Stewart Information Services 1Q earnings suffer from mortgage reductions
Posts net loss of $12.1 million
Houston-based Stewart Information Services Corporation (STC) first-quarter earnings suffered due to a significant pullback in mortgages.
Stewart reported a net loss of $12.1 million, or 54 cents per diluted share, for the first quarter 2014, compared to earnings of $3.2 million, or 15 cents per diluted share, for the first quarter 2013.
"The first quarter of 2014 was a challenge for Stewart. While we made progress on our strategic initiatives, operations suffered from mortgage originations falling to their lowest level in 17 years as lenders coped with harsh winter weather conditions, the implementation of new qualified mortgage regulations, and rising interest rates,” said Matthew Morris, CEO.
Between closed title orders falling to the lowest level in at least 15 years, title operations reporting a revenue decline of 5.6% and volume declining much more rapidly than anticipated, Morris explained that the company was required to take steps to reduce costs and implement new initiatives to increase flexibility to more rapidly scale to market conditions.
However, opened title orders in March and thus far in April, while still below prior year levels, have rebounded from January and February and bode well for the spring selling season.
Title segment revenues dropped 5.6% and 14.% from the first quarter 2013 and fourth quarter 2013, respectively.
On the other side, revenues from the mortgage services segment declined to $26.6 million for the first quarter 2014, decreasing 35.4% when compared to $41.2 million in the first quarter 2013, but increasing 3.9% sequentially from fourth quarter 2013 as recently signed contracts began generating revenues.
"We continue to see opportunity through the mortgage value chain and were able to take advantage of the shifting market for attractive acquisitions to expand our offerings to mortgage lenders. Subsequent to quarter end, we announced the acquisitions of Wetzel Trott, Inc. and the title and collateral valuation business lines of DataQuick Lending Solutions, as well as an agreement to acquire LandSafe Title,” Morris said.
“These acquisitions, with an aggregate purchase price of $39.9 million once completed, are expected to add approximately $150 million of annualized revenues. Combined with the existing Stewart Lender Services operations, we are well positioned as one of the strongest providers in the mortgage services market," concluded Morris.