Earnings call transcript Q4 2022

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Kelsey Duffey

Good morning, I’m Kelsey Duffey, Senior Vice President of Investor Relations at Walker & Dunlop, and I would like to welcome you to Walker & Dunlop’s Fourth Quarter and Full-Year 2022 Earnings Conference Call and Webcast.

Hosting the call today is Willy Walker, Walker & Dunlop Chairman and CEO. He is joined by Greg Florkowski, Executive Vice President & CFO. Today’s webcast is being recorded, and a replay will be available via webcast on the Investor Relations section of our website.

This morning, we posted our earnings release and presentation to the Investor Relations section of our website, www.walkerdunlop.com. a will for call. touch as Willy of serve Greg and on slides reference some point what These during the

also presentation core statements Investors will are adjusted language we on are historical refer in of financial to of earnings note metrics. Litigation non-GAAP of Please the reconciliation Please urged metrics, to deemed made the of which carefully Reform appendix release. financial the the be non-GAAP earnings this may this reference call. EBITDA forward-looking a call during EPS, the within meaning adjusted the the for course and that not read facts Statements Act statements Private our forward-looking XXXX. of these Securities

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

turn to Willy. call will the I now over

Willy Walker

our morning, over the XXX%. was Since Yet in estate of everyone. price and challenging achieve not year in precipitously, a stock XXXX, was our for down did public financial going not Thank targets. Kelsey, and Walker you, outstanding annual generated debt returns shareholder good real commercial but Dunlop. markets, XXXX industry, & we we only have XXXX,

full for financing apart. for Reserve direct XXX our the real the XXXX and basis estate accountability raising take performance. Federal points, reason by falling rates markets We sales the While commercial interest is

Federal down call and significant knowing got tightening in XXXX. Walker QX consistent year, total hikes more Reserve's last of XX% of Dunlop, the billion million, plan. the from significant, the of estate dramatically. We growth $XX.X total closed earnings revenues volume down real not for dramatic transaction as And of rate outlined of XXXX, commercial generating slowed QX, of this the On $XXX the from extent XX% & transaction market we down QX

Diluted primarily of generating Full-year capital X% dramatic only servicing we down in the $X.X the $X.XX, $X.XX, diluted flat activity the significant saw mortgage of in back $XX declines loan HUD Fannie was was financing deceleration per was XX% year. previous year, markets revenues and from share the half and XXXX. in reflective debt earnings share rights billion, sales XXXX, year-over-year, earnings volume Full-year down of Mae due from billion down originations. XX% per to from our from

pricing dramatic Mae adjust Fannie clients, for due which Mae resulted MSR our fees lending to rising revenues and interest volumes rate QX was deals QX lower for loans HUD. forced in with it fees share. per Fannie and reported loan servicing had lower To have the of done & Fannie of for Mae understand compression, year, over earnings share magnitude servicing per diluted fee overall this added increase $X been pricing us in to make to with XXXX would with Dunlop. The drop in the our overall guarantee on a and earnings environment Fannie work originations Mae Walker XX% The on our fees XXXX average

to we historic the profitability the and stabilize, levels. rates slows to expect tightening As fees servicing Fed of pace revert

XX% to less capital programs we to will competitive, was be has until as their annual And of their budget loan expectation. construction $X.X QX challenging. lender HUD market deploying below capital particularly the HUD be well modifies continue $XXX of for HUD while But plenty number multifamily loans. more lending was finished the than budget. billion originations million our of Our volume HUD of year two

our dominates scaled third up Mac and with high market billion and Freddie rate HUD, in profitability were we in decreased Mac Fannie their of the in and demand Freddie year-over-year. Mae with Floating Even lending in and the loans quarters. showed closed QX the XX% Freddie of loans, volumes $X.X partnerships with fourth area Fannie in lower value dramatically the

originations for one third W&D in Our totaled the tables. Freddie $X.X lead the Mac making Optigo Mac billion lender, Freddie year, largest up the position

past As share to shows that incredible five I graphic gains we're over Fannie begin going Dunlop’s with Mae by a to Fannie talk volumes, market & CoStar about our Walker run Mae produced the years.

with Mac's only was $XXX Fannie to due Mae competitiveness. million, volume QX Freddie Our

solidified one an Mae XXXX fourth share, ranking $XX Mae Fannie full-year year. number high consecutive as lender to and our the market the DUS XX.X% all-time Fannie Our volume of us billion brought for

