JACKSONVILLE, Fla. - (07/28/05) -- Financial services conglomerateFidelity National Financial Inc. will try again to reinvent itselfthrough financial engineering, with a planned spin off of its coretitle insurance business over the coming weeks. The company, whichdiversified through the acquisition of half a dozen financialoutsourcing companies, abandoned a plan to spin off its financialservices subsidiary last year in favor of a $2.5 billionrecapitalization and partial sale of the unit. That unit includessuch credit union outsourcing operations as Aurum Technology,ALLTEL Information Services, VISTA Information Solutions, andSanchez Computer Associates and InterCept. Separately, FidelityNational reported second earnings declined 14% to $190 million, or$1.07 a share, compared to the same period last year. Secondquarter revenues climbed 11% to $2.4 billion, much of it do to theintegration of several acquisitions. For the first six months ofthe year Fidelity National reported a 70% surge in earnings to$634.5, or $3.58 a share, based partially on a 16% rise in revenuesto $4.7 billion. Also, Bill Foley, CEO of Fidelity National whopaid himself more than $80 million as part of the company's$10-a-share special dividend last year, made a $15 million donationto the U.S. Naval Academy, the largest donation ever given to hisalma mater.
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The Cleveland-based bank is projecting steady growth in net interest income even as credit losses remain manageable. But Chairman and CEO Chris Gorman also said that he thinks a recession is likely.
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The first-quarter increase involved commercial real estate loans, including some problematic multifamily loans and an office credit, but none of the criticized loans were to consumers, officials at the Dallas company say. Further CRE deterioration is anticipated.
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The Detroit-based company is exploring ways to make more consumer auto loans without running afoul of stricter capital standards that are expected from the Federal Reserve. Possible approaches include more securitizations and the use of credit risk transfers.
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The House Financial Services Committee also sent to the full House two bipartisan bills, including one that would prevent large banks from opting out of having to recognize Accumulated Other Comprehensive Income in regulatory capital.
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Charge-offs and nonperforming loans rose at the Georgia bank in the first quarter. But it blamed the problem on one large client and said the matter has been resolved.
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Amid healthy first-quarter loan growth and improving credit quality, Discover Financial Services slashed its profits by $800 million to offset remediation costs from a 16-year period when it overcharged certain merchants.
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