EARNINGS PER SHARE AND STOCKHOLDERS EQUITY

6 Months Ended

Jun. 30, 2022

EARNINGS PER SHARE AND STOCKHOLDERS' EQUITY

Earnings Per Share and Stockholders' Equity

NOTE 10—EARNINGS PER SHARE AND STOCKHOLDERS’ EQUITY

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 2020 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 six months ended June 30, 2022 and 2021 under the two-class method. Participating securities were 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 June 30,				For the six months ended June 30,
EPS Calculations (in thousands, except per share amounts)	2022		2021		2022		2021
Calculation of basic EPS
Walker & Dunlop net income	$	54,286	$	56,058	$	125,495	$	114,110
Less: dividends and undistributed earnings allocated to participating securities		1,554		1,831		3,708		3,798
Net income applicable to common stockholders	$	52,732	$	54,227	$	121,787	$	110,312
Weighted-average basic shares outstanding		32,388		31,019		32,304		30,922
Basic EPS	$	1.63	$	1.75	$	3.77	$	3.57
Calculation of diluted EPS
Net income applicable to common stockholders	$	52,732	$	54,227	$	121,787	$	110,312
Add: reallocation of dividends and undistributed earnings based on assumed conversion		9		14		27		34
Net income allocated to common stockholders	$	52,741	$	54,241	$	121,814	$	110,346
Weighted-average basic shares outstanding		32,388		31,019		32,304		30,922
Add: weighted-average diluted non-participating securities		306		351		353		400
Weighted-average diluted shares outstanding		32,694		31,370		32,657		31,322
Diluted EPS	$	1.61	$	1.73	$	3.73	$	3.52

The assumed proceeds used for calculating the dilutive impact of restricted stock awards under the treasury-stock method includes the unrecognized compensation costs associated with the awards. For the three and six months ended June 30, 2022, 136 thousand average restricted shares and 87 thousand average restricted shares, respectively, were excluded. An immaterial number of average restricted shares were excluded from the computation of diluted EPS under the treasury-stock method for the three and six months ended June 30, 2021. These average restricted shares were excluded from the computation of diluted EPS under the treasury method  because the effect would have been anti-dilutive, as the grant date market price of the restricted shares was greater than the average market price of the Company’s shares of common stock during the periods presented.

The following non-cash transactions did not impact the amount of cash paid on the Condensed Consolidated Statements of Cash Flows. During 2022, the operating agreement of three of the Company’s tax-credit-related joint ventures changed. The Company reconsidered its consolidation conclusion based on these changes and concluded that the joint ventures should be consolidated, resulting in a $3.7 million increase in APIC and $6.8 million of noncontrolling interests consolidated as shown on the Consolidated Statements of Changes in Equity for the six months ended June 30, 2022. The consolidation also resulted in a $35.0 million increase in Receivables, net, a $21.3 million reduction in Other assets, and a $3.6 million increase in Other liabilities.

In February 2022, the Company’s Board of Directors approved a stock repurchase program that permits the repurchase of up to $75.0 million of the Company’s common stock over a 12-month period beginning on February 13, 2022. During the first quarter of 2022, the Company did not repurchase any shares of its common stock under the share repurchase program. During the second quarter of 2022, the Company repurchased 109 thousand shares of its common stock under the 2022 share repurchase program at a weighted-average price of $101.77 per share and immediately retired the shares, reducing stockholders’ equity by $11.1 million. As of June 30, 2022, the Company had $63.9 million of authorized share repurchase capacity remaining under the 2022 share repurchase program.

During each of the first and second quarters of 2022, the Company paid a dividend of $0.60 per share. On August 3, 2022, the Company’s Board of Directors declared a dividend of $0.60 per share for the third quarter of 2022. The dividend will be paid on September 2, 2022 to all holders of record of the Company’s restricted and unrestricted common stock as of August 18, 2022.

The Company’s Note Payable (“Term Loan”) contains direct restrictions to the amount of dividends the Company may pay, and the warehouse debt facilities and agreements with the Agencies contain minimum equity, liquidity, and other capital requirements that indirectly restrict the amount of dividends the Company may pay. The Company does not believe that these restrictions currently limit the amount of dividends the Company can pay for the foreseeable future.