EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2019

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

Earnings Per Share

NOTE 11—EARNINGS PER SHARE

EPS is calculated under the two-class method. The two-class method allocates all earnings (distributed and undistributed) to each class of common stock and participating securities based on their respective rights to receive dividends. The Company grants share-based awards to various employees and nonemployee directors under the 2015 Equity Incentive Plan that entitle recipients to receive nonforfeitable dividends during the vesting period on a basis equivalent to the dividends paid to holders of common stock. These unvested awards meet the definition of participating securities.

The following table presents the calculation of basic and diluted EPS for the three and nine months ended September 30, 2019 and 2018 under the two-class method. Participating securities are included in the calculation of diluted EPS using the two-class method, as this computation was more dilutive than the treasury-stock method.

	For the three months ended September 30,				For the nine months ended September 30,
EPS Calculations (in thousands, except per share amounts)	2019		2018		2019		2018
Calculation of basic EPS
Walker & Dunlop net income	$	44,043	$	37,716	$	130,457	$	115,689
Less: dividends and undistributed earnings allocated to participating securities		1,375		1,315		4,211		4,166
Net income applicable to common stockholders	$	42,668	$	36,401	$	126,246	$	111,523
Weighted-average basic shares outstanding		29,987		30,423		29,885		30,234
Basic EPS	$	1.42	$	1.20	$	4.22	$	3.69
Calculation of diluted EPS
Net income applicable to common stockholders	$	42,668	$	36,401	$	126,246	$	111,523
Add: reallocation of dividends and undistributed earnings based on assumed conversion		27		38		90		119
Net income allocated to common stockholders	$	42,695	$	36,439	$	126,336	$	111,642
Weighted-average basic shares outstanding		29,987		30,423		29,885		30,234
Add: weighted-average diluted non-participating securities		795		1,183		857		1,167
Weighted-average diluted shares outstanding		30,782		31,606		30,742		31,401
Diluted EPS	$	1.39	$	1.15	$	4.11	$	3.56

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury method includes the unrecognized compensation costs associated with the awards. An immaterial number of average outstanding options to purchase common stock and average restricted shares were excluded from the computation of diluted earnings per share under the treasury method for the three and nine months ended September 30, 2019 and 2018 because the effect would have been anti-dilutive (the exercise price of the options or the grant date market price of the restricted shares was greater than the average market price of the Company’s shares during the periods presented).