LPS swings to 4Q loss on legal, regulatory charges
Lender Processing Services (LPS) reported a loss of $21.2 million, or 25 cents a share, for the fourth quarter, including a $131.7 million charge for estimated legal and regulatory contingencies, among other expenses.
The Jacksonville, Fla., technology and mortgage services firm earned $70.7 million, or 78 cents a share, for the year-earlier quarter and $40.5 million, or 48 cents a share, in the third quarter.
For 2011, earnings fell about 68% to $96.5 million from $302.3 million in 2010.
Fourth-quarter revenue declined to $533.8 million from $618.1 million a year earlier, led by a 21.4% drop in loan transaction revenue. The company's revenue from mortgage technology, data and analytics rose 4.7% to $192.1 million from $183.5 million.
Total revenue beat previous projections from the company between $510 million and $520 million.
The $78 million in legal and regulatory charges is an estimate that LPS will revisit each quarter, according to Chief Financial Officer Tom Schilling. He said the final cost could "differ significantly" and did not expand on the company arrived at the number.
The assessment includes costs related to a consent order signed in April with the Federal Reserve, as well as from litigation by the state attorneys general. At least five AGs have taken some action against LPS, most notably Nevada AG Catherine Cortez Masto, who sued the company and filed robo-signing charges against former employees.
LPS recently asked a Clark County court to dismiss the Nevada lawsuit.
Hugh Harris, LPS president and chief executive, said the company expects to do the same regarding a suit filed last week by the Missouri attorney general against DocX, LPS's former mortgage-processing branch, and its former president.
"We are feeling better about all of the issues around the litigation," Harris said during a conference call Monday.
The Michigan AG's office, at the time of the announcement of the $25 billion foreclosure settlement last week, said the state continues to investigate foreclosure actions at LPS and DocX. Both California and Illinois subpoenaed LPS in May 2011.
Harris said LPS remains "committed to work closely" with the state AGs on outstanding litigation.
The company also recorded charges for expenses related to exiting noncore businesses and other nonrecurring expenses. LPS recently sold its income verification, auction service and tax businesses, calling them "unprofitable."
Schilling said he expects slower refinance and default volumes, at least in the short term, though that doesn't include any effect from an extension of the Home Affordable Refinance Program.
LPS's guidance for the first quarter 2012 includes revenue between $470 million and $490 million, and adjusted earnings a share between 50 cents to 55 cents.