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Title insurer Williston Financial Group (WFG) is expanding its presence in California after closing a deal to acquire 22 retail title locations and operations centers in California from struggling digital title and closing provider Doma.
Doma will receive up to $24.5 million for the sale of those assets in northern and central California, including $10.5 million WFG paid upfront when the deal closed on May 19. Doma stands to receive up to $14 million in additional earnouts next year, “based on the retention of specified employees” by WFG, according to the purchase agreement between the companies. Doma said it employed a total of 123 workers at the locations it sold who helped generate $37 million in revenue for the company last year.
“We are thrilled to extend our California market reach through this acquisition, as it will significantly enhance our ability to serve the needs of our customers in these key growth regions,” WFG founder and Chair Patrick Stone said, in a statement. “Since day one, our vision for WFG has been to eliminate friction, increase transparency and deliver a superior experience for our real estate, lender and title agent customers, as well as for the consumers we all serve. These new members of the WFG team share this vision, and we are extremely eager to join forces with them to enhance the customer experience in some of the nation’s strongest housing markets.”
Doma said it expects the sale will generate savings in corporate support, lease and administrative expenses related to its remaining 56 local retail title branches.
“Our West Coast operations are premier locations within their respective real estate communities with a track record of providing excellent customer service,” Doma founder and CEO Max Simkoff said, in a statement. “We believe we have found an optimal home for our local team members in the branches we have sold to WFG and they will continue to thrive under their leadership. I want to thank this team for their hard work and dedication to Doma and our vision over the years.”
Founded in 2016, Doma set out to reimagine the closing process using its machine learning platform, Doma Intelligence, and other technology it has developed to automate the title and escrow processes.
After raising less than anticipated when it went public in 2021 in a merger with a special purpose acquisition company (SPAC), Doma faced more headwinds last year as rising mortgage rates dramatically curtailed its clients’ mortgage refinancing business and it raced to adapt its technology to handle purchase mortgages.
In reporting a $42.1 million first quarter loss on May 9, Doma said revenue was down 34 percent from the same period a year ago, to $74.4 million. The 6,280 title orders Doma closed during the first three months of the year represented a 77 percent drop from a year ago. All told, since its founding in 2016, Doma has racked up an accumulated deficit of $536.9 million through March 31.
In three rounds of layoffs last year, Doma cut its workforce by 52 percent, eliminating 1,076 positions across the company and leaving it with 1,062 employees as of Dec. 31. Most of those workers were based in California, Florida and Texas, the company said in its most recent annual report to investors.
On an earnings call with investment analysts, Simkoff said the company continued to close unprofitable branches, reducing the company’s branch footprint by 13 percent during the first quarter.
On the call, Simkoff announced that Doma executives were finalizing a “transformative core strategy for the business” to better harness the company’s patented instant underwriting technology through partnerships with external partners.
“With respect to that new strategy, we have made solid progress towards finalizing potential partnerships with some of the largest players in the national mortgage origination market to bring down refinance-specific costs for end consumers associated with title and closing,” Simkoff told investment analysts.
Shares in Doma, which have traded for as little as 28 cents and as much as $2.17 over the last year, climbed above 30 cents in afternoon trading following Tuesday’s announcement.
After Doma’s share price slipped below $1 last year, the New York Stock Exchange warned Doma in August that the company was in danger of being kicked off of the exchange if the company’s shares did not climb back above $1 within six months. Doma says it intends to regain compliance with the exchange’s $1 share price rule by implementing a reverse stock split at the annual shareholders meeting this summer.
Based in Portland, Oregon, WFG operates three business divisions: company-owned direct title operations, agency operations and enterprise solutions.
- WFG National Title Insurance Company is a title insurance underwriter licensed in 49 states (Iowa does not require title insurance).
- WFG Lenders Services is a centralized provider of title, closing and settlement services for mortgage lenders nationwide.
- WFG’s Enterprise Solutions group includes WFG Lender Services and Valutrust Solutions, WFG’s national appraisal management and valuation service company. WFG NTIC Default Title Services, WFG’s trustee sale guarantee and default title services division, is also part of WFG Enterprise Solutions.
Last year, WFG National Title Insurance announced the formation of a new Rocky Mountain Region, expanding the company’s agency footprint into four additional western states — Colorado, Utah, Montana and Wyoming.
Editor’s note: This story has been updated to correct that earnouts are to be “based on the retention of specified employees” by WFG, rather than the total number of employees retained.
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Email Matt Carter