For much of 2020, shares of Walker & Dunlop (WD 0.10%) were down 20% or more from where they started the year -- and for good reason. Walker & Dunlop provides financial services for commercial real estate, and the coronavirus pandemic has wreaked havoc on the sector this year.
But when the company reported third-quarter earnings, it answered some big concerns about how its business was holding up. On the Oct. 29 edition of "The Wrap" on Motley Fool Live, host Jason Hall discussed the company's recent earnings and how they answered his biggest questions in a resoundingly positive way.
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Jason Hall: Walker & Dunlop, the ticker is WD, and for those of you that are not familiar with the business, they are big in commercial real estate, originating loans, servicing loans, just a really big player. This is a really scattered business. It has a ton of room for consolidation. Walker & Dunlop's goal is to consolidate and grow their market share.
Coming into the second half of the year, my biggest concern for this business personally -- I'm a shareholder and I follow the business relatively closely -- is so much of what they do is servicing commercial real estate loans. The way a company makes money when they do that is they get a take of the revenues, the payment as it comes in. With so many companies being at risk of not being able to meet their payments, I was concerned that this would have some impacts on Walker & Dunlop's results.
But the two things that we've seen is that a lot of business have been much stronger than expected in terms of generating cash flows, and Walker & Dunlop's business has absolutely held up. The company reported $247 million in revenues in the third quarter, that was a 16% increase. Net income was up 21%. On a per-share basis, it was up 19%. Really strong, their servicing portfolio increased by 13% to over $103 billion in loans that they service.
The business really, not just held up, but grew. They grew market share, I think, 69% -- Willy Walker, their Chairman, CEO, he's the grandson of the founder of the company, and so the family is still involved. There's a lot of value that gets added there. He said 69% of the quarterly loan refinancing activity was done on loans that were new to Walker & Dunlop, 25% in debt financing was done with new clients. That's expanded market share. That's really good. That's exactly what you want to see Walker & Dunlop doing.
