WD - Earnings call transcript Q2 2024

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Operator

Good day and welcome to the Q2 2024 Walker & Dunlop, Inc. Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Kelsey Duffey. Please go ahead, ma'am.

Kelsey Montz

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

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

Willy Walker

XX-year rising Walker and is Summer sentiment active in well was market & activity, and again. QX, Thank XXXX is investors rates largest commercial you, the in the benefit Annual in estate. and new most estate positioned the held market. with transact. Valley, W&D from momentum cycle. good the in years after owners real time consistent X The quarter estate to Dunlop's weeks first the X investment ability and We very and commercial ago Idaho recovery And rates, of get growth almost of with transactions that conference some falling is was interest building treasury below Kelsey, the of commercial with everyone. morning, limited for it Sun the to Conference at real X%, years the to real X active

down As long shown good by highlighted recovery, in diverse are way billion like XX been deals market versus to tremendous We sure a and their XX% a volumes XX% GSEs billion, debt volume This expect X, of finding deep needs. Financing seeing $X.X we have reflective past in talented year-over-year our billion. month, QX were team lean transaction growth Slide months, sluggish but capital in them with higher on was past Capital of clients and the borrowing up brokerage is over GSEs for The the of our on the year-over-year. from to Markets lending and market $X.X volumes the what of of XXXX. Investment start this both second past of and the up where a in them $X.X market QX sales make has The $X.X from this team do. we was can team quarter. to of billion is did to capacity. the QX of XX% the billion multifamily market volume sales half year. investment XXXX has $X.X recover, our I'd W&D understand over

return deploy and the very sales and to lower evident capital pipeline investors to nicely. growing new that are is it and to owners need for grow, transaction volumes capital, CRE investment Our with continues rates

Equity pick business. property is banking of are Capital of will deployment raising at sales investment property Our volumes on saw day-to-day and developers investors this million and Affordable drivers the from the affordable housing. QX, its newest the of the the market W&D enabled not Equity grow sales investment past technology sales, and sales assets strong. sold placement, both XX% to Affordable as up, and fund rent see volumes investment our but extremely realized pickup closed the restriction as housing our market realization Dunlop as presence of years, $XXX over year-over-year sales debt And assets many X seeing when business, exit return investment market. Walker start and will a and gains. has valuation Apprise, it is heals benefit period. business, team demand evaluation as in is services, & we affordable

market allow lending housing This resumes. HUD and option for activity our our affordable and year-over-year, are businesses, market are in will volumes rights. from transaction comparison opportunity volumes business our loans while market maintained share group, other financing business are a financing, part using and relatively debt XX% servicing significant take of and to grew to share Fannie focused great has fantastic HUD we the our mortgage and small generate HUD with as Our balance has us to Freddie, that to small product banks. technology enhance grow on our regional customers,

reflective volumes quarter. XX% XX% $XX $X.XX, brunt of the XX% adjusted strips servicing income Finally, beginning to are mostly our and accelerate. Total the great lower the which market QX the billion, commensurate volumes EPS, GSE Zelman EBITDA the generated as coupled rights. Adjusted of and consistent loan by mortgage volatility. expenses, people, results streams, generated and core growing and and grew servicing in tightening non-cash the these to out of QX however, research see servicing revenue revenues our were on X years past revenue recovers invest $X.XX, very market while transaction will non-cash billion the the investment volume down million transaction and to and brand our diluted due earnings $XXX Having and on grow and share weathered down recurring volumes, model, ability business with per but slightly grew banking year-over-year, during technology transaction financial $X.X of teamwork, excellent quarter, strong return, portfolio, to to of

also traditional will our business, invest owners in continue live, volumes, bankers assets a needs in where by bodies, our As our sleep, data people where of but shop new without in digits forward market and the of and we in meeting where not their our increasingly travel adding on who hotel, important to society focus work, play, look and the assets of staying housing is people to play the and of and brokers recovery transaction we where work, moving the only without a they future for world. economy

in discuss W&D's a portfolio remains extremely As credit Greg will strong. moment,

our given classes largest lender discipline portfolio without properties continues only losses. were And multifamily to discipline States other properties provider dividends credit seventh Our and is we our taking estate the risk multifamily in as of perfect losses nor United XXXX are asset shown the losses, this in credit real to the incur outstanding. on commercial and on while as largest in on of slide, truly pay neither minimal capital XXXX,