Our volumes largest largest have providers year chart GSE clients scale have will making benefits taken lending the to to significant industry years. pay beyond. & over and and multifamily lender clearly with in consistently Dunlop GSE We the the Fannie the we as us the the from share before. with two country this past capital demonstrates our of have market ended XXXX and market something Walker for five never This Mae XXXX, share the we competition in XX.X% significant done grown of combined

team CMBS As step closing $X.X financing market had in volume. a our in debt insurance and QX, large from capital banks lenders, companies funds billion solid back life the markets quarter

overall from XX% liquidity. of While of accomplishment an XXXX, and was given this lack volatility volume market QX was it off

free our XX% find. any could year, funds were brokerage of XXXX, on they volume was capital the lending from totaled $XX.X billion, asset debt and decrease when debt On a

volume volume quarter. $X.X similarly was still QX billion multifamily property XX% $X.X the year-over but sales down healthy -year, was of during billion

was Our from full-year market billion, a XX%. off $XX.X that XXXX in was sales up X% volume XXXX

institutional shows XXXX. X.X% XX.X% from sales, XXXX size slide market on in share W&D to in this multifamily grew As

W&D, the to which $XXX to the recently can to market billion the to XX% precipitous as finance country. you multifamily in multifamily Bankers the the forecast, see finance decline on on firmly the only at financing to XX% competitors Look projects have largest our estate and real with slide, real some estate largest sales total XXXX, fall platform $XXX this commercial Mortgage their entered is down market billion. this released in of market mix this be which commercial XXXX The in Association slide.

technology Freddie a is role of to XX% billion, billion $XXX multifamily our Dunlop capture market outsized just And total as Mac's to outperform once again. at opportunity and XXXX COVID Dunlop GSEs the to origination $XXX volumes the crisis These and MBA during looking huge financial presents are & CRE the market billion. compelling larger that pandemic, grew great estimates playing volumes a team, size an $XXX originations estimates grew this XX% Walker for and and multifamily market and estimate grow with outperformed Walker to & share. should brand XXXX,

assume that stabilize financing competitor of activities and in Many in XXXX of layoffs. announced firms our increase and rates year. We back the sales have the half

reasons. on team So for the following to our entire we're holding

First, an company. extremely efficient we're

on the side $X can slide, our see the revenue dramatically you at is employee. As right left-hand million this around per employee than per of competition higher

As shows, defined total revenues expense as our ratio efficiency the a better graph the SG&A is competition. than middle as dramatically percentage of

the set EBITDA right-hand by on graph, a margin. you can at is margin adjusted see of peer high-end Finally, the the our significant as

and access share to HUD licenses we achieve the Fannie and record GSEs Freddie Second, with capital XXXX. countercyclical Mae, market Mac have in from

are properties. multifamily we take with Third, exceptional on credit only risk and

coverage portfolio with and perspective. seen of at-risk times loan loans, whatsoever an our service from risk over no servicing credit buildings and degradation credit credit have ratio feel very debt on nor We average good in office construction X no we a

and portfolio which billion and revenue have servicing that Added from durable long-term year servicing escrow $X $XXX $XXX topped in all Fourth, streams to to and million, $XX for our was at by management the million of $XX QX. million QX servicing business. were million revenue started $XX million of we billion asset QX grew $XX income XXXX. revenues

asset of from the sales, quarter, full-year some $XXX EBITDA from transaction strength and business the to drove originations, mortgage previous reflective more million, EBITDA competitors. X% bringing During adjusted model built W&D in and clearly $XX is cash differentiates The of have fourth and million our to escrows over management the EBITDA property focused year. we revenues up servicing

we to the pandemic great during financial when company after financial history last and have of outperformed, wildly great XXXX the Finally, our the XXXX. a And public crisis performance grew make us the go were during place eight our great in and three the that for driving to zigging future We years and December a work. first mortgage are zag. A crisis in allowing earned designation of XXXX others growth financial of to today. are acquisitions XX major

XX% The EBITDA general only action. employee backfilling to meeting for to have in see over conditions accomplish For the the cut eligible senior as executive for opportunity a costs these as market pool. The bonuses five pool great we years. funding bonus to at markets. funded And the current possible, coming highest the we cut and require will team pool. outline Greg executive reasons, bonuses moment, growth not We bonus profitability. And shy such We fund the due did spending annual pressures into significant was of not XX% pool adjusted inflationary our expenses, positions. performance labor because we bonus eliminated taking account the tight this. are cut targets fell senior XXXX and our our improve dramatically And and budget, discretionary received fully general to level add to

team management our responsible XXXX unacceptable was accountable is beginning, for the at said and I the senior performance it. and As

markets return the stable expect While investors our us. and in are for the the daily with and team can XXXX, a from to confident half expectations growth evolve we we market more to financial come that goals meet in W&D continue capital XXXX have of our to place second

the and financial Greg turn how XXXX performance beyond. Greg? full-year we to to execute with in discuss to along and XXXX come I'll plan our now will guidance, I over and with QX then back call

