BETHESDA, MD—Walker & Dunlop reported earnings for second quarter. The company posted GAAP net income and adjusted net income of $12.9 million, or $0.40 per diluted share, compared to GAAP net income of $14.5 million, or $0.42 per diluted share and adjusted net income of $15.3 million, or $0.44 per diluted share for the same period in 2013.

Revenues were $85.3 million, a 6% decrease from $90.7 million for the second quarter 2013 that is attributed in part to a 17% decline in mortgage banking gains. Adjusted EBITDA was $20.9 million compared to $14.0 million for the second quarter 2013, a 50% increase.

Loan originations were $2.4 billion for the second quarter 2014 compared to $2.6 billion for the second quarter 2013, a 7% decrease. CEO Willy Walker attributed the drop to a commercial loan refinancing market that down 23% from 2013 and GSEs' origination volumes that year-to-date are down 48%. Given that, he says in a prepared statement, "$2.4 billion in loan originations producing $85.3 million in revenue is fantastic performance."

W&D's business with the GSEs and the Department of Housing and Urban Development were a mixed bag; originations with Fannie Mae and Freddie Mac increased 12%, accounting for 65% of the company's loan originations this quarter. HUD, however, has become a less competitive financing source, and dropped to only 7% of originations for W&D. That was a 62% drop from the second quarter 2013.

W&D has been positioning itself for such changes for a number of years, expanding its reaching into other asset classes and product types. It is getting ready, for example, to launch its first securitiztion in the third quarter under its new CMBS platform. It also has increased its on-balance-sheet lending by 74% over the second quarter 2013. It is still a solid GSE lender though.

"We are effectively selling Walker & Dunlop's scale and position as one of the largest GSE lenders in the country," Walker says. "Given the GSEs' strong performance since the 2014 FHFA scorecard was released in early May, we are very pleased with our current pipeline and outlook for the next several years."

Instant Insights /

W&D Preps for First CMBS; Reports Gains in Q2

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