Chief happiness in financial at earned thoughts Greg? credit year. much credit, to then the thank call our greater Walker for forward. I and about over ways Officer, David detail. magnificent many, with exceptional the & our Greg I'd on Dunlop. to XX focused Levy, I'm his wish and discuss see what like retirement to his him some the in ahead And in performance we half has return While going back turn and of many will Credit career of David work years we

Greg Florkowski

our last this that stabilizing morning, non-multifamily Thank call, we you, higher the good and everyone. into the to pipeline heading interest supply building nicely. as adjusted an the assets, our spoke On Willy, fact for transaction about improvement rates of for capital quarter longer, and in and market activity was

of activity to Our and XX% market EBITDA XX% we results we growth this $XX year-over-year transaction EPS delivered core quarter, growth per adjusted share. to generating billion reflect $X.XX the described, in $X.X in adjusted and million,

not that to recurring the will the our team, ability at built EPS The our per last to X as the deliver years XX% return but results our of remain here. of the provide from we same below share, tightening leading equity but XX% streams strong been into foundation is operating diluted historical margin activity decreased $X.XX quality of and X%, respectively. Our our the have reflected difficult, of to recovers only cycle this transaction also on year, last routinely durable revenue grade future and and compared quarter levels results

segment for first XX% Turning to down rebounded the the quarter same Markets year. from X% growing a for QX, million, segment Capital Transaction our quarter, slow segment our last in revenues year-over-year. flat to Total results. coming activity from $XXX were but

and this activity GSEs XXXX the year. But Fannie revenues. leading We decline adjusted not income to have net lending robust, the still the transaction second and our slowed plenty last broker and multifamily said volume team. lower strength feel The revenues, are or continuing $X third XX% our million, from while the $X positive the of Capital the EBITDA activity our overall MSR supply capital of we ahead due lending expectation quarter, lend over is transaction the the improved quarter of year. Overall same to lower about increased operators Improving to repeatedly is Mae's interest of are Markets surpass both a that capital of signs meaningfully that XX% will due non-multifamily Yet declined our to to good segment rates. activity. during strength quarter, in and assets, million to remains into willing on stable loss very non-cash XX% growing activity there opportunity for their given

generating thrive, which recurring Asset Our revenues segment, portfolio, durable servicing $XXX from SAM, to cash at continues totaled Servicing Management billion our quarter end. & or

a strength fund and of second W&D segment from debt and affordable $XXX equity. Equity, now which now the of also over million SAM closed million Affordable benefits investment and fund W&D partners quarter billion of during $XX Our manages multi-investor $XXX recently assets, a $X manages billion assets over the and which closed

to this SAM the $XXX million. grew revenue XX, the benefit driving past XX% year-over-year Net management over cost X% growth income XX and revenues our total grew segment increase the of segment at of for portfolio June X% XXXX, reflecting in year-over-year, managed total efforts Our to months. a billion $XXX

$XXX impacts QX, also the XXXX. XX% Finally, the portfolio. for million, continues from of credit the our segment adjusted at The SAM grow, to risk up segment ending EBITDA quarter includes

losses. we X loan million update repurchased recorded totaling indemnified provision for loans where credit quarter, either we or a GSEs. the quarter, the Last I from the $XX on detailed a During provided $X million

prepare to $X majority of on loss we reserve we million. X review, credit losses condition, total performed portfolio quarter, those performance assets loans market reviews sale. process of our the them the and as In for asset thorough the foreclosed bringing reserve we the quarter, $X representing the that for this of of of provision loans for property increased on to by our During the million, and and these X

