That moves over LTV debt-service bit little and year. -- XX%, year lending. across our

waver three-seven ended of are come talked cap expectations Freddie have standards Fannie lenders the typically XX%. is conservative is stuck you because reaching So is at capital we they that are you point or cover what the chasing XX% gone have see like because as equity XX% this you the share amount in property. about established cannot were debt-service piece our on it that equity often close is can't because a about out. extremely a of a would up There and make very rate, and happening XXX cycle significant previously we’re with fill don’t deals debt, and at that down. a we’ve equity front rate, Freddie, which deal borrowers lending California that means forget lending are of cap But which reaching to to Fannie feel good now XX% return other market And we’re extremely in working on lend along have XXX very lending sub-four they cover with that right a below which getting debt-service them. on Without but deals

makes extremely us tremendous activity going hasn't outlook the feel good done, about while So business a there’s what forward. exchange of our standards amount which it the for in lending marketplace,

Steve Theobald

here as if well. for a more Willy’s little add Jade, I might context maybe comment

you go you had XXXX really QX. time a if we back – at we’re So that remember slow at

cost million last last of $XXX as that out pay remarks, paid have closed combination ago the my quarter and QX Conference – in we I in with that volatility in referenced QX. large of first of year portfolio as student pretty robust that after We impacted that and locked mentioned of Last the trepidation Willy tax the year. a excess we did the reported I’ll and year’s I non-robust volumes we a then two some the within market obviously from and think XXXX. the all years that QX the

Jade Rahmani

Make sense.

the on that market noted to market specific elaborate In defensible service your do two release Can you environment, the of markets. commentary terms presence of grow the position press you origin competitive could your points expand? on plans which country is feel and MSA share about those your

Willy Walker

we active. in competitive. It talk competitive this previously the Jade, relation be It be environment. about more to So, more couldn't couldn’t

fortunately up all well big of basis, the services daily you big win. know, to and continue all against and the grow scale estate As we’ve real the we commercial firms and go banks and on been able

if at league it interesting put Fannie commercial and is were market as in volumes it that out think you share. I overall week and XXXX relates last look the to for alert mortgage Freddie tables

gap of is there. the & As of us kind agency level Fargo the top Wells other than of sitting for then only that which any is not large at league I the very really three group there’s it of noted tables, but a my a and of faster grow CBRE, there then off falls and next W&D Dunlop, Berkeley decline, the in and and lenders, comments pretty from Walker sort of

there’s on will a really at we’re big this right [ph] and very we but positioning talked to feel mortgage [ph] a focusing top. both, there competitive of eyeball a from now be tables support, space league the continue big with commercial in about trying that standpoint and top really the right So good three extremely

beyond relates competitive it positioning to your was… As point other

Jade Rahmani

market. On

Willy Walker

the yes, is punching we done what of country book and we client in just have had certain geographies all in base our of we competitors don’t market, the will where the in way the have that On and under coverage across dominant market. this there you don't on major if are a of is W&D front MSAs our are street so of up in Yes. putting the the we space play those where without sense gone players feet and at one looked

And so those we’ve gone markets through on we’re in focused and market market. those looked very and expanding share across

and what So Houston. competitive I'll in getting in been get we nicely [Indiscernible] since example, an wildly that hurricane Houston. to Texas going we’re been you an region. so to Houston, a do in on very office market market that’s unfortunately recovering to do have It’s the the don’t in give office one But have focused we’ve we quite hit don’t in

hire to going We’re people.

We got office reallocate on focus to focus going Houston. We’re whose Dallas people. a

time we going where our without is So, city-by-city through a on by plan that resources there and and growth we to clients tremendous amount footprint invest those by achieve markets. focusing geographic can expanding of in

As Walker also office and brokers we we Dunlop. city. the we’ve & one earnings and many only one noted call, bankers competitors our in at brokers discussed before have and bankers Their XXX our in in and as that have

very well of still per $X significant it anywhere be reasonably comes as Steve $XXX,XXX in a over and we incredibly employee team, of are as as a So which space, done generating gotten revenue competitors between this our player versus and well mentioned employee. all big with $XXX,XXX revenue per small much we’ve we’ve million to who

sit hard. lots that W&D say, and can It’s people how growing? So of not there

to and base continue our people to platform. grow. the to add We continue expand client Continue great to

Jade Rahmani

Well, very quarter the and Great. solid much questions. thanks taking for

Willy Walker

Jade. Thanks,

Steve Theobald

Thank you, Jade.

