First-quarter revenue was up but profits were down sharply at LandAmerica Financial Group Inc., mainly because of problems with a subprime lender that’s a LandAmerica customer, the company reported Tuesday.
LandAmerica, which sells title insurance and provides services to mortgage lenders, boosted revenue to $948.6 million, a 1.7 percent increase from the same quarter last year.
Net income fell by 66 percent, from $13.7 million to $4.7 million, reflecting a $12.5 million after-tax write-off of an “intangible asset” involving a major customer, Fremont General Corp.
Fremont General’s subprime lending subsidiary, Fremont Investment & Loan, was hit by a March 7 cease-and-desist order from the Federal Deposit Insurance Corp. alleging the bank lacked adequate underwriting criteria.
“We are pleased with our performance in a seasonally and cyclically difficult first-quarter 2007, excluding the write-off of the customer relationship intangible,” said LandAmerica Chairman and Chief Executive Officer Theodore L. Chandler Jr. in a press release.
LandAmerica said an increase in revenue from its merger with Capital Title Group was partially offset by overall weakness in the residential housing market.
Revenue from direct title operations grew by 8.4 percent from the first quarter of 2006, to $369.3 million. The increase was attributed to increased market share resulting from the merger with Capital Title, strong commercial revenues and an increase in direct operating revenue per direct order closed.
LandAmerica boosted direct orders 11 percent from the first quarter of 2006 to 296,100, and revenue per direct order was up 10.5 percent to $2,100.
Agency revenue in title operations slipped 11.7 percent, to $422.1 million, “due to softer market conditions across most of the regions, particularly in certain Southeastern markets,” LandAmerica reported.
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