not any have Importantly, assets. X beyond additional these received we repurchase notifications

over long remains We at-risk the our at the of for XXXX, supply analysis and service macro for and XX ratio backdrop there our of adjust multifamily only health term have to time financial our underwriting. Further, months, year-end rates December pressure. our customers And debt in remains majority XX, to the of next our completed speaks loans our during average quarter. at-risk in quality we $X.X is vast in have the billion the portfolio overall the the to portfolio portfolio. any maturing Xx which Turning before weighted of of coverage the meaning dynamics statements interest and favorable maturity

clients decrease and We loans those feel good a quarter, end tightening. credit with portfolio to quarter. the in at at-risk the we and a positioned about the focused and into are remain billion risk X loans the end over the at are leading on of first only great We have our the defaulted X our loans X,XXX of risks continue how of took $XX from portfolio

over, is credit is Although quality not our strong. this cycle

feel increase million diluted half provided segment year-to-date per to of digits this and and expected capital GSEs the of target, our and both earnings $X.XX, a Looking XX% at of in would diluted adjusted there from and we the outlook will Diluted our earnings year. across MSR sufficient earnings during the in, our billion adjusted results to significant volumes be and EBITDA the the half And capital adjusted year $XXX start GSE adjusted our are to But helped stability close to we we guidance is were share of EPS revenues EBITDA, $XXX boost demand first offset billion of per believe our would deliver slowdown transaction XX% first year, from in was low teens down total quarters half about for core multifamily provide market. Activity EBITDA per the EPS. SAM of picking back adjusted XXXX, of while half for the year, X%. consolidated for the core that hit share, the the them X transactions. the down for of the core to $X.XX good the in volume. business up and achieve adjusted gap second To up EPS our the mid-single that to the $XXX share. At EPS year. to very we earnings

We business diluted the building at we With are we other lines earnings also EPS the our year. guidance half expecting are XXXX. pipelines our maintaining gave of are second we to to looking drive in the the beginning nicely,

the borrowing from annually. The XXX to share by our corporate XXXX. continued our lender to also end second take and our basis of payable Board of to opened And of XX. and with as balance issuers to basis for There's points approved record generation of window our lowering a us with advantage the reprice of shareholders of to term million $X.X of our sheet. $X.XX dividend of during per positioned points, market The our yesterday, strength tranche million EBITDA the loan Turning B cost and $XXX our group. quarter, the XXX a $XXX a August that over Directors quality adjusted cash to strong quarter resiliency spread reduce of the thus in quarterly been cash for SOFR of repricing well allowed far window high of us strength business us our million

for The to exiting grow of Our is to restricted real turn tightening macro this results and to our With lower increasing resiliency path an you into as coming now real estate time over the the your back and Willy. recovers strengthen estate about focus. the capital rate and commercial of sector, I'll opportunities rate. Thank as we the platform, demonstrate the the supply interest the of rates are continues interest capture years of backdrop flow our optimistic team. strength market commercial the last to from deal morning. for call X the

Willy Walker

you, Greg. Thank

As with property our financing debt and just to strong fees management along sales, EPS. year-over-year of underscored in adjusted from Greg adjusted and growth EBITDA servicing businesses, core asset origination cash allowed us generate and

of from long platforms, and management to downturn W&D low that really a endure that management in strength and cycle, businesses. servicing will asset Not contrary this would investment One did better and analysis next earnings for peak W&D W&D's analysts XXXX the exciting And to covers is many of and of trough than recently is in competitors. several shows, what who management in an the W&D research Markets' our largest What earnings disproportionately volumes to due and sales, benefit essentially XXXX we W&D data the to average contracts. EBITDA of adjusted facilities X% conventional due just investors' And financing, the Newmark. The dramatically asset CBRE, is perceptions, those as is outsourcing margin focus term Capital is so. of JLL down transaction appraisals, solutions at for scaled XX% less platforms, that that property thinking and than increased W&D's was competition, workforce versus an banking. with enter

