On the strength of a rise in per-file fee income for residential and commercial files, Stewart Information Services Corp. saw its title operating income hold steady.
[caption id="attachment_7239" align="alignleft" width="150"]
An increase in file fees helped Stewart's financial performance.[/caption]
The domestic residential fee per file increased 10% to around $2,200, a result of the shift to more purchase transactions; and the commercial fee per file increased 43% to around $8,400 due to increased transaction sizes. All told, title revenue in the third-quarter 2018 ($486 million) were comparable to the prior year quarter ($485.4 million), a result of higher commercial and independent agency revenues, which a decline in non-commercial direct title revenues offset in part.
"Stewart delivered solid third-quarter results as increased fee-per-file levels in both commercial and residential operations offset lower order counts," stated Matthew Morris, chief executive officer at Stewart. "Even though order counts were down year-over-year as interest rates rose through the quarter, the growing mix of purchase transactions in our residential business and larger transaction sizes in our commercial business helped keep title revenues flat with the third-quarter 2017.”
Included in non-commercial domestic revenues were revenues from purchase transactions, which were roughly flat year-over-year, and centralized title operations (processing primarily refinancing and default title orders), which declined $5.7 million in the third-quarter compared to the third-quarter 2017. Also, gross and net revenues from independent agency operations increased 2 percent, compared to the third-quarter 2017.
Commercial revenues rose $7.3 million, or 16 percent, compared with the prior year.
Employee costs for the third-quarter 2018 were $138.3 million, a decrease of 1 percent compared to $140.1 million in the same quarter one year earlier. Average employee counts decreased around 8 percent in title and ancillary services in the third-quarter 2018, compared to the third-quarter 2017.
The reduced employee counts resulted in an 8 percent decrease in salaries and other employee benefits, which was partially offset by increased commissions on commercial title compensation. As a percentage of total operating revenues, employee costs for the third-quarter 2018 improved 40 basis points, or 27.7 percent compared to the same period a year earlier.
Third-quarter 2018 results included $6.8 million of third-party advisory expenses from the Fidelity National Financial merger transaction and $3.4 million of net unrealized gains relating to changes in fair value of equity investments.
“Our senior management team remains focused on the merger process as we continue to work with the FTC and the appropriate state regulators, and, as our results illustrate, all associates remain focused on delivering solid operating results," said Morris.