Greg Florkowski

Willy, good everyone. Thank you, and morning,

of quarter quarter year $XXX to of transaction XX% diluted earnings $XX.X the $X.XX, Our and revenues total generated from down fourth share same compared XX%, million, volume last per last billion year. down of

market our ranges the deal equity the at remain As impacts on on dynamics respectively. associated XX XX% challenging % and operating and profitability, margin our described our quarter result of a return just and target Willy below fourth level

generate the compensation cash to and transaction structure growing revenues our benefit variable of and asset servicing durable management nature when decline. continue volumes from our We from businesses and

year two of last of a the quarter million, in this revenues investments. recent of million $XXX As down million businesses revenues a the total and volumes. decline result, $XX the value adjusted from this of Zelman year-over-year recent and Highlighting those over was transaction contributed XX% and stability cash acquisitions despite Alliant XX% those quarter primarily only $XX same Notably, EBITDA year.

year a escrow earnings QX, We are deposits, year, dramatically $X throughout grew and also ago. rates increasing up which benefit short-term million from continue from on just to to million in the $XX our tied to

investments EBITDA a Entering our we and EPS strong technology to loyal client operating on continue rate interest and would low us were revenues, teens XX% XX% and margin base XXXX, equity. by along return diluted confident and stable that adjusted with people, in growing allow a high environment deliver high to a and double-digits brand and

half Our steep outperformance meet to confidence, interest MSR second commercial during non-cash we rates movements the associated not supply liquidity, the unprecedented volumes throughout half margins the on a but did transaction targets. year of on and real in the our year first supported of decline the in impacts and that and brought estate

generated total transaction we results $XXX $X.X $XX EBITDA, X% XXXX. up revenues down in healthy over prior flat billion, adjusted to compared of with the of only line million remain billion year. total And and Top X% volume

earnings at down also were annual $X.XX, margin and ended year return XX%, below equity the XX% compared to and diluted XX% per respectively, last operating targets. and However, year our share on

fell activity the in evaluated we months, several adjustments. over transaction model estate real commercial needs operating our last made business As and

a we During hiring. the positions contracts, since growth-related October. quarter, steadily our and backfilling of declined majority temporary as headcount dramatically our has result, terminated fourth stopped reduced employment the And

And several and minimal the also in general administrative look the personnel in $XX incurred entertainment, charges decisions. connection than We total travel third-party a across country. million. at by these quarter handful controllable contracts, reduced leases rate of and fourth with the closely run service renegotiated in spending and discretionary expenses reduced We of terminated more and and

another Paying on adjustment to on expenses, I few the made fourth quarter. want spend during minutes a

yet outs earn To-date, has acquisitions million GeoPhy its and million performance $XXX with to of $XX As a not out. its our of achieved achieved earn reminder, ahead of structured expectations, out Alliant the earn of milestone. GeoPhy million any Alliant while has were tied $XXX

these other during to revaluations. We associated are the revalue net earn out to expenses we quarterly $XX million required recognized quarter, our reduction liabilities of the item and line with a fourth

team out. good continues million country our perform we we of And the housing and in only track Alliant center. earn is front the feel The and to earn expense to And the very Portable an Alliant associated year above in about integration well incurred is and revaluation this on achieving expectations our with out. together. acquisition that first of this of $X full

align respect small earn With the two milestones appraiser. emerging we the growth to GeoPhy, with businesses, and balance lending of out

objectives, revenues we both see because scaling small XX expectations than earnout. we we toward as lending when earn to by full of the to summer. in grew growth could and for liability GeoPhy was balance and GeoPhy value enable that We appraisal drive the economic disruption we in XXXX our achieve out opportunity less our businesses the million. remain both in share last to While which market value anticipate earnouts on the the XXXX, the sectors did carrying we Therefore, also structured continue businesses not focused the began of reduced the growth capture $XX

continue periodically introduced will to our the years. We we results make next XXXX, provide further financial actual into and estimates and segment to as revalue to we evaluation up our further insight several true both to financial over and performance expect adjustments In performance. structure operating transparency earnouts

on transaction XX, volumes our on to Mae includes for related than of causing new loans, year servicing markets compared declined which our in non-cash $XXX steeply XX% primarily a businesses. slide to X%, down were due Excuse last generating down shown includes decline Fannie Revenues volumes, our me, fees million MSR revenues. As tighter transaction revenues, XXXX XX%. more segment capital related Transaction businesses. transaction

to headwinds we multi-family for classes And other volumes lending comps on liquidity the year-over-year start transaction quarters. with face margin XXXX. levels two fee And strong, Servicing XXXX. new faced remains although particularly the supporting remain demand historical loans and below next in GSEs, challenging asset

said mitigating for segment transaction this costs little related Now of variable, a compensation more revenues. in than declines are XX% expected

Importantly, for believe team and conditions have outlook the through record executing in commercial a established estate sector. difficult we a real with of track clients our the long-term of we

unprecedented As team through and to our has immense clients Willy captured volatility. share value delivered this stated, market

intact sales We $XX $XX will continue on objectives team and investments making XX of volumes our and remain billion focused to of of financing keep to drive billion this property volume. long-term achieving debt

activities includes of SAM segment asset performance and Our the servicing our management businesses.