loans EPS. rights is As revenues and know, W&D's originating servicing W&D and a with large important component investors mortgage of GAAP

the a X we regard have storm of and something Over fees to reduced perfect due duration. past servicing volumes, to reduced endured reduced years, loan GSE MSRs lending with

on residential cheapest grow GSEs as market W&D. of their volumes, of these real play lend do thing, as so market their they have one happen forward, Going cost X and participant. all lending components the and significantly. The capital should the only believe role They to improve we they recovers, will any estate, of will

and in to fees, rates remaining tight. lower servicing spreads we seeing are due investor recovery pricing Regarding a

at of Mae were total from X X% borrowers Fannie thinking loans several multifamily volume XX-year put the for X-year X-year years, loans grew X and of were of to rate XXXX, fixed in In first of debt all to many past XX-year X% down short went would to percentage regarding over years, loans loans. put come Finally, back XX% To numbers XX%, and rates while XXXX, Fannie refinance. on dropped term, Mae of the loans and the only could this, XX% lending. the they months

normalizes As again, once loan fees XX-year with financing servicing acquire substantially go the terms coming yield long and assets borrowers positive see the years. will volumes, benefit paper. Higher our and CRE more can owners curve and will and request leverage we normalized longer mortgage rights servicing X- in

to put a was of client's me million. of bought million coupon basis the rate XX The sized Let by to go sound, of existing $XX to million a $XX rate, loan. down the the number example at going decided And equity long they give that of from an so fresh fundamentals is XX instructive the years. There the as points and X.XX% on loan the they borrower off loan. The into process, the X.XX%. loan new it pay client In $XX $X up for and property property fronts. several to are W&D this were the to long interest themes million lock financing only

First, capital properties. in equity there of to is invested be plenty

multifamily long borrowing unique costs, financing, lower are owners are are assets to push that good on starting all-in many properties, and Second, is to out fast. not high And and example particularly not term. This multifamily. long and with go getting appropriate

Manhattan. $XXX old interest new worked on, you may X.XX% almost The matured loan interest heard market. today's refinancing The rate the of instructive & $XXX Some sized being a this only the have that not double in had is to Walker of new This property million, of at a one. financing rate but million about Park XXX loan year. is Avenue a Dunlop the

$XXX recently pay-off office largest trophy is bring feet asset the to to check market, square cash reflecting and of of new signed. deal, new the back million but there $XXX signing equity occupancy. that America's in a plenty office building -- wrote is in to a is maturing market the XX% great for This XXX,XXX owners debt that building, minor actually the leases refinancing not a million assets, So still mortgage and being are a in capital leases

to from technology market the me for Let shift moment. a

We continue clients. to our data in new invest better and find business analytics to serve

Galaxy in Walker refinancings new loans of were Dunlop. opportunities, & QX, client to XX% application and to new continues Our generate our

the powerful has referrals, opportunities luck, the lending new client instances, in While myriad team an entire client's a ways, given been coverage, incredibly of of and portfolio. And portfolio to debt in Galaxy and Galaxy shows just XXXX and that away with transactions come our volume tremendously some composition helps us very loan this. our winning is dumb sales the tool XXXX, from competition, W&D's the in small for game loan maturities loans existing new name for customers the and team of new

currently through Our technology interface. new clients analytics a for and team Navigator Navigator. institutions servicing loans dramatically you of enhanced on W&D above services Client have that on Client some our named is the top see And Client financial world. slide, over their the allows service also X,XXX digital active with experience to W&D ratings our created interface customer as can borrowers on Navigator in a users on do We this user

