SEGMENTS

9 Months Ended

Sep. 30, 2024

SEGMENTS

SEGMENTS

NOTE 11—SEGMENTS

The Company’s executive leadership team, which functions as the Company’s chief operating decision making body, makes decisions and assesses performance based on the following three reportable segments. The reportable segments are determined based on the product or service provided and reflect the manner in which management is currently evaluating the Company’s financial information.  

(i) Capital Markets (“CM”)—CM provides a comprehensive range of commercial real estate finance products to its customers, including Agency lending, debt brokerage, property sales, and appraisal and valuation services. The Company’s long-established relationships with the Agencies and institutional investors enable CM to offer a broad range of loan products and services to the Company’s customers, including first mortgage, second trust, supplemental, construction, mezzanine, preferred equity, and small-balance loans. CM provides property sales services to owners and developers of multifamily properties and commercial real estate and multifamily property appraisals for various investors. CM also provides real estate-related investment banking and advisory services, including housing market research.

As part of Agency lending, CM temporarily funds the loans it originates (loans held for sale) before selling them to the Agencies and earns net interest income on the spread between the interest income on the loans and the warehouse interest expense. For Agency loans, CM recognizes the fair value of expected net cash flows from servicing, which represents the right to receive future servicing fees. CM also earns fees for origination of loans for both Agency lending and debt brokerage, fees for property sales, appraisals, and investment banking and advisory services, and subscription revenue for its housing market research. Direct internal, including compensation, and external costs that are specific to CM are included within the results of this reportable segment.

(ii) Servicing & Asset Management (“SAM”)—SAM’s activities include: (i) servicing and asset-managing the portfolio of loans the Company (a) originates and sells to the Agencies, (b) brokers to certain life insurance companies, and (c) originates through its principal lending and investing activities, (ii) managing third-party capital invested in commercial real estate assets through senior secured debt or limited partnership equity instruments, e.g., preferred equity, mezzanine debt, etc. either through funds or direct investments, and (iii) managing third-party capital invested in tax credit equity funds focused on the LIHTC sector and other commercial real estate.

SAM earns revenue mainly through fees for servicing and asset-managing the loans in the Company’s servicing portfolio and asset management fees for managing third-party capital. Direct internal, including compensation, and external costs that are specific to SAM are included within the results of this reportable segment.

(iii) Corporate—The Corporate segment consists primarily of the Company’s treasury operations and other corporate-level activities. The Company’s treasury activities include monitoring and managing liquidity and funding requirements, including corporate debt. Other corporate-level activities include equity-method investments, accounting, information technology, legal, human resources, marketing, internal audit, and various other corporate groups (“support functions”). The Company does not allocate costs from these support functions to the CM or SAM segments in presenting segment operating results. The Company does allocate interest expense and income tax expense. Corporate debt and the related interest expense are allocated first based on specific acquisitions where debt was directly used to fund the acquisition, such as the acquisition of Alliant, and then based on the remaining segment assets. Income tax expense is allocated proportionally based on income from operations at each segment, except for significant, one-time tax activities, which are allocated entirely to the segment impacted by the tax activity.

The following tables provide a summary and reconciliation of each segment’s results for the three months ended September 30, 2024 and 2023.

Segment Results (in thousands)	For the three months ended September 30, 2024
Revenues		CM		SAM		Corporate		Consolidated
Loan origination and debt brokerage fees, net	$	72,723		823		—	$	73,546
Fair value of expected net cash flows from servicing, net		43,426		—		—		43,426
Servicing fees		—		82,222		—		82,222
Property sales broker fees		19,322		—		—		19,322
Investment management fees		—		11,744		—		11,744
Net warehouse interest income (expense)		(2,798)		651		—		(2,147)
Placement fees and other interest income		—		40,299		3,258		43,557
Other revenues		11,039		9,145		450		20,634
Total revenues	$	143,712	$	144,884	$	3,708	$	292,304
Expenses
Personnel	$	104,987		20,951		19,600	$	145,538
Amortization and depreciation		1,137		54,668		1,756		57,561
Provision (benefit) for credit losses		—		2,850		—		2,850
Interest expense on corporate debt		4,888		11,711		1,633		18,232
Goodwill impairment		—		—		—		—
Fair value adjustments to contingent consideration liabilities		(1,366)		—		—		(1,366)
Other operating expenses		5,137		6,611		20,236		31,984
Total expenses	$	114,783	$	96,791	$	43,225	$	254,799
Income (loss) from operations	$	28,929	$	48,093	$	(39,517)	$	37,505
Income tax expense (benefit)		7,073		10,756		(9,007)		8,822
Net income (loss) before noncontrolling interests	$	21,856	$	37,337	$	(30,510)	$	28,683
Less: net income (loss) from noncontrolling interests		26		(145)		—		(119)
Walker & Dunlop net income (loss)	$	21,830	$	37,482	$	(30,510)	$	28,802

