LandAmerica Reports Second Quarter 2007 Results
August 1, 2007
RICHMOND, Va., -- LandAmerica Financial Group, Inc. (NYSE: LFG) announced operating results for the second quarter and six months ended June 30, 2007.
|Second Quarter 2007||Second Quarter 2006|
|Total revenue||$1,005.0 Million||$1,002.1 Million|
|Net income||$7.9 Million||$35.6 Million|
|Net income per diluted share||$0.42||$2.06|
|Six Months 2007 |||Six Months 2006|
|Total revenue||$1,953.6 Million||$1,935.0 Million|
|Net income||$12.6 Million||$49.3 Million|
|Net income per diluted share||$0.68||$2.82|
- Total residential mortgage originations, as estimated by the Mortgage Bankers Association, decreased by approximately $20 billion, or 2.7%, in second quarter 2007 from the comparable period in 2006. Estimated purchase mortgage originations, which generate higher title fees per order compared to refinance transactions, decreased by approximately $56 billion, or 13.1%, in second quarter 2007 from the comparable period in 2006.
- Pretax income decreased by $45.7 million in second quarter 2007 from second quarter 2006, reflecting the weakness in the residential housing market and the increase in claims provision of $34.3 million, or $22.3 million after taxes.
- The claims provision for second quarter 2007 included $21.4 million which related to an increase in the ultimate expected loss rate of approximately 30 basis points for the 2004 policy year and 20 basis points each for policy years 2005 and 2006.
- Direct revenue from title and non-title commercial operations increased by 42.4% in second quarter 2007 to $152.1 million from $106.8 million in second quarter 2006.
- Direct orders opened were approximately 281,600 in second quarter 2007 compared to 271,200 in second quarter 2006. The increase of 3.8% was primarily due to additional volume from the Capital Title merger.
- Direct operating revenue per direct order closed was approximately $2,200 in second quarter 2007 compared to approximately $2,000 in second quarter 2006. Operating revenue for the Lender Services segment increased from $59.7 million in second quarter 2006 to $68.9 million in second quarter 2007.
- During second quarter 2007, the Company repurchased approximately 474,000 shares of its common stock for $42.0 million, at an average cost of $88.54 per share. At June 30, 2007, the Company had approximately 1,026,000 shares remaining under the 2007 repurchase program.
- Due to the increase in the Company's stock price, net income per diluted share in second quarter 2007 included approximately 2.1 million additional shares related to its convertible debt securities compared to 0.5 million shares in second quarter 2006.
"The residential real estate market is experiencing the largest volume decline in nearly 20 years," said Chairman and Chief Executive Officer Theodore L. Chandler, Jr. "We came out of first quarter 2007 ready for the seasonal acceleration we typically see in the second quarter. We did not see the traditional seasonal pick-up, causing our revenue to remain flat during second quarter 2007 over the first quarter of this year.
"Mortgage rates remain at historically low levels and the economy is expected to expand at a moderate pace. We believe the sharp decline in residential volume does not change the prospects for long-term demand driven by favorable demographics," said Chandler. "Given the current market conditions, we continue to adjust our costs to the reduced volume in order to better position ourselves for a market turnaround."
Chandler continued, "Within the commercial arena, a steady US economy, continued investor confidence, and market conditions favorably influenced our performance. We are pleased with the results from our commercial operations, which reflect our superior service and expertise, especially in closing highly sophisticated transactions."
Source: LandAmerica Financial Group, Inc.