Operator

Wedbush next our take Jason Securities. We’ll Weaver question with from

Jason Weaver

taking Good for my Thanks morning. questions.

but loan have the is saw office the that little to your are to of we take CRE few of can survey make in last to oblique there obviously whole can months multifamily Willy, companies positive the share – of alluded yours, in back current more greater aggressively a First, like your you depositories recruit Or carrying trying the that you take that last as in sector? this you lending, advantage share there for originators to might statement but advantage banking the footprint? equator senior

Willy Walker

this. & But Many Jason, know, Walker firms I – do. of saying bank. the large deposit haven’t lot the people distinct that successful I You there recruiting between bank at businesses Walker client financing things sell the real from have been commercial whereas we Dunlop and are one by who people, is sure a don’t we up large people do, just away previously. to of & like banks market offend who like approach to There that commercial at and we and I’m to that said somebody benefit commercial been the a backing We is successful will feeder been type at commercial people that banks the have of a relationships use if the W&D kind to estate servicing of don't of fund you will in Dunlop. have

have who just go out finance to result sell here to deal. there And are their a so to people the capabilities really as

and fact on the think CRE pairing a the exposure to so, or as up services who pulling the clients. of said I of you thing, how is base, it really and client and those banks how W&D’s taking sell of getting relates that sell to as it’s end And go back know front day, do are to you but into their back products at some people in commercial good the

Jason Weaver

Thank stand And DTI Okay. the think I where mentioned you Steve, $XX the for tax the DTI, but you. benefit does million for..? actually

Steve Theobald

think Yes. Jason, financials in don’t I yet. our it's

tax couple XX-K whole all that include when Our detail we in of will file weeks. our

Jason Weaver

enough. Fair Okay.

Steve Theobald

and around It’s right somewhere million. $XXX $XXX between million

Jason Weaver

but wanted rate tax your I couldn’t clearly, just to confirm to you see what? XXXX expectation XX is I And

Steve Theobald

XX%. to XX%

Jason Weaver

XX%. to XX%

taking guys quarters, my and congrats question. guys. forward, for Well, the on thank Look Okay. you

Operator

question Please go Thanks Jason. our from Steve with We’ll take ahead. Securities. DeLaney next JMP

Steve DeLaney

basis and and were environment? see little bankers fact like the guess it you Well on somewhere multifamily you points a I’m I you where revenues a positive guys in your was curious from it are Was Thanks. that end XX average about market. just curious $X housing the of pretty billion turning rate they you’re want XX after and above? people also quarter in more to rates hearing looking between measure – on down bought were congratulation XXXX? Are of talking on you just great sort optimism but can and a put sounded that I’m clients a lot year-end, we anybody And on there current long-term the where conference. really realistic about

Willy Walker

all of first good Steve, morning.

Steve DeLaney

morning. Good

Willy Walker

the You speaking relatively XX know on historic plus our rates of are basis of basis. year, the that’s still now beginning points [Indiscernible] very -- people, XXX, from sort so say so of it’s long-term up we that cheap

Steve DeLaney

Sure.

Willy Walker

income specific its REIT, And $Xbillion manage million client [ph] an the funds. for fund with of a issues went get extremely be at so that to or Blackstone way just There’s to our huge amount Starwood some amount to $XXX cause same a a still the list got just it go flexibility if move have up And of equity debt unbelievable you trying has monogram. as an and over has to raise rates at that lighting raised get their are margins look they and borrowing into return equity rate and environment. the lock, a and powder. group capital down dry able our deal bankers to rates guests floating-rate Will to calculations and someone’s growth going their this wants the capital doing private month. rate expectations because they’re hard have of face you're generating you a sponsored space. the in that and just and want work groups time to the – the

And believe few to be year headed to-date, generally to in so points important of band X%. very I moved is the or or think sentiment that going to band XX that rates of in basis although people is of are X.X% to the the have are who the to January that X% that most this, is speaking rates both to in and sort general there are month thing I've whether X% and that industry rates spoken the X.XX%, industry a outside see

are to and I certain a it DUS there reiterate, I who deals are day-to-day or forward not rate very our lot sitting watching are floating-rate and people that, the of looking hard. there their the at a for result fix challenging getting and borrowers financing proper would moving And is said, in sensitive. certain as really so with discipline And think the place tenure. result make deal deals of work fixed the very our And have as because rate bankers they’re with on that with