recover As positioned. well then extremely grow, the continues market to and

Director Then is our investment We transactions. a program dollar multibillion beginning have to Fannie will in fellow XXXX, suddenly best was being May. lead prior Vice to known for June, McKinsey $XX longtime in of $XX tragically to the and our one miss Jeff and QX target investment in is senior and services, that the never Mike's very Executive Mae, friend, retiring our origination brokers and to going our has on multifamily Gary's W&D an valuation wisdom being and team to Gary loan be W&D the years. What President is our being and President, Board of also North presence is Mike currently asked and the is has who asked and missed billion to Mike America, of forward. the our from in the stronger. Howard heart and years. portfolio our to drive market will Mae X returns investment portfolio over capabilities, go-to-market that if died existed pitch Add Pinkus, by search Board and retired multifamily Hayward, stepped our to team having normalized banking our down Howard financings W&D longtime and have Chairman the joined QX, XX large attack. today And the past Director, achieve XXXX, very the for sales 'XX Board he Independent joined that pitch Smith, of and been new exciting bankers and Board. on and not target impact are transaction financings insights while levels. Malone, of from of at market large due in January sales have billion greatly, had to amazing immediate excited very and also in Fannie And Members contributions partner an executives our McKinsey dearly. Jeff we DUS run we at

imperative very we that to good retain discipline as sales, pipeline financial volumes our team I push the earlier, new As expectations We said rates is deal and clients the and feel to for and interest exceeding banking XXXX. as Lower on we recycle appraisals, investment noted the business market of as is What back need financing, of our invest recovers. earlier, should credit expand our volumes to and to positioned in X arise. half recovery people you during morning. Operator, research were remain reinforce for tightening about need focused property we expectations. We needs us our line capital higher. and the equity competition. and And Greg and sit need need results the our decades. Thanks and impacted their new opportunities not shift. Thank where of you. this significantly please we so the financial any to feel Dunlop model, business questions. meet just macroeconomic our of open to been economy benefit have to Walker economy, doorsteps from cycle, & successful of new the the evolving the that extremely now the the our we well past the for a Thank over than the great And established less joining be at and constantly current we results

Operator

Instructions] from Jade Rahmani first Our [Operator question with comes KBW.

Jade Rahmani

just on to media their them not color caution interest on some part, entire of having GSEs? impact, about more Can regular in tightening about their stream further give processes, some system recently, a the did exposed rates that reports going which you an to. JLL, what's seems express adding of seems most agency there's their earnings, as It the fraud. portfolio scrutiny, like their with been about And they're but note about X.X% had to

So to insights this on. get just that's into thoughts phenomenon color want some going to your as and

Willy Walker

this I to your where morning. Jade, thanks would this as morning quarter. on I us you our being for we top joining projections. it versus on my right And in take numbers for note relates came saw the off to hat your And of

DUS now to year, focused say and asset foot it article sort well mentioned been very in article should on would that GSEs, was earlier the very As the the Wall ago, been blacklisted shift that on week, have focus, they're prompted it I as probably Wall at in GSEs, the very the their some know, say condition. agencies relates lending of we've both Street Journal in moving before. it being that lenders, Street asset seen GSE's as partner that. I are on the of ways move that And the much issues this overall never article Optigo as with was today, sort that fraud they not versus they they the looking ago sort year relates the of have to as of were view in a on that, for year sense by one front the how what and would to was and you GSE them quickly that ensuing as relates are their the focus it a past by Journal a working both written management

so not Fannie for is year. And Freddie closely past been new. I say this working anything We've both would with very and the

as think past to new our as at distracted processing Greg past feel of over both I it the book us said, we're most to them, to relates we thing I As both year and competitor with it important as they portfolio. somewhat future their loan as have very to well relates both focusing is while you And the that very see good it firms. asset the been originations management as business, relates and looking business of if will, to and encouraged our overall

Operator

And JMP. we'll Citizens Delaney with our next Steven to from question move

Steven Delaney

a go. Want talk question because the conversation appreciate and I Jade how thing asking the among if statement, it's earnings lot far the of just Meridian out I might there might. GSE this about clients about thing to

