The First American Financial Corporation announces 1994 profits of $19 million ...


February 8, 1995, SANTA ANA, CALIFORNIA

The First American Financial Corporation (NYSE: FAF) announced today a decline in 1994 annual profits due to increases in mortgage interest rates throughout the year.

The company's 1994 profits were $18.9 million, or $1.66 per share, despite a net loss of $2.9 million, or 25 cents per share, in the fourth quarter. This compares to 1993 earnings of $66.3 million, or $5.84 per share, and fourth quarter 1993 earnings of $20.5 million, or $1.80 per share. 1993 results included a $4.2 million tax benefit, or 37 cents per share, relating to Statement of Financial Accounting Standards No. 109 (SFAS 109), "Accounting for Income Taxes."

Revenues in 1994 totaled $1.376 billion, a decrease of 2 percent from last year's record of $1.398 billion. However, the company's fourth quarter revenues were $300.1 million, a decrease of 27 percent from the $409.2 million for the same period last year. "Lower revenues in the fourth quarter of 1994 were due in large part to the succession of interest rate hikes by the Federal Reserve during 1994, a persistently poor real estate economy in California and a return of traditional, seasonal conditions that negatively impact transaction volumes," said President Parker S. Kennedy. "The relatively low volume of new orders during the latter part of 1994 and January 1995 will adversely affect the first quarter 1995 results."

Kennedy noted that the company continues to focus on cost reduction efforts, while continuing to enhance its ability to provide customers with consistent, high-quality service. In January 1995, the company acquired key service components--credit reporting and flood certification--now operating under the company's subsidiary, First American Real Estate Information Services, Inc. The company also greatly enhanced its title insurance branch network with key acquisitions during 1994. According to Kennedy, "the long-term earnings potential of First American remains very strong."

The First American Financial Corporation, based in Santa Ana, California, is a leading provider of real estate financial services, including title insurance, tax monitoring, home warranty, credit reporting and property information services, to real property buyers and mortgage lenders. The company also operates a trust and banking business in Southern California. The company offers its title services through a network of more than 300 offices and 4,000 agents throughout the United States. It also provides title services abroad in the Bahama Islands, Bermuda, Canada, Guam, Mexico, Puerto Rico, the U.S. Virgin Islands and the United Kingdom.

Synopsis:

Quarter ended December 31:		1994		1993
Revenues			   $ 300,076,000   $ 409,154,000
Income (loss) before 
  income taxes			   $  (4,777,000)  $  34,907,000
Net income (loss)		   $  (2,877,000)  $  20,507,000
Net income (loss) per share	   $       (0.25)  $        1.80	

Year ended December 31: Revenues $1,376,393,000 $1,398,426,000 Income before income taxes $ 32,245,000 $ 103,991,000 Net income before accounting change $ 18,945,000 $ 62,091,000 Accounting change--SFAS 109 -- $ 4,200,000 Net income $ 18,945,000 $ 66,291,000 Per share data: Net income before accounting change $ 1.66 $ 5.47 Accounting change $ -- $ .37 Net income $ 1.66 $ 5.84 Average shares outstanding 11,447,000 11,353,000


SELECTED FINANCIAL DATA
(Unaudited)
For the Three Months Ended
December 31

For the Year Ended
December 31


 
  1994   1993   1994   1993


 
RESULTS OF OPERATIONS
Revenues
Operating revenues $294,409,000   $401,275,000   $1,356,946,000   $1,379,781,000
Investment and other income 5,667,000   7,879,000   $19,447,000   18,645,000
 
 
 
 
  300,076,000   409,154,000   1,376,393,000   1,398,426,000
 
 
 
 
Expenses
Salaries and other personnel costs 101,019,000   113,243,000   423,328,000   397,902,000
Premiums retained by agents 112,614,000   143,518,000   533,598,000   504,375,000
Other operating expenses 58,941,000   64,343,000   232,532,000   222,934,000
Provision for title losses and other claims 21,400,000   40,805,000   110,230,000   125,588,000
Depreciation and amortization 4,950,000   4,367,000   19,796,000   16,333,000
Interest 1,862,000   687,000   6,267,000   4,419,000
Minority interests 423,000   1,224,000   2,944,000   5,267,000
 
 
 
 
  301,209,000   368,187,000   1,328,695,000   1,276,818,000
 
 
 
 
Income (loss) before premium and income taxes (1,133,000)   40,967,000   47,698,000   121,608,000
Premium taxes 3,644,000   6,060,000   15,453,000   17,617,000
 
 
 
 
Income (loss) before taxes $(4,777,000)   $34,907,000   $32,245,000   103,991,000
 
 
 
 
OPERATING REVENUES
Title Insurance:
Direct operations $123,684,000   $188,397,000   $562,566,000   $632,226,000
Agency operations 140,067,000   175,697,000   659,015,000   618,353,000
 
 
 
 
  263,751,000   364,094,000   1,221,581,000   1,250,579,000
Real Estate Information 19,270,000   27,624,000   94,816,000   95,069,000
Home Warranty 7,544,000   6,071,000   28,116,000   22,402,000
Trust and Banking 3,844,000   3,486,000   12,433,000   11,731,000
 
 
 
 
Total operating revenues $294,409,000   $401,275,000   $1,356,946,000   $1,379,781,000
 
 
 
 
INCOME (LOSS) BEFORE INCOME TAXES
Title Insurance $610,000   $32,648,000   $37,819,000   $97,314,000
Real Estate Information (364,000)   9,439,000   17,371,000   35,046,000
Home Warranty 2,067,000   1,418,000   6,709,000   5,477,000
Trust and Banking 1,425,000   1,385,000   3,214,000   3,313,000
 
 
 
 
Total before corporate expenses and premium taxes 3,738,000   44,890,000   65,113,000   141,150,000
Corporate Expenses 4,871,000   3,923,000   17,415,000   19,542,000
Premium Taxes 3,644,000   6,060,000   15,453,000   17,617,000
 
 
 
 
Income (loss) before taxes $(4,777,000)   $34,907,000   $32,245,000   $103,991,000
 
 
 
 
TITLE INSURANCE ORDER
COUNTS FROM DIRECT OPERATIONS
Title orders opened 177,400   302,400   872,900   1,218,400
Title orders closed 150,800   270,600   722,900   932,700

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