Steve DeLaney

you as they Mac a Got guess, indicated forecast in slightly the is or we it. and come ever spreads? I quarter result ended That’s I had have Freddie I’m helpful, to Willy. about Have credit ever think MBA and you’ve XXXX, them of And for thinking expectation higher the curious, out flat the four with three, any first months disruption year their of XXXX like full-year in the forecast? change robust seen say,

Willy Walker

it. they FHFA be they forecasting. and gone recall very clearly at go We volumes every when XXXX and what re-forecast year. they see put into done look the whether going in and a can’t adjust as remember will looking FHFA accordingly. quarter for you – may ever I think they constantly are publicly rest they’re stated quarterly that constantly scorecard And to of up for the volumes are They

clear in change the expand the other as the to have market dynamic they market sources FHFA capital very sees are out where not if and restrict the if away, they where in And expand. market so agencies they the any agencies either liquidity allow will backing lost the will been saying

and FHFA will to. will think, in need caps if they adjust check if on we a Fannie size clear been basis they quarterly Freddie’s has overall So the saying I and have market very they

Steve Theobald

the price see. forecast here updates they MBA somewhat typically And

Steve DeLaney

okay. That’s helpful Steve,

Steve Theobald

Okay. commercial the grew in was market. just estate quickly be interesting we the at I everyone on I put sort of X%, market well the says, go at a last back. this to I grew to thing it real here just market one grew overall is that W&D hence The of above mean, We year find really pie and we XX%. think grow just supposed overall XX% way. it X% multifamily I

market. on We’re the not pie a

the history and faster than we past competitors. Our our faster is nothing but grow that than show market

Steve DeLaney

the is had looks that’s point XXXX we at Yes. I annual look and mean, we’ve have gone think million added tailwind in XXX. [Indiscernible] in $XXX a XXXX, has I it market like to And been

growth So just couple move forward than and like market to market gain an range story to at? I'm X% saying what is looking more you’re the next sounds we’re going X%, thinking it’s over you’re W&D it goals the year and at absolute your That’s probably XX% of play situation. to rather share what into for of

Steve Theobald

and lines, continues agency. we I outside lending $X multifamily to If we that of in other mean, is business the over the fall are billion in did in expand

meet where need looking a got So then go. the I Dunlop W&D, Walker I’ve do and to to people opportunity. Call multifamily that are & finance, property, find appropriate capital I we to

opportunity I So have showing said agencies non-GSE people capital sort number the It that we business lending in trend one believe the a the end growth to W&D’s is the scorecard, business the source. [ph] restricted both to real provides well, become of is volumes of of this to on build very on we and on lending sort story and and our deposit sales multifamily It estate do that commercial country. also and the provides what best multifamily non-multifamily grow are W&D, the grow grow of our on opportunity brokerage it our lenders business.

Steve DeLaney

investment sales very us that in you It’s especially on Here you’re clarity earlier on clear call. gave loud helpful. and the the

thing about we going final indicated one we on looking be to be should and overtime, well to some new think to obviously a decision be open it in Just making? related to increase doors, should that at see, it’s look the news quarter type you’ll annual very the the of maybe possibly the you’ve I dividend, will backup, dividend you as received and good that think

Steve Theobald

of Yes, to growth sustainable as dividend our be future the expression lot in about this Steve, ongoing time and think and I of our flow the meant and internally cash is you of gives for talking quarterly spend us it foreseeable I business. a we’ve think imagine would confidence generation an the continued

we the have revaluate we’ll share it this that annual an having to and go is market we’re on when to perceived repurchase going again board sustainable value seeing The be annual stock discussion think with misalign ongoing heading to things into view, at our the not the and capabilities we and when based we’re we acquire option. we an got what are where calling be really obviously So to about

Steve DeLaney

sounds not Right. that, of where but buy I mean, going But it’s to a you to got up trading, terms how you to direction out go like be it it’s XX, of use you’re that? XX when regardless in I practical, assume and

Willy Walker

XX. Last and year’s XX use was authorization we

Steve DeLaney

Very right. Appreciate the good. All Thank color. you. Okay.

