The First American Financial Corporation reported a profitable second quarter ...


August 11, 1988, SANTA ANA, CALIFORNIA

The First American Financial Corporation reported that the company was profitable for the second quarter and first half of 1988 despite severe title losses as well as agency defalcations in Florida and in New York amounting to $6,500,000 in the second quarter. According to D.P. Kennedy, president, the defalcations included $5,000,000 resulting from title insurance losses incurred as a result of erroneous policies fraudulently issued by an agency, Security Land Title Company of Florida, Inc., in connection with real estate transactions engaged in by its parent, Eastmont Corporation.

Based upon its extensive investigation, the company has determined that a maximum of no more than $5,000,000 in trust deeds and various liens were improperly reflected in the policies issued in connection with the Eastmont Corporation transactions.

Revenue for the second quarter 1988 totaled $154,433,000 while net income was $4,648,000, or $.95 per share, as compared with $11,105,000, or $2.01 per share, for the record-setting second quarter last year.

Revenue for the first half 1988 totaled $283,797,000 while net income totaled $1,472,000, or $.30 per share. Net income for the same period 1987 was $22,951,000, or $4.15 per share, which included a one-time transitional tax benefit of $8,996,000, or $1.63 per share.

The company's revenue trend reflects the nationwide decrease in real estate transactions which began in the second half of 1987 and continued through the early part of 1988. However, new orders received in July 1988 were somewhat higher than July 1987; thus with a continuance of current operating ratios and a return to a more normal level of underwriting losses, it appears that the company will operate at a satisfactory profit level for the remainder of the year.

Synopsis:

Three Months Ended June 30:		1988		1987
Revenue				    $154,433,000    $175,312,000*
Net income			    $  4,648,000    $ 11,105,000
Per share			    $        .95    $       2.01
Average shares outstanding	       4,921,000       5,505,000

Six Months Ended June 30: Revenue $283,797,000 $312,945,000* Net income $ 1,472,000 $ 22,951,000** Per share $ .30 $ 4.15** Average shares outstanding 4,886,000 5,525,000
* Restated for accounting change in method of recognizing premiums from agents.
** Including one-time transitional tax benefit of $8,996,000 or $1.63 per share.

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