Segment Results (in thousands)	For the three months ended September 30, 2023
Revenues		CM		SAM		Corporate		Consolidated
Loan origination and debt brokerage fees, net	$	56,149	$	—	$	—	$	56,149
Fair value of expected net cash flows from servicing, net		35,375		—		—		35,375
Servicing fees		—		79,200		—		79,200
Property sales broker fees		16,862		—		—		16,862
Investment management fees		—		13,362		—		13,362
Net warehouse interest income (expense)		(2,565)		534		—		(2,031)
Placement fees and other interest income		—		39,475		3,525		43,000
Other revenues		11,875		15,569		(618)		26,826
Total revenues	$	117,696	$	148,140	$	2,907	$	268,743
Expenses
Personnel	$	97,973	$	17,139	$	21,395	$	136,507
Amortization and depreciation		1,137		54,375		1,967		57,479
Provision (benefit) for credit losses		—		421		—		421
Interest expense on corporate debt		4,874		11,096		1,624		17,594
Goodwill impairment		14,000		—		—		14,000
Fair value adjustments to contingent consideration liabilities		(14,000)		—		—		(14,000)
Other operating expenses		4,193		5,039		19,297		28,529
Total expenses	$	108,177	$	88,070	$	44,283	$	240,530
Income (loss) from operations	$	9,519	$	60,070	$	(41,376)	$	28,213
Income tax expense (benefit)		2,386		15,040		(10,357)		7,069
Net income (loss) before noncontrolling interests	$	7,133	$	45,030	$	(31,019)	$	21,144
Less: net income (loss) from noncontrolling interests		83		(397)		—		(314)
Walker & Dunlop net income (loss)	$	7,050	$	45,427	$	(31,019)	$	21,458

The following tables provide a summary and reconciliation of each segment’s results for the nine months ended September 30, 2024 and 2023 and total assets as of September 30, 2024 and 2023.

Segment Results and Total Assets (in thousands)	As of and for the nine months ended September 30, 2024
Revenues		CM		SAM		Corporate		Consolidated
Loan origination and debt brokerage fees, net	$	180,264	$	2,356	$	—	$	182,620
Fair value of expected net cash flows from servicing, net		97,673		—		—		97,673
Servicing fees		—		242,683		—		242,683
Property sales broker fees		39,408		—		—		39,408
Investment management fees		—		40,086		—		40,086
Net warehouse interest income (expense)		(6,322)		1,475		—		(4,847)
Placement fees and other interest income		—		113,072		10,927		123,999
Other revenues		32,756		34,679		1,982		69,417
Total revenues	$	343,779	$	434,351	$	12,909	$	791,039
Expenses
Personnel	$	276,655	$	59,083	$	54,330	$	390,068
Amortization and depreciation		3,412		160,912		5,171		169,495
Provision (benefit) for credit losses		—		6,310		—		6,310
Interest expense on corporate debt		15,038		33,848		4,879		53,765
Goodwill impairment		—		—		—		—
Fair value adjustments to contingent consideration liabilities		(1,366)		—		—		(1,366)
Other operating expenses		14,831		18,462		60,093		93,386
Total expenses	$	308,570	$	278,615	$	124,473	$	711,658
Income (loss) from operations	$	35,209	$	155,736	$	(111,564)	$	79,381
Income tax expense (benefit)		8,689		38,430		(27,531)		19,588
Net income (loss) before noncontrolling interests	$	26,520	$	117,306	$	(84,033)	$	59,793
Less: net income (loss) from noncontrolling interests		353		(3,891)		—		(3,538)
Walker & Dunlop net income (loss)	$	26,167	$	121,197	$	(84,033)	$	63,331
Total assets	$	1,711,722		2,495,600		371,909	$	4,579,231

Segment Results and Total Assets (in thousands)	As of and for the nine months ended September 30, 2023
Revenues		CM		SAM		Corporate		Consolidated
Loan origination and debt brokerage fees, net	$	167,679	$	522	$	—	$	168,201
Fair value of expected net cash flows from servicing, net		107,446		—		—		107,446
Servicing fees		—		232,027		—		232,027
Property sales broker fees		38,831		—		—		38,831
Investment management fees		—		44,844		—		44,844
Net warehouse interest income (expense)		(7,006)		3,450		—		(3,556)
Placement fees and other interest income		—		100,636		8,674		109,310
Other revenues		40,735		42,697		(431)		83,001
Total revenues	$	347,685	$	424,176	$	8,243	$	780,104
Expenses
Personnel	$	281,502	$	53,669	$	53,254	$	388,425
Amortization and depreciation		3,412		161,935		5,390		170,737
Provision (benefit) for credit losses		—		(11,088)		—		(11,088)
Interest expense on corporate debt		13,870		31,385		4,623		49,878
Goodwill impairment		14,000		—		—		14,000
Fair value adjustments to contingent consideration liabilities		(14,000)		—		—		(14,000)
Other operating expenses		15,037		16,465		51,820		83,322
Total expenses	$	313,821	$	252,366	$	115,087	$	681,274
Income (loss) from operations	$	33,864	$	171,810	$	(106,844)	$	98,830
Income tax expense (benefit)		8,462		42,931		(26,698)		24,695
Net income (loss) before noncontrolling interests	$	25,402	$	128,879	$	(80,146)	$	74,135
Less: net income (loss) from noncontrolling interests		1,741		(3,364)		—		(1,623)
Walker & Dunlop net income (loss)	$	23,661	$	132,243	$	(80,146)	$	75,758
Total assets	$	1,424,270	$	2,361,245	$	492,336	$	4,277,851