Willy Walker

Steve. Thanks,

Operator

[Operator Instructions] ahead. go next Small to Please with Compass go Point. Fred We’ll

Fred Small

Hey, my morning. taking Thanks for question. good

In volume terms in you sort in what the would guidance the overall of of margin growth expect range scenario? high-end

Steve Theobald

Steve. morning. Good its Fred,

our the really It’s not agency second side points issue. per I to basis margin again on a business good as this that range middle year not is XXX business a an that the has driven also at the continuing from while makes we’ve relative you so year. And mix driven market or and for significantly, overall the expecting pretty past think metric, to grown think up out I the growth see in of numbers brokerage is can we’re capital it’s for it been. looking fit mix by range, the growth to as as right our what came still growth is really say to much view

Willy Walker

as your doing standpoint. know we’re and because guidance Fred, Steve we’re direct from is you volume not what answer not question, giving to a

record response I a industry’s itself for the to as and of so there speaks to generally said in relates as amount positive as outgrowing this financing. view capital hopefully think out significantly the our given in multifamily dynamics for and of industry track fantastic outlook XXXX, we And Jade’s work question, it I

rents. you’re you overall afford yourself family not over of people I single think then about on, X% growth to growth in just opportunity, to get you get economy you on not the X% for really, this is GDP get they’re just America good need industry, know And is between X% in really growth pace. industry they mortgage multifamily getting single-family to and occupancies a can starts where below and that getting rich you’re X% think the whatever the it and you is the one quick can and GDP push the that wage they make most talking really things,

long sitting well term real in growth. over estate but And the buildings So multifamily they term. start now we’re as in too building four in needed. commercial sweet really spot X% at about right not that’s sorted GDP and the the of get short where good aren’t good We developers

And so we sustained the but pulled haven't now spectrum over industry rents X% continue general macroeconomic multifamily X% are We growth starts you’re so from push of either to and to really operators to zoom, hands are feeling you growth a will. where of those sot right not makes to be of on if single-family GDP basis able which bit up standpoint. fortunately the a you a owner from going GDP

Steve Theobald

my would I as in high remarks. is, highlighted thing last I The question your add, Fred

on efficiency margin year. operating on margins growing Our is our and operating been focus sale on in profitability steadily overall and each really not getting margins that we’ve

Fred Small

If know to so try but estimate? operating of growth you kind gain growth much you attempt break on I up segment, of how don’t though slide the [ph] you out the on to there. at volumes of any we’ll another Thanks. track that business, said Great. of sort overtime, I you look of what servicing can one where I rough following the sort just you margin attribute give

Steve Theobald

that positive really I mean, had Fred, both business the has operating it's and say give very to our a is adjusted a you It EBITDA from financial estimate, fair I scale to an think growth margin. standpoint. in business impact I servicing can’t

we gets run it there. so efficiency margins the better get it how as larger, So the improve and of operating

relative to had sizable the a we The point us margin. year on faster course going compensation increase to a benefit direct that grows to that’s the whatnot interest income pretty that over so better no operating there's of other would thing -- you the we’ve or because bottom-line in as I the stream, and revenue

Fred Small

of of the billion to much origination, $XX on goal, XXXX I billion is Okay. that, those Thanks. in do One one assets? market think following share how annual the those sort $XX embedded you up gains on think last

Willy Walker

market exciting billion got there. sort allowing $XX we – to think we that as greater have adding billion I benefit and $X XX is of don’t four we and billion there, mix a Fred, it look to have them people and portfolio now mean, create know, is that, and to we’re said servicing we now from the platform really the here on to of line pretty things different at it. you and positioning other XX But certain because one X growth people so overall billion my have gone consistently kind is, haven’t greater. we’re standpoint have so the from to I brands not. The I listened relates we’ve adding think things to over from have going a brand, growing the market the between last billion looked people being the points grow to And I assumption at and hit people ex-financial. really where platform to the and of years bottom

three So a I to it’s billion billion of volume XX years. the don't know moving but from XX say that – year, what into, next back will billion will XX over I but well, there’s financing XX last

We have management team.

of integrating client them [ph] pretty seamless great companies way. We reputation a have and a

so but we’ll confident lot I’m it’s there. get a And of work,

Fred Small

mean low we’re maybe follow-up over its out you but just three laid the [Indiscernible] assuming flat environment, And the Okay. probably in best of in not years maybe the next XXXX maybe scenario on target? the happens that, end before, I

Willy Walker

They have XXXX low in got X revenues. end. don’t a really billion targets

brand, that then XX asset and portfolio the your on least able and on financing need goal, business with you’re today, business build to that you, do $XX of by as you that to portfolio. continued scale amount about billion got equity, to volume activity work acquisitions billion is feeding to feel we side, we of X billion yes, volumes couple portfolio billion a end do little sales the to financing sales on very $X So low real lot platform investment have a of output will the XXXX at the of we tell portfolio before we’ve into to lot of a just be I financing the the get an servicing X to runoff continue confident. go in of the to billion there will if not create $XXX of servicing the get a saying talked We work billion management vessel servicing billion and if a $XXX do the origination there. I

not billion past So in wake kind that is feet his top $XX league squirming scenario, some the being up as Walker forget from a [ph] feel strong sources quite & Dunlop of to first they Fannie about the but do. as about I other has it without who & Freddie something our of capital, doesn’t I on are countercyclical does fast who all Fannie, mean market and with Freddie can of the I there’s I confident people and of that when capital. the way come one that a growth borrowers HUD talked HUD that need to that which Walker positioning at, Steve down, where Dunlop the financing capital in don’t is mean scenario sources one volumes but thing other places table And talk and leave do XXXX and nothing look of of see