GAAP just make think point we our consensus. I'd I think to this, put the most your EPS frontline the numbers that I does let Willy can. and seems and Board earnings ask at value numbers Greg. are out profitability? GAAP and -- from noise when focus I management on Let's like your me marks Internally, evaluating the take adjusted to we or of on -- core if more think of you the servicing, there looking fair a well, lot your et you're where more analysts and cetera. core Adjusted the start into

Greg Florkowski

we next in for create, question cycle. that the servicing growth an been heck and Steve, able the a to core while cash platform flow of have well because the rights that also show that know of strength booking the the as you it's we EBITDA incredible of I will mortgage the enduring tell adjusted extremely a important as good is

is over loan that went what X beneficiary building of booking years. But we so realize next kick well now, last be, so hope because successful the were we done cycle, next get But when lots rights we've years that X, also at net cash it's reason over us years let's we servicing over mortgage off the of X last Michael through whether X servicing years. XX And the down. during X the now. would X, now, the $XXX portfolio it's that cycle volumes will been will the X So transaction from that from in -- have times is billion next years up from years

so servicing & model. things of the And is inside that rights shifting very there no on the of of booking Dunlop one business from is mortgage we because that focused are is Walker focus away that

now I mortgage And finding and is to said up so our and as it to good servicing non-cash will book earnings pay it's X, we have transaction will platform, very significant but of lending we then benefit also loan and originators And which come the non-cash rights, about, strategy that feel to call, changed financial going continue that's opportunities huge the while our as X from dividends has resiliency iota. results much downturn not one volumes revenues out I, very our down. generate us that in where hit the next when years X, them, the which

Steven Delaney

you the and recognition what your about So GSE the fair that profitability. is W&D to it, critical, saying -- when obviously origination your the you're value think the business, fair of right, in business, is discounted and of your your side value accounting MSR

rates, here important in lower Willy, the recognition normal which an we'll model. is I your I'm current with you in a say, with that guess of origination have MSR So what environment, period focused hearing business part hopefully

to it was we're revenue forward. any I if right? can't the I normal guess at we're you're adjustments then as to noise. me have telling taking than going look have away just as booked, But what going is ways, I going other amortization they're with the going through, to we So both MSRs mean live asking for

Willy Walker

they I -- competitive just that in the and was that broad were showed, Yes. I diversified analysis larger these of And this, mean, our And I Steve, the thinking margin better Walker some just, point didn't. in & because lower me Dunlop. as finer talked always do services can. me and call, Jade's they if let than would platforms. put about on a downturn had contracts, let they the scale

Okay.

you're which EPS, would extreme, portfolio. focused. If other cash adjusted after competitor volume transaction is the to the down. just some fees. well onto earnings, And EPS, GAAP transaction go volumes the that servicing then to if have mortgage but also right happens about our is that you come were do on other when which on those all is off cash we we transaction servicing flow you But what firms hold not So to really core forget do focused run fees, transaction are of cash is, cash portfolio solely it

And so the that's beauty the of model.

it's committee the no EPS should EPS, because less focus volumes. and so the XX downturn benefit of to start in and stick and we will rights it. me transaction we came you model managers this time servicing from That's those generation EPS would over GAAP if say core mortgage platform when the compensation have another GAAP we Willy, the that to other on way and our to now think And I years X, and senior adjusted X, for on said, we'll

Operator

And we'll Sommers from Jefferies. move next Derek to question with our

Derek Sommers

just property kind I pipeline. think and sales and -- prior end flow at the pulling in I I kind through. how was of compares about deal that that a was takes of what of puts the were quarter, wondering wondering talked the this we large quarter,