XX, million quarter assets with of slide revenues -- of slide full-year the we portfolio, servicing billion short management billion million, up escrow XX increases Turning XXXX see million ended the to XX, escrow our quarter from $XXX $XXX in expected rates balances, income, $X XXXX. $XX billion ended under we of other generating we which %. and to in interest $X.X $XX remain high, to With and in to grew continue -term will

a Also earnings current and between our as of unwound the than impact in losses benefit at-risk related and in Given pandemic expect loss forecasted More outlook, income million our in we the XXXX. XXXX. on the was of generate is double XXXX, portfolio, segment escrow forecast $XX rate which interest $XXX in included remaining net our and million to other SAM we updated of $XXX million our interest reserves.

times at-risk Our losses December remains points to XXst. and loans exceptionally in held our The service is asset exclusively we loans portfolio in We basis debt the multi-family continues over We less only exposure coverage class and delinquent well. X perform incredibly on healthy. our than of X point portfolio average years. over basis credit portfolio the on last average ratio X three of hold

year. just forecast the again XXXX did rate our we QX update QX will in loss historical as in loss used last We

the will we forecast headwinds economic face. loss contemplate Our

also year loss we loan loss losses did we with when historical and the a anticipate we zero near as rate updating But are a of just updated another recognizing forecast. benefit our ago year

In when first the segment recognized Our recognized corporate GeoPhy G&A debt GeoPhy. million chart corporate business, corporate from our and third restructured million includes acquisition corporate our corporate the overhead included repatriated our the certain we benefit quarter a in a gain and represents our from assets of tax acquired $X the in of quarter $XX segment expenses expense. of and fixed X-time the organization resulting majority which the of XXXX,

diluted be These will of and generated $X in two not over XXXX. EPS items repeated

interest interest the reflection of performance drivers of million, million $XX increases our segment rates year. year, and the due of is on over million debt. allocate dramatic of Alliant quarter, One last in better within expense primary segment. segment each totaled from an to increase in up this our In up our in a debt updated This the to the expense of in support $X expense provide debt acquisition expenses XXXX, corporate short-term reporting to XXXX, the we $X corporate

million to A of higher of by $XXX in $XXX of assumed January, used million increased million full-year debt pay continued and $XXX XXXX. a higher acquisition. rates In in and debt result growth expense slightly the our short-term term loan we will size proceeds Alliant balance interest the to in the down in

However, million eliminated debt, the off debt the greater principal from we upsized paying $XX capital roughly roughly and of downs creating million flexibility. in pay $XX mandatory Alliant by capital strategic raised annual

interest slide our and times EBITDA $XXX to December the was on our $XXX of is Importantly, escrow escrow more balances cost to than at XX increased the XXXX million as debt income of million X.X in expected ratio and adjusted other offset from shown XX, borrow.

to Consequently, than But or growth we rates year. levels our managing have slower of to last we are be that the half with of year business planning year. same year. XXXX, in in half the at the expectation current transaction a to return second the activity don't look will this the first all period but for are ball, we above we short-term ahead crystal As remain

servicing lending new related levels historical as this adjusted below driven revenues for late expect the Under fees EBITDA EPS in this I turn be That to in higher servicing flat scenario, to mentioned will until planning are in in Fannie on year. acquisition to growth deliver XXXX X-time We we ability our drive XXXX. Mae remain earlier replaced are cash escrow and with revenues. double-digit diluted

XX% in low ROE fees margins in loans transaction to remain until teens and servicing activity expect range low new on operating normalize. also remain the the We to and

metric an business of we new the Therefore, of we & and called environment, adjusted performance introducing and overshadowed. operating recent evolving of eliminating that revenues which the being was EPS, model year that Dunlop's in large dealt we swings core integrated occur from As are Walker business MSR this core reflects acquisitions related time X better our revenues macroeconomic impacts and with can adjustment. performance unprecedented by our non-revaluation non-cash acquisition felt a expenses

MSR on shown revenues, years. differences last included adjusted and amortization in back acquisition-related revenues expenses. a the the other over the depreciation at three and on is and XX, adjusted EPS of slide actual core out the earn of As this impact trend look and slide eliminates losses, estimated removes between non-cash credit core both in removes EPS impacts Also and

core EPS revenues. just transaction over related fell largely volumes that the decline was driven adjusted in Although XX% XXXX, overall decline in by and

servicing, escrow grow revenues. growth on EPS For adjusted expect related the XXXX, and by double-digits, in we largely to core asset management continued

transparent think We quarters the as overall will a share with it and investors updates of metric in this our guidance view into business. continue we to years health the on and provides coming