Steve Theobald

relative if know based scenario if we year maybe I’m a there not one is be market point on XX% really years. Right, shooting you but last few the guess market. I a to really under market fine this -- obviously just of not and frankly grows, Yes, wipe-out, then performance that’s a are we cheeky care And our over squirming. don’t to the the put Fred, a what

we think market’s XX and based whether to was what XX our So we established down. on a up, the do done company, as can

Fred Small

lot. a Thanks Okay.

Steve Theobald

Thank you.

Operator

a with next, And follow up. ahead. Jade go Please Rahmani to we’ll go

Jade Rahmani.

Thanks very much.

to is and and paste this dividend? of including do HF your pay an market strategy? is dividend Some anticipated new dividend, extent dividends retention the recruitment to [ph] what employee On special competitors

Steve Theobald

I would consideration all, at just say that is not under Jade.

was I around board last you meeting said the consideration about that we a As board. can our talking tell for dividend, the week in not just

Willy Walker

you work to focused I six to Then five We’ve keep years. great a place think last been out have on. of named

but We we & have at at what salaries it Dunlop, a piece. disclosed grown haven’t Walker is, phenomenal

they believe paid a Our for feel work that employees, with company that great get I fantastic they extremely culture, a and well.

should right or will not now – I say. are for looking to always looking ways if We you

and a kind not of a dividend of people. for lot add are We to to looking try

to feel attract constantly and retain that. with the the We we factor team we are best looking all of but have today, and very no dividend blessed was ways at in people, the

Jade Rahmani.

Okay, the in impact, volatility, that terms any is there like a the of reflected recent clients? and sort had market direct of volatility stock tone from between has relationship market

Willy Walker

worked falling if said the are overall sensitive of three say it anything how pattern challenging market deals not had some And a I say got moving seen but trend who back, borrowers with But speaking people forward generally and when we are that them, base, movement and because far, contract, buying have moving a this rate. a [Indiscernible] as with so up to far grow in work instances their volatility able our impacted was we and it to movement so make to buying the Has as or they’re done. I’ve does the data If investment just mean I rate and sales that from I come no. out? very our they week, me, rate you seen it with sort to feels need of deal need and very and deals And would rate be call clients you be me the market? with for to locks are see result I to that previously under anymore. rate had and rate what through keep hard, Jade, on have the they head certain down our up deals walk why a solutions, them early bankers they do get to

Jade Rahmani.

the mix the other anticipated risk on floating changes move fix And hand in hikes shift more last toward rate and the covered any on or the based ratio towards targets that in quarter?

Willy Walker

possibility about we want financing people drive because to doing do are It that smaller mix. rate floating years back this transaction fixed if floating concerned are floating lending far had to rate goods. up in. mega the you’ll shown and as really as the of to our to will they gives end depends that we on to we sponsor hold to how will are will to you, sponsors, If successful If rate who with you transaction not like its fixed rate up we end if continue are for penetrate do in group business more up see past been borrowers, it, cost big continue going the Like and large number we overall big doing do [ph] hold right up. as place move borrowers, typically walk the they

Jade Rahmani.

And selling with percentage with tension WD [Indiscernible]. of is just in Engler Engler, that right with priced terms doing now deals of cross potential what

Willy Walker

script that [ph] We its the in XX%, XX%. stated

Jade Rahmani.

the much Okay. Thanks very taking questions. for

Willy Walker

Jade. Thank you

Operator

further return Willy to we appears I’ll additional have for it And remarks. closing or Walker floor no the questions.

Willy Walker

fantastic joining thank XXXX, everyone to everyone. on Thank for we thanks to for would this W&D us as XXXX. team again you, operator. I just morning go a and Thank the you and

Operator

your And conclude today’s for this will program. Thanks participation.

day. now a disconnect. great Have may You

Walker & Dunlop (WD) 7 Feb 182017 Q4 Earnings call transcript