The First American Financial Corporation announces acquisition of CREDCO and Flood Data Services
January 3, 1995, SANTA ANA, CALIFORNIA
With the addition of Credco, First American becomes the second largest mortgage credit reporting company in the United States. FDSI, as the largest flood zone determination provider in the United States, moves First American into a prominent position in the rapidly expanding market for flood certification services. Pursuant to recently enacted federal legislation, mortgage loan originators must obtain a determination of the flood zone status of the mortgaged property and provide for status updates for the life of the loan.
"Since First American started out as a one-county title company, it has grown and diversified through concentrating on meeting the changing needs of our customers," said President Parker S. Kennedy. "Our success is measured in part by our steady growth in market share in all of our core businesses. We anticipate that both Credco and FDSI will significantly increase our revenue base as they are assimilated over time into our extensive service and distribution network."
Addressing the current operating environment, Kennedy further commented, "Despite a substantial paring of expenses since March 1994, the escalating mortgage interest rates and resultant decline in order volume have made it difficult to maintain profitability. New open orders appear to be at or above levels which normally lead to profitable operations upon closing, but mortgage interest rate increases have caused a higher percentage of these orders to be canceled.
This increased 'cancellation factor,' though typical in refinance transactions, is running at higher levels than normally expected for resale transactions, which currently dominate the company's mix of business.
"This situation also affects our tax service where account servicing continues despite the decline in new business," Kennedy continued. "Given these circumstances, it is likely that the company will not be profitable in the fourth quarter of 1994 and we believe that these conditions are likely to persist into the first quarter of 1995."
The First American Financial Corporation, based in Santa Ana, California, is a leading provider of real estate financial services, including title insurance, tax monitoring, home warranty, credit reporting, flood certification and property information services, to real property buyers and mortgage lenders. The company also operates a trust and banking business in Southern California. The company offers its title services through a network of more than 300 offices and 4,000 agents throughout the United States. It also provides title services abroad in the Bahama Islands, Bermuda, Canada, Guam, Mexico, Puerto Rico, the U.S. Virgin Islands and the United Kingdom.