the January. We million in allocation XXXX. briefly $XXX in year debt Turning of refinanced with our before capital closing cash ended to

and bonuses Our quarter tax pay liabilities. as seasonally the cash annual we related and always our first settle annual in performance subjective decreases

we cash and the capital financial to the capital to business returning Our have business continue investing with will to strong closely back in shareholders. into flexibility XXXX generate prioritize flow

since represents of cumulative last Directors our dividend Yesterday, a the share. $X.XX five a XX per a is fifth years. per And dividend and increase of dividend at we repurchase $X.XX increase in share, X% the increase XXX% Board program. authorized our February share initiated This the quarterly over XXXX of approved million annual

the support Our dividend gives growth the outlook in still business. adjusted XXXX confidence retaining expected yet and again, to capital while to increase for us double-digit EBITDA

that a gain right entered market that have with the We in and we place XXXX conviction continues to brand share. team

businesses We are focused long-term. the efficiencies scale operating and create on leveraging emerging technology for to

market an only management has also recessions team We experienced not have prevailed, dealt and that but and disruptions grown. with

diversified over our generation few portfolio the us Our past business to due years time. the we steadily due and to steady and over our model grown for management is combined that growth. allow investments current durable flow weather has strategic storm with servicing Post voice emerge to cost cash the will made

Most your us you investing business XX objectives our achieve remain & long-term and for on this for focused to our confidence Thank our we and in returns in drive for joining morning to importantly, shareholders. delivering Walker Dunlop. continued

back Willy. over to now I'll turn call the

Willy Walker

for clients' Walker multifamily access Thank market being multifamily multifamily of & of our Rarely revenues we With meet about broader it borrowing the multi-family and GSE rents growth public The risk good in great the compressing reported strong. challenging. country, extremely REITs, as more has already fundamentals our And capital the cap year. about from one properties, you, Greg. over lender ever the to show XX% economy industry hand our we are solid needs. feel Dunlop coming to XXX% and On positioning. been on feel business our in rates our and forecasting largest to start extremely who the have credit

was discussion interest distress. give points to Multifamily rates the optimism. us and stabilize the Reserve and to sales Council's half transact And sees to plenty and again yet basis National volumes difficult Las when Vegas data rate normalized when the Housing XXXX pace. investors the allow Conference to cap are the XX successive transaction watching Annual return topic financing At weeks to of in after literally a three exceedingly ago, markets. point predict There Federal back rates of of hikes It's in not will

just down and to CRE of all of our the half offered One unused line Dunlop’s us our warehouse Walker to warehouse & ask the size that capacity. take largest lending back Citibank, XXXX, expand in of a halted lenders,

Bankers on they And in finally, was Conference estate Association Mortgage the at the And point earlier this Reserve's looking were to the month XXXX. real received well lenders most XX week by more basis rate in market, Annual Federal last did commercial lend the Fed and X and more an they investors the how uptick transaction plenty clarity they buying X prompted cap or Yet raises times is by using on the are in until financing rate is priced. whether much properly volumes. know sidelines of on XXXX hike keeping are than of or they the

So the at our and Dunlop model clients' Walker we to and do control, in marketplace. new our further competitive to the meeting we can to in focusing afford technology, keep this extend and & investing of recurring And advantage on needs, maintaining things team of our strength expenses, the our extraordinary we business revenues, businesses professionals. minding due an

We challenging. still confident goal called financing strategic plan be the in our the are achieving five-year Hitting billion Drive debt will XX. $XX

in track record market have track or team the today need add as outperform team doing. acquisitions also place the doing we with significantly of through a have have We as our of record will to either we we a to

rate to growth rate XX-year $XX we over XX% growth of annual need next is XX%. to numbers our a compound put significantly than originations achieve lower To three this, our target, billion compound years, which at grow the will annual to

in property having achieving this just last target. sold is volume very Our $XX under confident year, target $XX are billion sales and we billion

and that And and exceed other has volumes or asset asset to classes, & industrial, expand last team multifamily not Our classes, in expanded the of team year. such investment retail, into incremental Walker but And hospitality goal, equity will new sales. XX% Dunlop. exceptional this this drive office in as by by growth, a X% only debt contracted opportunity XXXX market all whether our sales to financing

and servicing XX goals. to Revisiting showed servicing to management if portfolio tremendous our we SAM of volumes and that in both business is transaction businesses, management EBITDA. exceeds our achieve held value business walked and Our asset and billion, so financing asset $XXX X% do going a to goal management had yet flat thanks of XXXX, debt forward. X% we'll already growth Greg the And billion. growth its annual revenues slide through, our model we asset to will continue segment $XX just over W&D's servicing and in It the grow and drive saw fall

to financing, invest property businesses technology. sales, in and our Beyond asset management continue scaled and emerging servicing we our businesses,

