A slowdown in mortgage applications hurt First American Corp.’s bottom line in the fourth quarter, the company said Wednesday.
The Santa Ana-based title insurer reported revenue of $1.4 billion in the quarter, up 15% versus a year earlier. But net income before taxes fell 3% to $169 million.
“We achieved strong results during 2004, despite a 25% drop-off in total mortgage applications,” said Parker S. Kennedy, First American’s chairman and chief executive. “With a slowdown in refinance transactions, the residential resale and new home sale markets remained at record levels throughout the year.”
The title insurer closed 485,700 title orders in the fourth quarter, up 10% versus a year earlier.
First American and other title insurers depend on a healthy housing and refinance market to spur revenue. If rates rise quickly this year, choking off demand for homes, title insurers could have a tough time improving financial results.
Shares of First American were down 2% to $36 in morning trading Wednesday.
Last month a jury hit First American with $43.2 million in damages in a lawsuit with rival Fidelity National Financial Inc., which moved from Irvine to Florida in 2003.
First American, which, like Fidelity, offers title insurance, took a $10 million charge against its fourth-quarter earnings because of the jury award.
The lawsuit filed by Fidelity’s Chicago Title Insurance Corp. charged First American with violating a noncompetition agreement and “intentional interference with contract.” First American said it’s appealing the verdict.
