Fidelity National Sees Earnings Fall 92 Percent
Title industry giant Fidelity National Financial, Inc. (FNF) said late Wednesday that earnings fell to just $6.9 million, or $.03 per share, during the second quarter as the company continued to struggle with falling order volume and rising claims; the results contrast with $84.8 million in earnings, or $.38 per share, in the year-ago period. The bottom line for title companies like Fidelity is that origination volume is down, and that means there are fewer title policies to be had. As a result, quarterly revenue fell 21.3 percent as transaction volume continued to fall -- underscoring just how many homebuyers really did stay out of the market during the quarter. "Order counts weakened throughout the quarter, despite the fact that we were operating in the normally seasonally strong spring and summer months," said company chairman William Foley, II. Did they ever. Closed direct title orders totaled just 307,500 during the second quarter, off nearly 25 percent from one year earlier. Worse yet, the slowdown in transactions continued unabated throughout the quarter: April saw 113,200 closings; May 99,800; and June 94,500. Foley said the company is focused on managing costs, and that 1,200 positions in title field operations and an additional 400 positions in other areas of the company had been eliminated during June alone; the company also closed 90 field title offices, as well. The company also hiked its provision for losses, although the company did not provide significant detail surrounding its motives for doing so. "We decided to increase our provision for losses to 8.5% for the full-year 2008, resulting in a 9.5% provision in the second quarter," Foley said. "We expect to provide an 8.5% provision for the last two quarters of 2008." Fidelity National recently spun off its mortgage services division into Lender Processing Services, Inc. (LPS); unlike the title operations of its former parent, LPS is seeing demand for its services -- particularly related to managing borrower defaults -- surge dramatically, sources told HW on Thursday. LPS reports second quarter earnings on August 5. For more information, visit http://www.fnf.com. Disclosure: The author held no positions in FNF or LPS when this story was published; indirect holdings may exist, however, via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.