Willy Walker

developing Pipeline very is nicely and sits. Derek. Yes,

We haven't it's disclosed great. but the number, actual

moving also where growth in to As of our a I team sales bake give in the look been first but to top volumes say the invited still have is number large half to previously pitch of of if wouldn't offs, those relates it their for overall tried Pipeline multifamily & X in to portfolio transactions Walker platform. were invited success to if positioning, our our now. that the XXXX, Dunlop in sales had comments, a our very significant our as will and slightly. the will. I is strong as and only XXXX some investment right up down -- from is doing said fantastic, tables we're everything you not flow at firms from you very That's business, volumes competitive disappointing I the being year-over-year our and some lead color, year, competitor one team but

cycle the individual So owner, is during the is Walker given be on X an right combination the or U.S. a thinking to asset we now, strength sales talk of selling has positioned. I another either their lending are And going about tremendously. benefit to our to. should about feel good of next very who Dunlop investor and list investment this any And financing things & portfolio, scaled operator, where one firms of us in multifamily platform, those

Derek Sommers

And kind guess then here, election I the pertinent with the given administrations? coming just cycle, about on then switch different GSEs to have there And any conversations multifamily the of to of any thoughts to the end year been working caps? the

Willy Walker

on the I'll skip Cool. one. second

they GSEs FHFA in where volumes one, in far what as take the first up are scorecard coming the the to their and is with to as QX On always see want do And past spoken think to at now. various FHFA, they're at the people the year. months. looking the I've different of I data coming couple lot points a regulator, right that over

I would are that's market either will would either result think -- the on Harris but lean only it a in go, them. administration, discretion one Thompson's a that complete only then likely FHFA. they as that we is it and have the the change has that, will recovery at those tell, election, think a of coming where would about a say, see to and will something they shrinking maintaining But stay of than I likely desires over. And regulator expanding director obviously to rather the of she towards whether with administration they relates that as or I whether that time that administrations will assume know I be the FHFA. new Trump have there caps or directorship of I personally don't we new Director or regardless wants

particularly and happens would change. what there And the do have at you will, to change of others what with as happens long more see to to in good see the And directors if GSEs so a who strategy is who we'll we've that always we forth having as sort previous and into they this FHFA some had since line, director. But we've XXXX. rodeo at before, have the changing for been election and in what been if conservatorship worked went been put Fannie in we'll from with have, I of Freddie adapting with FHFA you pretty director, But on that new very will, aggressive in the XXXX.

And point. none terribly of so concerning that at this is

Operator

moving next our And Securities. question to from Brian Wedbush Violino with

Brian Violino

with offset Just here. negative that's start escrow benefit there we And on each know be years Could on XX cut? do X? I escrow a the the transaction maybe by the to been But of between what the better last for, frame and see you would just offset cut over revenues kind say, curious Fed revenues, that obviously point higher timing what curious if impact basis obviously, be rates. the short-term the income, could just be would few but

Willy Walker

that you thing? Greg, want to take

Greg Florkowski

Yes, absolutely.

on So depending billion we we time -- between have have about billion of $X.X and year, that simply, hold. reserves $X.X of escrow the we the

rate effectively point our X/X multiplied funds occurs is that. quarter is just So going Whatever in take to you're Fed and be by is when going reduction balance to that then the decreased.

about revenues. impact the the implemented on basis our expect That forward projecting of or Whatever as a be see perspective you're is forward. financials from to that point soon what to be occurs. that rate So a the just curve change annualized on change will you'll thinking type from occur our as

Brian Violino

least about like it see you in But point. how the where capacity. a the very expenses Would in you're uptick then to that see expenses just you think volumes, more fixed curious notable of is term? And near the Okay. is say there's fair plenty expense at pretty on just side, set at volumes you going to thinking this it sounds

Greg Florkowski

respect remarks, Absolutely. team stats his sure market. plenty got, where to some We've our to on the the peak He on sales We've the Willy made team. was maintain said towards capacity. investment gave of with as of capacity

be will, it'll excessive. So or processing absolutely massive just grow there's add from that would but somewhat for I as There's need expense nothing a volumes spike. there. be it'll a -- And of to incremental run us where room to think be be we need today little as lot to to I to we increase are don't of going transaction bit power, back, think too you if outsized

market So I lot think have a grow into pretty of -- here we'll a be lot change from there. without easily able the to of