galaxy competition database is isn't technology. brokerage lung appraisal And and gain we with and businesses our revenues our at financing and sales begin meaningful uncovering margins technology lending balance that continue higher data-driven share proprietary Our will to opportunities finding. contributing will small being and by enabled in next the three primarily did appraisals Exactly and as with years. small over debt $XXX over our to we million property businesses, revenues scale powered lending market balance both annual

research XX. its And Alliant Zelman's Zelman, in sticky driving lending in areas. exceeded annual affordable is XX in Walker extremely exceeded annual the business, having its growth balance budget, in small technology are and team. also growth of of us and focused on new investments significant and across our GeoPhy is the company. GeoPhy is Dunlop’s recruit helped inside Alliant lending & out and our GeoPhy businesses, appraisal Finally, sales an while the and drove capabilities exceptional budget earn W&D growth technological transforming profitability affordable the

and context gained X% flat significant revenues XXXX share W&D accomplishments, of execution both in model. EBITDA financing and the market and basis These are by and year grew teamwork held And customer the adjusted seizing, in extremely of service, even market huge at points XXX business thanks and sales. I'm the to team our proud the raising W&D. was by rates and Fed a challenging yet

of share have things when challenges, XXXX get certainly well its hard. W&D will but does

our clients steps Money forward, while help and bigger our brand the its to again people, and to shows to our continue be value competition as growing. while capital the back. and the shines, values, will model of becomes countercyclical a technology asset capital access our and competitive once [Indiscernible] us and cost culture there has business markets our advantage to adjust drives new strength, in invest ability Our

everyone Many time Kelsey now will line to for I questions. over for thanks call open the this to morning. to the turn your any

Operator

questions. question Rahmani KBW. is The Instructions] Jade? for from of now line is Jade coming Our open [Operator first

Jade Rahmani

Can you hear me?

Willy Walker

We can, Jade.

Jade Rahmani

Hey, how's it going?

Willy Walker

Great.

Jade Rahmani

Thanks for comments. so much your

share are the had Just housing with I affordable variances with on know you the very versus our downside for line? -- GSEs conversations of the historically with particular, one industry, very market the record on a the housing. was In the business company. side, comment in Mae high-quality Fannie Fannie that Can outlook the WDs strong for estimate. mission-driven Mae, that main that focused track And my on extremely

does within you fit will move are that the business up confident in WD's where Fannie in you. as pick we particular Mae originations that? Thank year? So And model later

Willy Walker

as to Sure, we pretty it's that hope with that Jade. slide I the last CoStar the produced, slide Fannie Mae up volumes there, it over a in the relates as dramatic put Well, five years. growth W&D's

number of moved not position, As a but our the lot then off into instances we firms the of further the volume, only competitor one moved lot and the fell moved and some left we to right gained to in chart. a

are we doing the provide to where when And today. there which are that. agencies market is The dislocates, they are liquidity

Fannie very continue have tremendous volume we think top any we overall amount and the volume lead do And with I so that an continue the from Mae. of a at will to standpoint, be doubt of tables don't to

going the due until pricing can historic stabilize, It rates strong we market. underscored, pricing under both been when rates we cap in I to conviction we GP stabilize and a have going get able is and to Greg fees. from pricing their under get And is in to those to But be deal to as fees standpoint. on servicing business. are be our that environment pressure just rising servicing As therefore Fannie every pressure is win reducing back back very pressure fees moment, to under reducing that to to a be rate

The on mission. focus final the and piece is affordability

et press [Li-Tech] clearly lender them breaks of products tables, manufactured is cetera, important was in with you lead release DUS relates housing, subgroups high the their lead that will, release If in if Fannie XXXX, Fannie Walker affordable are press driven housing, Dunlop those you that look the you in announced housing, seniors those Walker and the largest to (ph) out to cetera, business various, in also hitting & & housing, at that can look areas it scorecard. you Dunlop the the it Mae are Mae right mission et as there and on being Jade tables see and that of very specialty very that

performance A inside the in And I'd say Dunlop underscored a comments. XXXX & year his we've in final piece had lion their a of for had an only year. is exceptional financial and Greg lion Walker

business growing lender in space helpful. existing core Our having, as To continued acquisition tax of are our us is syndicator as credit post-Alliant growth affordable housing debt, if a the equity deployer between and super you and where super, today to pre-Alliant as a the acquisition and razor then synergies an will, integration. we

Jade Rahmani

Great.

on with to has affordable like respect W&D? to in on confirm, at you their concerns is impact a going that Fannie sounds focus Mae a that don't it have any just So negative on -- shift of terms

Willy Walker

No.

Jade Rahmani

Great.

