After Jeff Carbiener resigned as CEO of Lender Processing Services Inc. in June for health reasons, the Jacksonville-based company promised a comprehensive search for a replacement that would take as long as necessary.
As it turns out, it didn’t have to look very far.
LPS last week named Hugh Harris to replace Carbiener. And it’s not the first time the company has turned to Harris.
LPS provides processing services to mortgage lenders through all phases of the loan process, from origination to foreclosure if the loan goes bad.
It’s a company that traces its roots back nearly half a century to a Jacksonville company called Computing & Statistical Services that was eventually bought out by Alltel Corp. in 1992.
When title insurance company Fidelity National Financial Inc. bought the mortgage processing business from Alltel in 2003, it picked Harris to run it.
He did that for more than three years, before Fidelity spun off its financial services processing division into a separate company called Fidelity National Information Services Inc.
That company in turn spun off the mortgage processing business into a separate company called LPS in 2008.
LPS credits Harris with investing in technology and creating a strong management team during his first go-around with the company, which ended with his retirement in 2007.
But the challenges the 60-year-old Harris faces now are much more daunting. As everyone well knows, federal and state regulators have been investigating allegations that an LPS subsidiary falsified documents used in the foreclosure process.
Those investigations have dragged on for more than a year and a half and while analysts don’t expect them to result in big financial penalties for LPS, they are having an impact on the company’s business.
The investigations of LPS and other players in the mortgage industry have slowed the pace of foreclosures nationwide, resulting in lower fee revenue for LPS.
Meanwhile, the continued slumping real estate market is lowering the loan origination business, so LPS had to lower its earnings projections for the year.
On the day before Harris was hired, LPS’ stock fell to a record low of $12.91. It had been trading above $40 as recently as March 2010, just before LPS first revealed the federal investigation of the foreclosure procedures.
LPS continues to be the dominant player in the mortgage processing business. D.A. Davidson analyst John Kraft notes that despite all the negative news about the company, 13 of the top 14 U.S. mortgage lenders continue to use LPS’ systems.
“We expect LPS to be an important player in the mortgage industry,” Kraft said in a recent report. “In the near term, however, the company faces significant challenges.” So he doesn’t expect the stock to rebound any time soon.
LPS gave Harris a three-year employment contract, according to a Securities and Exchange Commission filing Thursday. He will receive a base salary of $880,000 a year, the same that Carbiener earned last year, and the ability to earn up to 165 percent of that base in incentive bonuses.
Solar Energy silence
After several months of silence, Solar Energy Initiatives Inc. filed a report last week with the Securities and Exchange Commission indicating that Michael Fann had resigned as president and acting chief financial officer. But it gave no other details on the state of the company.
When we last heard from Solar Energy Initiatives, it had filed an SEC report in June saying “if the company is not able to locate financing by August 2011 and negotiate the settlement of its outstanding debt, we will be forced to cease operations.”
After that filing, I visited the company’s headquarters office in Ponte Vedra Beach and found no one there, and its phone number was disconnected.
That same phone number was listed on last week’s SEC filing and it is still disconnected.
There was a number for a New York attorney on the filing, so I tried calling that firm. I was told they had no number for Solar Energy Initiatives but they gave me an email address for CEO David Fann. I sent an email but received no response.
Solar Energy Initiatives was established three years ago to develop solar systems. It set up a training center on Jacksonville’s Northside to teach people how to install solar systems, and it made several announcements of major solar projects.
But the company’s revenue never lived up to its predictions. Its last financial report showed a net loss of $3.95 million on revenue of $1.29 million for the nine-month period ended April 30.
Its stock still trades on the over-the-counter market but has been listed at less than a penny a share since April, according to Bloomberg News data.
Solar Energy Initiatives spun off a separate public company in January called Solar Park Initiatives Inc. to focus on developing land for large utility-scale solar projects.
But the SEC suspended trading in Solar Park Initiatives in June, citing concerns about the adequacy of information available about the company. The stock has not traded since then.
But Solar Park Initiatives has continued to file quarterly SEC statements. The latest shows a net loss of $827,780 on revenue of $39,000 in the nine-month period ended June 30.
Solar Park’s SEC filings list an address in Kingstree, S.C. But the phone number listed is the same disconnected 904-area code number listed for Solar Energy Initiatives. So both Solar Park Initiatives and Solar Energy Initiatives have been unreachable.
Trailer Bridge listing
Trailer Bridge Inc. said Friday in an SEC filing that it may lose its Nasdaq Stock Market listing because of its low stock price. The Jacksonville-based marine and truck freight company said it received a letter from Nasdaq because its stock price has been below $1 for the last 30 business days.
Trailer Bridge has 180 days to fix the problem. If its closing stock price is at least $1 for 10 consecutive business days during that time period, it will be back in compliance.