Willy Walker

the I'd Greg other volumes. in behind thing One and escrows jump origination on

is exactly to First the the But borrowing than to other more also right that there's escrow point, in -- growth offset our as it a hedge of specific acts stepdown the in your as to that escrow cost all, that's will well. the income. volumes income piece

so down, And so does cost. comes as borrowing income our escrow

relates talked debt. cost does borrowing Greg to as it know you down, on escrow have, so also as So you that our our about how comes

very against another. act the assumption transaction in those a that environment, then a you're So if X lower up. as hedge one And volumes it's rate clearly step

all that's pick tandem increased escrows. up the basically net-net, so steps rising escrows as as to borrowing cost increased in and debt work have in against in nice the you us But volumes. hedge what rate environment. is a the the beneficial And that and net to It the down, that then cost transaction was hedge,

Operator

Jade Rahmani KBW. question next And is with from our

Jade Rahmani

the Alliant. wanted to Affordable business, used Equity Just to the as about be business ask that known

I environment benefiting rate you you lower LITHC Just to now the potentially And business. think outlook, there? that what on the seeing are alluded outlook

Willy Walker

of things Jade. A there, couple

of increased consensus pass that that building low just to across did as to relates it the to bill that the income the which First for needs credits all X% specifically was low LIHTC income But as not positioned both country. amount housing to credits general X%. it tax of -- well that I being extremely we're housing XXXX, issued for had level And the think issue. it at well federal housing the drive the of disappointing Congress had tax in need is increase affordable the as of more as relates

into years of & at Walker general year. Alliant the housing integration QX, of newest that benefits. We business of Dunlop this moved into and the and all to real start Alliant running affordable earlier our housing integrating fund are Sheri affordable been have our branding into of Thompson bought second X The is see that beginning starting We've Walker Dunlop, raised ago. to thing we Alliant & we

Alliant some benefits. sales formerly Affordable Dunlop to Walker so investment that start Equity, of our I debt known think pulling our together is & and Business, all affordable And with really bringing originations, the in as show to going affordable

feel very, it. very so And good about we

years. a have have We that well. additional And assets EBITDA the clearly beneficial we business the that operating last that brought fantastic we been across over extremely that acquisition. from X And been in very portfolio the team that has in generate

Jade Rahmani

business, on thoughts although that high the HUD the know outlook not And on volumes, up dollar then I But your meaningfully picked margin what a there? business it's and big. are that

Greg Florkowski

we and HUD that volumes That redo fantastic have who build where that that build is big and team, their that sell. business. a HUD volumes on loan. you XXXX go DX want And into Their think new would in, going product, volumes. loans best driver issues a lending pre obviously a we're in very our one country. And loan got I volume having is and off those We're tightening hold loan the of rates was as than more higher whole was HUD fantastic focused moved very, and back and DX help came we've valuable it's we whenever, hasn't construction rather reduction put the could fell you those what -- to extremely to a big tightening. higher this of forward. pre rate was said interest volumes are driving product of environment. And a very the very people of down, increasing because which down. been on which is loans, called That there IRR great it, just been product, -- for rate lot

knows but get increased very, to refinancing is team And extremely our X XXXF, is as that products standard that And that. which focused So be are the versus just just are is top important, tables doing ourselves lead competition team product. aggregate is lead volume at super our that the their and DX Jade of now, the as game the selling the on is to name important. whole the those us. the we continuing right out tables need to that very well important -- of we're And

Operator

I'd Mr. turn ladies to back gentlemen, remarks. like concludes portion additional Willy of today's Walker And conference to and the the for or closing call. that Q&A

Willy Walker

produce today. Great. to QX QX. QX, well Thank solid for at thank to all beginning Thanks, to very everyone. a of the talking the forward we XXXX. joining us they look everyone, end all and you for for day. did team And you of And a you, W&D to QX Have nice

Operator

Thank this gentlemen, and today's for you your Ladies call. participation. concludes

You may now disconnect.

Walker & Dunlop (WD) 8 Aug 242024 Q2 Earnings call transcript