Second be performance it's the is. I performance. the to question how mean, me astonishing good credit would

coverage sharing debt and risk average over at service book then X noted You times. ratio

I very, a think loans even defaulted that minimal decrease. with very

So What the multifamily floating of come opportunity you And you an could maturity? be servicing And to extend are come credit for do expect those this loans loans? to up as side? repayment seeing they as loans even rate what up for especially happen? specifically on

Willy Walker

so is So calls floating far a issue this in a Jade, very as couple who particular an people, investor heard cycle. couple with excuse in other I've and earnings financing There you me, ask other rate clearly need need & to loans. things it to new There in relates to couple keep are as that a place rate those specifically for floating in caps mind on accounts Walker Dunlop. of go fund escrow to

thing first that statement. is carry The of CLOs, end any not we period risk do on

no risk have CLOs. We on

servicing Dunlop. to is The and our our book Freddie risk & second Freddie carries thing business Mac no that Mac Walker

I who our take And floating rate our underscored floating with on Freddie those those loans Freddie given Mac the are so QX volume space, risk the as on rate Mac lower Freddie we Mae, Fannie the carry lender while the risk ones has of loans. those the don't on BP's been volume Mac, loans, and predominant multifamily buyers in

as But standpoint? daily. Mac credit risk that to Very credit those you cap & from doing type trying opportunity Walker can a step Dunlop much relates deals, negotiate to to clients provide relief so. And refinancing for Does with to it Freddie and rate we're carry in it help imagine, we don't as cost an & loans. in our those expense servicers Walker Dunlop, of risk master some potentially floating on the

bankrupted final as Dunlop, credit the had And being always the been & this go have When where much, incredible the family-owned center focus of the bigger. privately is a loan more of we business we losses”, do are discipline. everything at honestly, Walker company. Walker could one credit underwriting held that, to And thing company company to bad, To & on company don't credit we be if emerged dividends we that then to much that I of a because has has at as scale a take very result deep we say quite paid point can I'd the small it “afford we that from as but Dunlop. joined today,

feel particularly And David fundamentals incredible got entire Chief and our extremely is credit given team, underwriting confidence a Officer, now I've underlying so his David Levy, from of good and Jade Credit the perspective, who we multifamily. right in

has for allow have people transaction reenter cap to fallen the rates waiting given gone market. to to While where for and volume off the rates adjustment precipitously,

reported the are As XXXX. have publicly at all starting far cap so showing my and rates of I fantastic the compressing multifamily rent traded REITs, beginning said who growth comments,

are strength very that fixed Fannie multifamily portfolio. holding fundamentals the up well servicing into Mae so of rate And and plays loan the of our

Jade Rahmani

much. very you Thank

Willy Walker

Yes.

Operator

Jade. you, Thank

at comes next Jay Wedbush Our Securities. question from Jay? McCanless

Jay McCanless

earnings for everyone. we start morning, you like change I'm ‘XX of the with this, stock third and it adjusted made the please the from comp my questions. way expressing out Thank calculation Good correctly? quarter reading a Am Thanks. it in If but took I change the looks could of you taking where just and you looks were like me wrong to now, on correct that it to the adjustment. tax Greg,

Greg Florkowski

revaluation part, earnouts. which the adjustments the Jay, the quarter particularly also past, haven't adjustment as most fully the fourth we well of we're including all in to For included the and

slight from So there's change But… a that.

Jay McCanless

stock I it's I comp? a mean think earnings? want that's true high that level, the would typically to since something non-cash you why take expense, something exclude out to show operating

Greg Florkowski

meaningful what -- stock core sort Yes, the our performance of not metric, part that expense platform compensation and an of more I like a Jay, is you of gives to plan better And just and we for most cash a of is a necessarily of it trying because the management. the it's people. retains important senior but think sense executives it something key comp our feel include, to make

to core don't metric. EBITDA, not -- we but adjustment adjusted EPS want necessarily important that's So for the an think we for new

Jay McCanless

you. GeoPhy, Okay, issue to question from lending got then it balance demand really small with And borrowers? do now, the it guess was more second a I issue a more on competitive Willy? the potential everyone trying is right Or

Willy Walker

couple a are there there. say things of I'd Jay, So

space had to a of in there borrower make it some joint been year. said in been want partner the in the have willing requirements raised to venture to relates to new lending box we outside lend Because that agencies. the able the that with of been the are be challenging meet as half the the need constrained on. We capital somewhat in SBL basically number properties do it to SBL lending in capital capital so the owned that space all, has agencies back have of that First our somewhat didn't that they that and to then

of rolling of have They sleeves And capital their and in sort the money let's increase they we saying now agencies ready And so to momentum back are and that that if work. with said the up source you SBL that off put have to side. also will, took our come space. and to go

