First American Expands National Default Outsourcing with Addition of SNK Holdings/LOGS
–Acquisition Strengthens First American as Number One Default Service Provider–
February 18, 2004, SANTA ANA, Calif.
The First American Corporation (NYSE: FAF), the nation’s leading data provider, today announced that it has completed a letter of intent to acquire privately held, mortgage default services provider SNK Holdings, Inc. and its subsidiary operations, including LOGS Financial Services.
First American will combine SNK Holdings with its Mortgage Information Group’s National Default Outsourcing (NDO) operations to introduce the industry’s most complete solution for managing all aspects of the mortgage default process. The new company, which will operate as First American National Default Outsourcing, will be headquartered in Lewisville, Texas. First American will manage and direct outsourcing activities from its regional offices in Milwaukee; Northbrook, Ill.; and Jacksonville, Fla. First American will also work to maximize service levels by continuing to utilize its existing attorney/agent network, as well as the LOGS network of agents nationwide.
Based in Northbrook, SNK/LOGS is the second largest mortgage default services provider in the nation. The company has established the industry’s premier system for complete process outsourcing. With the addition of the LOGS platform, First American will be better positioned to offer its lender customers either full-service onsite default assistance, or complete outsource management of default operations at a First American NDO support facility.
James C. Frappier, president of First American Default Management Solutions, said: “We are excited to add the talent and resources of SNK and LOGS to the First American team. This agreement is part of our continuing strategy to provide our customers with the complete suite of products and services in the default continuum. The addition of LOGS’ servicing platform gives us greater capacity to support clients and complements our recent acquisition of default claims management specialist Baker, Brinkley & Pierce.”
SNK Holdings has approximately 700 employees and was profitable in 2003 on revenues of $53.5 million. While complete details of the transaction were not disclosed, the combination of these businesses will be immediately accretive to First American. As a result of the combination of default servicing operations, technology integration, process improvements and other synergies, First American National Default Outsourcing will reduce annual operating expenses by $5 million within the first 12 months and will serve approximately 60 percent of the default outsourcing market.
“Our default operations are an important part of our strategy of being a full-service resource to our large lender customers and adding counter-cyclical revenues to our operations,” said Parker S. Kennedy, president and chief executive officer of The First American Corporation. “By expanding our services in this area, we are well positioned to meet our customers’ needs in the event of an increase in mortgage defaults. This addition also gives us the opportunity to cross sell other default, mortgage information and title related products and services.”
Gerald M. Shapiro, chairman of LOGS, stated: “By partnering with First American we will be able to integrate our default services and provide our customers with the best possible service and technology solutions to meet their unique needs. This new relationship with First American confirms our strategic vision and our significant investment in recent years to develop a complete end-to-end default outsource solution, which includes our MasterView© workflow software for law firms, and our REO management expertise.”
Michael Barrett, vice chairman of First American Real Estate Information Services, said, “The combination of the LOGS platform with the efficiencies provided by First American’s best-in-class default technologies, VendorScape/CMS, iClear and eDAISY, puts First American in a position to offer truly comprehensive default management to the servicing industry.”
Additional operations and opportunities that SNK brings to First American include: LOGS REO Management Company; ARM Financial, a California-based trustee; a facilities management business; a business practice management group that provides key support services to law firms and title agencies nationwide; and technology operations.
Certain statements made in this press release, including those related to the addition of the LOGS platform, earnings accretion and operating expenses, are forward looking. Risks and uncertainties exist that may cause results to differ materially from those set forth in these forward-looking statements. Factors that could cause the anticipated results to differ from those described in the forward-looking statements include: interest rate fluctuations; changes in the performance of the real estate markets; access to public records and other data; general volatility in the capital markets; changes in applicable government regulations; consolidation among the company’s significant customers and competitors; the company’s continued ability to identify businesses to be acquired; changes in the company’s ability to integrate businesses which it acquires; and other factors described in the company’s Annual Report on Form 10-K for the year ended Dec. 31, 2002, as filed with the Securities and Exchange Commission. The forward-looking statements speak only as of the date they are made. The company does not undertake to update forward-looking statements to reflect circumstances or events that occur after the date the forward-looking statements are made.