I've lending our to pieces our to the are a as & much big money execution landscape, money SBL itself around That competitive to our that's big team space our as be And kind from this we center have I it's Dunlop standpoint, you and blunt. Walker there service client of that business. very reason direct businesses, focused banks. tell I confidence I but and SBL excitement dominated to center mean times, what if by for said is very on. In a built and beat of And can't as all few have very, the multiple the space. banks

pretty lead as Those we continued we've over. just Mae relates we up and big brands the there some that how showed are up. outperform big pretty we've to our Those volumes some table jumped that against. at that it are moved to and Fannie You moved look brands

being firms a And will, And start have share. really win companies at a was them about us few battle. space, other we and a really not competitive the we to you, to gives and kind which of as so only thing companies regional bank, there focused go of market that that after apple that good in of share. compete then tell of another, discount feel sold to with And entrepreneurial of I in I'd just large force couple if SBL were this so bite upstart you to head-to-head to then one sort the are a anymore. there these And take behemoth some that space very final

Jay McCanless

around about then the seems next going the confidence Great. at about of -- that around know EBITDA but raise your and of rates remarks say kind it this being do I question, dividend raise gives year? the you know I Thank the to guess It don't talked confidence dividend, can prepared I you maybe to just to would skeptical, point. And Maybe my like adjusted the decision? bull seems premature making that you. in bigger what I are talk this that

Willy Walker

discussion this escrows put that very but meeting, our it XX% consistently, dividend just raising doing it we the we've of that and hedge let's go management the performance, cash that, than to the portfolio very result confident dividend as Board good done -- rather kick And off. our We in overall at that. increase. a But good very asset the capabilities. our don’t natural as with decided increasing feel servicing and the I we had well against board as as cash our relates X% from extremely interest the way, portfolio, as the generating given have to expense felt good a quite financial

Jay McCanless

getting or seen in a directionally of my I some we've seen And year? clients transactions about so you've guess, what little volatility look this more hesitant hesitant just Great. lot had getting and have rate a then January already of seen some between and we've then and last the entering what people volumes February more XX, February Thank given like far you you bit about talk XX facility in January question, you. could

Willy Walker

opposite. the actually It's

NMHC one at for you nothing. the feeling of I mean, I was and If were they're second hitting like, look and cap inflows you're we about and of were well, your at -- said, meeting And the this how week the agencies. with first I year, year our

of hit million boy, and they our week But a to for if they that so at have had of they if continue the inflows that rate, won't manage to we'll two our we weeks week, level, billion cap. $XXX So cap. the were and continue last year $X.X first at we

you. and afternoon started Greg market investors slow the very it but our six as until comments would out transaction you get underscored of to you try coming possibly to volumes can up numbers we typically tell off on does, The started of were as editing limited as momentum. market also we months overall But of volume yesterday both as the and and as is year gain our has The and market I imagine, can. insightful

a a April last deal. March added add our you over the today or the pipeline. But Just pipeline it's week, to and to lot we've

and the We on market like up calls And phone not base a is getting plant. facility do want us love we're say coming back. doing historic see call they We a fantastic to quarter but the client build. us, powder, have you're you're because dry had want going for a one seeing to that, just market that new what go with they so to facility a they

Jay, say, that market same we is shut seeing you as So prepared one done optimism I doing policy say to market, the stabilize maybe and of that XX my do off and I'm don't excited only going more the consistently has Fed at basis going we, the legs. that that are and accurately remarks, down things I'm its And we raise, said, drone basically and get this from plenty out gaining time, we're hey, I market they would in as go a we a said with said, keep for signs of then point too to raising.

And conservative it first pull we so very it's our potentially of will, you of all, about do. can in making that is very, what that so kind have we that if estimates push to be

lowest to and worked the ever wasn't buying second to no, going sitting is priced sudden the on my in bought make going, to they've I that everyone my clients, borrower to perfectly a in there who not And with, at. the scratch interest at they I who cap the tightest again. the then got asset I was that at, either thing all of at of high, borrowed issues are that buy rate isn't here the interest rate of transacting. or then investor, half because that look first an there rally concerned And fool. had a like the an sure Walker don't ever I financing there think rates a to about year, Dunlop was continue that too XXXX I Everyone sure that rate of at now & cap think are one who isn't cost is, waiting head single financing rate biggest kind is are got I And or make

makes breaks for so major theme will It's [dive] somebody the the will that (ph) NMHC. back. right waiting, gates was come saying market capital a at do has the moment everyone's step that the in think else very and goes of way, turned, the somebody stake and the theme psychology market dam flood in. interesting NMHC they now The the at and and was a of, open the then But in something major sort to

Jay McCanless

it. you, Thank Willie. details. Great Appreciate

Willy Walker

Sure.

Operator

We further time. this no have questions at

the I for back closing call remarks. So turn to now Willy will

Willy Walker

us you team as Thank and for together everyone joining thanks this and morning for hope great this you I earnings us effectively this you and Thanks. and pulling morning. W&D joining the to do. as all I all has day as everyone appreciate thank you always well for professionally team, a

Operator

Goodbye.

Walker & Dunlop (WD) 21 Feb 232022 Q4 Earnings call transcript